<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 26, 2000
REGISTRATION NO. 333-32786
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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)
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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. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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The information contained in this prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. 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 APRIL 26, 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 up to 227,500 additional shares of our
common stock at an exercise price of $10.00 per share. See "Description of
SouthernBank Holdings' 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 provides a brief overview of the key aspects of this
offering. Accordingly, this summary does not contain all of the information
contained in this prospectus that 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. Unless the
context otherwise requires, references in this prospectus to "we," "us" and
"our" refer to SouthernBank Holdings, Inc., and SouthernBank, N.A. collectively.
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 17, 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 will be required to raise a minimum of
$8,500,000 in capital and implement appropriate banking policies and procedures.
We received approval of our application for deposit insurance from the FDIC on
March 17, 2000 and, on March 31, 2000, we filed 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. According to estimates, Gwinnett County experienced the largest increase
in population of any county in the nation over the past decade, and is expected
to experience continued population growth over the next five years.
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 an
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.
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;
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- 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 the president of SouthernBank
Holdings, 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
.
Our directors intend to utilize their diverse backgrounds and their local
business relationships to attract customers from all segments of the communities
we serve. Currently, the board of directors of SouthernBank Holdings consists of
the following individuals:
<TABLE>
<S> <C>
- - James O. Andrews - M. Lauch McKinnon
- - James E. Hinshaw, Sr. - D. Alan Najjar
- - Donald F. Jackson - D. Arnold Tillman, Jr.
- - Lewis A. Massey - Jeffery S. Tucker
- - Tyler C. McCain
</TABLE>
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 .
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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.
PRODUCTS AND SERVICES
We plan to offer 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 their
additional financial risks undertaken during our formation and organization
process, our organizers will receive warrants to purchase one share of our
common stock, at $10.00 per share, for each share they purchase in the offering.
Accordingly, warrants will be offered only to our organizers and not to the
public. Given the intent of our organizers to purchase 227,500 shares in this
offering, we expect that they will be
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granted warrants to purchase an aggregate of 227,500 shares. The one-to-one
ratio between the anticipated number of shares to be purchased by our organizers
and the number of warrants to be issued to them was determined after considering
a number of factors, including prevailing market conditions and comparable de
novo bank holding company capitalizations. Because our organizers will be able
to purchase shares subject to the warrants at $10.00 per share, if the market
price of our common stock rises, our organizers will be able to purchase a
significant amount of our common stock in the future for less than its then
prevailing market value. We believe our directors' and organizers' financial
interest in SouthernBank Holdings will encourage their active participation in
growing our business. See "Description of SouthernBank Holdings' Capital
Stock - Organizers' Warrants" on page and "Management's Discussion and
Analysis of Financial Condition and Plan of Operations" 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
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 temporary facility that will be located
approximately 2.6 miles from the permanent site for our main office, and within
our primary service area. We anticipate opening for business in our temporary
facility in the second quarter of 2000.
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<PAGE> 8
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.
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 .
5
<PAGE> 9
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 .
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
SouthernBank Holdings' Capital Stock - Organizers' Warrants" on page and
"Management's Discussion and Analysis of Financial Condition and Plan of
Operations" 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
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<PAGE> 10
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 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.
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
7
<PAGE> 11
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 .
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.
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 .
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,
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<PAGE> 12
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
SouthernBank Holdings' 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
$2,903,500 or approximately 23.2% of the net proceeds of the offering. We cannot
predict the extent to which we will allocate these funds to 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 .
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<PAGE> 13
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> 14
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....................................... 30,000
Investment in common stock of SouthernBank.................. 8,500,000
-----------
Remaining Proceeds.......................................... $ 2,903,500
===========
</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 $30,000 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> 15
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 facility approximately 2.6 miles
from the permanent site for our main office. The following table shows the
rental cost of the temporary facility for a period of 15 months from the date of
occupancy. 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. 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.
<TABLE>
<S> <C>
Investment by SouthernBank Holdings in SouthernBank's common
stock..................................................... $8,500,000
Reimbursement to SouthernBank Holdings for land purchase
deposit................................................... 30,000
Purchase price of land, less deposit........................ 827,000
Construction of bank facility............................... 1,143,000
Furniture, fixtures and equipment........................... 250,000
Rental payments and leasehold improvements for temporary
facility (15 months)...................................... 44,880
----------
Remaining proceeds.......................................... $6,205,120
==========
</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 $10.00 as 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 30, 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 .
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<PAGE> 16
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 SouthernBank Holdings' 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)....................... 5,509 10,279,000
Accumulated deficit during development stage........ (88,444)(2) (380,500)(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 $380,500 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.
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.
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<PAGE> 17
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> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND PLAN OF OPERATIONS
GENERAL
SouthernBank Holdings was organized on July 13, 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
$88,444. The estimated net loss for the period from July 13, 1999 through May
2000, the anticipated opening date of SouthernBank, is $380,500 which is
attributable to the following estimated expenses:
<TABLE>
<S> <C>
Officer compensation........................................ $117,500
Legal, consulting and professional fees..................... 68,000
Equipment and occupancy expenses............................ 23,000
Other pre-opening expenses.................................. 172,000
--------
Total............................................. $380,500
========
</TABLE>
Our organizers will be issued up to an aggregate of 227,500 warrants in
connection with this offering. Once issued, these warrants will be treated as
common stock for purposes of SouthernBank Holdings' earnings per share
calculation. Therefore, as the warrants are issued, SouthernBank Holdings'
earnings per share may be diluted. See "Description of SouthernBank Holdings'
Capital Stock -- Organizer Warrants" on page .
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, 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 $10.00 as
consideration for the assignment. To pay for the property, SouthernBank has
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<PAGE> 19
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 30, 2000. Costs of constructing our permanent
facility are estimated at $1,143,000, and will be paid by SouthernBank after it
is capitalized. See "Our Proposed Business -- Offices" on page and "Related
Party Transactions" on page .
Until our permanent facility is completed, we plan to conduct our
operations in a temporary facility located approximately 2.6 miles from the site
of our permanent facility, and within our primary service area. The lease term
for our temporary facility will be for a term of 15 months from the date of
occupancy. SouthernBank will pay monthly rent in the amount of $2,600 for the
temporary facility. We expect to be open for business in our temporary 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.
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.
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<PAGE> 20
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> 21
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. On March 31, 2000 we applied 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 17, 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 approval of its FDIC deposit
insurance application on March 17, 2000. However, SouthernBank is awaiting final
approval from the OCC and receipt of a charter. We expect that SouthernBank will
receive all regulatory approvals and open for business in the second quarter of
2000. However, if we are unable to receive final approval for SouthernBank to
begin banking operations by September 15, 2001, we anticipate that we will seek
shareholder approval for the dissolution and liquidation of SouthernBank
Holdings. Upon dissolution, we will distribute to shareholders the proceeds of
the offering, less all expenses incurred by us, including the expenses of this
offering and our organization and pre-opening expenses.
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.
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 an 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
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<PAGE> 22
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%. According to the Gwinnett
Chamber of Commerce, more than 20,000 businesses are located in Gwinnett County,
with approximately 20% of the Fortune 500 companies, more than 480 high-tech
firms, and more than 270 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%.
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
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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, according to the U.S. Census Bureau.
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.
- 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
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example, we intend to differentiate SouthernBank from our competitors primarily
through our active calling programs for directors and employees, our 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 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 operating
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.
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- 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.
- 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. Our strategy
will vary from time to time based on the business cycle, economic forecasts and
available interest rate spreads. While there may be adjustments based on
changing economic conditions, SouthernBank's initial plan is to have its loan
portfolio be comprised of the following:
<TABLE>
<CAPTION>
LOAN CATEGORY RATIO
- ------------- -----
<S> <C>
Commercial loans to small- and medium-sized businesses...... 40%
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. SouthernBank will not make loans
secured by restricted stock or property held in trust for a minor, loans to
enable a borrower to speculate in the futures market, single payment loans with
a maturity of longer than one year, or loans to borrowers currently classified
as doubtful or substandard. In addition, SouthernBank will not make loans to
political candidates for campaign expenses or loans on which interest is
capitalized, unless additional security is taken by the bank. Further,
SouthernBank will avoid loans secured by an assignment against an undistributed
estate, loans to borrowers who have previously declared
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bankruptcy, the origination of mortgage loans secured by property outside of the
bank's primary service area, and loans dependent upon borrowing from other
sources for repayment, except for certain construction loans. Additionally,
unless guaranteed by a government agency, SouthernBank will avoid crop loans
dependent upon successful marketing of the crop and working capital loans to new
enterprises dependent upon the profitable operation of the new enterprise.
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.
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 exceed the Senior Loan Officer's lending
authority of $150,000, the loan request must be approved by the Chief Executive
Officer as well. If the loan request exceeds the Chief Executive Officer's
lending limit, which is $250,000, the loan must be approved by SouthernBank's
loan committee. Loan requests in excess of $1,200,000 must be approved by
SouthernBank's board of directors. In addition, loan requests from borrowers
outside of SouthernBank's primary service area, or loans that will be secured by
collateral located outside of SouthernBank's primary service area, must be
approved by the bank's loan committee. 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. 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, and
the ability of our commercial borrowers to evaluate and properly respond to
changing economic conditions. 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
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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 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,
variable interest rates based on the prime interest rate. Additionally, these
working capital loans will generally be secured by accounts receivable,
inventory, or other appropriate 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.
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The interest rate on commercial real estate loans will generally be
adjusted every 12 months or at maturity. 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.
- 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 interest rate on
construction and acquisition and development loans will be adjusted
every six months or at maturity. 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. Consumer loans will
generally be made with a fixed rate of interest. However, home equity lines of
credit will be made with a variable rate of interest based on the prime interest
rate.
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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. These
investments will include U.S. treasury bills and treasury notes, as well as
investments in securities of federally sponsored agencies, such as Federal Home
Loan Bank bonds. In addition, SouthernBank may also invest in federal funds,
negotiable certificates of deposit, banker's acceptances, mortgage backed
securities, corporate bonds and municipal or other tax-free bonds. 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.
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 has adopted. 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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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. After
considering a number of sites within the Mill Creek area, Land South Properties,
LLC, a real estate development company owned by two of our organizers, entered
into an agreement to purchase the proposed site for SouthernBank's main office
for a purchase price of approximately $857,000, or $16.00 per square foot. The
purchase price resulted from arms-length negotiations between Land South and
Mall Developers, LLC, the owner of the property, and was based on comparable
transactions in the area surrounding the Mall of Georgia which ranged from
$15.50 to $21.00 per square foot. Land South will assign its rights under the
agreement to SouthernBank and will receive $10.00 as consideration for the
assignment. 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 30, 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 $1,143,000.
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.
SouthernBank will operate initially out of a temporary facility located
approximately 2.6 miles from the site of the permanent facility, and within our
primary service area. The lease rate for the temporary facility will be
approximately $2,600 per month for 15 months.
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
NUMBER OF OUTSTANDING OPTIONS AND
NAME AND ADDRESS AGE POSITION HELD SHARES SHARES WARRANTS
- ---------------- --- --------------------- --------- ------------- -----------------
<S> <C> <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, Director 25,000 2.0 50,000(1)
337 Mount Vernon Drive
Calhoun, Georgia 30701
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 Executive Officers 202,500 16.2 237,500
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 .
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(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 SouthernBank Holdings' 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 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 has served on the executive council of
Bombardier Capital, the advisory council of Genmar Yachts, Carver Division,
MasterCraft and Donzi Marine, as well as the Supra Stearing Committee and
Correct Craft's Dealer Council. 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 Make a Wish Foundation and is a past presenting sponsor for the
Georgia Chapter of the March of Dimes.
James E. Hinshaw, Sr. is the president and founder 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. Since 1990, Mr.
Hinshaw has served on the board of directors of Waverly Inn, Inc. -- Historic
Inns, 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. Mr. Hinshaw is active in the
Gwinnett County Rotary Club, having served as president as well as district
governor. Mr. Hinshaw has also served as vice president of the Gwinnett Chamber
of Commerce.
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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. Prior to establishing Georgia Vinyl Products,
Mr. Jackson was co-owner and operations manager of Jackson Dairy Farm in Bartow
County. 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, and also served for two years as an alternate
on the Farm Services Agency Governing Board.
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.
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 1974,
where he held numerous officer level positions in banking, operations,
administration and data processing. 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
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<PAGE> 34
the University of Georgia in 1974 and from Stonier Graduate School of Banking in
1982. 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 a
volunteer for 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
346-unit luxury apartment complex in Forsyth County located within five miles of
SouthernBank's proposed main office in Mill Creek. Land South Construction
recently completed a 464-unit luxury apartment complex located within one mile
of SouthernBank's proposed main office. 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, including the Macon Civic Club.
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. Mr. Daws is a graduate of Georgia Tech, and
subsequently earned a masters degree from the University of Georgia.
Additionally, Mr. Daws is an associate of the Macon Heritage Foundation, which
is involved in the preservation of historic homes and neighborhoods.
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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. The committee also 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 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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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
$100,000 in salary and bonus in 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------
OTHER ANNUAL
NAME AND SALARY BONUS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)
------------------ ------ ------ ----- ----------------
<S> <C> <C> <C> <C>
D. Arnold Tillman, Jr.
Chief Executive Officer............ 1999 $5,500 -0- 1,900(1)
M. Lauch McKinnon,
President.......................... 1999(2) 7,500 -0- 2,958(3)
</TABLE>
- ---------------
(1) Mr. Tillman receives no actual 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. The salary compensation shown above
has been included solely to reflect the amount expensed ($1,000 per month)
in SouthernBank Holdings' financial statements to account for Mr. Tillman's
contribution to the Company and all of the costs of doing business as
required by financial reporting requirements.
(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:
- 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
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<PAGE> 37
- 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 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.
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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, 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.
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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 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.
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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, 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, or
$16.00 per square foot. The purchase price resulted from arms-length
negotiations between Land South and Mall Developers, LLC, the owner of the
property, and was based on comparable transactions in the area surrounding the
Mall of Georgia which ranged from $15.50 to $21.00 per square foot. Land South
will assign its rights under the agreement to SouthernBank and will receive
$10.00 as 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 30, 2000.
DESCRIPTION OF SOUTHERNBANK HOLDINGS' 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.
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
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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. The
warrants are being offered by this prospectus, and are being offered only to our
organizers and not to the public. 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 one-to-one ratio between the anticipated
number of shares to be purchased by our organizers and the number of warrants to
be issued to them was determined after considering a number of factors,
including prevailing market conditions and comparable de novo bank holding
company capitalizations.
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. See
"Management's Discussion and Analysis of Financial Condition and Plan of
Operations" on page .
TRANSFER AGENT
The transfer agent and registrar for our common stock is SunTrust Bank,
Atlanta.
IMPORTANT PROVISIONS OF SOUTHERNBANK HOLDINGS'
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
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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 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.
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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);
- 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 its 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.
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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, 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.
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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.
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.
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
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- 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 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.
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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.
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.
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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."
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.
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<PAGE> 50
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 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.
47
<PAGE> 51
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.
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
48
<PAGE> 52
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.
49
<PAGE> 53
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.
50
<PAGE> 54
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 over-allotment option, exercisable
within 30 days after the date of this prospectus, to purchase up to 187,500
additional shares of our common stock, representing 15.0% of the initial
1,250,000 shares to be outstanding upon the close of the offering. The
over-allotment option will be exercisable at the public offering price listed on
the cover page of this prospectus, less the 7.5% underwriting discount, and may
be exercised only to cover over-allotments made in connection with this
offering. If the underwriter exercises its over-allotment option, in whole or in
part, to cover any short sales made, the underwriter will deliver a copy of the
final prospectus to all purchasers of the over-allotment shares. Accordingly,
these purchasers will be entitled to the same legal remedies provided under the
federal securities laws as any other purchaser of shares covered by the
registration statement. The potential size of the syndicate short position is
not expected to exceed 187,500 shares, or 15.0% of initial 1,250,000 shares to
be outstanding upon the close of the 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.
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
51
<PAGE> 55
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.
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
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<PAGE> 56
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.
53
<PAGE> 57
- --------------------------------------------------------------------------------
SOUTHERNBANK HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL REPORT
DECEMBER 31, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Independent Auditor's Report................................ F-2
Balance Sheet, December 31, 1999............................ F-3
Statement of Loss, Period from July 13, 1999, Date of
Inception, to December 31, 1999........................... F-4
Statement of Cash Flows, Period from July 13, 1999, Date of
Inception, to December 31, 1999........................... F-5
Notes to Financial Statements............................... F-6
</TABLE>
F-1
<PAGE> 58
- --------------------------------------------------------------------------------
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
F-2
<PAGE> 59
- --------------------------------------------------------------------------------
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 5,509
Deficit accumulated during the development stage (88,444)
----------------
Total stockholder's deficit (82,934)
----------------
Total liabilities and stockholder's deficit $ 44,662
================
</TABLE>
See notes to financial statements.
F-3
<PAGE> 60
- --------------------------------------------------------------------------------
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 $ 13,000
Equipment and occupancy expenses 2,093
Interest 1,902
Legal and consulting 50,081
Regulatory fees 15,000
Other expenses 6,368
--------
88,444
--------
Net loss and deficit accumulated during the
development stage $(88,444)
========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 61
- --------------------------------------------------------------------------------
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 $(88,444)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 114
Unpaid compensation 5,500
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.
F-5
<PAGE> 62
- --------------------------------------------------------------------------------
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.
F-6
<PAGE> 63
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND SUMMARY OF 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. UNPAID COMPENSATION
The Company's chief executive officer did not and will not receive cash
compensation for services rendered to the Company for the period from July 13,
1999, date of inception, to December 31, 1999. The Company has estimated the
fair value of the services rendered to be $5,500. This amount has been recorded
as an expense in the statement of loss with a corresponding increase to capital
surplus in the balance sheet.
NOTE 4. 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.
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.
F-7
<PAGE> 64
- --------------------------------------------------------------------------------
NOTE 5. COMMON STOCK OFFERING
The Company proposes to file a Registration Statement on Form SB-2 with
the Securities and Exchange Commission offering for sale 1,250,000 shares of the
Company's common stock at a price of $10 per share.
NOTE 6. 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.
F-8
<PAGE> 65
- ------------------------------------------------------
- ------------------------------------------------------
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 OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary............................... 1
Risk Factors.......................... 5
A Warning About Forward-Looking
Statements.......................... 10
Use of Proceeds....................... 11
Capitalization........................ 13
Dividends............................. 13
Management's Discussion and Analysis
of Financial Condition and Plan of
Operations.......................... 15
Our Proposed Business................. 18
Management............................ 28
Executive Compensation................ 33
Related Party Transactions............ 37
Description of SouthernBank Holdings'
Capital Stock....................... 37
Important Provisions of SouthernBank
Holdings' Articles of Incorporation
and Bylaws.......................... 38
Supervision and Regulation............ 44
Shares Eligible for Future Sale....... 50
Underwriting.......................... 51
Legal Matters......................... 52
Experts............................... 52
Reports to Shareholders............... 52
Additional Information................ 52
Index to Financial Report............. F-1
</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> 66
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>
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.
II-1
<PAGE> 67
ITEM 27. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S> <C>
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 -- Agreement for purchase of main office property
10.2 -- Assignment Agreement, dated as of , 2000, by and
between Land South Properties, LLC, and SouthernBank, N.A.
(In Organization)**
10.3 -- Form of Lease Agreement for temporary facility, by and
between SouthernBank, N.A. (In Organization) and Blazer
Ridge, Inc.
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*
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*
23.1 -- Consent of Mauldin & Jenkins, LLC
23.2 -- Consent of Troutman Sanders LLP (contained in Exhibit 5.1)
24.1 -- Power of Attorney*
27.1 -- Financial Data Schedule (for SEC use only)
</TABLE>
- ---------------
* Previously filed.
** 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
II-2
<PAGE> 68
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 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-3
<PAGE> 69
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 April 26, 2000.
SOUTHERNBANK HOLDINGS, INC.
By: /s/ D. ARNOLD TILLMAN, JR.
------------------------------------
D. Arnold Tillman, Jr.
Chief Executive Officer
POWER OF ATTORNEY
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
--------- ----- ----
<C> <S> <C>
Director
- -----------------------------------------------------
James O. Andrews
/s/ RITA B. GRAY Chief Financial Officer April 26, 2000
- ----------------------------------------------------- (Principal Financial and
Rita B. Gray Accounting Officer)
* Director April 26, 2000
- -----------------------------------------------------
James. E. Hinshaw, Sr.
* Director April 26, 2000
- -----------------------------------------------------
Donald F. Jackson
* Director April 26, 2000
- -----------------------------------------------------
Lewis A. Massey
* Director April 26, 2000
- -----------------------------------------------------
Tyler C. McCain
/s/ M. LAUCH MCKINNON Director and President April 26, 2000
- -----------------------------------------------------
M. Lauch McKinnon
Director
- -----------------------------------------------------
D. Alan Najjar
/s/ D. ARNOLD TILLMAN Director and Chief Executive April 26, 2000
- ----------------------------------------------------- Officer (Principal Executive
D. Arnold Tillman Officer)
</TABLE>
II-4
<PAGE> 70
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
Director
- -----------------------------------------------------
Jeffrey S. Tucker
* /s/ M. LAUCH MCKINNON
- -----------------------------------------------------
M. Lauch McKinnon
Attorney-in-fact
</TABLE>
II-5
<PAGE> 71
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
4.3 -- Form of Organizer Warrant Agreement
10.1 -- Agreement for purchase of main office property
10.3 -- Form of Lease Agreement for temporary facility, by and
between SouthernBank, N.A. (In Organization) and Blazer
Ridge, Inc.
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
23.1 -- Consent of Mauldin & Jenkins, LLC
27.1 -- Financial Data Schedule (for SEC use only)
</TABLE>
<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 33 1/3% per year
beginning on the first anniversary of the close of the Company's
initial public offering of its common stock (the "Issue Date"). On each
successive anniversary of the Issue Date, an additional 33 1/3% 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.
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<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 10.1
AGREEMENT TO PURCHASE LAND
THIS AGREEMENT is made as of the Effective Date (as defined in the
last section of this Agreement) by and between MALL DEVELOPERS, LLC a limited
liability company (hereinafter referred to as "Seller"), LAND SOUTH PROPERTIES,
LLC, a Georgia limited liability company (hereinafter referred to as
"Purchaser"), HALL, BLOCK, GARLAND AND MEYER (hereinafter referred to as
"Escrow Agent"), BEN CARTER ASSOCIATES, L.L.C., a Georgia limited liability
company, and BRUCE WILLIAMS PROPERTIES, LLC, a Georgia limited liability
company (hereinafter collectively referred to as "Broker").
WHEREAS, Seller is the owner of the Property (as hereinafter defined):
and Seller has agreed to sell and Purchaser has agreed to purchase the
Property;
NOW, THEREFORE, in consideration of the agreements contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Property: Seller hereby agrees to sell and Purchaser hereby
agrees to purchase from Seller, all that approximately 1 acre tact of land
located in District 7, Land Lot 186, in Gwinnett County, Georgia, and depicted
on Exhibit "A" attached hereto as Lot 4, together with all rights,
hereditaments, and appurtenances thereto, and together with all improvements
and fixtures located thereon (the "Property").
2. Earnest Money: Within three (3) business days after the
Effective Date, Purchaser shall deliver to the undersigned Escrow Agent the sum
of Twenty Thousand Dollars ($20,000.00) by check as Earnest Money in connection
with the transaction contemplated hereby. Such funds, together with any and all
notes, checks, letters of credit or cash that may be deposited as additional
Earnest Money hereunder, any and all proceeds thereof, and any and all interest
earned thereon is hereinafter referred to as the "Earnest Money". Escrow Agent
shall hold the Earnest Money in an account at an FDIC insured commercial bank.
The Earnest Money shall be retained or refunded, as the case may be, in
accordance with the terms of this Agreement and shall be applied as a credit to
the amount of cash required of Purchaser at Closing. Escrow Agent's duties are
more specifically defined in Section 10. Escrow Agent of the Agreement. In the
event of Purchaser's default pursuant to the Agreement, the Earnest Money shall
be paid to the Seller in full and final liquidated damages resulting from
Purchaser's default and Seller shall not have the right to sue for specific
performance.
3.01 Purchase Price: The purchase price of the Property shall be
approximately Six Hundred Ninety Six Thousand Nine Hundred and Sixty Dollars
($696,900) which is calculated by multiplying the purchase price per square
foot (" Price Per Square Foot") to Sixteen Dollars ($16.00) by the number of
square feet comprising the Property which is estimated at 43,560 square feet.
The exact square footage of the Property shall be determined by a survey
<PAGE> 2
pursuant to Section 12 herein and the exact purchase price (the "Purchase
Price") of the Property shall be determined by multiplying the Price Per Square
Foot by the total number of square feet to the nearest 100th as determined by
the survey. After said new survey has been completed, Exhibit "A" hereto shall
automatically be amended to conform to a legal description based on said
survey.
3.02 The Purchase Price shall be paid as follows:
(a) Cash at Closing
4. Taxes and Expenses: Ad Valorem taxes constituting a lien
against the Property for the year in which the Closing occurs and all other
unpaid assessments shall be prorated as of the day of Closing. If the current
year's taxes and/or other applicable assessments have not been determined at
the time of Closing, the proration shall be based upon the previous year's
taxes and/or assessments. After Closing, at such time when any said taxes or
assessments are capable of an exact determination, the party having the
information permitting the exact determination shall send to the other party a
detailed report of the exact determination so made. Within twenty (20) days
after both Seller and Purchaser shall have received such report, Seller and
Purchaser shall adjust the amounts apportioned pursuant to the estimates made
at Closing to reflect the exact determinations contained in the report, and
Seller or Purchaser, as the case may be, shall pay to the other whatever amount
shall be necessary to compensate for the difference. Seller shall pay real
estate transfer tax. Purchaser shall pay the cost of title examination, title
insurance, survey, any cost associated with studies performed in the Inspection
Period and recording the Deed of Transfer. Each party shall pay its own
attorney's fees.
5. Closing:
(a) The closing or settlement ("Closing") of the
transaction contemplated hereby shall be held in or near Atlanta, Georgia at a
location acceptable to Seller and Purchaser on the earlier to occur of that
date that is the thirtieth (30th) day (or the next business day if such
thirtieth (30th) day is not a business day) after Southern Bank receives
confirmation of a State or Federal Bank charter or March 31, 2000. Purchaser
shall have the right to extend the Closing date to April 30th, 2000 by
providing Seller with written notice of its intention to extend said Closing on
or before March 31, 2000, accompanied by a check in the amount of $5,000
payable to Seller, which shall be nonrefundable to Purchaser in the event
Closing fails to occur but shall offset the Purchase Price in the event Closing
does occur. Notwithstanding anything in the Purchase Agreement to the contrary,
should Closing fail to occur by March 31, 2000 (or April 30,2000 as extended as
provided herein), the Purchase Agreement shall terminate and neither party will
have any further obligations hereunder.
(b) At closing, subject to the terms hereof, and as
contained in the Purchase Agreement:
(1) Purchaser shall pay to Seller the Purchase
Price, less a credit for the amount of the Earnest Money, and Escrow Agent
shall pay the Earnest Money to Seller.
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<PAGE> 3
(2) Seller will transfer good and marketable
title to the Purchaser, subject to Seller's Declaration of Covenants,
Conditions and Restrictions a copy of which shall be provided to Purchaser no
later than thirty (30) days prior to the expiration of the Inspection Period,
and other matters of record, free and clear of all liens, encumbrances and any
other indebtedness or claim whatsoever, except for such other title exceptions
as are approved by Purchaser and specifically referenced in the Agreement.
6. Title: At Closing, Seller shall convey good, marketable and
insurable title to the Property to Purchaser by limited warranty deed. The
Title may be subject to current and future ad valorem property taxes,
easements, covenants and restrictions of record, including a management
association, the standard exceptions of the ALTA owners policy (excluding
survey exception), and zoning ordinances affecting the Property. The property
shall not be subject to any (a) mortgage, deed to secure debt, deed of trust,
security agreement judgment, lien or claim of lien, or any other title
exception or defect unacceptable to Purchaser that are monetary of nature, or
any other (b) leases, rental agreements or other rights of occupancy of any
kind, whether written or oral. Seller hereby agrees to pay and satisfy of
record at its expense any title exception or defect that is in the nature of a
Lien or other encumbrance to secure the payment of money. If the defects or
objections are not satisfied by Seller, Purchaser may elect to terminate this
Agreement, in which case the entire Earnest Money shall he returned to
Purchaser and neither party shall have any further rights, obligations or
duties under this Agreement. If Seller does so cure or satisfy the defects or
objections, then this Agreement shall continue in effect. Purchaser shall have
the right at any time to waive any objection that it may have made and thereby
to preserve this Agreement in effect. Seller agrees not to further alter or
encumber in any way Sellers Title to the Property after the Effective Date.
7. Inspection Period: Purchaser shall have seventy five (75)
days after the Effective Date (which period shall be referred to as the
"Inspection Period.") to conduct Purchaser's due diligence as to the
feasibility of developing the Property for its intended uses. Such
determinations may include sewer availability and cost feasibility, access
availability, engineering studies, wetlands studies and related Corp of
Engineers approvals and any other investigations as Purchaser in its sole
discretion deems appropriate. Prior to the end of the Inspection Period,
Purchaser shall notify Seller in writing if Purchaser elects to proceed with
its obligations under this Agreement. If Purchaser fails to give notice of
Purchaser's election to proceed within the Inspection Period, this Agreement
shall be thereby terminated, whereupon Escrow Agent shall pay to Seller as
option money Fifty Dollars ($50.00) of the Earnest Money and the remainder of
the Earnest Money shall be refunded to Purchaser.
8. Seller's Representations and Warranties: As of the Effective
Date and as of the date of Closing, Seller represents and warrants to Purchaser
that Seller owns fee simple absolute title to the Property subject to those
items specified in Section 6, and neither Seller's execution, delivery, nor
performance of this Agreement is prohibited by or will cause a default under
any other agreement, covenant, document, or instrument.
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<PAGE> 4
9.01 Contingencies:
(a) The Closing, but not the return of the Earnest
Money, shall be contingent upon Purchaser or its assignee obtaining prior to
March 31, 2000, approval from the City of Buford and/or Gwinnett County for a
commercial building for use as a bank or other use acceptable to Seller. The
Closing shall also be contingent upon satisfactory water and sewer capacity.
(b) Prior to Closing, Seller shall rough grade the site
and compact the site to a 95% Proctor per a grading plan that shall be prepared
by Seller and delivered to Purchaser for its review within 15 days of the
Effective Date. Seller shall also constrict at its sole cost and expense the
Mill Creek Parkway as shown on the attached Exhibit A which shall be completed
no Later than 90 days after Closing.
(c) In the event Purchaser has not received confirmation
that Southern Bank has received a state or federal bank charter by February 28,
2000, the Purchase Agreement shall at Purchasers option, terminate and one-half
of the Earnest Money shall be returned to Purchaser and the other half will be
delivered to Seller and the parties shall have no further obligations under the
Purchase Agreement. In the event Purchaser does not elect to terminate the
Purchaser Agreement, the entire Earnest Money Deposit shall become
nonrefundable subject only to Sellers default.
(d) Purchaser represents that Southern Bank will file
for a state or federal bank charter prior to the end of the Inspection Period
and Purchaser agrees to provide Seller with written notice of such filing.
9.02 Conduct Prior to Closing: Subsequent to the date a Purchase
Agreement is executed by both parties, and until the date of closing:
(a) Seller will not
(1) Transfer, sell, assign, or otherwise convey
any other property adjacent to the Property, without first notifying Purchaser
who is purchasing said property and what the intended use they are
contemplating.
(2) Enter into any lease, contract, commitment,
or transaction in respect to the Property outside the ordinary course of
business, without the prior written consent of Purchaser.
(b) Seller shall at all times prior to Closing and at
its expense continue to maintain the Property in its present condition and
repair.
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<PAGE> 5
9.03 Work Product: In the event Purchaser terminates the contract
under the terms hereunder or fails to close for any reason other than Seller
default, Purchaser shall deliver to Seller all engineering or other work
product related to the Property that has been prepared by Purchaser or its
agents or consultants.
10. Escrow Agent: In performing any of its duties hereunder,
Escrow Agent shall not incur any liability to anyone for any damages, losses or
expenses, except for willful default or breach of trust, and it shall
accordingly not incur any such liability with respect (a) to any action taken
or omitted in good faith upon advice of its counsel or (b) to any action taken
or omitted in reliance upon any instruments, including any written notice or
instruction provided for in this Agreement, not only as to its due execution
and the validity and effectiveness of its provisions, but also as to the truth
and accuracy of any information contained therein, which Escrow Agent shall in
good faith believe to be genuine, to have been signed or presented by a proper
person or persons and to conform with the provisions of this Agreement. The
parties hereby agree to indemnify and hold harmless Escrow Agent against any
and all losses, claims, damages, liabilities and expenses, including reasonable
costs of investigations and counsel fees and disbursements, which may be
imposed upon Escrow Agent or incurred by Escrow Agent in connection with its
acceptance of the performance of its duties hereunder, including any litigation
arising from this Agreement or involving the subject matter hereof except for
willful default and breach of trust by Escrow Agent. In the event of a dispute
between any of the parties hereto sufficient in the discretion of Escrow Agent
to justify its doing so, Escrow Agent shall be entitled to tender into the
registry or custody of any court of competent jurisdiction all money or
property in its hands under this Agreement, and thereupon be discharged from
all further duties and liabilities under this Agreement. The Purchaser and
Seller shall bear all costs and expenses of any such legal proceedings.
5
<PAGE> 6
11. Brokers and Broker's Commission: Seller shall pay a
commission of five percent (5%) of the Purchase Price to Ben Carter Associates,
LLC and Bruce Williams Properties, LLC ("Broker") at Closing to be split evenly
between the two. Seller and Purchaser acknowledge that Broker has represented
Seller in this transaction. Purchaser and Seller each warrant and represent to
the other that, with the exception of the Broker identified in this Section 11
hereof, such party has not employed a real estate broker or agent in connection
with the transaction contemplated hereby. Each party agrees to indemnify and
hold the other harmless from any loss of representation herein being untrue.
Seller hereby covenants and agrees to defend, indemnify, and hold harmless the
Purchaser against and from any and all loss, expense, liability, cost, claim,
demand, damages, action, cause of action, and suit arising out of or in any
manner relating to the alleged employment or use by Seller of any real estate
broker other than the above referenced Broker in connection with this
transaction. Purchaser hereby covenants and agrees to defend, indemnify, and
hold harmless the Seller against and from any and all loss, expense, liability,
cost, claim, demand, damages, action, cause of action, and suit arising out of
or in any manner relating to the alleged employment or use by Purchaser of any
real estate broker other than the above referenced Broker in connection with
this transaction. Purchaser and Seller each agree to release and hold Broker
harmless with respect to any information furnished to such party by Broker,
unless such party furnishes clear and convincing evidence that Broker have
knowingly furnished false information. Seller acknowledges that Purchaser is a
licensed real estate broker active in the State of Georgia.
12. Survey and Inspection: Seller shall provide, at Seller's
cost, a survey of the property by a Georgia licensed and registered surveyor,
which survey shall contain a calculation of the square footage within the
property to the nearest 100th of a square foot, exclusive of any areas
dedicated to the public, subject to any private right-of-way or constituting a
public street, road or highway, no later than the end of the Inspection Period.
If Seller's survey is not acceptable to Purchaser, Purchaser shall have the
right at Purchaser's sole cost and expense to appoint a second Georgia licensed
and registered surveyor whose survey (Purchaser's Survey) shall then be used in
computing the exact square footage to be used in computing the total Purchase
Price. If Purchaser's Survey is not acceptable to Seller, then Seller's
surveyor and Purchaser's surveyor shall appoint a third Georgia licensed and
registered surveyor whose survey shall be conclusive as to the exact square
footage to be used in calculating the Purchase Price. The cost of any such
third survey shall be borne equally by Purchaser and Seller. Purchaser and
Purchaser's agents, employees, and independent contractors shall have the right
and privilege to enter upon the property prior to Closing to survey and inspect
the Property and to conduct soil borings and geological testing and engineering
tests or studies. Purchaser hereby covenants and agrees to indemnify and hold
harmless Seller from any and all loss, liability, costs, claims, demands,
damages, actions, causes of action, and suits arising out of or in any manner
related to the exercise by Purchaser of Purchaser's rights under this section,
except that any loss, liability, cost, claims, demands, damages, actions,
causes of action, or suits caused by Seller's negligence, fraud, or willful
misconduct.
13. Eminent Domain: If, after the Effective Date and prior to
Closing, Seller shall receive notice of the commencement or threatened
commencement of eminent domain or other like proceedings against the Property
or any portion thereof, Seller shall promptly notify
6
<PAGE> 7
Purchaser in writing, and Purchaser shall elect within thirty (30) days from
and after such notice, but at all times prior to the otherwise established
closing, to: (a) terminate this transaction, in which event the Earnest Money
shall be refunded to Purchaser and the Agreement shall be void and of no
further force and effect; or (b) to close the transaction contemplated hereby
in accordance with its terms but subject to such proceedings, in which event
the Purchase Price shall remain the same and Seller shall transfer and assign
to Purchaser at Closing all condemnation proceeds and rights to additional
condemnation proceeds, if any. If Purchaser elects to purchase after receipt of
such notice, all actions taken by Seller with regard to such eminent domain
proceedings, including but not limited to, negotiations, litigation,
settlement, appraisals, and appeals, shall be subject to the approval of
Purchaser, which approval shall not be unreasonably withheld. If Purchaser does
not make such election within the aforesaid time period, Purchaser shall be
deemed to have elected to close the transaction contemplated hereby in
accordance with clause (b) above.
14. Environmental Matters: Seller warrants that to the best of
his knowledge, (i) no portion of the Property has been used as a landfill, (ii)
the Property does not contain, no activity on the Property has produced, and
the Property has not been used in any manner for the storage of any hazardous
or toxic materials, waste, discharge, deposit, dumping or contamination,
whether soil, ground water or otherwise, (iii) the Property does not contain
any underground tanks of any type, and there are no surface or subsurface
conditions that constitute, or with the passage of time may constitute a public
or private nuisance, and (iv) the Property does not contain any materials
containing or producing any polychlorinated biphenyls or asbestos. During the
Inspection Period, Purchaser shall he granted the opportunity to enter the
Property and perform, or have performed, any investigation which may be useful
to Purchaser in seeking to detect the presence of hazardous or toxic wastes or
other conditions referred to in this paragraph on the Property. In the event
that evidence of such contamination or conditions is discovered prior to
Closing, Purchaser shall have the right to terminate this Agreement and have
returned to it all Earnest Money paid under this Agreement.
15. Notice: Each notice required or permitted to be given
hereunder shall be delivered in person or by courier or by depositing it with
the United States Postal Service by certified mail, return receipt requested,
with adequate postage prepaid, addressed to the appropriate party (and marked
to a particular individual's attention) as hereinafter provided. Each such
notice that is delivered in person or by courier shall be effective when
delivered to the address specified herein, and each such notice that is sent by
certified mail shall be effective upon being so deposited with the United
States Postal Service, by the time period in which a response to any such
notice must be given or any action taken with respect thereto shall commence to
run from the earlier of the date of receipt of the notice by the addresses
thereof, or three (3) days after being deposited with the United States Postal
Service, if applicable. The addresses of the parties to which notices are to be
sent shall be those set forth on the signature pages of this Agreement. Any
party shall have the right from time to time to change the address to which
notices to it shall be sent by giving to the other party or parties at least
thirty (30) days prior notice of the changed address or additional addresses.
7
<PAGE> 8
16. Documents: At or prior to Closing, each party shall deliver
to the other party appropriate evidence to establish the authority of such
party to enter into and close the transaction contemplated hereby. Seller shall
also execute and deliver to Purchaser at Closing a (i) Limited Warranty Deed;
(ii) an affidavit for mechanics' or materialmen's liens, other statutory liens,
or for the rights of parties in possession; and (iii) a certificate with
respect to Section 1445 of the Internal Revenue Code stating, among other
things, that Seller is not a nonresident alien as defined in the Internal
Revenue Code and IRS Regulations. The parties shall also execute and deliver at
Closing any other documents reasonable necessary or appropriate to complete and
evidence the transaction contemplated hereby.
17. Remedies. If this transaction fails to close by reason of
Purchaser's failure to perform its obligations under this Agreement, the Escrow
Agent shall deliver, pursuant to this Agreement, the Earnest Money that Escrow
Agent has in its possession at that time to Seller as full liquidated damages,
the parties hereby acknowledging and agreeing that the amount of Seller's
actual damages in such circumstance would be difficult, if not impossible, to
determine and that the agreed upon liquidated damages are a reasonable
pre-estimate of the actual damages, are not punitive or penalties, and are
just, fair and reasonable, all in accordance with O.C.G.A. 13-6-7. Seller
expressly acknowledges and agrees that receipt of the Earnest Money as provided
herein shall be Seller's sole remedy in the event of Purchaser's failure to
perform its obligations hereunder, Seller expressly waiving all other rights or
remedies that Seller may have at law or in equity, including without
limitation, specific performance. In the event that Seller fails or refuses to
convey the Property in accordance with the terms of this Agreement or otherwise
fails to perform its obligations hereunder, then Purchaser shall have the right
to a refund of the Earnest Money or the right of specific performance, in
addition to all other rights and remedies available to Seller at law or in
equity for Seller's breach.
18. Miscellaneous: Time is of the essence with respect to each
and every provision of this Agreement. This Agreement constitutes the entire
agreement of the parties and may not be amended except by written instrument
executed by Purchaser and Seller. Escrow Agent and Brokers shall not be
necessary parties to amendments to this Agreement, but such amendments shall
not adversely affect or impair the rights or duties of Escrow Agent and Brokers
hereunder. The provisions of this Agreement relating to tax prorations after
Closing, Purchaser's indemnification with respect to its entering upon the
Property prior to Closing, and the mutual indemnification's concerning
brokerage commissions shall survive any Closing pursuant to this Agreement or
any termination of this Agreement by either party as a matter of right
hereunder or in breach Agreement, notwithstanding any other provisions in this
Agreement to the contrary. All other representations and agreements set forth
herein shall expressly survive the Closing of this transaction. This Agreement
shall he construed and interpreted in accordance with the laws of the State in
which the Property is located. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Purchaser may assign all or any portion of its rights under this
Agreement, and upon any such assignment, the assignor shall be released
automatically from all duties hereunder and Seller shall look solely to the
assignee for performance. If more than one person shall sign this Agreement as
a Seller, then each person so signing shall he jointly and severally liable.
The exhibits referred to in any attached document to this Agreement are
incorporated herein in full by reference. If the time
8
<PAGE> 9
period by which the Closing must he held expires on a Saturday, Sunday or legal
or bank holiday, then such time period shall automatically be extended through
the close of business on the next regularly scheduled business day.
19. Offer, Acceptance and Contract: This document shall
constitute an offer by Purchaser that shall be open for acceptance by Seller
until 5:00 p.m., Atlanta, Georgia, time, August 27, 1999. For purposes of this
Agreement, the "Effective Date" is that date that Purchaser shall have received
actual delivery of this Agreement properly executed by Seller.
IN WITNESS WHEREOF, the undersigned have set their hands and seals
hereto on the day and year indicated next to their respective signatures.
PURCHASER:
LandSouth Properties, LLC
5400 Riverside Drive, Suite 101
Macon, Georgia 31210
By: /s/ Jeff S. Tucker Date: August 27, 1999
Its: Managing Member
SELLER:
Mall Developers, LLC
3491 Buckhead Loop, Suite 1506
Atlanta, Georgia 30326
By: /s/ Jack E. Fisher Date: September 7, 1999
Its: Member
Escrow Agent
Hall, Bloch, Garland and Meyer, LLP
2452 Vineville Avenue
Macon, Georgia 31201
By: /s/ Hall, Bloch, Garland and Meyer, LLP Date: August 26, 1999
Its: Partner
9
<PAGE> 10
BROKER
Ben Carter Associates, LLC (hereinafter referred to as BCA)
950 E. Paces Ferry Road
Suite 900
Atlanta, Georgia 30326
By: /s/ Ben Carter Associates, LLC Date: September 13, 1999
Bruce Williams Properties, LLC
21 North Main Street
Suite 201
Alpharetta, Georgia 30201
By: /s/ Bruce Williams, Properties, LLC Date: September 9, 1999
10
<PAGE> 1
STATE OF GEORGIA
GWINNETT COUNTY
LEASE AGREEMENT FOR MAGNOLIA OFFICE COMPLEX CONDOMINIUM
THIS LEASE AGREEMENT, made this 5th day of April, 2000, by and between BLAZER
RIDGE, INC., a Georgia corporation (hereinafter referred to as "Landlord"), and
SOUTHERNBANK, N.A., (under organization) a corporation of the State of Georgia,
(hereinafter referred to as "Tenant");
ARTICLE 1
PREMISES
1.01 Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the property hereinafter referred to as the "Leased Premises",
described as Magnolia Office Complex, Suites E-3 and E-4, 1400 Buford Highway,
Sugar Hill, Georgia, 30518, containing approximately 2,005 square feet of office
space ("Leased Premises"), which Leased Premises are to be constructed by
Landlord for Tenant, at Landlord's sole cost and expense, except as otherwise
specifically provided in this Lease Agreement, in accordance with Approved Plans
and Specifications (as defined in Paragraph 3.03 hereof), and located upon the
land (the "Land") as more particularly described on Exhibit "A" attached hereto
and by this reference incorporated herein.
ARTICLE 2
TERM
2.01 TO HAVE AND TO HOLD the Leased Premises for a term commencing on
May 1, 2000, (hereinafter referred to as the "Commencement Date") and
continuing until midnight on July 31, 2001, (or, if later, midnight on the last
day of the second year at the initial lease term).
2.02 Provided Tenant is not then and has not been in default hereunder
and Tenant has paid all rent on or before the due date throughout the term of
the Lease, Tenant shall have the option to renew and extend this Lease for three
successive three month terms under the same terms and conditions but subject to
the 4% rent escalation provided in Paragraph 3.01(b). Tenant shall give
Landlord written notice thirty days prior to the expiration of the initial term
of this Lease of Tenant's election to renew and extend the Lease. Tenant shall
have the option to terminate this Lease by giving Landlord written notice after
the first twelve months of this Lease.
ARTICLE 3
RENTAL
3.01 (a) As rental for the Leased Premises, Tenant agrees to pay to
Landlord, without notice, demand, offset or abatement, the annual base rental
described below, due and payable in equal monthly installments on or before the
first day of each calendar month beginning on the Commencement Date and
thereafter for the remainder of the term, together with any other additional
rental as hereinafter set forth. Rental payments not received by Landlord within
five (5) calendar days of the due date thereof shall be subject to a late
charge due and payable by Tenant to Landlord on the sixth (6th) calendar day
after the due date thereof in an amount equal to ten percent (10%) of such past
due rental, together with interest upon the past due rental payments at the rate
of twelve percent (12.0%) per annum from the due date thereof until paid. If the
Commencement Date of this Lease shall be a date
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other than the first day of a calendar month, applicable rent for such month
shall be prorated on a daily basis, based on the number of days in such month.
(b) The "base rental" for each lease year shall be THIRTY ONE
THOUSAND SEVENTY SEVEN and 50/100 U.S. DOLLARS ($31,077.50), but shall be
adjusted as provided in Paragraph 3.01 (b) and in Paragraphs 3.02 and 7.01. The
first "lease year" shall commence the Commencement Date and end on the day
before the first anniversary of the Commencement Date (provided that if the
Commencement Date is not the first day of a calendar month, the first "lease
year" shall end on the last day of the calendar month in which the first
anniversary of the Commencement Date occurs). Each subsequent "lease year" shall
be the twelve (12) month period commencing on the day after the last day of the
first lease year and the subsequent anniversaries thereof. Beginning on the
first anniversary of the Commencement Date and on each succeeding anniversary
date thereafter, the "Base Rental" for each lease year shall automatically
increase by an amount equal to four percent (4%) over the preceding year's base
rental.
3.02 The base rental provided in paragraph 3.01 above, incorporates as
a part thereof all costs and expenses of construction of the Leased Premises on
the basis set forth in the plans and specifications attached hereto in Exhibit
"B" (hereinafter referred to as the "Approved Plans and Specifications"), but
does not take into account: (1) any increases in such costs and expenses due to
cost incurred in excess of the amounts set forth in allowances; or (2) due to
Change Orders as defined in Paragraph 7.01; or (3) increases in the square
footage of the Building above 2,005 square feet. Changes in such costs and
expenses due to Change Orders shall be taken into account the manner described
in Paragraph 7.01 In no event shall annual base rental for any years in the term
be less than the amount stated in Paragraph 3.01 (b).
ARTICLE 4
DELAY IN DELIVERY OF POSSESSION
4.01 If Landlord shall fail to deliver to Tenant actual possession of
the Leased Premises by June 1, 2000, rent shall abate until possession is given,
but Landlord shall not be liable to Tenant for such failure, and the
Commencement Date shall become the date on which possession is given.
Notwithstanding the foregoing, however, if the Leased Premises are not available
for occupancy by Tenant on June 1, 2000, this Lease shall be violable by either
party, and if voided, all deposits and payments made to by Tenant hereunder, if
any, shall be immediately refunded to Tenant by Landlord; provided, however,
that such date shall be extended to the extent that construction is delayed by
any of the reasons set forth in Article 31 or other conditions beyond Landlord's
control or by amendments to the working drawings for the improvements to the
Leased Premises requested by Tenant. The Leased Premises shall be "available for
occupancy" when they are so completed that Tenant may conduct normal operations,
or when a Certificate of Occupancy has been issued for the Leased Premises,
whichever is earlier.
ARTICLE 5
USE OF LEASED PREMISES
5.01 The Leased Premises may be used and occupied for office purposes
only. Tenant will not perform any act or carry on any practices that may injure
the Leased Premises or be a nuisance or menace to owners or
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occupants of adjoining premises. On or before the Commencement Date, Tenant
shall take possession of, and, thereafter, continuously occupy the Leased
Premises during the term of this Lease, and operate thereon the normal business
operations of Tenant.
5.02 Tenant shall, at its sole cost and expense, keep, maintain, use
and operate the Leased Premises at all times in compliance with all applicable
federal, state and local laws and ordinances ("Applicable Laws", as defined
hereafter), including those addressing environmental compliance, worker health
and safety, discrimination in the workplace, and statutory insurance, and
including but not limited to obtaining any required permits, licenses or other
necessary prior approvals. The Tenant warrants that it shall maintain the Leased
Premises in good and sanitary order, condition and repair. As part of the
maintenance obligation, Tenant shall promptly respond to and clean up any
release or threatened release of any hazardous substance ("Hazardous Substance",
as defined hereafter) into the drainage systems, soil, surface water,
groundwater, or atmosphere, in a safe manner, in strict compliance with
Applicable Law, and as authorized or approved by all federal, state and/or
local agencies having authority to regulate the permitting, handling, and clean
up of Hazardous Substances. Tenant will further comply with all covenants,
conditions and restrictions which are applicable to the Property, including but
not limited to, the Declaration of Condominium for Magnolia Condominium, a
preliminary draft of which Tenant acknowledges receiving from Landlord, as the
same may be amended from time to time.
ARTICLE 6
UTILITIES, JANITORIAL SERVICE
6.01 Unless caused by the willful act or negligence of Landlord, its
agents, or employees, Landlord shall not be liable in the event of any
interruption in the supply of any utilities. Tenant agrees that it will not
install any equipment which will exceed or overload the capacity of any utility
facilities and that if any equipment installed by Tenant shall require
additional utility facilities, the same shall be installed by Tenant at Tenant's
expense in accordance with plans and specifications approved in writing by
Landlord. Landlord shall be solely responsible for and shall pay all charges for
use or consumption of sanitary sewer and water services for the Leased Premises
on or before the due date thereof. Tenant shall be solely responsible for and
shall pay all charges for use or consumption of electricity, telephone and any
other utility services other than sanitary sewer and water for the Leased
Premises on or before the due date thereof.
6.02 Tenant shall keep the Premises free from all litter, dirt,
debris, and obstructions and in a clean and sanitary condition. Without limiting
the generality of the foregoing, Tenant shall provide janitorial services at its
own expense, with the frequency and identity of the janitorial service provider
subject to the reasonable approval of the Landlord.
ARTICLE 7
LANDLORD'S OBLIGATIONS
7.01 The Leased Premises shall be constructed by Landlord in compliance
with all federal, state, county, municipal or local government laws, ordinances,
regulations, rules and orders (including, without limitation, the Occupational
Safety and Health Act of 1970, as amended). All costs of construction of the
Leased Premises pursuant to the Plans and Specifications and in accordance with
the allowances set forth therein shall be borne by Landlord; but Tenant shall
pay all costs of construction of the Tenant improvements in the Leased Premises
in
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excess of the allowances set forth in the Plans and Specifications or for any
changes in the Plans and Specifications which increase the cost. Changes in the
Plans and Specifications shall be made only pursuant to written change order
(hereafter a "Change Order") signed by both Tenant and Landlord. Such Change
Order shall specify the cost of such change (which shall be the sum of all
actual out of pocket costs and expenses attributable thereto and the cost of
financing with respect thereto), and any additional time required for
completion required by reason of such change. In the event of an increase in
the cost of construction resulting from Change Orders and from costs incurred
in excess of the allowances set forth in the Approved Plans and Specifications,
Tenant shall deposit with Landlord immediately collectible funds in an amount
sufficient to cover the excess in costs of construction prior to Landlord being
obligated to perform the work contemplated in the Change Order. In the event
the Change Order specifies additional time required for completion, such Change
Order shall constitute an amendment to this Lease extending any date specified
herein by that number of days of additional time so specified in such Change
Order provided, however, that in such event the Commencement Date, for purposes
of Tenant's obligation to commence the payment of rent and for purposes of
fixing the lease term, shall be the date on which completion would have
occurred but for the extension of time caused by such Change Order, unless such
Change Order was requested by Landlord, in which event the Commencement Date
shall be extended by that number of days of additional time so specified in
such Change Order.
7.02 During the course of construction of the Leased Premises,
Tenant may enter upon the Leased Premises for purposes of inspecting and
reviewing the work, taking measurements and making plans, without being deemed
thereby to have taken possession or obligated itself to pay rent but Tenant
agrees that: (a) Landlord shall have no liability for injury to any person,
death to any person, or damage to any property of Tenant stored on the Leased
Premises except for damages caused by the willful act or gross negligence (but
only to the extent of such gross negligence) of Landlord or its employees or
agents, (b) Tenant shall not interfere with Landlord's construction work on
the Leased Premises, (c) Tenant shall indemnify, protect and hold harmless
Landlord from and against any and all claims, demands, damages, losses, costs,
expenses, liabilities and actions at law or in equity based upon any occurrence
or condition arising out of or attributable to Tenants exercise of such right,
and (d) Tenant shall be solely responsible for the permitting of any such work
it performs. Without limiting the generality of the foregoing, and provided
that Tenant complies with the provisions of this Paragraph 7.02, Lessee shall
have access to the Leased Premises from ten (10) days prior to the Commencement
Date to the Commencement Date for the installation of telecommunication
systems, but not furniture or equipment.
7.03 No later than the Commencement Date, Tenant and Landlord
shall prepare an agreed final punch list setting forth the work, if any,
remaining to be done, or requiring correction, on the Leased Premises, and
Landlord shall promptly commence, and thereafter with due diligence prosecute
to completion, the work required by said punch list (which shall in no event
include, except on condition Tenant shall pay to Landlord the actual cost
thereof plus fifteen percent (15%) of such amount, work required as a
consequence of injury or damage to the Leased Premises attributable to Tenant,
its agents, employees, contractors or movers). If the parties cannot agree
upon the final punch list, then the punch list shall be determined by an
independent professional engineer employed by the mutual agreement and mutual
cost of Landlord and Tenant.
7.04 Landlord agrees at its expense during the term of this Lease
to keep in good repair the roof and structural components of the Leased
Premises, including electrical, plumbing and mechanical systems.
Notwithstanding anything elsewhere in this Lease to the contrary, Landlord
shall, at its sole cost and expense, upon notice by Tenant (with a copy of such
notice being sent to the holders of any mortgages, or deeds to secure debt,
which notice shall also provide such holders with an opportunity to cure such
defect within sixty (60) days thereafter, repair, replace or otherwise correct
construction defects, including defects in any of the additional items to be
constructed or installed by Landlord in accordance with this Lease, provided
that any correction or repair of
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any defect or condition caused by the acts or failure to act of Tenant, its
agents, contractors, employees or invitees shall be paid by Tenant as herein
provided.
7.05 From the Commencement Date until the expiration or earlier
termination of the term hereof, Tenant shall have exclusive control of the
Leased Premises and Landlord shall be under no obligation to inspect the same.
Tenant shall report in writing to Landlord (with a copy of such notice being
sent to the holders of any mortgages, or deeds to secure debt, which notice
shall also provide such holders with an opportunity to cure such defect within
sixty (60) days thereafter) any defective condition known to it which Landlord
is required to repair, and Landlord shall move with reasonable diligence to
repair such condition. Failure to report such defects within a reasonable time
shall make Tenant responsible to Landlord for any liability of Landlord which
was proximately caused by the failure of Tenant to report such defects within a
reasonable time.
7.06 For the purpose of this Article 7 Landlord shall not be
deemed in default hereunder unless and until the holder of mortgages or deeds
to secure debt (the names and addresses of which have previously been provided
to Tenant) shall have been given the same opportunity to cure Landlord's
default as herein provided.
ARTICLE 8
TENANT REPAIRS
8.01 Except as otherwise expressly provided in Article 7
(including but not limited to the obligation of Landlord in Paragraph 7.04 to
correct construction, defects), Tenant shall, at its sole cost, keep and
maintain the Leased Premises and appurtenances and every part thereof,
including by way of illustration and not by way of limitation the floors, all
windows, doors, and the interior of the Leased Premises, including all
plumbing, heating, air conditioning, sewer, electrical systems and all fixtures
and all other similar equipment serving the Leased Premises in good and
sanitary order, condition, and repair. Tenant shall be responsible for all pest
control within the Leased Premises, including, but not limited to the
eradication of any ants or termites should infestation be observed during the
term of the Lease. Tenant shall, at its sole cost, keep and maintain all
utilities, fixtures and mechanical equipment within the Leased Premises in good
order, condition, and repair. All windows shall be washed and cleaned as often
as necessary to keep them clean and free from smudges and stains. In the event
Tenant fails to maintain the Leased Premises as required herein or fails to
commence repairs (requested by Landlord in writing) within fifteen (15) days
after such request, or fails diligently to proceed thereafter to complete such
repairs, Landlord shall have the right in order to preserve the Leased Premises
or portion thereof, and/or the appearance thereof, to make such repairs or have
a contractor make such repairs and charge Tenant for the cost thereof as
additional rent, together with interest at the rate of twelve percent (12%) per
annum from the date of making such payments.
ARTICLE 9
ALTERATIONS, MECHANICS' LIENS
9.01 Alterations may not be made to the Leased Premises without
prior written consent of Landlord, and any alterations of the Leased Premises
excepting movable furniture and trade fixtures shall at Landlord's option
become part of the realty and belong to Landlord.
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9.02 Should Tenant desire to alter the Leased Premises and
Landlord gives written consent to such alterations, at Landlord's option,
Tenant shall contract with a contractor reasonably approved by Landlord for the
construction of such alterations.
9.03 Notwithstanding anything in paragraph 9.02 above, Tenant
may, upon written consent of Landlord, install trade fixtures (meaning articles
placed in or attached to the Leased Premises by the Tenant, to facilitate the
trade or business for which it occupies the Leased Premises, or to be used in
connection with such business), machinery or other trade equipment in
conformance with all applicable laws, statutes, ordinances, rules, regulations,
and the same may be removed upon the termination of this Lease provided Tenant
shall not be in default under any of the terms and conditions of this Lease,
and the Leased Premises are not damaged by such removal. For the purpose of the
immediately preceding sentence, Landlord agrees not to unreasonably withhold
nor delay its consent to installation of trade fixtures; provided that if the
installation of such trade fixtures does not affect the integrity of the Leased
Premises and its structural components and such trade fixtures are not attached
to structural components, then no consent by the Landlord shall be required.
Tenant shall return the Leased Premises on the termination of this Lease in the
same condition as when rented to Tenant, reasonable wear and tear and casualty
damage only excepted. Tenant shall keep the Leased Premises, including Land,
the Leased Premises and all parts thereof, free from any liens arising out of
any work performed for, materials furnished to, or obligations incurred by
Tenant, and Tenant shall discharge of record by bond or otherwise, within ten
(10) days following Tenant's notice of the filing thereof, any mechanic's or
similar lien or encumbrance filed against the Leased Premises for work or
materials claimed to have been furnished to or for the benefit of Tenant and/or
the Leased Premises. All such work provided for above, shall be done at such
times and in such manner as Landlord may from time to time designate without
the same being an assumption of liability as a consequence thereof. Tenant
shall give Landlord written notice five (5) days prior to employing any laborer
or contractor to perform substantial work resulting in an alteration of the
Leased Premises so that Landlord may post a notice of non-responsibility.
9.04. Despite anything contained in this Paragraph 9 to the
contrary, Landlord, at its option, may require Tenant to remove any
improvements, fixtures and equipment installed by Tenant prior to Tenant's
vacation of the Leased Premises. Tenant shall indemnify and hold Landlord
harmless against all damages to the Leased Premises caused by the removal of
any furniture, trade fixtures or other personal property from the Leased
Premises, and other fixtures if such other fixtures are required by Landlord to
be removed by Tenant.
ARTICLE 10
WASTE AND QUIET CONDUCT
10.01 Tenant shall not commit, or suffer any waste upon the Leased
Premises, or any nuisance, or other act or thing which may disturb the quiet
enjoyment of any owner or occupant of any other property in the project in
which the Leased Premises are located.
ARTICLE 11
FIRE INSURANCE, HAZARDS
11.01 No use shall be made or permitted to be made of the Leased
Premises, nor acts done which might increase the existing rate of insurance
thereon or cause the cancellation of any insurance policy thereby, or any part
thereof, nor shall Tenant sell, or permit to be kept, used or sold, in or about
the Leased Premises, any article which may be prohibited by the Standard form
of fire insurance policies, Tenant shall, at its sole cost and expense,
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comply with any and all requirements of any insurance organization or company
necessary for the maintenance of reasonable fire and public liability insurance
covering the Leased Premises and appurtenances.
ARTICLE 12
INDEMNIFICATION BY TENANT
12.01 Tenant shall indemnify Landlord and hold Landlord, its
mortgagee or the holder of any indebtedness or deed to secure debt harmless
against and from any and all claims arising from Tenant's use of the Leased
Premises (other than those arising from any negligence of Landlord or its
agents or employees), or the conduct of its business or from any activity,
work, or thing done, permitted or suffered by the Tenant in or about the Leased
Premises, and shall further indemnify and hold harmless such parties against
and from any and all claims arising from any breach or default in the
performance of any obligation on Tenant's part to be performed under the terms
of this Lease, or arising from any act, neglect, fault or omission of the
Tenant, or of its agents or employees, and from and against all costs,
attorney's fees, expenses and liabilities incurred in or about such claim or
any action or proceeding brought relative thereto and in case any action or
proceeding be brought against any such parties by reason of any such claim,
Tenant upon notice from Landlord or its mortgagee, or holder of any
indebtedness or deed to secure debt, as the case may be, shall defend the same
at Tenant's expense by counsel chosen by Tenant and who is reasonably
acceptable to Landlord or the applicable co-defendant. Tenant, as a material
part of the consideration to Landlord, hereby assumes all risk of damage to
property or injury to persons in or about the Leased Premises from any cause
whatsoever except that which is caused by the willful act, negligence of or the
failure of Landlord to observe any of the terms and conditions of this Lease
after written notice of such failure and the passage of any applicable cure
periods as provided in this Lease without the failure being cured by Landlord.
The obligations of Tenant under this Paragraph arising by reason of any
occurrence taking place during the term of this Lease shall survive any
termination of this Lease.
ARTICLE 13
WAIVER OF CLAIMS
13.01 Tenant, as a material part of the consideration to be
rendered to Landlord, hereby waives all claims against Landlord for damages to
goods, wares and merchandise in, upon or about the Leased Premises and for
injury to Tenant, its agents, employees, invitees, or third persons in or about
the Leased Premises from any cause arising at any time other than the
negligence (and only to the extent thereof) of Landlord, its agents and
employees.
ARTICLE 14
ENTRY BY LANDLORD
14.01 Tenant shall permit Landlord and Landlord's agents, servants,
mortgagees or independent contractors to enter the Leased Premises at all
reasonable times upon twenty-four (24) hours prior notice (except in an
emergency for which no notice shall be required) for the purpose of inspecting
the same or for the purpose of maintaining the Leased Premises, or for the
purpose of making repairs, alterations, or additions to any portion of the
Leased Premises, including the erection and maintenance of such scaffolding,
canopies, fences and props as may be required or for the purpose of posting
notices of non-responsibility for alterations, additions, or repairs, or
placing upon the Leased Premises any usual or ordinary "for sale" signs,
without any rebate, reduction, abatement or offset of rent and without any
liability to Tenant for any loss of occupation or quiet enjoyment of the Leased
Premises thereby occasioned; and shall permit Landlord at any time within six
(6) months prior to the expiration of this
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Lease, to place upon the Leased Premises any usual or ordinary "to let", "to
lease" or "for sale" signs or for the purpose of showing the Leased Premises to
prospective tenants or purchasers.
ARTICLE 15
TAXES
15.01 (a) Landlord shall pay all ad valorem real property taxes
assessed against the Land and the building containing the Leased Premises (but
not any personal property ad valorem taxes relative to Tenant's property), as
and when due.
(b) Tenant shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Tenant contained in the Leased Premises.
ARTICLE 16
INSURANCE
16.01 Liability Insurance. Tenant, at its own expense, shall obtain
and keep in full force and effect at all times during the term of this Lease
public liability insurance written by a company reasonably acceptable to
Landlord for the benefit of Landlord and Tenant (and, at Landlord's request,
any Mortgagee of Landlord), jointly against liability for personal injury and
property damage in the amount of not less than One Million Dollars
($1,000,000.00) in respect to injuries to or death of more than one person in
any one occurrence, in the amount of not less than Five Hundred Thousand
Dollars ($500,000.00) in respect to injuries to or death of any one person, and
in the amount of not less than One Hundred Thousand Dollars ($ 100,000.00) per
occurrence in respect to damage to property, such limits to be for any greater
amounts as may be reasonably indicated by circumstances from time to time
existing. Not more frequently than each two (2) years, if, in the reasonable
opinion of Landlord, the amount of insurance required under this paragraph
16.01 is not adequate, Tenant shall increase said insurance coverage as
reasonably required by Landlord. However, such increase may be more frequent
than each two (2) years if reasonably required by Landlord's Mortgagee. As used
herein, "Mortgage" means any deed to secure debt, mortgage, deed of trust, or
similar security instrument now or at any time hereafter encumbering the Leased
Premises, any part thereof or interest therein. "Mortgagee" means the holder of
a Mortgage.
16.02 Property Insurance. Tenant shall obtain and keep in full
force and effect at all times during the term of this Lease on all of its
personal property in the Leased Premises (including without limitation
fixtures, equipment, movable and non-movable trade fixtures, inventory,
merchandise and goods) a policy or policies of fire and extended coverage
insurance written by a company reasonably acceptable to Landlord with standard
coverage endorsement to the full extent of their insurable value. During the
term of this Lease the proceeds from any such policy or policies of insurance
shall be used for the repair or replacement of the fixtures, and Landlord will
sign all reasonable documents necessary or proper in connection with the
settlement of any claim or loss by Tenant. Landlord will have no obligation to
carry insurance on Tenant's possessions and Landlord will not be responsible
for any damage thereto except as expressly set forth in this Lease to the
contrary.
16.03 Workers' Compensation Insurance. Tenant shall obtain, and
keep in full force and effect at all times during the term of this Lease, a
policy or policies of workers' compensation insurance written by a company
reasonably acceptable to Landlord in the amount required by law to protect
Tenant's employees.
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ARTICLE 17
ABANDONMENT
17.01 If Tenant shall abandon, vacate or surrender the Leased
Premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to Tenant and left on the Leased Premises shall, at the
option of the Landlord, be deemed abandoned and be and become the property of
Landlord.
ARTICLE 18
DESTRUCTION
18.01 In the event of damage to or destruction of the Leased
Premises during the lease term which requires repairs to the Leased Premises,
Landlord shall forthwith make repairs, provided, in Landlords judgment, repairs
can be completed within one hundred eighty (180) days from the date of such
damage or destruction, but such damage or destruction (including any
destruction necessary in order to make repairs) shall in no way annul or void
this Lease, except that Tenant shall be entitled to a proportionate reduction
of base rent while such repairs are being made. The proportionate reduction is
to be based upon the extent to which the making of repairs shall interfere with
the business carried on by Tenant in the Leased Premises. If repairs cannot
in Landlord's judgment be completed within one hundred eighty (180) days,
Landlord may, at its option, make same within a reasonable time, this Lease
continuing in full force and effect and the base rent to be proportionately
abated, as in this paragraph provided. In the event that Landlord does not so
elect to make repairs which cannot in Landlord's judgment be completed within
one hundred eighty (180) days, or repairs cannot be made under current laws and
regulations, this Lease may be terminated at the option of either party.
Landlord agrees to notify Tenant in writing, of the estimated time period for
the completion of required repairs and of Landlord's election, if applicable,
with regard to making said repairs, within thirty (30) days after Landlord
receives notice of the occurrence of the damaging event, and to promptly
commence and diligently prosecute unto completion any repairs required to be
made by Landlord hereunder.
ARTICLE 19
ASSIGNMENT AND SUBLETTING
19.01 Landlord shall have the right to transfer and assign, in whole
or in part its rights and obligations in the Leased Premises. Tenant shall not
assign this Lease or sublet all or any part of the Leased Premises without the
prior written consent of the Landlord. In the event of any assignment or
subletting, Tenant shall nevertheless at all times, remain fully and primarily
responsible and liable for the payment of the rent and for compliance with all
of its other obligations under the terms, provisions and covenants of this
Lease. Upon the occurrence of an "Event of Default" as defined below, if all or
any part of the Leased Premises are then assigned or sublet, Landlord, in
addition to any other remedies provided by this Lease or provided by law, may at
its option, collect directly from the assignee or subtenant all rents becoming
due to Tenant by reason of the assignment or sublease. Any collection directly
by Landlord from the assignee or subtenant shall not be construed to constitute
a novation or a release of Tenant from the further performance of its
obligations under this Lease, or an acceptance of such assignee or subtenant.
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ARTICLE 20
INSOLVENCY OF TENANT
20.01 Either (a) the appointment of a receiver to take possession of
all or substantially all of the assets of Tenant, or (b) a general assignment by
Tenant for the benefit of creditors, or (c) any action taken or suffered by
Tenant under any insolvency or bankruptcy act shall, if any such appointment,
assignment or action continues for a period of sixty (60) days, constitute a
breach of this Lease by Tenant, and Landlord may at its election without notice,
terminate this Lease and in that event be entitled to immediate possession of
the Leased Premises and damages as provided below.
ARTICLE 21
BREACH BY TENANT
21.01 The occurrence of any of the following shall constitute an
Event of Default ("Event of Default") under this Lease on the part of Tenant:
(a) Failure to pay when due any payment of base rental,
additional rent, or any other sum of money payable by Tenant under
this Lease, and such failure to pay continues for a period of five (5)
days after written notice from Landlord of such failure to pay;
provided however, Landlord shall not be required to provide such notice
more than two (2) times in any one (1) lease year, the third (3rd) and
any subsequent such failure in such lease year to pay within five (5)
days after the due date therefor constituting an Event of Default
without Landlord being required to provide such notice or allow Tenant
a grace period after such notice;
(b) Tenants interest in this Lease or the Leased Premises
shall be subjected to any attachment, execution, levy or other judicial
seizure pursuant to any order or decree entered against Tenant in any
legal proceeding that is not stayed (so as to prevent seizure) pending
appeal and such order or decree is not vacated or bonded against so as
to prevent seizure upon the earlier to occur of (aa) fifteen (15) days
prior to the sale of such interest pursuant to such order or decree, or
(bb) sixty (60) days after entry of the order; or
(c) Tenant breaches or fails to comply with any term,
provision, condition, or covenant of this Lease, other than as
described in clause 21.01 (a) above, and such breach or failure
continues for fifteen (15) days after written notice from Landlord of
such breach or failure to comply.
21.02 Upon the occurrence of an Event of Default, Landlord shall
have the option to do and perform any one or more of the following in addition
to, and not in limitation of, any other remedy or right permitted it by law or
in equity or by this Lease:
(a) Landlord, with or without terminating this Lease, may
immediately or at any time thereafter reenter the Leased Premises and
correct or repair any condition which shall constitute a failure on
Tenant's part to keep, observe, perform, satisfy, or abide by any term,
condition, covenant, agreement, or obligation of this Lease or of any
notice given Tenant by Landlord pursuant to the terms of this Lease,
and Tenant shall fully reimburse and compensate Landlord on demand for
Landlord's actual costs so incurred.
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<PAGE> 11
(b) Landlord, with or without terminating this Lease, may
immediately or at any time thereafter demand in writing that Tenant
vacate the Leased Premises and thereupon Tenant shall immediately
vacate the Leased Premises and remove therefrom all property thereon
belonging to or placed in the Leased Premises by, at the direction of,
or with consent of Tenant, whereupon Landlord shall have the right to
reenter and take possession of the Leased Premises. Any such demand,
reentry and taking possession of the Leased Premises by Landlord shall
not of itself constitute an acceptance by Landlord of a surrender of
this Lease or of the Leased Premises by Tenant and shall not of itself
constitute a termination of this Lease by Landlord.
(c) Landlord, with or without terminating this Lease, may
immediately or at any time thereafter, reenter the Leased Premises
pursuant to a court order and remove therefrom Tenant and all property
belonging to or placed on the Leased Premises by, at the direction of,
or with consent of Tenant. Any such re-entry and removal by Landlord
shall not of itself constitute an acceptance by Landlord of a surrender
of this Lease or of the Leased Premises by Tenant and shall not of
itself constitute a termination of this Lease by Landlord.
(d) Landlord, with or without terminating this Lease, may
immediately or at any time thereafter relet the Leased Premises or any
part thereof, without cost to Landlord, for such time or times, at such
rental or rentals and upon such other terms and conditions as Landlord
in its sole but reasonable judgment deems advisable, and Landlord may
make any alterations or repairs to the Leased Premises which it may
deem necessary or proper to facilitate such reletting; and Tenant shall
pay all actual costs of such reletting including but not limited to the
cost of any such alterations and repairs to the Leased Premises,
attorneys' fees actually incurred, leasing inducements, and brokerage
commissions; and if this Lease shall not have been terminated, Tenant
shall continue to pay all rent due under this Lease up to and including
the date of beginning of payment of rent by any subsequent tenant of
part or all of the Leased Premises, and thereafter Tenant shall pay
monthly during the remainder of the term of this Lease the difference,
if any, between the rent and other charges collected from any such
subsequent tenant or tenants and the rent and other charges reserved in
this Lease, but Tenant shall not be entitled to receive any excess of
any such rents collected over the rent reserved herein.
(e) Landlord may immediately or at any time thereafter
terminate this Lease, and this Lease shall be deemed to have been
terminated upon receipt by Tenant of notice of such termination; upon
such termination Landlord shall recover from Tenant all damages that
Landlord may suffer by reason of such termination including, without
limitation, all arrearages in rentals, costs, charges, additional
rentals, and reimbursements, the cost (including court costs and
attorneys' fees actually incurred) of recovering possession of the
Leased Premises, the actual or estimated (as reasonably estimated by
Landlord) cost of any alteration of or repair to the Leased Premises
which is necessary or proper to prepare the same for reletting; in
addition, Landlord may declare immediately due and payable the present
value (using a discount rate of eight percent (8%) per annum) of all
rent and other sums due or to become due under this Lease; provided,
however that such payment shall not constitute a penalty or forfeiture,
but shall constitute full liquidated damages due to Landlord as a
result of Tenant's default. Landlord and Tenant acknowledge that
Landlord's actual damages in the event of a default by Tenant under
this Lease will be difficult to ascertain, and that the liquidated
damages provided above represent the parties' best estimate of such
damages. The parties expressly acknowledge that the foregoing
liquidated damages are intended not as a penalty, but as full
liquidated damages, as permitted by Paragraph 13-6-7 of the Official
Code of Ga. Annotated. Upon making such payment, Tenant shall be
entitled to receive from Landlord all rents actually received by
Landlord from other assignees, tenants and subtenants on account of the
Leased Premises
11
<PAGE> 12
during the term of this Lease, provided that the monies to which Tenant
shall so become entitled shall in no event exceed the entire amount
actually paid by Tenant to Landlord pursuant to this subparagraph (e),
less all costs, expenses and attorneys' fees incurred by Landlord in
connection with the re-letting of the Premises.
21.03 If Landlord re-enters the Leased Premises or terminates this
Lease pursuant to any of the provisions of this Lease, Tenant hereby waives all
claims for damages which may be caused by such re-entry or termination by
Landlord's reasonable acts complying with the provisions of this Lease. No such
reentry or termination shall be considered or construed to be a forcible entry.
ARTICLE 22
ATTORNEY'S FEES
22.01 If Landlord and Tenant litigate any provision of this Lease or
the subject matter of this Lease, the unsuccessful litigant will pay to the
successful litigant all costs and expenses, including reasonable attorneys' fees
and court costs, incurred by the successful litigant at trial and on any
appeal. If, without fault, either Landlord or Tenant is made a party to any
litigation instituted by or against the other, the other will indemnify the
faultless one against all loss, liability, and expense, including reasonable
attorneys' fees and court costs, incurred by it in connection with such
litigation. For the purpose of this Article 22 the term Landlord shall include
Landlord's Mortgagee as defined in Article 15 if and only if Landlord's
Mortgagee is the successful litigant.
ARTICLE 23
CONDEMNATION
23.01 If, at any time during the term of this Lease, title to the
entire Leased Premises should become vested in a public or quasi-public
authority by virtue of the exercise of expropriation, appropriation,
condemnation or other power in the nature of eminent domain, or by voluntary
transfer from the owner of the Leased Premises under threat of such a taking,
then this Lease shall terminate as of the time of such vesting of title, after
which neither party shall be further obligated to the other except for
occurrences before such taking. The same results shall follow if less than the
entire Leased Premises be thus taken, or transferred in lieu of such a taking,
but to such extent that it would be legally and commercially impracticable for
Tenant to occupy the portion of the Leased Premises remaining, and impracticable
for Tenant to reasonably conduct its trade or business therein. In the event of
any such taking or transfer, whether of the entire Leased Premises or a portion
thereof, it is expressly agreed and understood that all sums awarded, allowed or
received in connection therewith shall belong to Landlord, and any such rights
otherwise vested in Tenant are hereby assigned to Landlord, and Tenant shall
have no interest in nor claim to any such sums or any portion thereof, whether
the same be for the taking of the property or for damages, or otherwise;
provided, however, that Tenant may separately claim and receive from the
condemning authority (but not from Landlord), if legally payable, compensation
for Tenant's removal and relocation costs and/or business interruption, provided
that such claim and recovery shall in no way diminish Landlord's recovery.
12
<PAGE> 13
ARTICLE 24
NOTICES
24.01 Any notice, approval, requests, demands, tenders, or other
communication which may be required or permitted to be given or delivered
hereunder shall be in writing and shall be deemed to have been given, delivered
and received (i) as of the date when the notice is actually personally
delivered, or (ii) if mailed, on the third business day after being deposited in
the United States Mail, certified, return receipt requested, to the address for
each party set forth below, as of the date which is the date of the post mark on
such notice, or (iii) if delivered by courier or express mail service, telegram
or mailgram, to the address for each party set forth below, where the carrier
provides or retains evidence of the date of delivery, as of the date of such
delivery, or (iv) one (1) day after being delivered to a nationally recognized
commercial courier for next day delivery, to the address for each party set
forth below. Any party, by written notice to the others in the manner herein
provided, may designate an address different from that set forth herein.
(a) To Tenant at: __________________
__________________
__________________
(b) To Landlord at: BLAZER RIDGE, INC.
1400 Buford Hwy.
Building A-1
Sugar Hill, Georgia 30518
Attn: Mr. Jeffrey M. Herman, President
With a copy to: Thomas J. Andersen
Andersen, Davidson & Tate, P.C.
1505 Lakes Parkway, Suite 100
Lawrenceville, Georgia 30243
with a copy to such other place as Landlord may from time to time
designate by notice to Tenant.
(c) To Mortgagee at: [TO BE PROVIDED BY WRITTEN NOTICE LATER BY
LANDLORD TO TENANT]
ARTICLE 25
WAIVER
25.01 The waiver by Landlord of any breach of any term, covenant, or
condition herein contained shall not be deemed to be a waiver of such term,
covenant, or condition or any subsequent breach of the same or any other term,
covenant, or condition herein contained. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant, or condition of this Lease, other than the
failure of Tenant to pay the particular rental so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent.
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<PAGE> 14
ARTICLE 26
EFFECT OF HOLDING OVER
26.01 If Tenant should remain in possession of the Leased Premises
after the expiration of the lease term without the written consent of Landlord
and without executing a new lease, then such holding over shall be construed as
a tenancy at sufferance from month to month, subject to all the conditions,
provisions, and obligations of this Lease insofar as the same are applicable to
a month to month tenancy, except that the rent payable pursuant to subparagraph
3.01 hereof shall be multiplied by 1.25. In such event, Landlord shall have the
right to terminate such tenancy-at-sufferance by giving Tenant five (5) business
days prior written notice of such termination.
ARTICLE 27
SUBORDINATION
27.01 This Lease and all rights of Tenant hereunder are and shall be
subject and subordinate to each Mortgage which may now or hereafter affect
Landlord's fee simple title to the Leased Premises, or any interest therein, and
to any modifications, renewals, consolidations, extensions or replacements
thereof. The subordination provisions hereof shall be wholly self-operative.
Tenant agrees without further act or agreement being required hereunder, to
recognize and attorn to any party succeeding to the interest of Landlord as a
result of the enforcement of any Mortgage, and to be bound to such party under
all of the terms, covenants, and conditions of this Lease, for the balance of
the term of this Lease, including renewal terms, with the same force and effect
as if such party were the original Landlord under this Lease.
ARTICLE 28
ESTOPPEL CERTIFICATE
28.01 Upon ten (10) days notice from Landlord or Landlord's
Mortgagee, as the case maybe, to Tenant, Tenant shall deliver a certificate
dated as of the first day of the calendar month in which such notice is
received, executed by an appropriate officer, partner or individual, in the form
as Landlord or such mortgagee may reasonably require and stating the following:
(i) the commencement date of this Lease; (ii) the space occupied by Tenant
hereunder; (iii) the expiration date hereof; (iv) a description of any renewal
or expansion options; (v) the amount of rental currently and actually paid by
Tenant under this Lease; (vi) the nature of any default or claimed default
hereunder by Landlord; (vii) that Tenant is not in default hereunder nor has any
event occurred which with the passage of time or the giving of notice would
become a default by Tenant hereunder and (viii) such other statements as
Landlord or such mortgagee may reasonably require.
ARTICLE 29
MORTGAGEE PROTECTION
29.01 In the event of any default on the part of Landlord, Tenant
will give notice by registered or certified mail to any holder of a Mortgage
covering the Leased Premises whose address shall have been furnished to Tenant,
and shall offer such Mortgagee the opportunity to cure the default as provided
in the SNDA, including a reasonable time period to obtain possession of the
Leased Premises by power of sale or a judicial foreclosure, if such should prove
necessary to effect a cure.
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<PAGE> 15
ARTICLE 30
BROKERAGE COMMISSIONS
30.01 Landlord and Tenant acknowledge that Suwanee Realty
Residential, Inc. ("Landlord's Broker") has represented Landlord (but not
Tenant) in connection with this Lease. Landlord agrees to pay to Suwanee Realty
Residential, Inc. a commission (which commission has already been negotiated in
a separate agreement) that is equal to the first month's rent and four percent
(4%) of the scheduled rental payments under the original term of this Lease by
the Commencement Date.
30.02 In the event the Lease is made in cooperation with another
Broker representing Tenant (but not Landlord), the Tenant's Broker shall receive
the amount equal to the first month's rent and the Landlord's Broker shall
receive the amount that equals four percent (4%) of the scheduled rental
payments under the original term of this Lease, payable by Landlord by the
Commencement Date.
30.03 Landlord and Tenant each represent and warrant to the other
that it has not dealt with any broker, agent, commission salesman or other
persons (other than Landlord's Broker and Tenant's Broker) in the negotiations
for and procurement of this Lease and of the Leased Premises and that no
commissions, fees, or compensation of any kind are due and payable in connection
herewith to any broker, agent, commission salesman or other persons (other than
Landlord's Broker and Tenant's Broker) as a result of any such dealings.
Landlord and Tenant each hereby agree to indemnify the other and hold the other
harmless from and against any and all claims, suits or judgments (including
without limitation, reasonable attorneys' fees and court costs incurred in
connection with any such claims or suits of any kind which arise out of or are
in any way connected with any claimed dealings or relationship with the
indemnifying party.
30.04 Tenant's Broker represents and warrants to Landlord,
Landlord's Broker and Tenant that Tenant's Broker has not dealt with any broker,
agent, commission salesman or other person in the negotiations for and
procurement of this Lease and of the Leased Premises, and that no commissions,
fees or other compensation of any kind are due and payable in connection
herewith to any broker, agent, commission salesman or other person as a result
of any such dealings. Tenant's Broker agrees to indemnify and hold Landlord,
Landlord's Broker and Tenant harmless from and against any and all reasonable
attorneys' fees and court costs incurred in connection with any such claims,
suits, or judgments or in the enforcement of this indemnity for any fees,
commissions or compensation of any kind which arise out of or are in any way
connected with any claimed dealings or relationship with Tenant's Broker.
30.05 Tenant's Broker has executed this Lease solely for the purpose
of agreeing to the provisions of this Article 30 and for no other purpose.
30.06 The provisions of this Article 30 shall survive the expiration
or termination of this Lease for any reason.
15
<PAGE> 16
ARTICLE 31
EXCUSABLE DELAYS
31.01 Definition. The term "Excusable Delay" shall mean any delay
due to war, natural catastrophe, strikes, lockouts or other labor or industrial
disturbance, future order of any government, court or regulatory body claiming
jurisdiction, blockage, embargo, failure or inability to secure materials,
supplies or labor through ordinary sources by reason of shortages or priority
or similar regulation or order of any government or other regulatory body,
storm, flood, washout, adverse weather conditions, delays in construction of
road and utilities, inability to obtain or delay in obtaining permits for
reasons beyond the control of the party seeking such permits, or any other
cause whatsoever beyond the reasonable control of the party from whom
performance is required, whether or not similar to any of the causes stated
above; provided, however, that a party's lack of funds or a party's failure,
refusal or neglect to pay any amount due hereunder shall not be deemed to be a
cause beyond the control of such party, nor shall any Excusable Delay abate
Tenant's obligations to pay base rent or additional rent hereunder, and an
Excusable Delay shall be deemed to exist only so long as the party relying on
such delay to excuse its performance exercises due diligence to remove or
overcome it (except that it is expressly agreed that nothing contained in this
definition of Excusable Delay or elsewhere in this Lease shall obligate either
party to settle a strike or labor dispute when it does not wish to do so).
31.02 Performance Excused. Landlord and Tenant shall each be
excused for the period of any Excusable Delay from, and shall not be deemed in
default with respect to, the performance of any of the terms, covenants and
conditions of this Lease to be performed by such party, other than the payment
of base rent and additional rent by Tenant except as is otherwise expressly
provided for herein, when prevented from doing so by Excusable Delays;
provided, however, that nothing contained in this paragraph shall excuse a
party's performance or prohibit the other party from exercising any remedy in
any circumstance in which any other provision of this Lease expressly provides
that such party is not excused or that such remedy may be exercised
notwithstanding or without regard to the existence of all or certain Excusable
Delays.
ARTICLE 32
COMPLIANCE WITH DECLARATION OF CONDOMINIUM
32.01 In addition to and without in any way limiting any of the
other provisions of this Lease, Tenant shall comply with the provisions of the
Declaration as such Declaration pertains to the Leased Premises, except that
Landlord shall be responsible for payment of any annual and special assessments
imposed under the Declaration.
ARTICLE 33
MISCELLANEOUS PROVISIONS
A. Whenever the singular number is used in this Lease and
when required by the context, the same shall include the plural, and the
masculine gender shall include the feminine and neuter genders, and the word
"person" shall include corporation, limited liability company, partnership,
firm or association. If there be more than one tenant, the obligations imposed
upon Tenant under this Lease shall be joint and several.
16
<PAGE> 17
B. The headings or titles to paragraphs of this Lease are not
a part of this Lease and shall have no effect upon the construction or
interpretation of any part of this Lease.
C. This instrument contains all of the agreements and
conditions made between the parties to this Lease and may not be modified
orally or in any other manner than by agreement in writing signed by all
parties to this Lease.
D. Time is of the essence of each term and provision of this
Lease.
E. Except as otherwise expressly stated, each payment
required to be made by Tenant shall be in addition to and not in substitution
for other payments to be made by Tenant.
F. Subject to Article 19, the terms and provisions of this
Lease shall be binding upon and inure to the benefit of the heirs, executors,
administrators, successors, and assigns of Landlord and Tenant.
G. Except as otherwise expressly provided herein, all
covenants and agreements to be performed by Tenant under any of the terms of
this Lease shall be performed by Tenant at Tenant's sole cost and expense and
without any abatement of rent.
H. Where the consent, approval or acceptance of a party is
required, the party agrees that such consent, approval or acceptance shall not
be unreasonably withheld or unreasonably delayed; except that Landlord may
withhold any consent or approval pursuant to Paragraphs 5.01, 9.01 and 19.01
in its sole and absolute discretion.
I. This Lease shall create the relationship of Landlord and
Tenant between Landlord and Tenant; no estate shall pass out of Landlord;
Tenant has only a usufruct, not subject to levy and/or sale and not assignable
by Tenant except as provided in Paragraph 19.01 hereof.
J. Tenant acknowledges and agrees that Landlord shall not
provide guards or other security protection for the Leased Premises and that
any and all security protection shall be the sole responsibility of Tenant.
K. This Lease shall be governed by Georgia law.
L. Tenant shall not permit cars, trucks and other vehicles to
be parked in the Outside Common Areas except in the ordinary course of
business, e.g. no storage of inoperable vehicles shall be permitted. Tenants
shall abide by these rules and regulations attached as Exhibit "E" hereto and
made a part hereof. Tenant shall abide by such rules and regulations as
Landlord may establish, change, alter or amend in Landlord's sole discretion
provided such rules and regulations are reasonable, non-discriminatory and
apply uniformly to the Park.
M. Landlord's liability for performance of its obligations,
including but not limited to any indemnification under the terms of this Lease
shall be limited to its interest in the Leased Premises, and neither Landlord,
nor any officer, director, shareholder, member or partner of Landlord, shall
have any personal liability whatsoever with respect to this Lease. In the event
of any sale, conveyance, transfer or assignment by Landlord of its interest in
and to the Premises, and provided that Landlord's successor-in-title (or any
subsequent successor-in-title) in and to the Premises has assumed the
obligations of Landlord under this Lease, all obligations under this Lease of
the party selling, conveying, transferring, assigning or otherwise disposing
shall cease and terminate and, provided such assumption has occurred, Tenant
releases said party from same and Tenant shall thereafter look only
17
<PAGE> 18
and solely to the party to whom or which the Premises were sold, conveyed,
transferred, assigned or otherwise disposed of for performance of all Landlord's
duties and obligation under this lease.
N. All parties acknowledge that Landlord is part owner of
Suwanee Realty Residential, Inc.
IN WITNESS WHEREOF, the parties hereto who are individuals have set
their hands and seals, and the parties who are corporations, limited liability
companies or other entities have caused this instrument to be duly executed by
its proper offices and its corporate or other entity seal to be affixed, as of
the day and year first above written.
LANDLORD:
BLAZER RIDGE, INC., a Georgia corporation
By:
-------------------------------------
, its President
------------------ -----------------
LANDLORD'S BROKER:
SUWANEE REALTY RESIDENTIAL, INC.
-------------------------------------
Broker or Broker's Affiliated Licensee
As to Landlord, signed, sealed
And delivered in the presence of:
- -------------------------------------
Witness
TENANT:
SOUTHERNBANK, N.A. (under organization)
By:
--------------------------------------
Title: President
-----------------------------------
As to Landlord, signed, sealed
And delivered in the presence of:
---------------------------------
Unofficial Witness
[CORPORATE SEAL]
18
<PAGE> 19
AMENDMENTS TO LEASE AGREEMENT
AMENDMENT #1
LEASE PAYMENT SCHEDULE
(a) Upon the signing of this Lease, Tenant will pay to
Landlord a Security Deposit an amount equal to one month of the "Base Lease" of
the first lease year. This Security Deposit will be returned to Tenant within
thirty days of the expiration and/or termination date of this Lease provided
Tenant is not then and has not been in default hereunder and Tenant has paid
all rent on or before the due date throughout the term of this Lease and the
Leased Premises have been left in satisfactory condition normal wear and use
excluded and all keys returned to Landlord.
(b) Tenant will pay to Landlord the first month of the "Base
Lease" of the first year an amount that equals TWO THOUSAND FIVE HUNDRED
EIGHTY-NINE AND 79/100 U.S. DOLLARS ($2,589.79) on May 1, 2000.
(c) Tenant will pay to Landlord the remaining balance of the
"Base Lease" of the first year an amount that equals TWENTY EIGHT THOUSAND FOUR
HUNDRED EIGHTY-SEVEN AND 71/100 U.S. DOLLARS ($28,487.71) on June 1, 2000.
(d) Tenant will pay to Landlord the remaining term and
exercised options of this Lease on a monthly basis in accordance to Paragraph
2.02 and Article 3.
(e) Tenant agrees to reimburse Landlord for any and all costs
agreed to by both Tenant and Landlord for upgrades and/or extras in materials,
labor and construction costs beyond the standard build-out provided by
Landlord. Landlord will provide an itemized list and costs to Tenant for
reimbursement. Tenant will pay this reimbursement to Landlord upon completion
of build-out and before occupancy.
AMENDMENT #2
FEDERAL DEPOSIT INSURANCE CORPORATION
REQUIRED AMENDMENT
(a) Notwithstanding any other provisions contained in this
lease, in the event (a) Lessee (Tenant) or its successors or assignees shall
become insolvent or bankrupt, or if it or their interests under the Lease shall
be levied upon or sold under execution or other legal process, or (b) the
depository institution then operating on the Premises is closed, or is taken
over by any depository institution supervisory authority ("Authority"), Lessor
(Landlord) may, in either such event terminate this Lease only with the
concurrence of any Receiver or Liquidator appointed by such Authority;
provided, that in the event this Lease is terminated by the Receiver or
Liquidator, the maximum claim of Lessor (Landlord) for rent, damages, or
indemnity for injury resulting from the termination, rejection, or abandonment
of the unexpired Lease shall by law in no event be in an amount equal to all
accrued and unpaid rent to the date of termination.
TENANT: LANDLORD:
SOUTHERNBANK, N.A. (under organization) BLAZER RIDGE, INC
By: By:
------------------------------------ ------------------------
<PAGE> 20
EXHIBIT A
[LEGAL DESCRIPTION OF LAND]
20
<PAGE> 21
EXHIBIT B
[PROJECT PLANS AND SPECIFICATIONS]
21
<PAGE> 22
EXHIBIT "C"
RULES AND REGULATIONS
1. The sidewalks, entries, passages, corridors, stairways and
elevators, if any, shall not be obstructed by Tenants, their employees or
agents, or used by them for purposes other than ingress and egress to and from
their respective suites other than, in Tenant's initial move in.
2. The Tenant shall not (without Landlord's written consent)
install or operate any fans, electric heaters, or stoves upon the Leased
Premises (except that standard microwave ovens are permitted), or carry on any
mechanical business thereon, or do any cooking thereon, or use or allow to be
used upon the Leased Premises, oil, burning fluids, kerosene, gasoline or
kerosene for heating, warming or light. No article deemed hazardous on account
of fire and no explosives shall be brought into the Leased Premises. No
offensive gases or liquids will be permitted within the Leased Premises.
3. No sign, advertisement or notice shall be inscribed,
painted or affixed on any part of the inside or outside of the Leased Premises
unless of such color, size and style and in such places as shall first be
designated by Landlord; there shall be no obligation or duty on Landlord to
allow any sign, advertisement or notice to be inscribed, painted or affixed on
any part of the inside or outside of the Leased Premises. Tenant suite
identification on or adjacent to entry doors will conform to standards
established by Landlord and must be installed by Landlord at Tenants expense.
Landlord shall have the right to remove all other signs, without notice to
Tenant at the expense of Tenant. No awnings or other projections shall be
attached to the outside walls of the Leased Premises.
4. No person shall disturb the occupants of the Park by the use
of any musical instruments, radios, televisions, phonographs, tape players,
etc., the making of unreasonable noises, odors, vibrations or any other
unreasonable use of the Leased Premises. No dogs or other animals or pets of
any kind will be allowed in the Leased Premises, except for those animals used
to assist persons with disabilities. Landlord shall be notified in advance, and
in writing, if any such animals will be used on a regular basis.
5. No portion of the Leased Premises shall be occupied or used
as sleeping or lodging quarters at any time.
6. Tenant shall not employ any person other than janitors who
are expressly approved in writing by Landlord (who will be provided with
pass-keys into the Leased Premises) for the purpose of cleaning or taking
charge of the Leased Premises.
7. Landlord reserves the right to exclude or expel from the
Leased Premises any person who, in the judgment of Landlord, is intoxicated or
under the influence of liquor or drugs, or who shall in any manner do any act
in violation of any of the rules and regulations of the Leased Premises.
22
<PAGE> 1
EXHIBIT 10.5
PROMISSORY NOTE
<TABLE>
<CAPTION>
- ----------------- ------------- ------------- -------------- --------- ----------- ------------ ------------ --------------
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$860,000 03-31-2000 06-30-2000 JLN
- ----------------- ------------- ------------- -------------- --------- ----------- ------------ ------------ --------------
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, N.A. 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: $860,000.00 INITIAL RATE: 7.750% DATE OF NOTE: MARCH 31, 2000
</TABLE>
PROMISE TO PAY. SOUTHERNBANK, N.A. (IO) ("BORROWER") PROMISES TO PAY TO THE
BANKERS BANK ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF
AMERICA, THE PRINCIPAL AMOUNT OF EIGHT HUNDRED SIXTY THOUSAND & 00/100 DOLLARS
($860,000.00), TOGETHER WITH INTEREST ON THE UNPAID OUTSTANDING PRINCIPAL
BALANCE FROM MARCH 31, 2000, UNTIL PAID IN FULL.
PAYMENT. BORROWER WILL PAY THIS LOAN IN ONE PAYMENT OF $860,000 PLUS INTEREST ON
JUNE 30, 2000. THIS PAYMENT DUE ON JUNE 30, 2000, WILL BE FOR ALL PRINCIPAL AND
ACCRUED INTEREST NOT YET PAID. 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 under the payment schedule. 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) Any representation or statement made or furnished to Lender
by Borrower or on Borrower's behalf is false or misleading in any material
respect either now or at the time made or furnished. (d) 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.
(e) Any creditor tries to take any of Borrower's property on or in which Lender
has a lien or security interest. This includes a garnishment of any of
Borrower's accounts with Lender. (f) Any guarantor dies or any of the other
events described in this default section occurs with respect to any guarantor of
this Note. (g) A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired. (h) Lender in good faith deems itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest 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.
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 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, N.A. (IO), INC.
<TABLE>
<S> <C>
BY: (SEAL) BY: (SEAL)
---------------------------- -------------------------------
D. ARNOLD TILLMAN, CEO M. LAUCH MCKINNON, PRESIDENT
</TABLE>
LENDER:
THE BANKERS BANK
BY:
---------------------------------------
AUTHORIZED OFFICER
<PAGE> 5
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>
JLN
- -------------- ------------ ------------ ------------ ----------- ------------ ------------ ------------ ------------
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, N.A. (IO) 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 Eight Hundred Sixty
Thousand & 00/100 Dollars ($860,000.00).
CONTINUING 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, ("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, N.A. (IO) ("BORROWER") TO LENDER ON
THE TERMS AND CONDITIONS SET FORTH IN THIS GUARANTY. THE OBLIGATIONS OF
GUARANTOR UNDER THIS GUARANTY ARE CONTINUING.
DEFINITIONS. The following words shall have the following meanings when used in
this Guaranty:
BORROWER. The word "Borrower" means SouthernBank N.A. (IO).
GUARANTOR. The word "Guarantor" means .
GUARANTY. The word "Guaranty" means this Guaranty made by Guarantor
for the benefit of Lender dated March 31, 2000.
INDEBTEDNESS. The word "Indebtedness" is used in its most
comprehensive sense and means and includes any and all of Borrower's
liabilities, obligations, debts, and indebtedness to Lender, now
existing or hereinafter incurred or created including, without
limitation, all loans, advances, interest, costs, debts, overdraft
indebtedness, lease obligations, other obligations, and liabilities of
Borrower, or any of them, and any present of future judgments against
Borrower, or any of them; and whether any such Indebtedness is
voluntarily or involuntarily incurred, due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined;
whether Borrower may be liable individually or jointly with others or
primarily or secondarily, or as guarantor or surety; whether recovery
on the indebtedness may be or may become barred on unenforceable
against the Borrower for any reason whatsoever; and whether the
Indebtedness arises from transactions which may be voidable on account
of infancy, insanity, ultra vires, or otherwise.
LENDER. The word "Lender" means The Bankers Bank, its successors and
assigns.
<PAGE> 6
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 $860,000, 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's liability under this Guaranty shall be open and
continuous for so long as this Guaranty remains in force. 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.
Accordingly, no payments made upon the Indebtedness will discharge or diminish
the continuing liability of Guarantor in connection with any remaining portions
of the Indebtedness or any of the Indebtedness which subsequently arises or is
thereafter incurred or contracted.
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 incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all other obligations of Guarantor
under this Guaranty shall have been performed in full. If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at the address
of Lender listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor's written
revocation. For this purpose and without limitation, the term "new Indebtedness"
does not include Indebtedness which at the time of notice of revocation is
contingent, unliquidated, undetermined or not due and which later becomes
absolute, liquidated, determined or due. This Guaranty will continue to bind
Guarantor for all Indebtedness incurred by Borrower or committed by Lender prior
to receipt of Guarantor's written notice of revocation, including any
extensions, renewals, substitutions or modifications of the Indebtedness. All
renewals, extensions, substitutions, and modifications of the Indebtedness
granted after Guarantor's revocation, are contemplated under this Guaranty and,
specifically will not be considered to be new Indebtedness. This Guaranty shall
bind the estate of Guarantor as to Indebtedness created both before and after
the death or incapacity of Guarantor, regardless of Lender's actual notice of
Guarantor's death. Subject to the foregoing, Guarantor's executor or
administrator or other legal representative may terminate this Guaranty in the
same manner in which Guarantor might have terminated it and with the same
effect. 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. It is
anticipated that fluctuations may occur in the aggregate amount of Indebtedness
covered by this Guaranty, and it is specifically acknowledged and agreed by
Guarantor that reductions in the amount of Indebtedness, even to zero dollars
($0.00), prior to written revocation of this Guaranty by Guarantor shall not
constitute a termination of this Guaranty. This Guaranty is binding upon
Guarantor and Guarantor's heirs, successors and assigns so long as any of the
guaranteed Indebtedness remains unpaid and even though the Indebtedness
guaranteed may from time to time be zero dollars ($0.00).
<PAGE> 7
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, WITHOUT NOTICE OR DEMAND AND WITHOUT LESSENING
GUARANTOR'S LIABILITY UNDER THIS GUARANTY, FROM TIME TO TIME: (A) PRIOR TO
REVOCATION AS SET FORTH ABOVE, 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> 8
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> 9
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> 10
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> 11
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, except for revocation notices
by Guarantor, 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. All revocation notices by Guarantor shall be in
writing and shall be effective only upon delivery to Lender as provided
above in the Section titled "DURATION OF GUARANTY." 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> 12
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> 13
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> 14
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> 15
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> 16
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 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
April 26, 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> 86,542
<INCOME-PRETAX> (88,444)
<INCOME-PRE-EXTRAORDINARY> (88,444)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (88,444)
<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>
