April 22, 1996
Dear Fellow Shareholder:
On behalf of the Board of Directors, I am pleased to
extend to you an invitation to attend the Annual Meeting of
Shareholders of Southwest Georgia Financial Corporation ("the
Company") to be held on Tuesday, May 14, 1996, at 4:30 P.M.
at the Colquitt County Arts Center, 401 Seventh Avenue, S.W.,
Moultrie, Georgia.
The notice of the meeting and Proxy Statement which appear
on the following pages contain information about matters which
are to be considered at the meeting. On February 23, 1996,
the Board of Directors unanimously voted to approve certain
amendments (collectively, the "Proposed Amendments") to the
Articles of Incorporation, having determined that such
amendments are advisable and in the best interest of the
Company and its shareholders. These Proposed Amendments are
described in detail within the Proxy Statement and Exhibits A-F.
The Proposed Amendments are designed to afford certain
protections from possible hostile takeover actions against
Southwest Georgia Financial Corporation and to ensure that all
shareholders of the Company will receive fair treatment in the
event of any hostile, unsolicited offer to acquire or take
control of the Company. We are not aware of any current
effort to acquire control of the Company and are proposing
these amendments in order to maintain the ability of the Board
of Directors to protect shareholder interests in the future.
The Proposed Amendments are not intended to prevent a
friendly acquisition of the Company. They are, however
designed to encourage any prospective acquiror to negotiate
with your representatives on the Board of Directors and to
preserve the flexibility of the Directors in any possible
future negotiations.
In order to ensure that your shares are voted at the
meeting, please complete, date, sign and return the Proxy in
the enclosed postage-paid envelope at your earliest
convenience. Before voting, please read carefully the
sections in the Proxy Statement which describe the Proposed
Amendments and their purposes and effects. Every shareholder's
vote is important, whether you own a few shares or many. I
look forward to seeing you at the meeting.
Sincerely,
John H. Clark
President
<PAGE>
<PAGE>
SOUTHWEST GEORGIA FINANCIAL CORPORATION
P.O. Box 849
201 First Street, S.E.
Moultrie, Georgia 31768
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 14, 1996
The annual meeting of shareholders of Southwest Georgia Financial
Corporation ("the Company") will be held on Tuesday, May 14, 1996, at 4:30
P.M. at the Colquitt County Arts Center, 401 Seventh Avenue, S.W., Moultrie,
Georgia, for the purposes of considering and voting upon:
1. The election of twelve directors to constitute the Board of
Directors to serve until the next annual meeting and until their
successors are elected and qualified; and
2. To consider and act upon a proposal to amend the Company's
Articles of Incorporation to authorize the issuance of up to
3,000,000 shares of Preferred Stock, $1.00 par value per share;
and
3. To consider and act upon a proposal to amend the Company's
Articles of Incorporation to authorize the Board of Directors to
consider constituencies when evaluating a business combination
proposal; and
4. To consider and act upon a proposal to amend the Company's
Articles of Incorporation to eliminate cumulative voting for
directors; and
5. To consider and act upon a proposal to amend the Company's
Articles of Incorporation to provide for the limitation of
director liability; and
6. To consider and act upon a proposal to amend the Company's
Articles of Incorporation to require the affirmative vote of the
holders of 80% of the issued and outstanding shares entitled to
vote thereon to amend the Articles of Incorporation or the By-Laws
of the Company; and
7. To consider and act upon a proposal to amend the Company's
Articles of Incorporation to enact a provision to govern potential
business combination transactions with interested shareholders;
and
8. To consider and act upon a proposal to amend the Company's
Articles of Incorporation to provide that directors can be removed
only for cause by the affirmative vote of the holders of 80% of
the issued and outstanding shares entitled to vote thereon; and
9. In the discretion of management, to adjourn the Annual
Meeting to permit solicitation of additional proxies in the
event there are not sufficient affirmative votes to approve
one or more amendments to the Articles of Incorporation.
10. Such other matters as may properly come before the meeting or any
adjournment thereof.
Only shareholders of record at the close of business on April 15, 1996
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
<PAGE>
A Proxy Statement and a Proxy solicited by the Board of Directors are
enclosed herewith. Please sign, date and return the Proxy promptly in the
enclosed business reply envelope. If you attend the meeting you may, if you
wish, withdraw your Proxy and vote in person.
Also enclosed is the Company's 1995 Annual Report to Shareholders, which
contains financial data and other information about the Company.
By Order of the Board of Directors,
JOHN H. CLARK
President
April 22, 1996
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE
ENCLOSED SELF-ADDRESSED ENVELOPE.
<PAGE>
<PAGE>
SOUTHWEST GEORGIA FINANCIAL CORPORATION
P.O. Box 849
201 First Street, S.E.
Moultrie, Georgia 31768
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of Southwest Georgia Financial Corporation
(the "Company") for use at the Annual Meeting of Shareholders of the Company
to be held on May 14, 1996, and any adjournment thereof, for the purposes
set forth in the accompanying notice of the meeting. The expenses of this
solicitation, including the cost of preparing and mailing this Proxy
Statement, will be paid by the Company. Copies of solicitation materials
may be furnished to banks, brokerage houses and other custodians, nominees
and fiduciaries for forwarding to beneficial owners of shares of the
Company's Common Stock, and normal handling charges may be paid for such
forwarding service. In addition to solicitations by mail, directors and
regular employees of the Company may solicit Proxies in person or by
telephone. It is anticipated that this Proxy Statement and the
accompanying Proxy will first be mailed to shareholders on April 22, 1996.
The record of shareholders entitled to vote at the Annual Meeting of
Shareholders was taken as of the close of business on April 15, 1996. On that
date, the Company had outstanding and entitled to vote 1,277,421 shares of
Common Stock, par value $1.00 per share.
Any Proxy given pursuant to this solicitation may be revoked by any
shareholder who attends the meeting and gives oral notice of his or her
election to vote in person, without compliance with any other formalities. In
addition, any Proxy given pursuant to this solicitation may be revoked prior
to the meeting by delivering a signed writing revoking it or a duly executed
Proxy bearing a later date to the Secretary of the Company at Southwest Georgia
Financial Corporation, P.O. Box 849, Moultrie, Georgia 31776-0849. If the
Proxy is properly completed and returned by the shareholder and is not revoked,
it will be voted at the meeting in the manner specified thereon. If the Proxy
is returned but no choice is specified thereon, it will be voted for all the
persons named below under the caption "Information about Nominees for
Director" and each of the proposals set forth below.
In the event there is not a sufficient number of
affirmative votes to approve the amendments to the Articles of
Incorporation, management of the Company may seek to adjourn
the Annual Meeting to permit solicitation of additional
proxies. The place and date to which the Annual Meeting would
be adjourned would be announced at the Annual Meeting. Pursuant to
Section 14-2-705 of the Georgia Corporate Code ("Georgia Code") in the
event of such an adjournment, the Company would not be
obligated to notify stockholders not attending the Annual
Meeting of the adjournment or to fix in advance thereof a new
record date, as long as the record date set for the original meeting date
is within 120 days before the adjourned meeting date. Such an
adjournment would not invalidate any proxies previously filed.
Approval of an adjournment would require the affirmative
vote of a majority of the shares of the Company represented in
person or by proxy at the Annual Meeting. In the absence of
a vote "against" or an abstention with respect to adjournment, the proxy
holder may vote in favor of the proposal. However, proxies directing a
vote against a majority of the proposed amendments to the Articles of
Incorporation will not be voted to adjourn the Annual Meeting without
specific authority indicated on the proxy card.
The Company will furnish without charge a copy of its Annual Report
on Form 10-KSB filed with the Securities and Exchange Commission for the
fiscal year ended December 31, 1995, including financial statements and
schedules, to any record or any beneficial owner of its Common Stock as
of March 18, 1996 who requests a copy of such report. Any request for
the Form 10-KSB report should be in writing addressed to:
Mr. George R. Kirkland
Southwest Georgia Financial Corporation
P.O. Box 849
Moultrie, Georgia 31776-0849
<PAGE>
If the person requesting the report was not a shareholder of record
on April 15, 1996, the request must include a representation that the
person was a beneficial owner of Common Stock on that date. Copies of
any exhibits to the Form 10-KSB will also be furnished on request and
upon the payment of the Company's expense in furnishing the exhibits.
VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table sets forth as of April 1, 1996, beneficial
ownership of the Company's Common Stock by each "person" (as that term is
defined by the Securities and Exchange Commission) known by the Company to be
the beneficial owner of more that 5% of the Company's voting securities and by
all directors and officers of the Company as a group.
<TABLE>
<CAPTION>
Name And Address of Number of Shares
Beneficial Owner Owned Beneficially Percent of Class
- ------------------- ------------------ ----------------
<S> <C> <C>
Leo T. Barber, Jr. 242,571 (1,2) 18.99%
617 Third Street, S.W.
Moultrie, Georgia 31768
Albert W. Barber 230,121 (1,3,4) 18.01%
118 Dogwood Circle
P.O. Box 627
Moultrie, Georgia 31768
The Employee Stock Ownership Plan 232,888 18.23%
and Trust of Southwest Georgia
Financial Corporation
201 First Street, S.E.
Moultrie, Georgia 31768
All Directors and Officers as a Group 509,359 39.87%
(23 persons)
________________
</TABLE>
(1) Includes 129,825 shares held by the Louise W. Barber Trust, of which
Leo T. Barber, Jr. and Albert W. Barber are joint trustees. Also includes
62,420 shares held by the L.T.B., Sr., Trust of which Leo T. Barber, Jr.
and Albert W. Barber serve as co-trustees.
(2) Includes 3,000 shares held in the name of Mr. Leo T. Barber's wife.
(3) Includes 1,300 shares held in the name of Mr. Albert W. Barber's wife.
(4) Includes 2,000 shares held by the Estate of Sue Barber Fontenot, of
which Albert W. Barber serves as executor.
At each election for directors every shareholder entitled to vote at such
election shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected
and for whose election he has a right to vote, or to cumulate his votes by
giving one candidate as many votes as the number of such directors multiplied
by the number of his shares shall equal, or by distributing such votes on the
same principle among any number of such candidates. The Company has proposed
to eliminate cumulative voting rights in future elections of directors. See
"Proposal 4 -- Elimination of Cumulative Voting Rights." Cumulative voting
allows a shareholder to multiply the number of votes they are entitled to cast
by the number of directors for whom they are entitled to vote and cast the
product for a single candidate or distribute the product among two or more
candidates.
<PAGE>
<PAGE>
NOMINATION AND ELECTION OF DIRECTORS
The bylaws of the Company provide that the Board of Directors shall consist
of not less than five nor more than twenty-five directors. The exact number
of directors is currently set at twelve by Board resolution. The number of
directors may be increased or decreased within the foregoing range from time
to time by the Board of Directors or resolution of the shareholders. The
terms of office for directors continue until the next Annual Meeting of
Shareholders and until their successors are elected and qualified or until
earlier resignation, removal from office or death.
Each Proxy executed and returned by a shareholder will be voted as
specified thereon by the shareholder. If no specification is made, the
Proxy will be voted for the election of the nominees named below to constitute
the entire Board of Directors. In the event that any nominee withdraws or
for any reason is not able to serve as a director, the Proxy will be voted
for such other person as may be designated by the Board of Directors as
substitute nominee, but in no event will the Proxy be voted for more than
twelve nominees. Management of the Company has no reason to believe that any
nominee will not serve if elected. All the nominees are currently directors of
the Company.
Directors are elected by a plurality of the votes cast by the holders of
the shares entitled to vote in the election at a meeting at which a quorum is
present. A quorum is present when the holders of a majority of the shares
outstanding on the record date are present at a meeting in person or by proxy.
An abstention would not be considered to be one of the "votes cast" for
purposes of the first sentence of this paragraph, but would be included in
determining whether a majority of the outstanding shares is represented for
determining whether a quorum is present at a meeting.
INFORMATION ABOUT NOMINEES FOR DIRECTOR
The following information as of April 1, 1996, has been furnished by
the respective nominees for Director. Except as otherwise indicated, each
nominee has been or was engaged in his present or last principal employment,
in the same or a similar position, for more than five years.
<TABLE>
<CAPTION>
Number of Shares
Information Owned Beneficially
Name (Age) About Nominee (Percent of Class)
- ---------- --------------- -------------------
<S> <S> <C>
John H. Clark (58) President and Director of Southwest 37,890
Georgia Bank (the "Bank") since 1978, (2.97%) (1)
Mr. Clark has served as President
and Director of the Company since 1980.
Leo T. Barber, Jr. (73) A Director of the Bank since 1951 and of 242,571
the Company since 1981, Mr. Leo Barber is (18.99%) (2)
Chairman of the Board of both the Bank and the
Company. He is a general partner of South Georgia
Finance Company, a family investment company.
Also, he is President of South Georgia
Investment Company, a rental and investment
company.
Albert W. Barber (66) A Director of the Company and Bank since 1990, 230,121
Mr. Albert Barber is a general partner of South (18.01%) (3)
Georgia Finance Company, a family investment
company. Also, he is Vice President and Treasurer
of South Georgia Investment Company, a rental and
investment company.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
<S> <S> <C>
R. Bradford Burnette (56) President and Chief Executive Officer of Park Avenue 161*
Bank, which is located in Valdosta, Georgia.
Mr. Burnette was elected as Director of the Bank
and the Company by the Board in 1995. Mr. Burnette
is standing for election as Director of the
Company for the first time at the Company's
1996 Annual Meeting.
Robert M. Duggan (64) A Director of the Bank since 1980 and of 15,751
the Company since 1981, Mr. Duggan is a (1.23%)
retired President of Davis Gas Company
and is currently self employed as a tree
farmer.
E. J. McLean, Jr. (73) A Director of the Company since 1981 and of 24,411
the Bank since 1980, Mr. McLean is a retired (1.91%)
Vice President and active consultant of McLean
Engineering Company, Inc., a consulting
engineering firm.
Glenn D. Moon (66) A Director of the Bank and the Company since 5,501*
1995, Mr. Moon is a retired Senior Vice
President and Trust Officer of the Bank and
the Company.
Richard L. Moss (44) A Director of the Bank since 1980 and of the 10,136*
Company since 1981, Mr. Moss is
President of Moss Farms.
Lee C. Redding (49) A Director of the Bank and the Company since 10,129*
1995, Dr. Redding is a Dentist and owner
of a family dental practice since 1976.
Roy H. Reeves (36) A Director of the Bank and the Company since 13,523
1991, Mr. Reeves is Secretary-Treasurer of (1.06%)
Kelly-Reeves Furniture Company and managing
partner with Reeves Properties, a property
rental company.
Jack Short (73) A Director of the Bank since 1975 and of the 12,636*
Company since 1981, Mr. Short is Vice Chairman
of the Board of both the Bank and the Company.
Also, he is a Partner in the law firm of Short
and Fowler.
Johnny R. Slocumb (43) A Director of the Bank and the Company since 13,661
1991, Mr. Slocumb is owner of the Slocumb (1.07%)
Company, a company which offers real estate
and insurance services.
</TABLE>
- ---------------------
* Less than one percent (1%)
(1) Includes 21,731 shares allocated to the account of Mr. Clark in the
Employee Stock Ownership Plan and Trust, over which shares Mr. Clark
exercises voting power.
(2) Includes 129,825 shares owned of record by the Louise W. Barber Trust,
of which Mr. Leo T. Barber is co-trustee, 62,420 shares owned of record
by the L.T.B.,Sr.,Trust of which Mr. Barber is co-trustee,
and 3,000 shares owned of record by Mr. Barber's wife.
(3) Includes 129,825 shares owned of record by the Louise W. Barber Trust,
of which Mr. Albert Barber is co-trustee, 62,420 shares owned by the
L.T.B.,Sr.,Trust of which Mr. Barber is co-trustee, 1,300 shares owned of
record by Mr. Barber's wife, and 2,000 shares owned by the Estate of
Sue Barber Fontenot, of which Mr. Barber is executor.
There are no family relationships between any director, executive
officer or nominee for director of the Company or any of its subsidiaries with
the exception of two directors, Leo T. Barber, Jr. and Albert W. Barber, who
are brothers.
<PAGE>
EXECUTIVE COMPENSATION
The Company did not pay any remuneration to its officers during the year
ended December 31, 1995. The following table sets forth the annual and other
compensation paid or accrued for each of the last three fiscal years, including
directors' fees, for John H. Clark, who is the President and Director of the
Company and the Bank. No other executive officers of the Company were paid
$100,000 or more in salary, bonus and directors' fees during 1995.
<TABLE>
Summary Compensation Table
<CAPTION>
Name and Principal Annual Compensation All Other
------------------------------------------------
Position During 1995 Year Salary Bonus Other Compensation
- -------------------- ---- ------ ----- ------ ------------
<S> <C> <C> <C> <C> <C>
John H. Clark 1995 143,400 35,000 1,800 (1) 27,750 (2)
President of the Company and 1994 139,400 36,000 1,800 (1) 27,151 (2)
the Bank 1993 133,508 36,000 1,800 (1) 28,351 (2)
</TABLE>
(1) Amount represents fair market value of discount on stock purchased under
the Company's stock plan for officers and directors, which allows a
participant to receive Common Stock in lieu of salary and directors'
fees, up to certain limits, with a value of 150% of the cash
compensation foregone by each participant.
(2) Amount includes Bank's contributions to defined contribution plan of
$22,500, contribution to supplementary retirement plan of $3,900, and
premiums for group term life insurance of $1,350.
The Company has never granted restricted stock, options, stock
appreciation rights or similar awards to any of its present or past executive
officers.
Compensation of Directors
Compensation. The Board of Directors of the Bank consists of the same
members as the Board of Directors of the Company. In 1995, the Chairman, Vice
Chairman and each Director of the Bank received an annual fee of $6,000,
$4,200, and $2,400, respectively, and $100 per Bank's Board meeting
attended. Also, each Director of the Bank received $50 per Bank's Board
committee meeting attended. The Directors of the Company are not compensated
for membership on the Company's Board of Directors.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
On November 21, 1989, the Company entered into an employment agreement
(the "Agreement") with John H. Clark, employing Mr. Clark as Chief Executive
Officer until ten (10) years after the date of the Agreement (the "Term") or
until the Agreement is earlier terminated. Under the Agreement the Board of
Directors of the Bank or Company has discretion to determine Mr. Clark's
compensation , based upon the financial successes of and the contribution
of Mr. Clark to the Bank and the Company. Benefits of the kind customarily
granted to other executives of the Bank and Company, including disability
insurance, medical insurance for life and life insurance, identical to that
provided to Mr. Clark at the commencement of the Term, until age 65 and
thereafter with life insurance comparable to that provided to retirees at the
commencement of the Term, shall be granted to Mr. Clark under the Agreement.
In determining Mr. Clark's compensation under the Agreement, the Board
subjectively considers Mr. Clark's tenure with the Bank and Company and the
growth in assets and the results of operations of the Company during
Mr. Clark's tenure.
<PAGE>
Mr. Clark's employment may be terminated for cause if Mr. Clark violates
or breaches any material term of the Agreement, habitually neglects his duties
or is convicted of a felony. If Mr. Clark is terminated for cause, the Bank
and the Company will have no further financial obligation to Mr. Clark.
If Mr. Clark's employment terminates for any reason, Mr. Clark agrees not
to provide banking services or solicit certain bank customers within certain
geographical limits within five years of such termination. In consideration
for such non-compete agreement and services rendered, if Mr. Clark's
employment is terminated without cause prior to the end of the Term, Mr. Clark
will receive a termination payment annually during the remainder of the Term.
The amount of such annual payment will depend upon the year of termination,
and can vary from an annual payment of $100,000 for the remaining four years
of the Term to a single payment of $125,000 if Mr. Clark were terminated
during the last year of the Term.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank from time to time has had, and expects to have in the future,
banking transactions in the ordinary course of business with officers and
directors of the Company and their related interests, on substantially the
same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons, and such transactions
have not involved more than the normal risk of collectibility or presented
other unfavorable features.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held 12 regular meetings during 1995. All of the
directors attended at least seventy-five percent (75%) of the Board and
committee meetings held during their tenure as directors.
The Company has a personnel committee of the Board of Directors. This
committee is composed of three members, John H. Clark, Leo T. Barber, Jr., and
Jack Short. The committee, which recommends compensation levels for the
Bank's employees, held two meetings during 1995. The Company has no standing
audit or nominating committee of the Board of Directors or committee
performing similar functions.
<PAGE>
<PAGE>
DISSENTERS' RIGHTS
Any shareholder of record of Common Stock who objects to the
amendment to the Articles of Incorporation to eliminate
cumulative voting rights ("Proposal no. 4," described below) and who fully
complies with Section 14-2-1301, et seq. of the Georgia Code will be entitled
to demand and receive payment in cash of an amount equal to the fair value
of all, but not less than all, of his shares of Common Stock ("dissenters'
rights") if the amendment to the Articles of Incorporation to eliminate
cumulative voting rights is approved. A shareholder who objects to any other
proposed amendment to the articles of incorporation described below will not
be entitled to dissenters' rights. A shareholder of record may assert
dissenters' rights with respect to Proposal no. 4 as to fewer than all the
shares registered in his name only if he dissents with respect to all
shares beneficially owned by any one beneficial owner and
notifies the Company in writing of the name and address of each
person on whose behalf he asserts dissenters' rights. For the
purpose of determining the amount to be received in connection
with the exercise of statutory dissenters' rights under the
Georgia Code, the fair value of a dissenting shareholder's Common
Stock equals the value of the shares immediately before the date
on which the amendment to the Articles of Incorporation to
eliminate cumulative voting rights is approved, excluding any
appreciation or depreciation in anticipation of such amendment.
Any Company shareholder desiring to receive payment of the
fair value of his Common Stock in accordance with the
requirements of the Georgia Code:
(a) must deliver to the Company, prior to the time the
shareholder vote on Proposal no. 4, the amendment to the Articles of
Incorporation to eliminate cumulative voting rights, is taken, a
written notice of his intent to demand payment for his shares if
such amendment is approved;
(b) must not vote his shares in favor of such amendment;
and
(c) must demand payment and deposit stock certificates
representing Company Common Stock in accordance with the terms of
a notice which will be sent to the shareholder by the Company no
later than 10 days after such amendment is approved.
A filing of the written notice of intent to dissent with
respect to the amendment to the Articles of Incorporation to
eliminate cumulative voting rights should be sent to:
John Clark, President
Southwest Georgia Financial Corporation
201 First Street, S.E.
Moultrie, GA 31768.
A VOTE AGAINST PROPOSAL NO. 4, THE AMENDMENT TO ELIMINATE CUMULATIVE VOTING
RIGHTS, ALONE WILL NOT SATISFY THE REQUIREMENTS FOR THE SEPARATE
WRITTEN NOTICE OF INTENT TO DISSENT TO THE AMENDMENT, THE
SEPARATE WRITTEN DEMAND FOR PAYMENT OF THE FAIR VALUE OF SHARES
OF COMPANY COMMON STOCK AND THE DEPOSIT OF THE STOCK
CERTIFICATES, WHICH ARE REFERRED TO IN CONDITIONS (A) AND (C)
ABOVE. RATHER, A DISSENTING SHAREHOLDER MUST SEPARATELY COMPLY
WITH ALL OF THOSE CONDITIONS.
Within ten days of the later of the date on which Proposal no. 4, the
amendment to the Articles of Incorporation to eliminate
cumulative voting rights, is approved, or receipt of a payment
demand by a shareholder who deposits his stock certificates in
accordance with the dissenters' notice sent to those shareholders
who notify the Company of their intent to dissent and take
appropriate steps to dissent, described in (a), (b) and (c)
above, the Company must offer to pay to each dissenting
shareholder the amount the Company estimates to be the fair value
of the dissenting shareholder's shares, plus accrued interest.
Such offer must be accompanied by:
<PAGE>
(a) The Company's balance sheet as of the end of a fiscal
year ending not more than 16 months before the date of making
payment, an income statement for that year, a statement of
changes in shareholders' equity for that year, and the latest
available interim financial statements, if any;
(b) An explanation of how the interest was calculated;
(c) A statement of the dissenting shareholder's right to
demand payment of a different amount under Section 14-2-1327 of
the Georgia Code; and
(d) A copy of the dissenters' rights provisions of the
Georgia Code.
If the dissenting shareholder accepts the Company's offer by
written notice to the Company within 30 days after the Company's
offer, or is deemed to have accepted the offer by reason of
failing to respond to such offer within such 30-day period, the
Company must make payment for the dissenting shareholder's shares
within 60 days after the making of the offer or the date on which
the amendment to eliminate cumulative voting rights is approved
by shareholders, whichever is later. Upon payment of the agreed
value, the dissenting shareholder will cease to have any interest
in his shares of Common Stock.
If within 30 days after the Company offers payment for the
shares of the dissenting shareholder, the dissenting shareholder
does not accept the Company's estimate of fair value of his
shares and interest due thereon and demands payment of his own
estimate of the fair value of the shares and interest due
thereon, then the Company, within 60 days after receiving the
payment demand of a different amount from a dissenting
shareholder, must file an action in a court of competent
jurisdiction in Colquitt County, Georgia, requesting that the
fair value of such shares be found and determined. The Company
must make all dissenting shareholders whose demands remain
unsettled parties to the proceedings. If the Company does not
commence the proceeding within such 60-day period, it shall be
required to pay each dissenting shareholder whose demand remains
unsettled the amount demanded by the dissenting shareholder who
did not accept the Company's estimate of the fair value of the
shares of Common Stock.
The foregoing does not purport to be a complete statement of
the provisions of the Georgia Code related to statutory
dissenters' rights and is qualified in its entirety by reference
to the dissenters' rights provisions of the Georgia Code, which
are reproduced in full in Appendix A to this Proxy Statement and
which are incorporated herein by reference.
<PAGE>
<PAGE>
AMENDMENTS TO ARTICLES OF INCORPORATION
PROPOSALS 2 THROUGH 8
Introduction
The Board of Directors has approved unanimously all of the amendments
described below (collectively, the "Proposed Amendments") to the Articles of
Incorporation, as amended of the Company (collectively, the "Articles of
Incorporation"),having determined that such amendments are advisable and in the
best interests of the Company and its shareholders. The Proposed Amendments are
set forth in Exhibits A-F attached hereto and are described in detail below.
If the Proposed Amendments are approved by the shareholders, the
amendments as set forth in Exhibits A-F hereto will be reflected in the
Articles of Incorporation. If not all of the amendments proposed hereby are
approved by the shareholders, only those amendments which are approved will be
reflected in the Articles of Incorporation. The Company believes that its
officers and directors will vote shares of Common Stock owned by each of them
in favor of the Proposed Amendments, but it has not polled its officers and
directors about this matter; therefore no assurances can be given in this
regard.
Adoption of the Proposed Amendments could have a significant effect on
the ability of shareholders and the Company to benefit from mergers,
tender offers, acquisitions or assumptions of control which may be
opposed by the incumbent Board of Directors and may render such
transactions more difficult, even if beneficial to some or all
shareholders. Accordingly, before voting, shareholders are urged to read
carefully the following sections of this Proxy Statement which describe
the Proposed Amendments and their purposes and effects. The Company believes
that the following descriptions are complete in all material respects, but
they are are qualified in their entirety by the full text of the Proposed
Amendments to the Articles of Incorporation.
The Proposed Amendments
General. The Proposed Amendments would (i) amend the Company's Articles
of Incorporation to authorize the issuance of 3,000,000 shares of Preferred
Stock $1.00 par value per share; (ii) amend the Company's Articles of
Incorporation to authorize the Board of Directors to consider, in addition to
the effects of any transaction on the Company and its shareholders, the
interests of employees, customers, suppliers and creditors of the Company and
the Bank and the communities in which the Company and the Bank are located, and
any other factors and interests the Board considers appropriate
("constituencies") when evaluating a transaction; (iii) amend the Company's
Articles of Incorporation to eliminate cumulative voting for directors; (iv)
amend the Company's Articles of Incorporation to provide for the limitation of
director liability; (v) amend the Company's Articles of Incorporation to re-
quire the affirmative vote of the holders of 80% of the issued and outstanding
shares entitled to vote thereon to amend the Articles of Incorporation or the
By-Laws of the Company; (vi) amend the Company's Articles of Incorporation to
enact a provision to govern potential business combination transactions with
interested shareholders; and (vii) amend the Company's Articles of
Incorporation to provide that directors can be removed only for cause by the
affirmative vote of the holders of 80% of the issued and outstanding shares
entitled to vote thereon.
Purpose and Effect of the Proposed Amendments. A principal purpose of
the Proposed Amendments is to supplement and strengthen existing
provisions of the Articles of Incorporation and By-Laws and to discourage
certain types of transactions that involve an actual or threatened change
of control of the Company that the Board believes is not in the Company's
best interests. These provisions are intended to make any change in the
control of the Board more difficult and time-consuming and thereby
encourage potential acquirors to negotiate with the Board prior to
commencing any takeover of the Company. The provisions would reduce the
vulnerability of the Company to an unsolicited proposal for the takeover
of the Company which is (i) unfair in that it does not contemplate the
acquisition of all of the outstanding shares or (ii) at a price that is
unfair or under conditions that are unfair. The Board believes that as a
general rule such unsolicited proposals are not in the best interests of
the Company and its shareholders because (i) in cases where a potential
acquiror seeks to acquire less than all shares of a company the acquiror
will often pay a premium for a controlling interest in the company,
without affording all shareholders the opportunity to receive the same
economic benefits; for instance, an acquiror may seek to pay cash to
acquire a controlling interest and then to pay remaining shareholders a
<PAGE>
lower price than paid for the acquisition of control or to pay for such
shares in a less desirable form, (ii) a non-negotiated takeover bid may
be timed to take advantage of temporarily depressed stock prices, and
(iii) a non-negotiated takeover may be designed to foreclose or minimize
the possibility of more favorable competing bids or alternative
transactions. If such provisions are approved, the Board could reject a
transaction that it deems not in the Company's best interest even if
supported by some or all of the shareholders and even if some or all
shareholders are offered a premium for their shares over the then current
market value or over their cost basis in such shares.
The Proposed Amendments are also intended to discourage accumulations of
substantial blocks of the Company's stock and "surprise" takeovers and to
provide management and the Board with sufficient time and information to
evaluate properly takeover or business combination proposals. The Proposed
Amendments should also promote conditions conducive to continuity and
stability of the Board and its management and policies.
The Board believes that it is in a better position to negotiate
effectively on behalf of all shareholders than the individual shareholders of
the Company in that the Board is likely to be more knowledgeable than any
individual shareholder in assessing the business and prospects of the Company.
Accordingly, the Board is of the view that negotiations between the Company
and a potential acquiror would increase the likelihood that shareholders would
receive the best possible price for their shares from anyone desiring to
obtain control of the Company.
Possible Disadvantages of the Proposed Amendments and Other
Considerations. The Proposed Amendments, if adopted, may make more difficult
or discourage a proxy contest or the assumption of control of the Company or
the consummation of a business combination by a holder of a substantial block
of the Company's stock. Adoption of the Proposed Amendments also may make
more difficult the removal of the incumbent Board or the enlargement of the
Board and thus could increase the likelihood that incumbent directors will
retain their position. If adopted, the Proposed Amendments also could have
the effect of discouraging a third party from making a tender offer or
otherwise attempting to obtain control of the Company, even though such an
attempt might be beneficial to the Company and some or all of the
shareholders, and could discourage offers by third parties that may be at a
significant premium to the then-current market value of the Company's Common
Stock. Nevertheless, the Board believes that the benefits of enhancing its
ability to negotiate with the proponent of an unfriendly or unsolicited
proposal to take over or restructure the Company outweigh the disadvantages of
discouraging such proposals.
The proposals are not being submitted in response to any specific effort
of which the Board is aware to accumulate the Company's Common Stock or to
obtain control of the Company. The Board believes, however, that it is
desirable for the shareholders to adopt the Proposed Amendments at this time
to provide the Company with a degree of flexibility in negotiations should
such efforts occur in the future.
The Board believes that the Proposed Amendments will have no material
adverse effect on the present market value of the Company's Common Stock.
Since the 1980's,companies throughout the United States have adopted provisions
in their Articles of Incorporation and bylaws similar to the Proposed
Amendments. As a result, the Board believes shareholders are accustomed to the
adoption of such provisions by companies with respect to which they own equity
interests. The Board believes that its shareholders and the communities in
which the Company does business, generally the market area for its Common Stock
(which is not publicly traded), will not consider the Proposed Amendments, if
adopted, to negatively impact the value of their ownership interests in the
Company.
Proposal No. 2 - Authorization of Preferred Stock
The Board of Directors proposes that Article V of the Company's Articles
of Incorporation amended to authorize the issuance of up to 3,000,000 shares
of Preferred Stock, par value $1.00 per share. The terms of the Preferred
Stock are set forth as Exhibit A to this Proxy Statement and are incorporated
herein by reference. If approved by the shareholders, the Board would have
the authority to issue the Preferred Stock in one or more series and to fix or
alter the designation, powers, preferences, rights, qualifications,
limitations and restrictions of the shares of each such series, including the
dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provision), liquidation
preferences and the number of shares constituting any such series, without any
<PAGE>
further vote or action by the shareholders. The various series of Preferred
Stock, as determined by the Board of Directors from time to time, will not be
required to be on a parity with each other series and to share ratably in the
payment of dividends or as to assets on liquidation. Such determinations will
be made by the Board at the time that it establishes a particular series of
Preferred Stock and will take into account the circumstances pertinent at that
time. Shares of Preferred Stock reacquired by the Company from time to time
could, in the discretion of the Board of Directors, be reissued as shares of
the same or any other series.
The Board believes it is in the best interest of the Company to
establish authority for the issuance of Preferred Stock in order to meet the
possible future developments for which the issuance of such shares may be
desirable, or to provide for future acquisitions of desirable property or
securities of other businesses, or to sell shares for cash under circumstances
in which the Board deems such action to be in the best interest of the Company
and its shareholders, or for other corporate purposes. If authorization of
the Preferred Stock were postponed until specific needs arose, the time and
expense incident to shareholder action on each proposed issuance might deprive
the Company of a degree of flexibility in negotiation, which in the Board's
view is important to an effective use of such shares. Such flexibility will
be available if the shareholders authorize the creation of the new class of
Preferred Stock.
Shares of Preferred Stock could be issued with such rights, privileges
and preferences as would deter a future tender or exchange offer. It is
possible that the unissued shares of Preferred Stock could be used in the
future by the Board of Directors in such a manner as to discourage the
acquisition of control or some other transaction that some, or a majority, of
the shareholders might believe to be in their best interest, or in which the
shareholders might receive a premium for their stock over the market price of
such stock. To the extent that any series of Preferred Stock had conversion
rights, the exercise of such conversion rights could have the effect of
diluting the voting power of persons attempting to gain control of the
Company. The Board of Directors has no present intention to issue shares of
Preferred Stock to implement defensive or anti-takeover devices in the present
environment.
The full text of the proposed amendment to Section V of the Articles of
Incorporation is contained in Exhibit A to the Proxy Statement and is
incorporated herein by reference.
Adoption of the foregoing amendment to the Company's Articles of
Incorporation requires the approval of the holders of a majority of the issued
and outstanding Common Stock. Abstentions and broker non-votes will be
included in determining whether a quorum is present at the meeting, but would
have the effect of votes against the proposal. THE BOARD OF DIRECTORS
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSED AMENDMENT TO THE ARTICLES
OF INCORPORATION. UNLESS A VOTE "AGAINST" OR AN ABSTENTION IS INDICATED ON A
PROXY, THE PROXY WILL BE VOTED "FOR" THE PROPOSAL.
Proposal No. 3 - Authorization For Board of Directors to Consider
Constituencies
The Board of Directors has proposed the adoption of an amendment to the
Company's Articles of Incorporation that allows the Board to consider factors
in addition to the effects of any transaction on the Company and its
shareholders (the "Business Judgment Amendment").
Under present Georgia law, the directors of a corporation are
required to discharge their duties in good faith and with that
degree of diligence, care and skill that ordinarily prudent
men would exercise under similar circumstances in like
positions, whether in accepting or rejecting a solicitation
offer or pursuing other alternatives or defenses. The provisions of the
Company's articles of incorporation and bylaws guide directors in discharging
their duties. Actions taken by directors in accordance with their fiduciary
duties will generally be afforded the protections of the business judgment
rule. Historically, in the takeover context, the board's duty is to endeavor
to achieve the best possible result for its shareholders.
Often, a board may believe that their duties translate into a duty to
maximize the monetary gain of the shareholders although this is not a
requirement under the Georgia Code; a focus on price is often criticized
because it ignores other relevant factors. In order to define more fully
those factors the Board of Directors may consider to determine in good faith
their response to a tender offer or similar proposal, the Business Judgment
<PAGE>
Amendment has been submitted for shareholder approval. In a transaction in
which an acquiror must negotiate with the Board, the Board may take account
of the underlying and long-term values of the Company's business, the
possibilities for more favorable terms, anticipated favorable developments in
the Company's business not yet reflected in the stock price and equal
treatment of all shareholders. By adopting Proposal No. 3, authorization for
the Board to consider constituencies, the shareholders would make it explicit
to potential acquirors that the Board may consider the foregoing factors,
among others, when negotiating with a potential acquiror. Historically, the
Company has not received an unsolicited takeover offer.
If the shareholders adopt the proposed amendment, the Board of Directors
would be expressly authorized, but not required, to consider other factors
when deciding what is in the best interests of the Company and its
shareholders. This expanded business judgment could be utilized by the Board
when deciding whether to accept, reject, or investigate a proposal or offer
for the Company or its securities. These factors could include, without
limitation, the interests of the employees, customers, suppliers and creditors
of the Company and its subsidiary, the communities in which offices of the
Company and its subsidiary are located and all other factors which the Board
considers appropriate. Additional factors could include, but would not be
limited to factors such as the adequacy of the purchase price compared not
only to the then-current market price, but also to the directors' estimates of
the future value of the Company, and the short-term and long-term interests of
the Company, including the possibility that the best interests of the Company
may be served by remaining independent from any other entity.
The Business Judgment Amendment could deter offers made directly to the
shareholders or the Company or result in the Board of Directors' rejecting an
offer or transaction that would provide shareholders a premium on their
investment. The adoption of this proposal could result in the Board of
Directors' justifying the rejection of business combination proposals
considered favorable by the shareholders on the grounds that the "other
factors considered" outweigh the short-term profit potential of the
acquisition proposal. On the other hand, this proposal frees the Board to
consider a broad range of criteria when carrying out their duties to the
Company and its shareholders, rather than being constrained by shareholder
monetary benefit. The Board believes that the Company and the shareholders
are best served by a full consideration of a broader spectrum of ramifications
on the Company's business, rather than restricting the scope of the Board's
inquiry.
While value to shareholders is a very important factor when weighing the
benefits of a proposal, the Board of Directors believes it appropriate also to
consider other relevant factors. For example, a takeover bid often places the
target company in the position of making a forced sale, sometimes when the
market price of its stock may be temporarily depressed. The Board of
Directors believes that frequently the consideration offered in such a
situation, even though it may be in excess of the then market price, is less
than that which could be obtained in a freely negotiated transaction.
Management, in a freely negotiated transaction, on the other hand, would have
the opportunity to seek a suitable partner at a time of its choosing and to
negotiate for the most favorable price and terms which reflect not only the
current but also the future value of the Company. If the Business Judgment
Amendment is approved by shareholders, the Board of Directors could consider
such factors.
The Board of Directors also believes that adoption of the Business
Judgment Amendment may create an attitude of confidence on the part of its
employees and customers which will be of immediate benefit to the Company. In
the opinion of the Board of Directors, approval of the Business Judgment
Amendment will strengthen its position in dealing with the Company's business.
Another effect of the proposed Business Judgment Amendment may be to dissuade
shareholders from engaging the Company in costly litigation when such
shareholders are displeased with Board action. Such litigation might require
significant management time, and, for example, might otherwise involve an
allegation by a shareholder that the Board of Directors breached an obligation
to shareholders by not limiting its evaluation of a takeover bid to the value
of the consideration being offered in relation to the then market price.
Litigation could be deterred because the Business
Judgment Amendment, by broadening the range of factors the
Board of Directors may consider when evaluating a proposal,
reduces the number of issues upon which a shareholder is
likely to be successful in a lawsuit alleging that the Board
of Directors violated its duties. The Board of Directors
believes that the Business Judgment Proposal would not deter
legitimate shareholder lawsuits, but instead would only deter
lawsuits where the only issue is the price of an offer or
similar transaction.
<PAGE>
Another effect of the proposed amendment may be to discourage, in
advance, a tender offer or other proposal. The Business Judgment Amendment
would not make a tender offer or similar transaction regarded by the Board of
Directors as being in the best interests of the Company more difficult to
accomplish. However, it would permit the Board of Directors to determine that
a proposed transaction was not in the best interests of the Company (and thus
to oppose it) on the basis of the various factors deemed relevant. In some
cases, such opposition by the Board of Directors might have the effect of
maintaining the position of incumbent management.
The full text of the proposed amendment to the Articles of Incorporation
is contained in Exhibit B to the Proxy Statement and is incorporated herein by
reference.
Adoption of the foregoing amendment to the Company's Articles of
Incorporation requires the approval of the holders of a majority of the issued
and outstanding shares of Common Stock. Abstentions and broker non-votes
will be included in determining whether a quorum is present at the meeting,
but would have the effect of votes against the proposal. THE BOARD OF
DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSED AMENDMENT TO
THE ARTICLES OF INCORPORATION TO AUTHORIZE BOARD OF DIRECTORS TO CONSIDER
CONSTITUENCIES. UNLESS A VOTE "AGAINST" AN ABSTENTION IS INDICATED ON A
PROXY, THE PROXY WILL BE VOTED "FOR" THE PROPOSAL.
Proposal No. 4. - Elimination of Cumulative Voting Rights
The shareholders are being requested to approve an amendment to the
Company's Articles of Incorporation to eliminate cumulative voting in the
election of directors. Currently, the Articles of Incorporation provide for
cumulative voting rights. In an election of directors governed by cumulative
voting rights, the shareholders are entitled to multiply the number of votes
they are entitled to cast by the number of directors for whom they are
entitled to vote and cast the product for a single candidate or distribute the
product among two or more candidates.
Currently, to ensure the right to elect one board member through
cumulative voting, a shareholder must control one more share than the total
number of voting shares divided by the number of directors to be elected plus
one, or 1 + V/(D+1), where V is the number of voting shares, and D is the
number of directors to be elected. Therefore, using cumulative voting,
assuming that 12 directors are to be elected, and assuming all 1,277,421
of the currently issued and outstanding shares of the Company are voted, a
shareholder must control 98,264 shares to ensure the right to elect one
director. This amount is equal to approximately 7.69 percent of the total
number of outstanding shares of the Company. If cumulative voting is
eliminated, a shareholder would have to control greater than 50 percent of
the total number of shares voting in order to ensure the right to elect one or
more board member.
If the proposal is adopted, in all future elections of the Board of
Directors holders of a plurality of the shares actually voted (assuming that a
quorum is present) will be able to elect all of the directors being elected at
the time. The elimination of cumulative voting is not a departure from
the manner in which the Company's directors have been elected in the past.
Although the Company's Articles of Incorporation have always permitted
cumulative voting,such voting has never been used in the election of a
director to the Company's board. The elimination of cumulative voting will
make it more difficult for a minority shareholder or shareholders to obtain
representation on the Board of Directors without the concurrence of holders of a
majority of the shares. In addition, the proposal can function as an
anti-takeover device. It may under certain circumstances discourage or render
more difficult a merger, tender offer or proxy contest or discourage the
acquisition of large blocks of the Company's shares by persons who would not
make such an acquisition without assurances of the ability to attain
representation on the Board of Directors. On the other hand, the Board
believes that each director should represent the interests of all shareholders,
and that the presence on the Board of Directors of one or more directors
representing the interests of a minority shareholder or group of shareholders
could prevent the Company from operating in the most effective manner.
The proposal to eliminate cumulative voting is not in response to any
effort by a minority shareholder or group of shareholders to attain
representation on the Board of Directors or acquire greater influence in the
management of the Company's business, nor is the Company aware of any such
effort. Furthermore, it is not in response to any attempt to acquire control
of the Company, nor is the Company aware of any such attempt.
<PAGE>
The proposed amendment to the Articles of Incorporation would delete in
its entirety Article VI of the Articles of Incorporation, as amended. Proposal
no. 4 gives rise to dissenters' rights. See "Dissenters' Rights" above.
Adoption of the foregoing amendment to the Company's Articles of
Incorporation requires the approval of the holders of a majority of the issued
and outstanding shares of Common Stock. Abstentions and broker non-votes
will be included in determining whether a quorum is present at the meeting,
but would have the effect of votes against the proposal. THE BOARD OF
DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSED AMENDMENT TO
THE ARTICLES OF INCORPORATION TO ELIMINATE CUMULATIVE VOTING IN THE ELECTION
OF DIRECTORS. UNLESS A VOTE "AGAINST" OR AN ABSTENTION IS INDICATED ON A
PROXY, THE PROXY WILL BE VOTED "FOR" THE PROPOSAL.
Proposal No. 5 - Limitation of Director Liability
The Board of Directors recommends that the shareholders adopt an
amendment to the Articles of Incorporation to limit, as allowed since 1989 by
the Georgia Business Corporation Code (the "Georgia Code"), director liability
for monetary damages to the Company, as described below. Under the present
provisions of the Company's Articles of Incorporation, there is no limitation
on the liability of directors. While adoption of the proposed amendment
affects the potential liability of members of the current Board of Directors,
and the current members are, therefore, interested in its adoption, the Board
is of the view that the proposed amendment is important to help assure the
ability of the Company to recruit and retain competent directors. The
Bank has in place a limitation on director liability to
the fullest extent allowed by the Georgia Financial Institutions Code,
although Georgia law does not allow for a limitation on liability to the
banking subsidiary.
Georgia law requires directors to discharge their duties in a manner
they believe in good faith to be in the best interest of the corporation, and
with the care which an ordinarily prudent person in a like position would
exercise under similar circumstances under the current Articles of the
Company, an action may be brought against a director for breach of his duties
by a shareholder in a derivative action on behalf of the corporation. Should
the Board of Directors fail to exercise such care, the Board's actions could
be enjoined or rescinded by court order or the directors could be personally
sued for damages.
Pursuant to Georgia law, the amendment would eliminate or limit the
personal liability of a director to the Company or its shareholders for mone-
tary damages for breach of the duty of care or other duty as a director. As
provided by law, the amendment would not eliminate or limit the
liability of a director for appropriating, in violation of his duties, any
business opportunity of the Company, engaging in intentional misconduct or a
knowing violation of law, obtaining an improper personal benefit, or
authorizing a dividend, stock repurchase or redemption or a distribution of
assets that is illegal under Section 14-2-832 of the Georgia Code. Therefore,
even if the proposed amendment were adopted, liability for monetary damages on
any of these grounds would still exist. Liability for monetary damages for
violations of federal securities laws would also be unaffected. Furthermore,
the proposed amendment would not limit or eliminate the right of the Company
or any shareholder to seek an injunction, a rescission or any other equitable
(non-monetary) relief in the event of a breach of a director's fiduciary
duties. In addition, pursuant to Georgia law, the amendment may not
eliminate or limit the liability of any director for any act
or omission that occurred prior to the date on which the
amendment is approved by shareholders.
The Board believes that the amendment to eliminate director's potential
liability for monetary damages to the Company is desirable due to
significant increases in the number and magnitude of lawsuits against
directors. Although the Company has been able to attract and retain
directors, obtain directors' liability insurance and there has been no actual
or threatened litigation involving the Company's directors, the Board
nevertheless believes that these changes may threaten the quality and
stability of the governance of the Company because directors may be deterred
from serving or from making entrepreneurial decisions because of the threat of
personal liability.
While the Board believes that the amendment is in the best interest of
the shareholders as outlined herein as well as the Company, such an amendment
will limit the remedies available to a shareholder dissatisfied with Board
decisions protected by the amendment, including responses to any takeover
proposals for the Company. A shareholder's only remedy under the Georgia Code
<PAGE>
in such circumstances would be to sue to stop the completion of the Board's
action if the proposed amendment were adopted. In many instances, this remedy
may not be effective. Shareholders, for example, may not be aware of a
transaction or an event until it is too late to be prevented. In these cases,
shareholders in the Company could be injured by, and yet have no effective
remedy under the Georgia Code for, a Board decision which is negligent or even
grossly negligent, to the extent that such negligence is not deemed to
constitute intentional misconduct. In addition, although the Board
anticipates that the amendment may have positive effects outlined above, no
assurances can be given that such results would be achieved.
The Board believes that the level of fiduciary responsibility exercised
by directors stems primarily from their desire to act in the best interests of
the Company. Consequently, the Board believes that the level of fiduciary
responsibility exercised by directors will not be diminished by the proposed
amendment to limit director's liability.
The full text of the proposed amendment to the Articles of Incorporation
is contained in Exhibit C to the Proxy Statement and is incorporated herein by
reference.
Adoption of the foregoing amendment to the Company's Articles of
Incorporation requires the approval of the holders of a majority of the issued
and outstanding shares of Common Stock. Abstentions and broker non-voters
will be included in determining whether a quorum is present at the meeting,
but would have the effect of votes against the proposal. The Board of
Directors recommends that shareholders vote "FOR" the proposed amendment to
the Articles of Incorporation to limit the personal monetary liabilities of
the directors, as described above. Unless indicated otherwise, proxies will
be voted "FOR" the proposal.
Proposal 6 - Amendment to Articles of Incorporation to Require Vote of
Holders of 80% of the Issued and Outstanding Shares Entitled to Vote Thereon
to Amend Articles of Incorporation or By-Laws.
The Board of Directors proposes that the shareholders adopt an amendment
to the Company's Articles of Incorporation that would specifically provide
that the neither the Articles of Incorporation nor the By-Laws of the Company
can be amended without the affirmative vote the holders of 80% of the shares
issued and outstanding and entitled to vote thereon. The Georgia Code
provides that unless the Articles of Incorporation provide otherwise, the
Articles of Incorporation and the By-Laws can be amended by the affirmative
vote of the holders of a majority of the shares issued and outstanding. This
provision would protect defensive measures included in the Articles or By-
Laws, including the ones proposed for shareholder approval at the annual
meeting, by making more difficult future amendments to the Articles of
Incorporation or the By-Laws that could result in the deletion or revision of
such defensive measures. At the 1995, 1994 and 1993 annual meetings of
shareholders, 83.2%, 83.9% and 81%, respectively, of the issued and
outstanding shares of common stock were voted at the meetings.
The proposal, however, could allow the holders of 21% of the outstanding
capital stock to exercise an effective veto over a proposed amendment to the
Articles of Incorporation or the By-Laws, despite the fact that the holders of
79% of the shares favor the proposal; however, the Board believes that the
protection gained by implementing the proposal would outweigh this potential
disadvantage, because, without the implementation of this amendment, a
potential hostile acquiror could effectively overturn all protective aspects
of the Articles of Incorporation and the By-Laws merely by obtaining 51% of
the outstanding shares entitled to vote thereon.
The full text of the proposed amendment to the Articles of Incorporation
is contained in Exhibit D to the Proxy Statement and is incorporated herein by
reference.
Adoption of the foregoing amendment to the Company's Articles of
Incorporation requires the approval of the holders of a majority of the issued
and outstanding shares of Common Stock. Abstentions and broker non-votes will
be included in determining whether a quorum is present at the meeting, but
would have the effect of votes against the proposal. THE BOARD OF DIRECTORS
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSED AMENDMENT TO THE ARTICLES
OF INCORPORATION TO REQUIRE THE AFFIRMATIVE VOTE OF THE HOLDERS OF 80% OF THE
OUTSTANDING SHARES ENTITLED TO VOTE THEREON TO AMEND THE ARTICLES OF
INCORPORATION OR THE BY-LAWS OF THE COMPANY. UNLESS A VOTE "AGAINST" OR AN
ABSTENTION IS INDICATED ON A PROXY, THE PROXY WILL BE VOTED "FOR" THE PROPOSAL.
Proposal 7 - Amendment to Articles of Incorporation to require prior approval
of 75% of the Board or a 75% vote of all shares and a 75% vote of
disinterested shares for a business combination with an interested
shareholder.
<PAGE>
The Board of Directors recommends that a new Article IX be added to the
Company's Articles of Incorporation. Proposed Article IX (the "Supermajority
Amendment") would require that certain procedural safeguards for the
protection of noncontrolling shareholders be observed by an Interested
Shareholder (as defined below) seeking to effect certain business
combinations. Under the Supermajority Amendment, if a proposed Business
Combination (as defined below) is not approved by three-fourths of all
directors, the Business Combination must be approved by the affirmative vote
of the holders of at least 75% of the outstanding shares of Common Stock of
the Company, including the affirmative vote of the holders of at least 75% of
the outstanding shares of Common Stock held by shareholders other than the
controlling shareholder.
Increase of Shareholder Vote for Certain Business Combinations. At the
present time, Georgia law and the Company's Articles of Incorporation require
that after the Board of Directors (i) adopts a plan of merger or share
exchange or (ii) approves the sale, lease, exchange or other disposition of
all or substantially all of the Company's property, such plan of merger or
share exchange or disposition of property must be approved by the vote of the
holders of at least a majority of the outstanding common stock of the Company
(except that (i) a parent corporation owning at least 90 percent of the
outstanding shares of each class of a subsidiary corporation may merge the
subsidiary into itself or (ii) if the Company is insolvent the Board of
Directors may approve the sale, lease, exchange or other disposition of all or
substantially all of the Company's property without approval of any
shareholders). Other business combinations do not require shareholder
approval under Georgia law or the Company's present Articles of
Incorporation. The Supermajority Amendment would require the approval of
the holders of at least 75% of the outstanding shares of Common Stock of the
Company, including the affirmative vote of the holders of at least 75% of
the outstanding shares of Common Stock other than shares held by an Interested
Shareholder (the "75%/75% shareholder vote") for a Business Combination
involving an Interested Shareholder, unless the transaction is approved
by three-fourths of all directors. In the event the transaction is so
approved by the directors, the normal majority requirements of Georgia law
would apply or, for certain transactions as noted above, no shareholder
vote would be necessary. Thus, depending upon the circumstances, the
Supermajority Amendment could require the 75%/75% shareholder vote for a
business combination involving an Interested Shareholder, where presently
(as described above), either a majority vote or no vote is presently required
under Georgia law or the Company's Articles of Incorporation.
A "Business Combination" includes:
(i) any merger or consolidation of the Company or any Subsidiary (as defined
in Exhibit E) with (a) any Interested Shareholder or (b) any other corporation
(whether or not itself an Interested Shareholder) which is, or after such
merger or consolidation would be, an Affiliate (as defined in Exhibit E) of an
Interested Shareholder which is, or after such merger or consolidation would
be, an Affiliate or an Interested Shareholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any
Interested Shareholder or any Affiliate of any Interested Shareholder of any
assets of the Company or any Subsidiary having an aggregate Fair Market Value
(as hereinafter defined) of $1,000,000 or more; or
(iii) the issuance or transfer by the Company or any Subsidiary (in one
transaction or a series of transactions) of any securities of the Company or
any Subsidiary to any Interested Shareholder or any Affiliate of any
Interested Shareholder in exchange for cash, securities or other property (or
a combination thereof) having an aggregate Fair Market Value of $1,000,000 or
more; or
(iv) the adoption of any plan or proposal for the liquidation or dissolution
of the Company proposed by or on behalf of an Interested Shareholder or any
Affiliate of any Interested Shareholder; or
(v) any reclassification of securities (including any reverse stock split),
or recapitalization of the Company, or any merger or consolidation of the
Company with any of its Subsidiaries or any other transaction (whether or not
with or into or otherwise involving an Interested Shareholder) which has the
effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities of the
Company or any Subsidiary which is directly or indirectly owned by any
Interested Shareholder or any Affiliate of any Interested Shareholder.
An "Interested Shareholder" will include any person (other than the
Company, any Subsidiary or either the Company or any Subsidiary acting as
trustee or in a similar fiduciary capacity) who or which:
<PAGE>
(i) is the beneficial owner of more than 10% of the outstanding Common
Stock; or
(ii) is an Affiliate of the Company and at any time within the two-year
period immediately prior to the date in question was the beneficial owner,
directly or indirectly, of 10% or more of the then outstanding Common Stock;
or
(iii) acquired any shares of Common Stock which were at any time within the
two-year period immediately prior to the date in question beneficially owned
by any Interested Shareholder, if such acquisition shall have occurred in the
course of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1993.
Exceptions to the Supermajority Requirements. The 75%/75% shareholder
vote would not be required if the transaction is approved by three-fourths of
all directors.
One purpose of proposed Article IX is to discourage attempts by other
corporations or groups to acquire control of the Company, without negotiation
with management, through the acquisition of a substantial number of shares of
the Company's stock followed by a forced merger. The Board of Directors
believes that such a merger generally is not in the best interests of the
Company or its shareholders because such transactions often treat minority
shareholders unfairly. Such forced mergers may result in noncontrolling
shareholders being cashed out at a price less than that paid to holders of
a controlling interest in the Company or the consideration paid to
shareholders in a forced merger might be illiquid securities. The Board
currently believes that a transaction that is fair to all shareholders
would be priced at a level in and a form of consideration and undertaken at a
time that takes into account all of the Company's constituencies as well
as the short and long term prospects for the Company, as well as all other
factors relevant at the time.
A merger transaction effected without negotiations with the Board
of Directors might be in the interests of shareholders where management
refuses to consider a legitimate business combination transaction. The
Supermajority Amendment would make it more difficult to effect such a merger
and may therefore discourage any attempt to do so. Proposed Article IX would
also serve to reduce the danger of possible conflicts of interest between the
Interested Shareholder on the one hand and the Company and its other
shareholders on the other.
Shareholders should recognize that adoption of the Supermajority
Amendment could enable a minority of the shareholders of the Company to
prevent a transaction favored by a majority of the shareholders.
Additionally, in some circumstances, the Board of Directors could, by
withholding its consent to such a transaction, cause the 75%/75% shareholder
vote to be required to approve the transaction, thereby enabling management to
retain control over the affairs of the Company and their present positions
with the Company.
Tender offers or other nonopen market acquisitions of stock are usually
made at prices above the prevailing market price of a company's stock. In
addition, acquisitions of stock by persons attempting to acquire control
through market purchases may cause the market price of the stock to reach
levels which are higher than would otherwise be the case. The Supermajority
Amendment may discourage such purchases, particularly those of less than all
the Company's shares, and may thereby deprive holders of the Company's stock
of an opportunity to sell their stock at a temporarily higher price, because
of the potentially higher vote requirements for shareholder approval of any
subsequent Business Combination. The Supermajority Amendment may therefore
decrease the likelihood that a tender offer will be made and, as a result, may
adversely affect the shareholders who would desire to participate in a tender
offer.
Another effect of adoption of the Supermajority Amendment would be to
give veto power to the holders of a majority of the outstanding Common Stock
with respect to a Business Combination which is opposed by the directors, but
which a majority of shareholders may believe to be desirable and beneficial.
In addition, since only the directors would have the authority to eliminate
the 75%/75% shareholder vote required by the Supermajority Amendment through
their power to approve Business Combinations, the Supermajority Amendment may
tend to insulate current management against the possibility of a takeover bid
which would result in their removal.
The full text of the proposed amendment to the Articles of Incorporation
is contained in Exhibit E to the Proxy Statement and is incorporated herein by
reference.
<PAGE>
Adoption of the foregoing amendment to the Company's Articles of
Incorporation requires the approval of the holders of a majority of the issued
and outstanding shares of Common Stock. Abstentions and broker non-votes
will be included in determining whether a quorum is present at the meeting,
but would have the effect of votes against the proposal. THE BOARD OF
DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE SUPERMAJORITY PROVISION
OF SECTION IX OF THE ARTICLES OF INCORPORATION. UNLESS A VOTE "AGAINST" OR AN
ABSTENTION IS INDICATED ON A PROXY, THE PROXY WILL BE VOTED "FOR" THE PROPOSAL.
Proposal 8 - Removal of Directors only for Cause Upon Approval of Holders of
80% of Outstanding Shares Entitled to Vote Thereon.
The Board of Directors recommends that shareholders adopt an amendment
to the Articles of Incorporation to provide that any director or the entire
board of directors may only be removed for cause upon the approval of the
holders of 80% of the outstanding shares entitled to vote thereon, as allowed
by the Georgia Code. The Company's Articles of Incorporation and Bylaws
currently provide that the holders of a majority of the issued and outstanding
Common Stock can remove a director without cause.
This proposal is designed to prevent a significant shareholder from
avoiding Board scrutiny of a proposed business combination by merely removing
directors with conflicting views. This proposal is similar to Proposal No. 6,
also being considered at the annual meeting, which requires an 80% vote to
amend the Company's Articles of Incorporation or By-laws. Both proposals are
designed to ensure the effective use of the protective measures such as the
Business Judgment Amendment and the Supermajority Amendment. This provision
would encourage individuals or groups who desire to propose takeover bids or
similar transactions to negotiate with the Board of Directors. This amendment
would make it more difficult for the shareholders to remove a member of the
Board of Directors than to elect one.
The addition of the "for cause" requirement to remove a director means that
the shareholders must have some expressed reason to remove the director.
These reasons could include, but would not be limited to, finding that the
director committed some action harmful to the Company or committed a
crime or some action involving fraud, dishonesty, gross negligence, willful
misconduct, moral turpitude.
The potential disadvantage of this provision is that outside of the
context of an acquisition attempt, it may make serve as an impediment to a
more legitimate need to remove a director; however this disadvantage is
lessened because shareholders may elect the full Board at the annual meeting
each year by a plurality vote. Thus, if a significant shareholder nominates
directors in accordance with procedures in the bylaws he could elect new
members of the Board at an annual meeting. Additionally, under the proposed
amendment, a director could retain his or her position on the Board of
Directors despite the fact that 79.9% of the shareholders may support his or
her removal.
The full text of the proposed amendment to the Articles of Incorporation
is contained in Exhibit F to the Proxy Statement and is incorporated herein by
reference.
Adoption of the foregoing amendment to the Company's Articles of
Incorporation requires the approval of the holders of a majority of the issued
and outstanding shares of Common Stock. Abstentions and broker non-votes will
be included in determining whether a quorum is present at the meeting, but
would have the effect of votes against the proposal. THE BOARD OF DIRECTORS
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSED AMENDMENT TO THE ARTICLES
OF INCORPORATION TO PROVIDE THAT DIRECTORS CAN BE REMOVED ONLY FOR CAUSE BY
THE AFFIRMATIVE VOTE OF HOLDERS OF 80% OF THE OUTSTANDING SHARES ENTITLED TO
VOTE THEREON. UNLESS A VOTE "AGAINST" OR AN ABSTENTION IS INDICATED ON A
PROXY, THE PROXY WILL BE VOTED "FOR" THE PROPOSAL.
<PAGE>
INFORMATION CONCERNING THE COMPANY'S ACCOUNTANTS
Draffin & Tucker was the principal independent public accountant for the
Company during the year ended December 31, 1995. Representatives of Draffin &
Tucker are expected to be present at the annual meeting and will have the
opportunity to make a statement if they desire to do so and to respond to
appropriate questions. The Company anticipates that Draffin & Tucker will be
the Company's accountants for the current fiscal year.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's 1997
Annual Meeting of Shareholders must be received by November 14, 1996, in order
to be eligible for inclusion in the Company's Proxy Statement and Proxies for
that meeting.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
Management of the Company knows of no matters other than those stated
above that are to be brought before the meeting. If any other matters should
be presented for consideration and voting, however, it is the intention of the
persons named as proxies in the enclosed Proxy to vote in accordance with
their judgment as to what is in the best interest of the Company.
By order of the Board of Directors,
John H. Clark
President
April 22, 1996
<PAGE>
<PAGE>
APPENDIX A
Georgia Dissenters' Rights Statutes
14-2-1301. Definitions.
As used in this article, the term:
(1) "Beneficial shareholder" means the person who is a
beneficial owner of shares held in a voting trust or by a nominee
as the record shareholder.
(2) "Corporate action" means the transaction or other
action by the corporation that creates dissenters' rights under
Code Section 14-2-1302.
(3) "Corporation" means the issuer of shares held by a
dissenter before the corporate action, or the surviving or
acquiring corporation by merger or share exchange of that issuer.
(4) "Dissenter" means a shareholder who is entitled to
dissent from corporate action under Code Section 14-2-1302 and
who exercises that right when and in the manner required by Code
Sections 14-2-1320 through 14-2-1327.
(5) "Fair value," with respect to a dissenter's shares,
means the value of the shares immediately before the effectuation
of the corporate action to which the dissenter objects, excluding
any appreciation or depreciation in anticipation of the corporate
action.
(6) "Interest" means interest from the effective date of
the corporate action until the date of payment, at a rate that is
fair and equitable under all the circumstances.
(7) "Record shareholder" means the person in whose name
shares are registered in the records of a corporation or the
beneficial owner of shares to the extent of the rights granted by
a nominee certificate on file with a corporation.
(8) "Shareholder" means the record shareholder or the
beneficial shareholder. (Code 1981, Section 14-2-1301, enacted
by Ga. L. 1988, p. 1070, Section 1; Ga. L. 1993, p. 1231, Section
16.)
14-2-1302. Right to dissent.
(a) A record shareholder of the corporation is entitled to
dissent from, and obtain payment of the fair value of his shares
in the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the
corporation is a party:
(A) If approval of the shareholders of the
corporation is required for the merger by Code Section
14-2-1103 or the articles of incorporation and the
shareholder is entitled to vote on the merger; or
(B) If the corporation is a subsidiary that is
merged with its parent under Code Section 14-2-1104;
(2) Consummation of a plan of share exchange to which
the corporation is a party as the corporation whose shares
will be acquired, if the shareholder is entitled to vote on
the plan;
(3) Consummation of a sale or exchange of all or
substantially all of the property of the corporation if a
shareholder vote is required on the sale or exchange
pursuant to Code Section 14-2-1202, but not including a sale
pursuant to court order or a sale for cash pursuant to a
plan by which all or substantially all of the net proceeds
of the sale will be distributed to the shareholders within
one year after the date of sale;
<PAGE>
(4) An amendment of the articles of incorporation that
materially and adversely affects rights in respect of a
dissenter's shares because it:
(A) Alters or abolishes a preferential right of
the shares;
(B) Creates, alters, or abolishes a right in
respect of redemption, including a provision respecting
a sinking fund for the redemption or repurchase, of the
shares;
(C) Alters or abolishes a preemptive right of the
holder of the shares to acquire shares or other
securities;
(D) Excludes or limits the right of the shares to
vote on any matter, or to cumulate votes, other than a
limitation by dilution through issuance of shares or
other securities with similar voting rights;
(E) Reduces the number of shares owned by the
shareholder to a fraction of a share if the fractional
share so created is to be acquired for cash under Code
Section 14-2-604; or
(F) Cancels, redeems, or repurchases all or part
of the shares of the class; or
(5) Any corporate action taken pursuant to a
shareholder vote to the extent that Article 9 of this
chapter, the articles of incorporation, bylaws, or a
resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain
payment for their shares.
(b) A shareholder entitled to dissent and obtain payment
for his shares under this article may not challenge the corporate
action creating his entitlement unless the corporate action fails
to comply with procedural requirements of this chapter or the
articles of incorporation or bylaws of the corporation or the
vote required to obtain approval of the corporate action was
obtained by fraudulent and deceptive means, regardless of whether
the shareholder has exercised dissenter's rights.
(c) Notwithstanding any other provision of this article,
there shall be no right of dissent in favor of the holder of
shares of any class or series which, at the record date fixed to
determine the shareholders entitled to receive notice of and to
vote at a meeting at which a plan of merger or share exchange or
a sale or exchange of property or an amendment of the articles of
incorporation is to be acted on, were either listed on a national
securities exchange or held of record by more than 2,000
shareholders, unless:
(1) In the case of a plan of merger or share exchange,
the holders of shares of the class or series are required
under the plan of merger or share exchange to accept for
their shares anything except shares of the surviving
corporation or another publicly held corporation which at
the effective date of the merger or share exchange are
either listed on a national securities exchange or held of
record by more than 2,000 shareholders, except for scrip or
cash payments in lieu of fractional shares; or
(2) The articles of incorporation or a resolution of
the board of directors approving the transaction provides
otherwise. (Code 1981, Section 14-2-1302, enacted by Ga. L.
1988, p. 1070, Section 1; Ga. L. 1989, p. 946, Section 58.)
<PAGE>
14-2-1303. Dissent by nominees and beneficial owners.
A record shareholder may assert dissenters' rights as
to fewer than all the shares registered in his name only if he
dissents with respect to all shares beneficially owned by any one
beneficial shareholder and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this
Code section are determined as if the shares as to which he
dissents and his other shares were registered in the names of
different shareholders. (Code 1981, Section 14-2-1303, enacted by
Ga. L. 1988, p. 1070, Section 1.)
14-2-1320. Notice of dissenters' rights.
(a) If proposed corporate action creating dissenters'
rights under Code Section 14-2-1302 is submitted to a vote at a
shareholders' meeting, the meeting notice must state that
shareholders are or may be entitled to assert dissenters' rights
under this article and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under
Code Section 14-2-1302 is taken without a vote of shareholders,
the corporation shall notify in writing all shareholders entitled
to assert dissenters' rights that the action was taken and send
them the dissenters' notice described in Code Section 14-2-1322
no later than ten days after the corporate action was taken.
(Code 1981, Section 14-2-1320, enacted by Ga. L. 1988, p. 1070,
Section 1; Ga. L. 1993, p. 1231, Section 17.)
14-2-1321. Notice of intent to demand payment.
(a) If proposed corporate action creating dissenters'
rights under Code Section 14-2-1302 is submitted to a vote at a
shareholders' meeting, a record shareholder who wishes to assert
dissenters' rights:
(1) Must deliver to the corporation before the vote is
taken written notice of his intent to demand payment for his
shares if the proposed action is effectuated; and
(2) Must not vote his shares in favor of the proposed
action.
(b) A record shareholder who does not satisfy the
requirements of subsection (a) of this Code section is not
entitled to payment for his shares under this article. (Code
1981, Section 14-2-1321, enacted by Ga. L. 1988, p. 1070, Section
1.)
14-2-1322. Dissenters' notice.
(a) If proposed corporate action creating dissenters'
rights under Code Section 14-2-1302 is authorized at a
shareholders' meeting, the corporation shall deliver a written
dissenters' notice to all shareholders who satisfied the
requirements of Code Section 14-2-1321.
(b) The dissenters' notice must be sent no later than ten
days after the corporate action was taken and must:
(1) State where the payment demand must be sent and
where and when certificates for certificated shares must be
deposited;
(2) Inform holders of uncertificated shares to what
extent transfer of the shares will be restricted after the
payment demand is received;
(3) Set a date by which the corporation must receive
the payment demand, which date may not be fewer than 30 nor
more than 60 days after the date the notice required in
subsection (a) of this Code section is delivered; and
<PAGE>
(4) Be accompanied by a copy of this article. (Code
1981, Section 14-2-1322, enacted by Ga. L. 1988, p. 1070,
Section 1.)
14-2-1323. Duty to demand payment.
(a) A record shareholder sent a dissenters' notice
described in Code Section 14-2-1322 must demand payment and
deposit his certificates in accordance with the terms of the
notice.
(b) A record shareholder who demands payment and deposits
his shares under subsection (a) of this Code section retains all
other rights of a shareholder until these rights are cancelled or
modified by the taking of the proposed corporate action.
(c) A record shareholder who does not demand payment or
deposit his share certificates where required, each by the date
set in the dissenters' notice, is not entitled to payment for his
shares under this article. (Code 1981, Section 14-2-1323,
enacted by Ga. L. 1988, p. 1070, Section 1.)
14-2-1324. Share restrictions.
(a) The corporation may restrict the transfer of
uncertificated shares from the date the demand for their payment
is received until the proposed corporate action is taken or the
restrictions released under Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted as
to uncertificated shares retains all other rights of a
shareholder until these rights are cancelled or modified by the
taking of the proposed corporate action. (Code 1981, Section 14-
2-1324, enacted by Ga. L. 1988, p. 1070, Section 1.)
14-2-1325. Offer of payment.
(a) Except as provided in Code Section 14-2-1327, within
ten days of the later of the date the proposed corporate action
is taken or receipt of a payment demand, the corporation shall by
notice to each dissenter who complied with Code Section 14-2-1323
offer to pay to such dissenter the amount the corporation
estimates to be the fair value of his or her shares, plus accrued
interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a
fiscal year ending not more than 16 months before the date
of payment, an income statement for that year, a statement
of changes in shareholders' equity for that year, and the
latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the
fair value of the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand
payment under Code Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by
written notice to the corporation within 30 days after the
corporation's offer or is deemed to have accepted such offer by
failure to respond within said 30 days, payment for his or her
shares shall be made within 60 days after the making of the offer
or the taking of the proposed corporate action, whichever is
later. (Code 1981, Section 14-2-1325, enacted by Ga. L. 1988, p.
1070, Section 1; Ga. L. 1989, p. 946, Section 59; Ga. L. 1993, p.
1231, Section 18.)
<PAGE>
14-2-1326. Failure to take action.
(a) If the corporation does not take the proposed action
within 60 days after the date set for demanding payment and
depositing share certificates, the corporation shall return the
deposited certificates and release the transfer restrictions
imposed on uncertificated shares.
(b) If, after returning deposited certificates and
releasing transfer restrictions, the corporation takes the
proposed action, it must send a new dissenters' notice under Code
Section 14-2-1322 and repeat the payment demand procedure. (Code
1981, Section 14-2-1326, enacted by Ga. L. 1988, p. 1070, Section
1; Ga. L. 1990, p. 257, Section 20.)
14-2-1327. Procedure if shareholder dissatisfied with payment or
offer.
(a) A dissenter may notify the corporation in writing of
his own estimate of the fair value of his shares and amount of
interest due, and demand payment of his estimate of the fair
value of his shares and interest due, if:
(1) The dissenter believes that the amount offered
under Code Section 14-2-1325 is less than the fair value of
his shares or that the interest due is incorrectly
calculated; or
(2) The corporation, having failed to take the
proposed action, does not return the deposited certificates
or release the transfer restrictions imposed on
uncertificated shares within 60 days after the date set for
demanding payment.
(b) A dissenter waives his or her right to demand payment
under this Code section and is deemed to have accepted the
corporation's offer unless he or she notifies the corporation of
his or her demand in writing under subsection (a) of this Code
section within 30 days after the corporation offered payment for
his or her shares, as provided in Code Section 14-2-1325.
(c) If the corporation does not offer payment within the
time set forth in subsection (a) of Code Section 14-2-1325:
(1) The shareholder may demand the information
required under subsection (b) of Code Section 14-2-1325, and
the corporation shall provide the information to the
shareholder within ten days after receipt of a written
demand for the information; and
(2) The shareholder may at any time, subject to the
limitations period of Code Section 14-2-1332, notify the
corporation of his own estimate of the fair value of his
shares and the amount of interest due and demand payment of
his estimate of the fair value of his shares and interest
due. (Code 1981, Section 14-2-1327, enacted by Ga. L. 1988,
p. 1070, Section 1; Ga. L. 1989, p. 946, Section 60; Ga. L.
1990, p. 257, Section 21; Ga. L. 1993, p. 1231, Section 19.)
14-2-1330. Court action.
(a) If a demand for payment under Code Section 14-2-1327
remains unsettled, the corporation shall commence a proceeding
within 60 days after receiving the payment demand and petition
the court to determine the fair value of the shares and accrued
interest. If the corporation does not commence the proceeding
within the 60 day period, it shall pay each dissenter whose
demand remains unsettled the amount demanded.
<PAGE>
(b) The corporation shall commence the proceeding, which
shall be a non-jury equitable valuation proceeding, in the
superior court of the county where a corporation's registered
office is located. If the surviving corporation is a foreign
corporation without a registered office in this state, it shall
commence the proceeding in the county in this state where the
registered office of the domestic corporation merged with or
whose shares were acquired by the foreign corporation was
located.
(c) The corporation shall make all dissenters, whether or
not residents of this state, whose demands remain unsettled
parties to the proceeding, which shall have the effect of an
action quasi in rem against their shares. The corporation shall
serve a copy of the petition in the proceeding upon each
dissenting shareholder who is a resident of this state in the
manner provided by law for the service of a summons and
complaint, and upon each nonresident dissenting shareholder
either by registered or certified mail or by publication, or in
any other manner permitted by law.
(d) The jurisdiction of the court in which the proceeding
is commenced under subsection (b) of this Code section is plenary
and exclusive. The court may appoint one or more persons as
appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described
in the order appointing them or in any amendment to it. Except
as otherwise provided in this chapter, Chapter 11 of Title 9,
known as the "Georgia Civil Practice Act," applies to any
proceeding with respect to dissenters' rights under this chapter.
(e) Each dissenter made a party to the proceeding is
entitled to judgment for the amount which the court finds to be
the fair value of his shares, plus interest to the date of
judgment. (Code 1981, Section 14-2-1330, enacted by Ga. L. 1988,
p. 1070, Section 1; Ga. L. 1989, p. 946, Section 61; Ga. L. 1993,
p. 1231, Section 20.)
14-2-1331. Court costs and counsel fees.
(a) The court in an appraisal proceeding commenced under
Code Section 14-2-1330 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of
appraisers appointed by the court, but not including fees and
expenses of attorneys and experts for the respective parties. The
court shall assess the costs against the corporation, except that
the court may assess the costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent
the court finds the dissenters acted arbitrarily, vexatiously, or
not in good faith in demanding payment under Code Section 14-2-
1327.
(b) The court may also assess the fees and expenses of
attorneys and experts for the respective parties, in amounts the
court finds equitable;
(1) Against the corporation and in favor of any or all
dissenters if the court finds the corporation did not
substantially comply with the requirements of Code Sections
14-2-1320 through 14-2-1327; or
(2) Against either the corporation or a dissenter, in
favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted
arbitrarily, vexatiously, or not in good faith with respect
to the rights provided by this article.
(c) If the court finds that the services of attorneys for
any dissenter were of substantial benefit to other dissenters
similarly situated, and that the fees for those services should
not be assessed against the corporation, the court may award to
these attorneys reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited. (Code 1981, Section
14-2-1331, enacted by Ga. L. 1988, p. 1070, Section 1.)
<PAGE>
14-2-1332. Limitation of actions.
No action by any dissenter to enforce dissenters'
rights shall be brought more than three years after the corporate
action was taken, regardless of whether notice of the corporate
action and of the right to dissent was given by the corporation
in compliance with the provisions of Code Section 14-2-1320 and
Code Section 14-2-1322. (Code 1981, Section 14-2-1332, enacted
by Ga. L. 1988, p. 1070, Section 1.)
<PAGE>
<PAGE>
Exhibit A
As amended, Section V of the Articles of Incorporation would read, in its
entirety, as follows:
"V.
The corporation shall have the authority to issue not more than
8,000,000 shares, consisting of 5,000,000 shares to be known as common stock,
having a par value of $1.00 per share and 3,000,000 shares of preferred stock,
having a par value of $1.00 (herein called the "Preferred Stock"). Except as
otherwise required by law or as provided in this Article V, holders of Common
Stock will be entitled to one vote per share on all matters to be voted on by
the Corporation's shareholders. In the event of any dissolution, liquidation
or winding up of the affairs of the Corporation, whether voluntary or
involuntary, after payment or provision for payment of the debts and other
liabilities of the Corporation, and the payment of any liquidation preference
with respect to any other class of capital stock of the Corporation which has
a liquidation preference over the Common Stock, the remaining assets and funds
of the Corporation shall be divided equally among and paid ratably to the
holders of the Common Stock as a single class. All cross-references in each
subdivision of this Section V. refer to other paragraphs in such subdivision
unless otherwise indicated.
Subject to the provisions of any applicable law and these Articles of
Incorporation (as from time to time amended), shares of Preferred Stock may be
issued from time to time in one or more series as may be determined by the
Board of Directors. The Board of Directors is authorized to determine or
alter the designations, voting powers, preferences, and relative,
participating, optional or other special rights, and qualifications,
limitations and restrictions on such rights, as the Board of Directors may
authorize by resolutions duly adopted prior to the issuance of any shares of a
series of Preferred Stock, including, but not limited to: (i) the distinctive
designation of each series and the number of shares that will constitute such
series (except that any decrease in the number of shares constituting such
series shall not be below the number of shares of such series then
outstanding); (ii) the voting rights, if any, of shares of such series and
whether the shares of any such series having voting rights shall have multiple
votes per share; (iii) the dividend rate on the shares of any such series, any
restrictions, limitations, or conditions upon the payment of such dividends,
whether such dividends shall be cumulative, the relative priority of the
payments of dividends, if any, and the dates on which such dividends are
payable; (iv) the prices at which, and the terms and conditions on which, the
shares of such series may be redeemed, if such shares are redeemable; (v) the
purchase or sinking fund provisions, if any, for the purchase or redemption of
shares of such series; (vi) any preferential amount payable upon shares of
such series in the event of the liquidation, dissolution, or winding-up of the
Company, or the distribution of its assets; (vii) the prices or rates of
conversion at which, and the terms and conditions on which, the shares are
convertible; and (viii) any other relative preferences, rights, restrictions,
or limitations of that series, including, without limitation, any obligation
of the Corporation to repurchase shares of that series upon the occurrence of
specified events.
The Corporation may purchase its own shares of capital stock out of
unreserved and unrestricted earned surplus and capital surplus available
therefor and as otherwise provided by law.
The Board of Directors may from time to time distribute to shareholders
out of capital surplus of the Corporation a portion of its assets, in cash or
in property."
<PAGE>
<PAGE>
Exhibit B
As amended, a new Section VI would be added to the Articles of Incorporation
and would read, in its entirety, as follows:
"VI
In discharging the duties of their respective positions and in
determining what is believed to be in the best interests of the Corporation,
the Board of Directors of the Corporation, committees of the Board of
Directors, and individual directors, in addition to considering the effects of
any action on the Corporation or its Shareholders, may consider interests of
the employees, customers, suppliers, and creditors of the Corporation and its
subsidiaries, the communities in which offices or other establishments of the
Corporation and its subsidiaries are located, and all other factors such
directors consider pertinent; provided, however, that such consideration shall
be deemed solely to grant discretionary authority to the directors and shall
not be deemed to provide to any constituency any right to be considered.
Exhibit C
As amended, a new Section VII would be added to the Articles of Incorporation
and would read, in its entirety, as follows:
"VII
No director of the Corporation shall be personally liable to the Corporation
or its shareholders for monetary damages for breach of his duty of care or
other duty as a director, provided, that this provision shall eliminate or
limit the liability of a director only to the extent permitted from time to
time by the Georgia Business Corporation Code or any successor laws or laws."
Exhibit D
As amended, a new Section VIII would be added to the Articles of
Incorporation and would read, in its entirety, as follows:
"VIII
Except as otherwise provided by law, any amendment or repeal of any provision
of the Articles of Incorporation or the By-Laws of the Corporation requires
the affirmative vote of holders of 80% of the shares of capital stock of the
Corporation then issued and outstanding and entitled to vote on such matters."
Exhibit E
As amended, a new Section IX would be added to the Articles of Incorporation
and would read, in its entirety, as follows:
"IX.
I.(A)In addition to any affirmative vote required by law, and subject to
the provisions of any series of Preferred Stock which may at the time be
outstanding, the affirmative vote of the holders of not less than 75% of the
outstanding shares of Common Stock of the Corporation and the affirmative vote
of the holders of not less than 75% of the outstanding shares of Common Stock
of the Corporation other than those beneficially owned (as defined below) by
an Interested Shareholder (as defined below) (the "two-tier requirement"),
shall be required for the approval or authorization of any Business
Combination (as defined below) of the Corporation with such Interested
Shareholder; provided that the two-tier voting requirement shall not be
applicable if the Business Combination was approved by three-fourths of all
Directors.
<PAGE>
<PAGE>
(B)The term "Business Combination" as used in this Article IX shall
mean:
(i)any merger or consolidation of the Corporation or any Subsidiary (as
hereafter defined) with (a) any Interested Shareholder (as hereinafter
defined) or (b) any other corporation (whether or not itself an
Interested Shareholder) which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an Interested
Shareholder; or
(ii)any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with
any Interested Shareholder or any Affiliate of any Interested
Shareholder of any assets of the Corporation or any Subsidiary having an
aggregate Fair Market Value (as hereinafter defined) of $1,000,000 or
more; or
(iii)the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary to any Interested Shareholder or any
Affiliate of any Interested Shareholder in exchange for cash, securities
or other property (or a combination thereof) having an aggregate Fair
Market Value of $1,000,000 or more; or
(iv)the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Shareholder or any Affiliate of any Interested Shareholder; or
(v)any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
other transaction (whether or not with or into or otherwise involving an
Interested Shareholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of any
class of equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any Interested
Shareholder or any Affiliate of any Interested Shareholder.
II. For purposes of this Article IX:
(A)A "person" shall mean any individual, firm, corporation or other
entity.
(B)"Interested Shareholder" shall mean any person (other than the
Corporation, any Subsidiary or either the Corporation or any Subsidiary
acting as Trustee or in a similar fiduciary capacity) who or which:
(i)is the beneficial owner of more than 10% of the outstanding Common
Stock; or
(ii)is an Affiliate of the Corporation and at any time within the two-
year period immediately prior to the date in question was the beneficial
owner, directly or indirectly, of 10% or more of the then outstanding
Common Stock; or
(iii)acquired any shares of Common Stock which were at any time within
the two-year period immediately prior to the date in question
beneficially owned by any Interested Shareholder, if such acquisition
shall have occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning of the
Securities Act of 1993.
(C)A person shall be a "beneficial owner" of any Common Stock:
(i)which such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly; or
(ii)which such person or any of its Affiliates or Associates has,
directly or indirectly, (a) the right to acquire (whether such right is
exercisable immediately or only after the passage of time), pursuant to
any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options or otherwise, or
(b) the right to vote pursuant to any agreement, arrangement or
understanding; or
(iii)which are beneficially owned, directly or indirectly, by any other
person with which such person or any of its Affiliates or Associates has
any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of Common Stock.
(D)For the purposes of determining whether a person is an Interested
Shareholder pursuant to paragraph B of this Section II, the number of
shares of Common Stock deemed to be outstanding shall include shares
deemed owned through application of paragraph C(ii)(a) of this Section
II but shall not include any other shares of Common Stock which may be
issuable pursuant to any agreement, arrangement or understanding, or
upon exercise of conversion rights, warrants or options, or otherwise.
<PAGE>
(E)
(i)An "Affiliate" of a specified person is a person that directly,
through one or more intermediaries, controls, or is controlled by, or is
under common control with, the person specified.
(ii)The term "Associate" used to indicate a relationship with any person
means (1) any firm, corporation or other entity (other than the
Corporation or any Subsidiary) of which such person is an officer or
partner or is, directly or indirectly, the beneficial owner of 10% or
more of any class of equity securities, (2) any trust or other estate in
which such person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary capacity, and
(3) any relative or spouse or such person, or any relative of such
spouse who has the same home as such person.
(F)"Subsidiary" means any corporation of which a majority of any class
of equity securities is owned, directly or indirectly, by the
Corporation unless owned solely as trustee or other similar fiduciary
capacity.
(G)"Fair Market value" means: (i) in the case of stock, the closing
sales price of a share of such stock on the Composite Tape on the New
York Stock Exchange-Listed Stocks, or, if such stock is not quoted on
the Composite Tape, on the New York Stock Exchange, or, if such stock is
not listed on such Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934, as
amended, on which such stock is listed, or, if such stock is not listed
on any such exchange, the closing sales price or the sales price or the
average of the bid and asked prices reported with respect to a share of
such stock on the National Association of Securities Dealers, Inc.
Automated Quotation System or any system then in use, or if no such
quotations are available, the fair market value on the date in question
of a share of such stock as determined by the Board in good faith; and
(ii) in the case of property other than cash or stock, the fair market
value of such property on the date in question as determined by the
Board in good faith.
(H)The term "acquire" or "acquired" means the acquisition of beneficial
ownership.
(I)The Directors of the Corporation shall have the power and duty to
determine for the purposes of this Article IX, on the basis of
information known to them after reasonable inquiry, (i) whether a person
is an Interested Shareholder, (ii) the number of shares of Common Stock
beneficially owned by any person, (iii) whether a person is a Affiliate
or Associates or another, and (iv) whether the assets which are the
subject of any Business Combination have, or the consideration to be
received for the issuance or transfer of securities by the Corporation
or any Subsidiary in any Business Combination has, an aggregate Fair
Market Value of $1,000,000 or more.
(K)Nothing contained in this Article IX shall be construed to relieve
any Interested Shareholder of any of its Affiliates or Associates from
any fiduciary obligation imposed by law.
<PAGE>
<PAGE>
Exhibit F
As amended, a new Section X would be added to the Articles of
Incorporation and would read, in its entirety, as follows:
"X
"A director of the Corporation may be removed only for cause and upon the
affirmative vote of the holders of 80% of the issued and outstanding shares
entitled to vote on such matter."
<PAGE>
<PAGE>
COMMON STOCK
OF
SOUTHWEST GEORGIA FINANCIAL CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE 1996
ANNUAL MEETING OF SHAREHOLDERS.
The undersigned hereby appoint(s) E. J. McLean, Jr. and John
J. Cole, Jr., or either of them with power of substitution to
each, as Proxies of the undersigned to vote the Common Stock of
the undersigned at the Annual Meeting of Shareholders of
SOUTHWEST GEORGIA FINANCIAL CORPORATION (the "Company") to be
held on May 14, 1996, and any adjournment thereof.
1. Election of Directors (Please check either A or B)
A. I (we) grant authority to vote FOR all
nominees for director listed below except as
marked to the contrary in the space provided:
Albert W. Barber; Leo T. Barber, Jr.; R.
Bradford Burnette; John H. Clark; Robert M.
Duggan; E. J. McLean, Jr.; Glenn D. Moon;
Richard L. Moss; Lee C. Redding; Roy H. Reeves;
Jack Short; and Johnny R. Slocumb.
Instructions: To withhold authority to vote
for any of the individual nominees listed
above, write the name(s) of the nominee(s) on
the lines provided below.
________________________________________________________________
________________________________________________________________
________________________________________________________________
B. I (we) withhold authority to vote for all of
the nominees listed above.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" THE ELECTION
AS DIRECTORS OF THE PERSONS NAMED IN THE PROXY AND
ACCOMPANYING PROXY STATEMENT AND, UNLESS INSTRUCTIONS
TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED,
THIS PROXY WILL BE SO VOTED.
2. Amendment of the Company's Articles of Incorporation to
authorize the issuance of up to 3,000,000 shares of Preferred
Stock, $1.00 par value per share (Please check either A, B,
or C)
A. ____ FOR
B. ____ AGAINST
C. ____ ABSTAIN
3. Amendment of the Company's Articles of Incorporation to
authorize the Board of Directors to consider constituencies when
evaluating a business combination proposal (Please check either A, B, or
C)
A. ____ FOR
B. ____ AGAINST
C. ____ ABSTAIN
<PAGE>
<PAGE>
COMMON STOCK
OF
SOUTHWEST GEORGIA FINANCIAL CORPORATION
4. Amendment of the Company's Articles of Incorporation to
eliminate cumulative voting for directors (Please check either A, B,
or C)
A. ____ FOR
B. ____ AGAINST
C. ____ ABSTAIN
5. Amendment of the Company's Articles of Incorporation to
provide for the limitation of director liability (Please check either A,
B, or C)
A. ____ FOR
B. ____ AGAINST
C. ____ ABSTAIN
6. Amendment of the Company's Articles of Incorporation to
require the affirmative vote of the holders of 80% of the issued and
outstanding shares entitled to vote thereon to amend the Articles of
Incorporation or the By-Laws of the Company (Please check either A, B, or
C)
A. ____ FOR
B. ____ AGAINST
C. ____ ABSTAIN
7. Amendment of the Company's Articles of Incorporation to
enact a provision to govern potential business combination
transactions with interested shareholders (Please check either A, B, or
C)
A. ____ FOR
B. ____ AGAINST
C. ____ ABSTAIN
8. Amendment of the Company's Articles of Incorporation to
provide that directors can be removed only for cause by the affirmative
vote of the holders of 80% of the issued and outstanding shares
entitled to vote thereon (Please check either A, B, or C)
A. ____ FOR
B. ____ AGAINST
C. ____ ABSTAIN
<PAGE>
<PAGE>
COMMON STOCK
OF
SOUTHWEST GEORGIA FINANCIAL CORPORATION
9. In the discretion of management, to adjourn the Annual
Meeting to permit solicitation of additional proxies in the
event there are not sufficient affirmative votes to approve
one or more amendments to the Articles of Incorporation.
(Please check either A, B, or C)
A. _____ FOR
B. _____ AGAINST
C. _____ ABSTAIN
10. Other Matters to Come Before the Meeting
I (we) grant the Proxies authority to vote in accordance
with their best judgment with respect to any other matters
that may properly come before the meeting.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" EACH OF THE
FOREGOING PROPOSALS AND, UNLESS THE VOTE OF THE SHAREHOLDER INDICATES
OTHERWISE, THIS PROXY WILL BE SO VOTED.
X _____________________________
X _____________________________
Please sign this Proxy exactly as
name appears at left. In the case
of joint tenants, each joint owner
must sign. Note: When signing as an
attorney, trustee, administrator or
guardian, please give your title as
such.
Date Signed: _____________________
<PAGE>
<PAGE>
COMMON STOCK OF
SOUTHWEST GEORGIA FINANCIAL CORPORATION
DIRECTIONS FOR VOTING COMMON STOCK ALLOCATED
TO A PARTICIPANT'S ACCOUNT PURSUANT TO THE
SOUTHWEST GEORGIA FINANCIAL CORPORATION
EMPLOYEE STOCK OWNERSHIP TRUST
A PROXY IS SOLICITED FROM SOUTHWEST GEORGIA BANK TRUST DEPARTMENT
AS TRUSTEE BY THE BOARD OF DIRECTORS FOR THE 1996 ANNUAL MEETING
OF SHAREHOLDERS.
The undersigned participant in the Employee Stock Ownership
Plan ("ESOP") hereby directs Southwest Georgia Bank Trust
Department as Trustee of the Southwest Georgia Financial
Corporation Employee Stock Ownership Trust to vote those shares
of Common Stock of Southwest Georgia Financial Corporation
allocated to the undersigned's account in connection with the
Annual Meeting of Shareholders of SOUTHWEST GEORGIA FINANCIAL
CORPORATION (the "Company") to be held on May 14, 1996, and any
adjournment thereof.
1. Election of Directors (Please check either A or B)
A. I grant authority to vote FOR all nominees
for director listed below except as marked to
the contrary in the space provided:
Albert W. Barber; Leo T. Barber, Jr.; R.
Bradford Burnette; John H. Clark; Robert M.
Duggan; E. J. McLean, Jr.; Glenn D. Moon;
Richard L. Moss; Lee C. Redding; Roy H. Reeves;
Jack Short; and Johnny R. Slocumb.
Instructions: To withhold authority to vote
for any of the individual nominees listed
above, write the name(s) of the nominee(s) on
the lines provided below.
_________________________________________________________________________
_________________________________________________________________________
__________________________________________________________________________
B. I withhold authority to vote for all of the
nominees listed above.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" THE ELECTION
AS DIRECTORS OF THE PERSONS NAMED IN THE PROXY AND
ACCOMPANYING PROXY STATEMENT AND, UNLESS INSTRUCTIONS
TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED,
THIS PROXY WILL BE SO VOTED.
2. Amendment of the Company's Articles of Incorporation to
authorize the issuance of up to 3,000,000 shares of Preferred
Stock, $1.00 par value per share (Please check either A, B,
or C)
A. ____ FOR
B. ____ AGAINST
C. ____ ABSTAIN
<PAGE>
<PAGE>
COMMON STOCK OF
SOUTHWEST GEORGIA FINANCIAL CORPORATION
3. Amendment of the Company's Articles of Incorporation to
authorize the Board of Directors to consider constituencies when
evaluating a business combination proposal (Please check either A, B, or
C)
A. ____ FOR
B. ____ AGAINST
C. ____ ABSTAIN
4. Amendment of the Company's Articles of Incorporation to
eliminate cumulative voting for directors (Please check either A, B,
or C)
A. ____ FOR
B. ____ AGAINST
C. ____ ABSTAIN
5. Amendment of the Company's Articles of Incorporation to
provide for the limitation of director liability (Please check either A,
B, or C)
A. ____ FOR
B. ____ AGAINST
C. ____ ABSTAIN
6. Amendment of the Company's Articles of Incorporation to
require the affirmative vote of the holders of 80% of the issued and
outstanding shares entitled to vote thereon to amend the Articles of
Incorporation or the By-Laws of the Company (Please check either A, B, or
C)
A. ____ FOR
B. ____ AGAINST
C. ____ ABSTAIN
7. Amendment of the Company's Articles of Incorporation to
enact a provision to govern potential business combination
transactions with interested shareholders (Please check either A, B, or
C)
A. ____ FOR
B. ____ AGAINST
C. ____ ABSTAIN
<PAGE>
<PAGE>
COMMON STOCK OF
SOUTHWEST GEORGIA FINANCIAL CORPORATION
8. Amendment of the Company's Articles of Incorporation to
provide that directors can be removed only for cause by the affirmative
vote of the holders of 80% of the issued and outstanding shares entitled
to
vote thereon (Please check either A, B, or C)
A. ____ FOR
B. ____ AGAINST
C. ____ ABSTAIN
9. In the discretion of management, to adjourn the Annual
Meeting to permit solicitation of additional proxies in the
event there are not sufficient affirmative votes to approve
one or more amendments to the Articles of Incorporation.
(Please check either A, B, or C)
A. _____ FOR
B. _____ AGAINST
C. _____ ABSTAIN
10. Other Matters to Come Before the Meeting
I grant the Trustee authority to vote in accordance with
their best judgment with respect to any other matters that
may properly come before the meeting.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" EACH OF THE
FOREGOING PROPOSALS AND, UNLESS THE VOTE OF THE SHAREHOLDER INDICATES
OTHERWISE, THIS PROXY WILL BE SO VOTED.
X ___________________________________
Please sign this Proxy exactly as name appears
at left. Note: When signing as an attorney,
trustee, administrator or guardian, please
give your title as such.
Date Signed: ________________________
