<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 April 16, 1996
The annual meeting of shareholders of Southwest Georgia Financial
Corporation ("the Company") will be held on Tuesday, April 16, 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. Such other matters as may properly come before the meeting or any
adjournment thereof.
Only shareholders of record at the close of business on March 6, 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
March 15, 1996
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE
ENCLOSED SELF-ADDRESSED ENVELOPE.
<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 April 16, 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 March 15, 1996.
The record of shareholders entitled to vote at the Annual Meeting of
Shareholders was taken as of the close of business on March 6, 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 an instrument revoking it or a duly executed
Proxy bearing a later date to the Secretary of the Company. 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."
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 6, 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
If the person requesting the report was not a shareholder of record on
March 6, 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.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table sets forth as of January 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 522,416 40.90%
(24 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 Estate of Leo T. Barber, Sr., of
which Leo T. Barber, Jr. and Albert W. Barber serve as co-executors.
(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.
3
<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.
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.
INFORMATION ABOUT NOMINEES FOR DIRECTOR
The following information as of January 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 Secretary and Treasurer of
Barber Contracting Company, a general contracting
company. Also, he is President of South Georgia
Investment Company, a property rental company.
Albert W. Barber (66) A Director of the Company and Bank since 1990, 230,121
Mr. Albert Barber is President of Barber (18.01%) (3)
Contracting Company, a general contracting
company. Also, he is Vice President and Treasurer
of South Georgia Investment Company, a property
rental company.
</TABLE>
<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, Mr. Redding is a Dentist and owner
of a family dental practice since 1976.
Roy 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 14,136
Company since 1981, Mr. Short is Vice Chairman (1.11%)
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 Estate of Leo T. Barber, Sr., of which Mr. Barber is co-executor,
and 3,000 shares owned of record by Mr. Barber's wife.
<PAGE>
(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
Estate of Leo T. Barber, Sr., of which Mr. Barber is co-executor, 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.
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 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
a Company compensation plan.
(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.
<PAGE>
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 and benefits, including disability insurance, medical insurance
and life insurance, subject to certain parameters set forth in the Agreement.
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>
AMENDMENTS TO ARTICLES OF INCORPORATION
PROPOSALS 2 THROUGH 8
Introduction
The Board of Directors has approved unanimously certain amendments
(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.
Adoption of the Proposed Amendments could have a significant effect on
the ability of shareholders and the Company to benefit from certain kinds of
transactions which may be opposed by the incumbent Board of Directors.
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; however, the following descriptions
do not purport to be complete and 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 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 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; (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 principle purpose of
the Proposed Amendments is to supplement and strengthen existing provisions of
the Articles of Incorporation and By-Laws and are designed 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.
<PAGE>
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 certain shareholders.
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.
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
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.
<PAGE>
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 indicated otherwise, proxies 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").
If the shareholders adopt the proposed amendment, the Board of Directors
would be 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.
<PAGE>
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.
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-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 authorize Board of Directors to consider
constituencies. Unless indicated otherwise, proxies will be voted "FOR" the
proposal.
13
<PAGE>
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. Without cumulative voting rights, the
holders of a majority of the shares present at an annual meeting or any
special meeting held to elect directors would have the power to elect all the
directors to be elected at that meeting, and it is possible that no person
could be elected without the support of holders of a majority of the shares
voting at such meeting.
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 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.
The proposed amendment to the Articles of Incorporation would delete in
its entirety Article VI of the Articles of Incorporation, as amended.
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 eliminate cumulative voting in the election
of directors. Unless indicated otherwise, proxies will be voted "FOR" the
proposal.
14
<PAGE>
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
Company's bank subsidiary 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. 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. If approved by
shareholders, the proposed amendment would limit a director's liability to the
Company to the fullest extent permitted by Georgia law, but would not limit
the availability of equitable remedies, such as injunction or rescission, for
breach of the duty of care or other duty as a director. 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.
Pursuant to Georgia 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.
The Board believes that the amendment to eliminate director's potential
liability for monetary damages to the Company is desirable due to changes in
recent years in the market for director's liability insurance and to
significant increases in the number and magnitude of lawsuits against
directors. Although the Company has been able to attract and retain directors
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. In addition, the Board believes that the
amendment may benefit the Company through lower liability insurance premiums,
although there can be no assurance on this matter.
While the Board believes that the amendment is in the best interest of
the shareholders 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 in such
<PAGE>
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.
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.
<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 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 indicated otherwise,
proxies 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.
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 a substantial
shareholder seeking to effect certain business combinations. Under the
Supermajority Amendment, if a proposed business combination 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, certain business combination transactions must be approved by
the vote of the holders of at least a majority of the outstanding Common Stock
of the Company, while other business combination transactions do not require
any shareholder approval at all. 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 (as defined below) (the "75%/75% shareholder
vote") for a Business Combination (as defined below) involving an Interested
Shareholder, unless the transaction is approved by three-fourths of all
directors when certain quorum requirements are met. 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 in cases in which
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
18
<PAGE>
(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:
(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. Such a merger may not be in
the best interests of the Company or its shareholders. 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.
<PAGE>
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.
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 Supermajority Provision
of Section IX of the Articles of Incorporation. Unless indicated otherwise,
proxies 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 Business Corporation Code (the "Georgia Code"). The Articles
of Incorporation currently provides that a plurality of the shareholders can
amend the Articles of Incorporation or Bylaws.
This proposal is designed to prevent a 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.
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.
<PAGE>
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 80% of the shareholders. Unless indicated otherwise,
proxies will be voted "FOR" the proposal.
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
March 15, 1996
<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>
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>
(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
<PAGE>
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.
(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.
27
<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."
28
<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 April 16, 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 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
1
<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
2
<PAGE>
COMMON STOCK
OF
SOUTHWEST GEORGIA FINANCIAL CORPORATION
9. 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: _____________________
3
<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 April 16, 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 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
1
<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
2
<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. 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: ________________________
3
