-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K0rdWkvNFkamzuUw6exj10k8xRe99SFYGSnoyOdkwyAgY9Asjrw5FR7kmI6un7zI Q87qxYoMXDg9BIy1V/Fp1w== 0000942708-00-000011.txt : 20000411 0000942708-00-000011.hdr.sgml : 20000411 ACCESSION NUMBER: 0000942708-00-000011 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREENVILLE FIRST BANCSHARES INC CENTRAL INDEX KEY: 0001090009 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 582459561 STATE OF INCORPORATION: SC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-27719 FILM NUMBER: 582555 BUSINESS ADDRESS: STREET 1: 1805 LAURENS RD CITY: GREENVILLE STATE: SC ZIP: 29607 BUSINESS PHONE: 8642417806 MAIL ADDRESS: STREET 1: 1805 LAURENS RD CITY: GREENVILLE STATE: SC ZIP: 29607 10KSB 1 GREENVILLE FIRST BANCSHARES, INC. 10KSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB [X] Annual Report Pursuant To Section 13 Or 15(d)of The Securities Exchange Act Of 1934 For The Fiscal Year December 31, 1999 Or [ ] Transition Report Pursuant To Section 13 Or 15 (D) Of The Securities Exchange Act Of 1934 For the Transition Period from ___________ to ________________ Commission file number 333-83851 Greenville First Bancshares, Inc. ----------------------------------------------- (Exact name of registrant as specified in its charter) South Carolina 58-2459561 - --------------------------- ----------------------------- (State of Incorporation) (I.R.S. Employer Identification No.) 112 Haywood Road Greenville , S.C. 29607 - ---------------------------- -------------------- (Address of principal executive offices) (Zip Code) 864-679-9000 ------------------------------------ (Telephone Number) Not Applicable ---------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for past 90 days. Yes X No -------- ----- Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] The issuer's loss for its most recent fiscal year was $534,329. As of March 15, 2000, 1,150,000 shares of Common Stock were issued and outstanding. The aggregate market value of the Common Stock held by non-affiliates of the Company on March 15, 2000 is $6,623,250. This calculation is based upon an estimate of the fair market value of the Common Stock of $7.50 per share, which was the price of the last trade of which management is aware prior to this date. Transitional Small Business Disclosure Format. (Check one): Yes No X DOCUMENTS INCORPORATED BY REFERENCE Company's Proxy Statement Item 1. Description of Business This Report contains statements which constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements are based on many assumptions and estimates and are not guarantees of future performance. Our actual results may differ materially from those projected in any forward-looking statements, as they will depend on many factors about which we are unsure, including many factors which are beyond our control. The words "may," "would," "could," "will," "expect," "anticipate," "believe," "intend," "plan," and "estimate," as well as similar expressions, are meant to identify such forward-looking statements. Potential risks and uncertainties include, but are not limited to: o significant increases in competitive pressure in the banking and financial services industries; o changes in the interest rate environment which could reduce anticipated or actual margins; o changes in political conditions or the legislative or regulatory environment; o general economic conditions, either nationally or regionally and especially in primary service area, becoming less favorable than expected resulting in, among other things, a deterioration in credit quality; o changes occurring in business conditions and inflation; o changes in technology; o changes in monetary and tax policies; o changes in the securities markets; and o other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission. General Greenville First Bancshares, Inc., was incorporated to operate as a bank holding company pursuant to the Federal Bank Holding Company Act of 1956 and the South Carolina Banking and Branching Efficiency Act, and to purchase 100% of the issued and outstanding stock of Greenville First Bank, an association organized under the laws of the United States, to conduct a general banking business in Greenville, South Carolina. Since our inception on February 22, 1999, we have engaged in organizational and pre-opening activities necessary to open the bank. On October 26, 1999, we sold 1,100,000 shares of our common stock at $10 per share in our initial public offering, and on November 30, 1999, we sold 50,000 additional shares pursuant to the underwriters' over-allotment option for a total of 1,150,000 shares of common stock. The offering raised $10,646,700 net of underwriting discounts and commissions. Our directors and executive officers purchased 266,900 shares of common stock in this offering. Upon purchase of these shares, the Company issued stock warrants to the organizers to purchase up to an additional 129,950 shares of common stock. On January 10, 2000, we opened the bank. Of the net proceeds from the offering, we used $8,500,000 to capitalize the bank. The bank's funds were applied primarily to provide funds for the bank's investments and lending operations, for leasing our temporary and permanent facilities, for furnishing and equipping the bank, and for other general corporate purposes. Marketing Focus The bank is the first independent bank organized in the City of Greenville in over ten years. Because there are few locally owned banks left in Greenville, we believe we offer a unique banking alternative for the market by offering a higher level of customer service and a management team more focused on the needs of the community than most of 2 our competitors. We believe that this approach will be enthusiastically supported by the community. The bank uses the theme "Welcome to Hometown Banking," and it actively promotes it in our target market. While the bank has the ability to offer a breadth of products similar to large banks, we emphasize the client relationship. We believe that the proposed community focus of the bank will succeed in this market, and that the area will react favorably to the bank's emphasis on service to small businesses, individuals, and professional concerns. We plan to take advantage of existing contacts and relationships with individuals and companies in this area to more effectively market the services of the bank. Location and Service Area Our primary service area consists of Greenville County, South Carolina. We expect initially to draw a large percentage of our business from the central portion of Greenville County, within a ten mile radius of our main office. This principal service area is bounded by Rutherford Road to the north, Poinsett Highway to the west, Mauldin Road and Butler Road to the south, and Highway 14 and Batesville Road to the east. Included in this area is the highest per capita income tract in the county. Our expansion plans include the development of two "service centers" located along the periphery of our service area. These service centers will extend the market reach of our bank, and they will increase our personal service delivery capabilities to all of our customers. Lending Activities General. We emphasize a range of lending services, including real estate, commercial, and equity- line consumer loans to individuals and small- to medium-sized businesses and professional firms that are located in or conduct a substantial portion of their business in the bank's market area. We compete for these loans with competitors who are well established in the Greenville County area and have greater resources and lending limits. As a result, we may have to charge lower interest rates to attract borrowers. Loan Approval and Review. The bank's loan approval policies provide for various levels of officer lending authority. When the amount of aggregate loans to a single borrower exceeds an individual officer's lending authority, the loan request will be considered and approved by an officer with a higher lending limit or the officers' loan committee. The officers' loan committee has lending limits, and any loans in excess of this lending limit will be approved by the directors' loan committee. The bank does not make any loans to any director, officer, or employee of the bank unless the loan is approved by the board of directors of the bank and is made on terms not more favorable to such person than would be available to a person not affiliated with the bank. The bank generally adheres to Federal National Mortgage Association and Federal Home Loan Mortgage Corporation guidelines in its mortgage loan review process, but may alter this policy in the future. The bank currently intends to sell its mortgage loans into the secondary market, but may choose to hold them in the portfolio in the future. Lending Limits. The bank's lending activities are subject to a variety of lending limits imposed by federal law. In general, the bank is subject to a legal limit on loans to a single borrower equal to 15% of the bank's capital and unimpaired surplus. Different limits may apply in certain circumstances based on the type of loan or the nature of the borrower, including the borrower's relationship to the bank. These limits will increase or decrease as the bank's capital increases or decreases. Based upon the capitalization of the bank with $8.5 million, the bank has a self-imposed loan limit of $1.2 million, which represents 78% of our anticipated legal lending limit of $1.2 million. However, these limits will drop as we expect to incur losses, and therefore have less capital, in the first several years of operations. Unless the bank is able to sell participations in its loans to other financial institutions, the bank will not be able to meet all of the lending needs of loan customers requiring aggregate extensions of credit above these limits. Real Estate and Mortgage Loans. We estimate that loans secured by first or second mortgages on real estate will make up 50% of the bank's loan portfolio. These loans will generally fall into one of three categories: commercial real estate loans, construction and development loans, or residential real estate loans. Each of these categories is discussed in more detail below, including their specific risks. Home equity loans are not included because they are classified as consumer loans, which are discussed below. Interest rates for all categories may be fixed or adjustable, and will more likely be fixed for shorter-term loans. The bank will generally charge an origination fee for each loan. Real estate loans are subject to the same general risks as other loans. They are particularly sensitive to fluctuations in the value of real estate, which is generally the underlying security for real estate loans. Fluctuations in 3 the value of real estate, as well as other factors arising after a loan has been made, could negatively affect a borrower's cash flow, creditworthiness, and ability to repay the loan. We have the ability to originate real estate loans for sale into the secondary market. We can limit our interest rate and credit risk on these loans by locking the interest rate for each loan with the secondary investor and receiving the investor's underwriting approval prior to originating the loan. o Commercial Real Estate Loans. Commercial real estate loans generally have terms of five years or less, although payments may be structured on a longer amortization basis. We evaluate each borrower on an individual basis and attempt to determine its business risks and credit profile. We attempt to reduce credit risk in the commercial real estate portfolio by emphasizing loans on owner-occupied office and retail buildings where the loan-to-value ratio, established by independent appraisals, does not exceed 80%. We also generally require that debtor cash flow exceed 115% of monthly debt service obligations. We typically review all of the personal financial statements of the principal owners and require their personal guarantees. These reviews generally reveal secondary sources of payment and liquidity to support a loan request. o Construction and Development Real Estate Loans. We offer adjustable and fixed rate residential and commercial construction loans to builders and developers and to consumers who wish to build their own home. The term of construction and development loans generally are limited to eighteen months, although payments may be structured on a longer amortization basis. Most loans mature and require payment in full upon the sale of the property. Construction and development loans generally carry a higher degree of risk than long term financing of existing properties. Repayment depends on the ultimate completion of the project and usually on the sale of the property. Specific risks include: o cost overruns; o mismanaged construction; o inferior or improper construction techniques; o economic changes or downturns during construction; o a downturn in the real estate market; o rising interest rates which may prevent sale of the property; and o failure to sell completed projects in a timely manner. We attempt to reduce risk by obtaining personal guarantees where possible, and by keeping the loan-to-value ratio of the completed project below specified percentages. We also reduce risk by selling participations in larger loans to other institutions when possible. o Residential Real Estate Loans. Residential real estate loans generally have longer terms up to 30 years. We offer fixed and adjustable rate mortgages. We have limited credit risk on these loans as most are sold to third parties soon after closing. Commercial Loans. The bank makes loans for commercial purposes in various lines of businesses. Commercial loans are generally considered to have greater risk than first or second mortgages on real estate because they may be unsecured, or if they are secured, the value of the security may be difficult to assess and more likely to decrease than real estate. We offer small business loans utilizing government enhancements such as the Small Business Administration's 7(a) program and SBA's 504 programs. These loans typically are partially guaranteed by the government, which helps to reduce the bank's risk. Government guarantees of SBA loans do not exceed 80% of the loan value and are generally less. The well established banks in the Greenville County area make proportionately more loans to medium to large-sized businesses than we can. Many of the bank's commercial loans are made to small- to medium-sized businesses which may be less able to withstand competitive, economic, and financial conditions than larger borrowers. 4 Consumer Loans. The bank makes a variety of loans to individuals for personal and household purposes, including secured and unsecured installment loans and revolving lines of credit. Installment loans typically carry balances of less than $50,000 and be amortized over periods up to 60 months. Consumer loans are offered with a single maturity basis where a specific source of repayment is available. Revolving loan products typically require monthly payments of interest and a portion of the principal. Consumer loans are generally considered to have greater risk than first or second mortgages on real estate because they may be unsecured, or if they are secured, the value of the security may be difficult to assess and more likely to decrease than real estate. We also offer home equity loans. Our underwriting criteria for and the risks associated with home equity loans and lines of credit will generally be the same as those for first mortgage loans. Home equity lines of credit typically have terms of 15 years or less, typically carry balances less than $125,000, and may extend up to 100% of the available equity of each property. Deposit Services We offer a full range of deposit services that are typically available in most banks and savings and loan associations, including checking accounts, commercial accounts, savings accounts, and other time deposits of various types, ranging from daily money market accounts to longer-term certificates of deposit. The transaction accounts and time certificates are tailored to our primary market area at rates competitive to those offered in the Greenville County area. In addition, we offer certain retirement account services, such as IRAs. We solicit these accounts from individuals, businesses, associations, organizations, and governmental authorities. Other Banking Services The bank offers other bank services including safe deposit boxes, traveler's checks, direct deposit, U.S. Savings Bonds, and banking by mail. The bank to is associated with the Honor, Cirrus, and Master-Money, ATM networks, which are available to its customers throughout the country. We believe that by being associated with a shared network of ATMs, we are better able to serve our customers and are able to attract customers who are accustomed to the convenience of using ATMs, although we do not believe that maintaining this association is critical to our success. We intend to begin offering Internet services in the second quarter of 2000. We do not expect the bank to exercise trust powers during its first year of operation. Market Share As of June 30, 1999, total deposits in the bank's primary service area were almost $5.3 billion, which represented a 5% deposit growth rate from 1998. Our plan over the next five years is to grow our deposit base to $100 million. Of course, we cannot be sure that these deposit growth rates will continue, or that we will accomplish this objective. Employees As of March 15, 2000, the bank had 14 employees and the company has no full-time employees. Supervision and Regulation Both the company and the bank are subject to extensive state and federal banking laws and regulations which impose specific requirements or restrictions on and provide for general regulatory oversight of virtually all aspects of operations. These laws and regulations are generally intended to protect depositors, not shareholders. The following summary is qualified by reference to the statutory and regulatory provisions discussed. Changes in applicable laws or regulations may have a material effect on our business and prospects. Beginning with the enactment of the Financial Institution Report Recovery and Enforcement Act in 1989 and following with the FDIC Improvement Act in 1991, numerous additional regulatory requirements have been placed on the national banking industry in the past several years, and additional changes have been proposed. Our operations may be affected by legislative changes and the policies of various regulatory authorities. We cannot predict the effect that fiscal or monetary policies, economic control, or new federal or state legislation may have on our business and earnings in the future. 5 Gramm-Leach-Bliley Act On November 4, 1999, the U.S. Senate and House of Representatives each passed the Gramm-Leach-Bliley Act, previously known as the Financial Services Modernization Act of 1999. The Act was signed into law by President Clinton on November 12, 1999. Among other things, the Act repeals the restrictions on banks affiliating with securities firms contained in sections 20 and 32 of the Glass-Steagall Act. The Act also permits bank holding companies to engage in a statutorily provided list of financial activities, including insurance and securities underwriting and agency activities, merchant banking, and insurance company portfolio investment activities. The Act also authorizes activities that are "complementary" to financial activities. The Act is intended to grant to community banks certain powers as a matter of right that larger institutions have accumulated on an ad hoc basis. Nevertheless, the Act may have the result of increasing the amount of competition that we face from larger institutions and other types of companies. In fact, it is not possible to predict the full effect that the Act will have on us. From time to time other changes are proposed to laws affecting the national banking industry, and these changes could have a material effect on our business and prospects. We cannot predict the nature or the extent of the effect on our business and earnings of fiscal or monetary policies, economic controls, or new federal or state legislation. Greenville First Bancshares, Inc. The company owns the outstanding capital stock of the bank, and therefore it is considered to be a bank holding company under the federal Bank Holding Company Act of 1956 and the South Carolina Banking and Branching Efficiency Act. The Bank Holding Company Act. Under the Bank Holding Company Act, the company is subject to periodic examination by the Federal Reserve and required to file periodic reports of its operations and any additional information that the Federal Reserve may require. Our activities at the bank and holding company level are limited to: o banking and managing or controlling banks; o furnishing services to or performing services for its subsidiaries; and o engaging in other activities that the Federal Reserve determines to be so closely related to banking and managing or controlling banks as to be a proper incident thereto. Investments, Control, and Activities. With certain limited exceptions, the Bank Holding Company Act requires every bank holding company to obtain the prior approval of the Federal Reserve before: o acquiring substantially all the assets of any bank; o acquiring direct or indirect ownership or control of any voting shares of any bank if after the acquisition it would own or control more than 5% of the voting shares of such bank (unless it already owns or controls the majority of such shares); or o merging or consolidating with another bank holding company. In addition, and subject to certain exceptions, the Bank Holding Company Act and the Change in Bank Control Act, together with regulations thereunder, require Federal Reserve approval prior to any person or company acquiring "control" of a bank holding company. Control is conclusively presumed to exist if an individual or company acquires 25% or more of any class of voting securities of a bank holding company. Control is rebuttably presumed to exist if a person acquires 10% or more, but less than 25%, of any class of voting securities and either the company has registered securities under Section 12 of the Securities Exchange Act of 1934 or no other person owns a greater percentage of that class of voting securities immediately after the transaction. The company's common stock is registered under the Securities Exchange Act of 1934. The regulations provide a procedure for challenge of the rebuttable control presumption. Under the Bank Holding Company Act, a bank holding company is generally prohibited from engaging in, or acquiring direct or indirect control of more than 5% of the voting shares of any company engaged in nonbanking activities unless the Federal Reserve Board, by order or regulation, has found those activities to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Some of the activities that the Federal Reserve Board has determined by regulation to be proper incidents to the business of a bank holding company include: 6 o making or servicing loans and certain types of leases; o engaging in certain insurance and discount brokerage activities; o performing certain data processing services; o acting in certain circumstances as a fiduciary or investment or financial adviser; o owning savings associations; and o making investments in certain corporations or projects designed primarily to promote community welfare. The Federal Reserve Board imposes certain capital requirements on the company under the Bank Holding Company Act, including a minimum leverage ratio and a minimum ratio of "qualifying" capital to risk-weighted assets. These requirements are described below under "Capital Regulations." Subject to its capital requirements and certain other restrictions, the company is able to borrow money to make a capital contribution to the bank, and these loans may be repaid from dividends paid from the bank to the company. Our ability to pay dividends will be subject to regulatory restrictions as described below in "Greenville First Bank - Dividends." The company is also able to raise capital for contribution to the bank by issuing securities without having to receive regulatory approval, subject to compliance with federal and state securities laws. Source of Strength; Cross-Guarantee. In accordance with Federal Reserve Board policy, the company is expected to act as a source of financial strength to the bank and to commit resources to support the bank in circumstances in which the company might not otherwise do so. Under the Bank Holding Company Act, the Federal Reserve Board may require a bank holding company to terminate any activity or relinquish control of a nonbank subsidiary, other than a nonbank subsidiary of a bank, upon the Federal Reserve Board's determination that such activity or control constitutes a serious risk to the financial soundness or stability of any subsidiary depository institution of the bank holding company. Further, federal bank regulatory authorities have additional discretion to require a bank holding company to divest itself of any bank or nonbank subsidiary if the agency determines that divestiture may aid the depository institution's financial condition. South Carolina State Regulation. As a bank holding company registered under the South Carolina Banking and Branching Efficiency Act, we are subject to limitations on sale or merger and to regulation by the South Carolina Board of Financial Institutions. Prior to acquiring the capital stock of a national bank, we are not required to obtain the approval of the Board, but we must notify them at least 15 days prior to doing so. We must receive the Board's approval prior to engaging in the acquisition of banking or nonbanking institutions or assets, and we must file periodic reports with respect to our financial condition and operations, management, and intercompany relationships between the company and its subsidiaries. Greenville First Bank The bank operates as a national banking association incorporated under the laws of the United States and subject to examination by the Office of the Comptroller of the Currency. Deposits in the bank are insured by the FDIC up to a maximum amount, which is generally $100,000 per depositor subject to aggregation rules. The Office of the Comptroller of the Currency and the FDIC regulate or monitor virtually all areas of the bank's operations, including: o security devices and procedures; o adequacy of capitalization and loss reserves; o loans; o investments; o borrowings; o deposits; o mergers; o issuances of securities; o payment of dividends; o interest rates payable on deposits; o interest rates or fees chargeable on loans; o establishment of branches; 7 o corporate reorganizations; o maintenance of books and records; and o adequacy of staff training to carry on safe lending and deposit gathering practices. The Office of the Comptroller of the Currency requires the bank to maintain specified capital ratios and imposes limitations on the bank's aggregate investment in real estate, bank premises, and furniture and fixtures. The Office of the Comptroller of the Currency requires the bank to prepare quarterly reports on the bank's financial condition and to conduct an annual audit of its financial affairs in compliance with its minimum standards and procedures. Under the FDIC Improvement Act, all insured institutions must undergo regular on site examinations by their appropriate banking agency. The cost of examinations of insured depository institutions and any affiliates may be assessed by the appropriate agency against each institution or affiliate as it deems necessary or appropriate. Insured institutions are required to submit annual reports to the FDIC, their federal regulatory agency, and their state supervisor when applicable. The FDIC Improvement Act directs the FDIC to develop a method for insured depository institutions to provide supplemental disclosure of the estimated fair market value of assets and liabilities, to the extent feasible and practicable, in any balance sheet, financial statement, report of condition or any other report of any insured depository institution. The FDIC Improvement Act also requires the federal banking regulatory agencies to prescribe, by regulation, standards for all insured depository institutions and depository institution holding companies relating, among other things, to the following: o internal controls; o information systems and audit systems; o loan documentation; o credit underwriting; o interest rate risk exposure; and o asset quality. National banks and their holding companies which have been chartered or registered or have undergone a change in control within the past two years or which have been deemed by the Office of the Comptroller of the Currency or the Federal Reserve Board to be troubled institutions must give the Office of the Comptroller of the Currency or the Federal Reserve Board thirty days' prior notice of the appointment of any senior executive officer or director. Within the 30 day period, the Office of the Comptroller of the Currency or the Federal Reserve Board, as the case may be, may approve or disapprove any such appointment. Deposit Insurance. The FDIC establishes rates for the payment of premiums by federally insured banks and thrifts for deposit insurance. A separate Bank Insurance Fund and Savings Association Insurance Fund are maintained for commercial banks and savings associations with insurance premiums from the industry used to offset losses from insurance payouts when banks and thrifts fail. In 1993, the FDIC adopted a rule which establishes a risk-based deposit insurance premium system for all insured depository institutions. Under this system, until mid-1995 depository institutions paid to Bank Insurance Fund or Savings Association Insurance Fund from $0.23 to $0.31 per $100 of insured deposits depending on its capital levels and risk profile, as determined by its primary federal regulator on a semiannual basis. Once the Bank Insurance Fund reached its legally mandated reserve ratio in mid-1995, the FDIC lowered premiums for well-capitalized banks, eventually eliminating premiums for well-capitalized banks, with a minimum semiannual assessment of $1,000. However, in 1996 Congress enacted the Deposit Insurance Funds Act of 1996, which eliminated even this minimum assessment. It also separated the Financial Corporation assessment to service the interest on its bond obligations. The amount assessed on individual institutions, including the bank, by Financial Corporation assessment is in addition to the amount paid for deposit insurance according to the risk-related assessment rate schedule. Increases in deposit insurance premiums or changes in risk classification will increase the bank's cost of funds, and we may not be able to pass these costs on to our customers. Transactions With Affiliates and Insiders. The bank is subject to the provisions of Section 23A of the Federal Reserve Act, which places limits on the amount of loans or extensions of credit to, or investments in, or certain other transactions with, affiliates and on the amount of advances to third parties collateralized by the securities or obligations of affiliates. The aggregate of all covered transactions is limited in amount, as to any one affiliate, to 10% of the bank's capital and surplus and, as to all affiliates combined, to 20% of the bank's capital and surplus. Furthermore, 8 within the foregoing limitations as to amount, each covered transaction must meet specified collateral requirements. Compliance is also required with certain provisions designed to avoid the taking of low quality assets. The bank is subject to the provisions of Section 23B of the Federal Reserve Act which, among other things, prohibits an institution from engaging in certain transactions with certain affiliates unless the transactions are on terms substantially the same, or at least as favorable to such institution or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies. The bank is subject to certain restrictions on extensions of credit to executive officers, directors, certain principal shareholders, and their related interests. Such extensions of credit (i) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties and (ii) must not involve more than the normal risk of repayment or present other unfavorable features. Dividends. A national bank may not pay dividends from its capital. All dividends must be paid out of undivided profits then on hand, after deducting expenses, including reserves for losses and bad debts. In addition, a national bank is prohibited from declaring a dividend on its shares of common stock until its surplus equals its stated capital, unless there has been transferred to surplus no less than one-tenth of the bank's net profits of the preceding two consecutive half-year periods (in the case of an annual dividend). The approval of the Office of the Comptroller of the Currency is required if the total of all dividends declared by a national bank in any calendar year exceeds the total of its net profits for that year combined with its retained net profits for the preceding two years, less any required transfers to surplus. Branching. National banks are required by the National Bank Act to adhere to branch office banking laws applicable to state banks in the states in which they are located. Under current South Carolina law, the bank may open branch offices throughout South Carolina with the prior approval of the Office of the Comptroller of the Currency. In addition, with prior regulatory approval, the bank is able to acquire existing banking operations in South Carolina. Furthermore, federal legislation has been passed which permits interstate branching. The new law permits out-of-state acquisitions by bank holding companies, interstate branching by banks if allowed by state law, and interstate merging by banks. Community Reinvestment Act. The Community Reinvestment Act requires that, in connection with examinations of financial institutions within their respective jurisdictions, the Federal Reserve, the FDIC, or the Office of the Comptroller of the Currency shall evaluate the record of each financial institution in meeting the credit needs of its local community, including low and moderate income neighborhoods. These factors are also considered in evaluating mergers, acquisitions, and applications to open a branch or facility. Failure to adequately meet these criteria could impose additional requirements and limitations on the bank. Other Regulations. Interest and other charges collected or contracted for by the bank are subject to state usury laws and federal laws concerning interest rates. The bank's loan operations are also subject to federal laws applicable to credit transactions, such as: o the federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; o the Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; o the Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; o the Fair Credit Reporting Act of 1978, governing the use of information to credit reporting agencies; o the Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and o the rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws. The deposit operations of the bank also are subject to: o the Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; and 9 o the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve Board to implement that act, which governs automatic deposits to and withdrawals from deposit accounts and customers' rights and liabilities arising from the use of automated teller machines and other electronic banking services. Capital Regulations. The federal bank regulatory authorities have adopted risk-based capital guidelines for banks and bank holding companies that are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies and account for off-balance sheet items. The guidelines are minimums, and the federal regulators have noted that banks and bank holding companies contemplating significant expansion programs should not allow expansion to diminish their capital ratios and should maintain ratios in excess of the minimums. We have not received any notice indicating that either the company or the bank is subject to higher capital requirements. The current guidelines require all bank holding companies and federally-regulated banks to maintain a minimum risk-based total capital ratio equal to 8%, of which at least 4% must be Tier 1 capital. Tier 1 capital includes common shareholders' equity, qualifying perpetual preferred stock, and minority interests in equity accounts of consolidated subsidiaries, but excludes goodwill and most other intangibles and excludes the allowance for loan and lease losses. Tier 2 capital includes the excess of any preferred stock not included in Tier 1 capital, mandatory convertible securities, hybrid capital instruments, subordinated debt and intermediate term-preferred stock, and general reserves for loan and lease losses up to 1.25% of risk-weighted assets. Under these guidelines, banks' and bank holding companies' assets are given risk-weights of 0%, 20%, 50%, or 100%. In addition, certain off-balance sheet items are given credit conversion factors to convert them to asset equivalent amounts to which an appropriate risk-weight applies. These computations result in the total risk-weighted assets. Most loans are assigned to the 100% risk category, except for first mortgage loans fully secured by residential property and, under certain circumstances, residential construction loans, both of which carry a 50% rating. Most investment securities are assigned to the 20% category, except for municipal or state revenue bonds, which have a 50% rating, and direct obligations of or obligations guaranteed by the United States Treasury or United States Government agencies, which have a 0% rating. The federal bank regulatory authorities have also implemented a leverage ratio, which is equal to Tier 1 capital as a percentage of average total assets less intangibles, to be used as a supplement to the risk-based guidelines. The principal objective of the leverage ratio is to place a constraint on the maximum degree to which a bank holding company may leverage its equity capital base. The minimum required leverage ratio for top-rated institutions is 3%, but most institutions are required to maintain an additional cushion of at least 100 to 200 basis points. The FDIC Improvement Act established a new capital-based regulatory scheme designed to promote early intervention for troubled banks which requires the FDIC to choose the least expensive resolution of bank failures. The new capital-based regulatory framework contains five categories of compliance with regulatory capital requirements, including "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized," and "critically undercapitalized." To qualify as a "well capitalized" institution, a bank must have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of no less than 6%, and a total risk-based capital ratio of no less than 10%, and the bank must not be under any order or directive from the appropriate regulatory agency to meet and maintain a specific capital level. Initially, we will qualify as "well capitalized." Under the FDIC Improvement Act regulations, the applicable agency can treat an institution as if it were in the next lower category if the agency determines (after notice and an opportunity for hearing) that the institution is in an unsafe or unsound condition or is engaging in an unsafe or unsound practice. The degree of regulatory scrutiny of a financial institution increases, and the permissible activities of the institution decreases, as it moves downward through the capital categories. Institutions that fall into one of the three undercapitalized categories may be required to do some or all of the following: o submit a capital restoration plan; o raise additional capital; o restrict their growth, deposit interest rates, and other activities; o improve their management; o eliminate management fees; or o divest themselves of all or a part of their operations. 10 Bank holding companies controlling financial institutions can be called upon to boost the institutions' capital and to partially guarantee the institutions' performance under their capital restoration plans. These capital guidelines can affect us in several ways. If we grow at a rapid pace, our capital may be depleted too quickly, and a capital infusion from the holding company may be necessary which could impact our ability to pay dividends. Our capital levels currently are more than adequate; however, rapid growth, poor loan portfolio performance, poor earnings performance, or a combination of these factors could change our capital position in a relatively short period of time. Failure to meet these capital requirements would mean that a bank would be required to develop and file a plan with its primary federal banking regulator describing the means and a schedule for achieving the minimum capital requirements. In addition, such a bank would generally not receive regulatory approval of any application that requires the consideration of capital adequacy, such as a branch or merger application, unless the bank could demonstrate a reasonable plan to meet the capital requirement within a reasonable period of time. Enforcement Powers. The Financial Institution Report Recovery and Enforcement Act expanded and increased civil and criminal penalties available for use by the federal regulatory agencies against depository institutions and certain "institution-affiliated parties." Institution-affiliated parties primarily include management, employees, and agents of a financial institution, as well as independent contractors and consultants such as attorneys and accountants and others who participate in the conduct of the financial institution's affairs. These practices can include the failure of an institution to timely file required reports or the filing of false or misleading information or the submission of inaccurate reports. Civil penalties may be as high as $1,000,000 a day for such violations. Criminal penalties for some financial institution crimes have been increased to 20 years. In addition, regulators are provided with greater flexibility to commence enforcement actions against institutions and institution-affiliated parties. Possible enforcement actions include the termination of deposit insurance. Furthermore, banking agencies' power to issue cease-and-desist orders were expanded. Such orders may, among other things, require affirmative action to correct any harm resulting from a violation or practice, including restitution, reimbursement, indemnification or guarantees against loss. A financial institution may also be ordered to restrict its growth, dispose of certain assets, rescind agreements or contracts, or take other actions as determined by the ordering agency to be appropriate. Effect of Governmental Monetary Policies. Our earnings are affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies. The Federal Reserve Bank's monetary policies have had, and are likely to continue to have, an important impact on the operating results of commercial banks through its power to implement national monetary policy in order, among other things, to curb inflation or combat a recession. The monetary policies of the Federal Reserve Board have major effects upon the levels of bank loans, investments and deposits through its open market operations in United States government securities and through its regulation of the discount rate on borrowings of member banks and the reserve requirements against member bank deposits. It is not possible to predict the nature or impact of future changes in monetary and fiscal policies. 11 Item 2. Description of Property - ---------------------------------- The company's main office is located at 112 Haywood Road in Greenville, South Carolina. We intend to lease the main office for approximately $25,000 per month for 20 years. We are currently operating out of a temporary facility located on the site of our main office, and we intend to complete our main office in the fourth quarter of 2000. Item 3. Legal Proceedings. - ----------------------------- None. Item 4. Submission of Matters to a Vote of Security Holders. - -------------------------------------------------------------- No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report. Item 5. Market for Common Equity and Related Stockholder Matters. - ------------------------------------------------------------------- Since our public offering on October 26, 1999, our common stock has been quoted on the OTC Bulletin Board under the symbol "GVBK." Our articles of incorporation authorize us to issue up to 10,000,000 shares of common stock, of which 1,150,000 shares, for a total of $11,500,000, were sold in the initial public offering and are outstanding as of March 15, 2000. We have 46 shareholders of record. To date, we have not paid cash dividends on our common stock. We currently intend to retain earnings to support operations and finance expansion and therefore do not anticipate paying cash dividends in the foreseeable future. The following table sets forth the high and low sales price information as quoted on the OTC Bulletin Board during the period indicated since our common stock began trading publicly in October, 1999. Stock Price --------------- High Low 1999 Fourth Quarter $10.50 $8.75 All of our outstanding shares of common stock are entitled to share equally in dividends from funds legally available when, and if, declared by the Board of Directors. (b) Pursuant to Commission Rule 463, we are obligated to report on the use of proceeds from our initial public offering. The information provided below is given as of December 31, 1999. (1) Our registration statement on Form SB-2 (File No. 333-83851) was declared effective by the Commission on October 26, 1999. (2) The offering commenced on October 26, 1999. (3) The offering closed on October 29, 1999 upon the sale of 1,100,000 shares the company had registered. (4) (i) On November 30, 1999, the underwriter exercised its over-allotment option and purchased an additional 50,000 securities that the company had registered. (ii) Wachovia Securities, Inc., served as underwriter for the offering. (iii) Common stock was the only class of securities registered in the offering. 12 (iv) We also registered warrants for our common stock which we have granted to our organizers. (v) 1,519,950 shares of our common stock was registered, of which 1,150,000 shares were sold. Warrants to purchase 139,950 shares of our common stock for $10.00 per share were also registered in the offering. We granted to our organizers warrants to purchase a total of 129,950 shares of common stock. The warrants granted to our organizers were based on shares they purchased. (vi) We incurred approximately $841,500 in expenses (including underwriters discounts) in connection with the issuance and distribution of the common stock in the offering. All of these expenses were paid directly or indirectly to persons or entities other than directors, officers, persons owning 10% or more of our securities, or affiliates. (vii) Our net proceeds after deducting the total expenses described above were $10,646,700. (viii) Through December 31, 1999, $5,856 of the net proceeds of the offering were invested in cash, $10,024,645 were invested in investments and related accrued interest, $111,192 in property and equipment and $534,329 was used to pay organizational costs. On October 29, 1999, the company invested $8,500,000 in the bank as initial operating capital. None of the net proceeds have been paid directly or indirectly to directors, officers, persons owning 10% or more of our securities, and affiliates, except for an aggregate of $233,325 paid as salaries to our officers and the bank's officers. (ix) The use of proceeds described above does not represent a material change from the use of proceeds disclosed in the prospectus for the offering. 13 Item 6. Management's Discussion and Analysis of Results of Operation - --------------------------------------------------------------------- Forward-Looking Statements The following is a discussion of the Company's financial condition as of and for the period ended December 31, 1999. These comments should be read in conjunction with the Company's condensed consolidated financial statements and accompanying footnotes appearing in this report. Financial Condition The company was organized on February 22, 1999. The company's initial principal activities have been related to its organization, the conducting of its initial public offering, obtaining approvals from the Office of the Comptroller of the Currency and FDIC of its application to charter the bank and to obtain deposit insurance, and obtaining approvals from the Federal Reserve Board for the company to acquire control of the bank. At December 31, 1999, the company had total assets of $10,141,693. These assets consisted principally of cash of $5,856, short-term investments of $9,777,872, accrued interest of $246,773, and property and equipment of $111,192. Property and equipment consists primarily of improvements to the bank's current main office site and computer equipment. The company has entered into an operating lease for the property of its commercial bank office for $500. Future plans are to construct its main building on this site and to lease the building and property for approximately $25,000 per month for 20 years. The company's liabilities at December 31, 1999 were $29,322 and consisted of accounts payable of $11,322 and accrued expenses of $18,000. The company had shareholders' equity of $10,112,371. The company had a net loss of $255,579 for the three months ended December 31, 1999, or a pro forma net loss of $.22 per share for the three months ended December 31, 1999 based on the actual shares of 1,150,000 which were outstanding as a result of the offering that was completed on October 29, 1999. The company also incurred a net loss of $534,329 from inception through December 31, 1999, or a pro forma net loss of $.46 per share since inception. These losses resulted from expenses incurred in connection with activities related to the organization of the company and the bank. These activities included preparing and filing an application with the OCC and the FDIC to charter the bank and to obtain deposit insurance, preparing an application with the Federal Reserve Board for approval of the company to acquire the bank, responding to questions and providing additional information to the OCC, the FDIC, and the Federal Reserve Board in connection with the application process, preparing a prospectus and filing a registration statement with the Securities and Exchange Commission, selling the company's common stock, meetings and discussions among various organizers regarding various preopening issues, hiring qualified personnel to work for the bank, conducting public relation activities on behalf of the bank, developing prospective business contacts for the bank and the company, and taking other actions necessary for a successful bank opening. Because the company was in the organization stage, it had no operations other than earnings from the proceeds from the public stock offering from which to generate revenues. During 1999, a total of $10,646,700 was used to capitalize the company. Of this amount, $8,500,000 was used to capitalize the bank and the remainder will be used to pay organization expenses of the company and provide working capital, including additional future capital for investment in the bank, if needed. The company believes this amount will be sufficient to fund the activities of the bank in its initial stages of operations. The company believes that income from the operations of the bank will be sufficient to fund the activities of the company on an ongoing basis; however, there can be no assurance that either the bank or the company will achieve any particular level of profitability. 14 Item 7. Financial Statements - ----------------------------- INDEX TO FINANCIAL STATEMENTS FOR THE PERIOD FROM FEBRUARY 22, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999 Report of Independent Public Accountant..............................F-2 Balance Sheet........................................................F-3 Statement of Operations..............................................F-4 Statement of Changes in Organizers' Deficit..........................F-5 Statement of Cash Flows..............................................F-6 Notes to Financial Statements...................................F-7- F-9 F-1 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Directors Greenville First Bancshares, Inc. Greenville, South Carolina We have audited the accompanying balance sheet of Greenville First Bancshares, Inc. (a development stage enterprise) as of December 31, 1999 and the related statements of operations, changes in organizers' deficit and cash flows for the period from February 22, 1999 (date of inception) through December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Greenville First Bancshares, Inc. (a development stage enterprise) as of December 31, 1999 and the results of its operations and its cash flows for the period from February 22, 1999 through December 31, 1999 in conformity with generally accepted accounting principles. /s/ Elliott, Davis & Company, LLP February 25, 2000 F-2
GREENVILLE FIRST BANCSHARES, INC. (A DEVELOPMENT STAGE ENTERPRISE) BALANCE SHEET DECEMBER 31, 1999 ASSETS ASSETS Cash and cash equivalents $ 5,856 Federal funds sold 1,460,000 Investments 8,317,872 Accrued interest 246,773 Property and equipment 111,192 --------------- Total assets $ 10,141,693 =============== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Accounts payable $ 11,322 Accrued expenses 18,000 --------------- Total liabilities 29,322 --------------- STOCKHOLDERS' EQUITY Preferred stock, par value $.01 per share, 10,000,000 shares authorized, no shares issued- Common stock, par value $.01 per share, 10,000,000 shares authorized, 1,150,000 issued 11,500 Additional paid-in capital 10,635,200 Retained deficit accumulated during the development stage (534,329) --------------- Total stockholders' equity 10,112,371 --------------- Total liabilities and stockholders' equity $ 10,141,693 ===============
The accompanying notes are an integral part of this financial statement. F-3 GREENVILLE FIRST BANCSHARES, INC. (A DEVELOPMENT STAGE ENTERPRISE) STATEMENT OF OPERATIONS For the period from February 22, 1999 (date of inception) through December 31, 1999 INTEREST INCOME $ 92,676 EXPENSES Salaries and payroll taxes 336,877 Professional fees 120,014 Marketing 32,371 Application 27,850 Insurance 10,960 Interest 12,049 Occupancy 13,001 Office Supplies 28,081 Membership dues and subscriptions 16,879 Telephone 6,737 Other 22,186 --------------- Total expenses 627,005 --------------- Loss before provision for income taxes (534,329) PROVISION FOR INCOME TAXES - --------------- Net loss $ (534,329) =============== The accompanying notes are an integral part of this financial statement. F-4
GREENVILLE FIRST BANCSHARES, INC. (A DEVELOPMENT STAGE ENTERPRISE) STATEMENT OF CHANGES IN ORGANIZERS' DEFICIT For the period from February 22, 1999 (date of inception) through December 31, 1999 Retained deficit accumulated Common stock Additional during the ------------------------- paid-in development Shares Amount capital stage Total --------- ------------ ------------ -------------- ----- Proceeds from the sale of stock (net of offering expenses of $854,110) 11,500 $ 11,500 $ 10,635,200 $ - $ 10,646,700 Net loss - - - (534,329) (534,329) ----------- ----------- -------------- ----------------- ------------- Balance, December 31, 1999 11,500 $ 11,500 $ 10,635,200 $ (534,329) $ 10,112,371 =========== =========== ============== ================= ============= F-5
The accompanying notes are an integral part of this financial statement. GREENVILLE FIRST BANCSHARES, INC. (A DEVELOPMENT STAGE ENTERPRISE) STATEMENT OF CASH FLOWS For the period from February 22,1999 (date of inception) through December 31, 1999 NET CASH USED FOR PRE-OPERATING ACTIVITIES Net loss $(534,329) Changes in operating liabilities increasing cash 29,322 --------------- Net cash used for pre-operating activities (505,007) --------------- INVESTING ACTIVITIES Increase in federal funds sold (1,460,000) Purchase of securities (18,464,645) Maturity of securities 9,900,000 Purchase of property and equipment (111,192) ---------------- Net cash used for investment activities (10,135,837) --------------- FINANCING ACTIVITIES Proceeds from borrowings on line of credit 400,000 Repayment of borrowings on line of credit (400,000) Proceeds from sale of stock 10,646,700 --------------- Net cash provided by financing activities 10,646,700 --------------- Net increase in cash 5,856 CASH AND CASH EQUIVALENTS, FEBRUARY 22, 1999 (date of inception) - --------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,856 =============== The accompanying notes are an integral part ofthis financial statement. F-6 GREENVILLE FIRST BANCSHARES, INC. (A DEVELOPMENT STAGE ENTERPRISE) NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES Greenville First Bancshares, Inc. (the "Company") is a South Carolina corporation organized for the purpose of owning and controlling all of the capital stock of Greenville First Bank (in organization) (the "Bank"). The Bank is a national bank under the laws of the United States located in Greenville County, South Carolina. The company received approval from both the FDIC and the OCC on January 7, 2000. The Bank began operations on January 10, 2000. The Company as of December 31, 1999 was a development stage enterprise as defined by Statement of Financial Accounting Standard No. 7, "Accounting and Reporting by Development Stage Enterprises", as it devotes substantially all its efforts to establishing a new business. The Company's planned principal operations had not commenced and revenue has not been recognized from the planned principal operations. On October 26, 1999, the Company sold 1,100,000 shares of its common stock at $10 per share and on November 30, 1999 sold 50,000 additional shares for a total of 1,150,000 shares. The offering raised $10,647,000 net of estimated underwriting discounts and commissions and offering expenses. The directors and executive officers of the Company purchased 266,900 shares of common stock at $10 per share, for a total of $2,660,000. Upon purchase of these shares, the Company issued stock warrants to the organizers to purchase up additional 129,950 shares of common stock. The Company used $8.5 million of the proceeds to capitalize the Bank. Year-end The Company has adopted a fiscal year ending on December 31, effective for the period ending December 31, 1999. A minimal amount of transactions occurring prior to the Company's incorporation have been combined in these financial statements for ease of presentation. Estimates The financial statements include estimates and assumptions that effect the Company's financial position and results of operations and disclosure of contingent assets and liabilities. Actual results could differ from these estimates. Statement of cash flows For purposes of reporting cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet caption "Cash and Due from Banks." Cash and cash equivalents have an original maturity of three months or less. Investment securities The Company accounts for investment securities in accordance with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities". The statement requires investments in equity and debt securities to be classified into three categories: 1. Available for sale securities: These are securities which are not classified as either held to maturity or as trading securities. These securities are reported at fair market value. Unrealized gains and losses are reported, net of income taxes, as separate components of shareholders' equity (accumulated other comprehensive loss). NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, Continued 2. Held to maturity securities: These are investment securities which the Company has the ability and intent to hold until maturity. These securities are stated at cost, adjusted for amortization of premiums and the accretion of discounts. F-7 GREENVILLE FIRST BANCSHARES, INC. (A DEVELOPMENT STAGE ENTERPRISE) NOTES TO FINANCIAL STATEMENTS (Continued) 3. Trading securities: These are securities which are bought and held principally for the purpose of selling in the near future. Trading securities are reported at fair market value, and related unrealized gains and losses are recognized in the income statement. The Company has no trading securities. Gains or losses on dispositions of investment securities are based on the differences between the net proceeds and the adjusted carrying amount of the securities sold, using the specific identification method. Organization costs Organization costs include incorporation, legal and consulting fees incurred in connection with establishing the Company. In accordance with Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities," organization costs are expensed when incurred. Income taxes Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the financial reporting and income tax bases of assets and liabilities. At December 31, 1999, no taxable income has been generated and therefore, no tax provision has been included in these financial statements. NOTE 2 - FEDERAL FUNDS SOLD When the Company's cash reserves are in excess of the required amount, it may lend excess to other banks on a daily basis. At December 31, 1999, federal funds sold amounted to $1,460,000. NOTE 3 - INVESTMENT SECURITIES The amortized costs and fair value of investment securities available for sale as of December 31, 1999 are as follows: Amortized Fair cost value ---------- ----- Federal agencies Due within one year $ 8,317,872 $ 8,317,872 NOTE 4 - LINE OF CREDIT The Company had available at December 31, 1999 a line of credit from a correspondent bank for short-term borrowings equal to 25 percent of the Company's capital. NOTE 5 - COMMITMENTS AND CONTINGENCIES The Company has entered into a 12-month operating lease for a modular unit to temporarily serve as its commercial bank office. The lease requires monthly payments of approximately $5,880. F-8 GREENVILLE FIRST BANCSHARES, INC. (A DEVELOPMENT STAGE ENTERPRISE) NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 5 - COMMITMENTS AND CONTINGENCIES, Continued The Company has also entered into an operating lease for the property of its temporary bank office for $500. Future plans are to construct its main building on an adjacent site and to lease the building and property for approximately $25,000 per month for 20 years. The Company entered into an agreement for preparation of site for the temporary facility at an estimated cost of $75,000. This cost will be amortized over one year. The Company has entered into an employment agreement with its president and chief executive officer that includes a three year compensation term, annual bonus, incentive program, stock option plan and a one-year non-compete agreement upon early termination. The Company has entered into an agreement with a data processor to provide ATM services, item processing and general ledger processing. Components of this contract include minimum charges based on volume and include initial setup costs of approximately $87,400 per year. The Company has entered into a 36 month operating lease on an automobile that is used by the Company's president and chief executive officer. The monthly payments are $620. At December 31, 1999 thirty-three lease payments remained. NOTE 6 - RELATED PARTY TRANSACTIONS One of the directors of the Company prepared the site for the temporary bank office and owns the land where the Company will lease the land and building for use as its main office (Note 5). F-9 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure - ------------------------------------------------------------------------ None. Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act - --------------------------------------------------------------------- In response to this Item, the information contained on page 10 of our Proxy Statement for the Annual Meeting of Shareholders to be held on May 11, 2000 is incorporated herein by reference. Item 10. Executive Compensation - -------------------------------- In response to this Item, the information contained on page 8 of our Proxy Statement for the Annual Meeting of Shareholders to be held on May11, 2000 is incorporated herein by reference. Item 11. Security Ownership of Certain Beneficial Owners and Management - ------------------------------------------------------------------------ In response to this Item, the information contained on page 10 of our Proxy Statement for the Annual Meeting of Shareholders to be held on May 11, 2000 is incorporated herein by reference. Item 12. Certain Relationships and Related Transactions - -------------------------------------------------------- In response to this Item, the information contained on page 10 of our Proxy Statement for the Annual Meeting of Shareholders to be held on May 11, 2000 is incorporated herein by reference. Item 13. Exhibits, List and Reports on Form 8-K - ------------------------------------------------- (a) The following documents are filed as part of this report: 1.1 Form of Underwriting Agreement between Greenville First Bancshares and Wachovia Securities (incorporated by reference to Exhibit 1.1 of the Registration Statement on Form SB-2, File No. 333-83851). 3.1. Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 of the Registration Statement on Form SB-2, File No. 333-83851). 3.2. Bylaws (incorporated by reference to Exhibit 3.2 of the Registration Statement on Form SB-2, File No. 333-83851). 4.1. See Exhibits 3.1 and 3.2 for provisions in Greenville First Bancshares's Articles of Incorporation and Bylaws defining the rights of holders of the common stock (incorporated by reference to Exhibit 4.1 of the Registration Statement on Form SB-2, File No. 333-83851). 4.2. Form of certificate of common stock (incorporated by reference to Exhibit 4.2 of the Registration Statement on Form SB-2, File No. 333-83851). 5.1. Opinion Regarding Legality (incorporated by reference to Exhibit 5.1 of the Registration Statement on Form SB-2, File No. 333-83851). 10.1. Employment Agreement dated July 27, 1999 between Greenville First Bancshares and Art Seaver (incorporated by reference to Exhibit 10.1 of the Registration Statement on Form SB-2, File No. 333-83851). 10.2. *Lease Agreement incorporated by reference between Greenville First Bank and Halton Properties, LLC, formerly Cothran Properties, LLC 10.3 Data Processing Services Agreement dated June 28, 1999 between Greenville First Bancshares and the Intercept Group (incorporated by reference to Exhibit 10.3 of the Registration Statement on Form SB-2, File No. 333-83851). 16 10.4 Form of Stock Warrant Agreement (incorporated by reference to Exhibit 10.4 of the Registration Statement on Form SB-2, File No. 333-83851). 10.5 Promissory Note dated February 22, 1999 from Greenville First Bancshares, Inc. in favor of John J. Meindl, Jr. (incorporated by reference to Exhibit 10.5 of the Registration Statement on Form SB-2, File No. 333-83851). 10.6 *Standard Form of Agreement between Greenville First Bancshares, Inc. and AMI Architects 27.1 *Financial Data Schedule (for electronic filing purposes) - ----------------------------- *Filed herewith (b) Reports on Form 8-K The company did not file any reports on Form 8-K during the fourth quarter of 1999. 17 SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GREENVILLE FIRST BANCSHARES, INC. Date: March 28, 2000 By: /s/ R. Arthur Seaver, Jr. -------------------------- ------------------------------------- President and Chief Executive Officer KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints R. Arthur Seaver, Jr., his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-KSB, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. Signature Title Date - --------- ----- ---- /s/ James M. Austin - ---------------------------- James M. Austin, III Chief Financial Officer, March 29, 2000 Principal Financial and Accounting Officer - ----------------------------- Andrew B. Cajka Director March --, 2000 /s/ Mark A. Cothran - ---------------------------- Mark A. Cothran Director March 29, 2000 /s/ Leighton M. Cubbage - ---------------------------- Leighton M. Cubbage Director March 29, 2000 /s/ Tecumseh Hooper - ---------------------------- Tecumseh Hooper, Jr. Director March 29, 2000 /s/ Rudolph G. Johnston - ------------------------------ Rudolph G. Johnstone, III, M.D. Director March 29, 2000 /s/ Keith J. Marrero - ---------------------------- Keith J. Marrero Director March 29, 2000 18 /s/ James B. Orders - ---------------------------- James B. Orders, III Director, Chairman March 29, 2000 /s/ William B. Sturgis - ---------------------------- William B. Sturgis Director March 29, 2000 /s/ R. Arthur Seaver - ---------------------------- R. Arthur Seaver, Jr. Director, Chief Executive March 29, 2000 Officer and President (principal executive officer) /s/ Fred Gilmer - ---------------------------- Fred Gilmer, Jr. Director, Senior Vice- March 29, 2000 President 19 EXHIBIT INDEX Exhibit Number Description - ------- ----------- 1.1 Form of Underwriting Agreement between Greenville First Bancshares and Wachovia Securities (incorporated by reference to Exhibit 1.1 of the Registration Statement on Form SB-2, File No. 333-83851). 3.1. Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 of the Registration Statement on Form SB-2, File No. 333-83851). 3.2. Bylaws (incorporated by reference to Exhibit 3.2 of the Registration Statement on Form SB-2, File No. 333-83851). 4.1. See Exhibits 3.1 and 3.2 for provisions in Greenville First Bancshares's Articles of Incorporation and Bylaws defining the rights of holders of the common stock (incorporated by reference to Exhibit 4.1 of the Registration Statement on Form SB-2, File No. 333-83851). 4.2. Form of certificate of common stock (incorporated by reference to Exhibit 4.2 of the Registration Statement on Form SB-2, File No. 333-83851). 5.1. Opinion Regarding Legality (incorporated by reference to Exhibit 5.1 of the Registration Statement on Form SB-2, File No. 333-83851). 10.1. Employment Agreement dated July 27, 1999 between Greenville First Bancshares and Art Seaver (incorporated by reference to Exhibit 10.1 of the Registration Statement on Form SB-2, File No. 333-83851). 10.2. *Lease Agreement between Greenville First Bank and Halton Properties, LLC, formerly Cothran Properties, LLC 10.3 Data Processing Services Agreement dated June 28, 1999 between Greenville First Bancshares and the Intercept Group (incorporated by reference to Exhibit 10.3 of the Registration Statement on Form SB-2, File No. 333-83851). 10.4 Form of Stock Warrant Agreement (incorporated by reference to Exhibit 10.4 of the Registration Statement on Form SB-2, File No. 333-83851). 10.5 Promissory Note dated February 22, 1999 from Greenville First Bancshares, Inc. in favor of John J. Meindl, Jr. (incorporated by reference to Exhibit 10.5 of the Registration Statement on Form SB-2, File No. 333-83851). 10.6 *Standard Form of Agreement between Greenville First Bancshares, Inc. and AMI Architects 27.1 *Financial Data Schedule (for electronic filing purposes) - ---------------------------------- *Filed herewith EX-10.2 2 LEASE AGREEMENT LEASE AGREEMENT LESSOR: Halton Properties LLC LESSEE: Greenville First Bank, National Association STATE OF SOUTH CAROLINA ) ) COUNTY OF GREENVILLE ) LEASE AGREEMENT THIS LEASE AGREEMENT (the "Lease") first made and entered into on the 23rd day of December, 1999, by and between Halton Properties, LLC, hereinafter called "Lessor", and Greenville First Bank, National Association, hereinafter called "Lessee"; WITNESSETH: WHEREAS, the Lessor is the owner of certain real property located at 112 Haywood Road in the City of Greenville, South Carolina as shown on survey for Halton Properties, LLC by C. O. Riddle Surveying Co. Inc. dated October 19, 1999, said survey being recorded in the RMC Office for the City of Greenville in Greenville County on October 26, 1999, in Book 40Z, Page 33, and a reduced copy of which is attached hereto as Exhibit A (survey); and, WHEREAS, the Lessor has constructed an office building on the Premises containing approximately 14,000 square feet (herein the "Building") with related improvements); and, WHEREAS, the Lessor desires to lease to Lessee and Lessee desires to lease from Lessor a portion of the Building containing 11,607 square feet of office space with related improvements and appurtenances, as more fully set out below, together with a non-exclusive right or easement to use all driveways, parking areas, retention surface water and other facilities. NOW, THEREFORE, Lessor and Lessee covenant and agree as follows: ARTICLE I GRANT AND TERM 1.01 Premises. The Lessor, for and in consideration of the rents, covenants, agreements and stipulations hereinafter mentioned reserved and contained, to be paid, kept and performed by the Lessee, by these presents does lease and rent to the said Lessee, and said Lessee hereby agrees to lease and take upon the terms and conditions which hereinafter appear a portion of the Improvements containing 11,607 square feet of office space, together with a non-exclusive right and easement to use all driveways, parking areas, retention surface water and other facilities of Leased Premises. 1.02 Access and Parking. Lessor warrants that there is full and free ingress, egress and access to and from the Leased Premises from a public highway or road. The 2 Lessor hereby grants to Lessee, its employees, visitors and guests a non-exclusive right and easement to use all driveways and parking facilities at no charge for the term of the Lease, as same may be extended, which form a part of the leased premises, subject to posted rules and regulations and at the sole risk of each driver and user of said facility. Tenant shall be entitled to the non-exclusive use of 3.65 spaces per 1,000 square feet of space leased. The parking facility shall not be used for the storage of abandoned or defective vehicles or for any other purpose except transient parking. Neither Lessee nor Lessee's employees, officers, agents, guests, invitees or other persons visiting the Leased Premises shall have any rights to any particular parking space or spaces, and no special markings or signs may be placed on any parking spaces by Lessee. 1.03 Term. The period beginning upon the execution of this Lease Agreement and continuing until the occupancy date shall be hereinafter referred to as the "Initial Term." The twenty (20) year period beginning on the first day of the first complete calendar month following the occupancy date (the "Lease Commencement Date") shall be hereinafter referred to as the "Base Term." Every twelve (12) calendar month period following the Lease Commencement Date shall constitute a lease year. An Addendum shall be executed by Lessor and Lessee prior to occupancy of the space by Lessee giving the Rental Commencement Date of the Base Term hereof and shall be attached hereto and incorporated herein by reference. 1.04 Renewal Option. Providing Lessee has not defaulted in the performance of any condition of this Lease Agreement, Lessee shall have the option to extend the term of this Lease Agreement for three (3) additional periods of five (5) years from the expiration date of the Base Term (the "Renewal Term"), provided however that written notice is given Lessor of such intention to extend the Lease Agreement one hundred eighty (180) days prior to the expiration date, and further provided that all conditions of said Lease Agreement except the rental rate which shall be adjusted as provided herein shall continue in full force and effect for the period of such extension, and there shall be no privilege to extend the terms of this Lease Agreement for any period of time beyond the expiration of the agreed upon extended terms. 1.05 Construction of Premises. Prior to the Rental Commencement Date (as defined in Paragraph 2.01), Lessor, at Lessor's sole expense, shall construct leased premises substantially in accordance with the Site plan included herein as Exhibit B, the Building plans (hereinafter the "Building plan") included herein as Exhibit C and specifications (hereinafter the "Specifications") included herein as Exhibit D. Lessee shall bear any expense in excess of Improvements specified in the within referenced Floor Plan and Specifications together with an additional charge of twenty percent (20%) of such excess to cover Lessor's overhead, by payment to Lessor prior to commencement of such work. All improvements made to the Leased Premises shall be the property of the Lessor during the term of this Lease Agreement and shall remain the property of Lessor upon termination of this Lease Agreement. Lessor will use its best 3 efforts to have the space completed within three hundred (300) days of the full execution of the Lease Agreement. 1.06 Occupancy: Lease Commencement Date.There shall be no delay in the commencement of the Term of this Lease Agreement and/or payment of the rent. The Leased Premises shall be ready for occupancy on such date that the improvements are substantially completed which shall be defined as either (i) the supervising architect certifies the Improvements have been substantially completed in accordance with the Floor Plan and Specifications and a Certificate of Occupancy has been issued, or, (ii) the Improvements have been substantially completed in accordance with the Floor Plan and Specifications and a Certificate of Occupancy has not been issued where Lessee causes a delay in preparing the Leased Premises for occupancy by changing the Floor Plan and Specifications, fails to make other decisions necessary for preparation of the Leased Premises for occupancy, Lessee fails to complete work Lessee has contracted for that is necessary for issuance of a Certificate of Occupancy or the date of occupancy by Lessee. If Lessor fails to have the Leased Premises ready for occupancy by the scheduled Lease Commencement Date, then (i) the Lease Commencement Date shall be extended to the date five (5) days after Lessor shall notify Lessee that the Leased Premises are ready for occupancy (ii) neither Lessor nor Lessor's agent, officers, employees, or contractors shall be liable for any damage, loss, liability or expense caused thereby, (iii) nor shall this Lease Agreement become void or voidable (unless such failure continues for more than one hundred eighty (180) days, in which case Lessee may, upon twenty (20) days written notice to Lessor, terminate this Lease). Prior to occupying the Leased Premises, Lessee shall execute and deliver to Lessor, a letter, in form and substance satisfactory to Lessor in its sole discretion, acknowledging the Lease Commencement Date and certifying that the Improvements have been completed and that Lessee has examined and accepted the Leased Premises. Lessee hereby authorizes any agent or employee who receives the keys to the Leased Premises on behalf of Lessee to execute and deliver such letter. Lessee shall conclusively be deemed to have made such acknowledgment and certification by occupying the Leased Premises. ARTICLE II RENT 2.01 Rent. Beginning on the Rental Commencement Date (as hereinafter defined) and continuing throughout the full term of this Lease Agreement, Lessee shall pay to Lessor without notice, demand, reduction, abatement, set off or any defense, minimum base rent (the "Base Rent") in equal monthly installments, in advance, on or before the first day of each month. Lessee's obligation to begin the payment of Base Rent shall be the "Rental Commencement Date" which shall be the first business day following the date on which (a) the supervising architect certifies that Lessor has substantially 4 completed construction of the Leased Premises in accordance with the Site Plan, Building Plan and Specifications in Exhibit B, Exhibit C and Exhibit D attached hereto or (b) the date of occupancy by the Lessee, whichever is sooner. If the Rental Commencement Date is a date other than the first day of a calendar month, the Base Rent shall be prorated daily from such date to the first day of the next calendar month and paid on the Rental Commencement Date. a. Initial Term. During the Initial Term, Lessee shall not be required to pay Rent. b. Base Term. The rent during the first five (5) years of the Base Term shall be as follows but shall be subject to the modifications as provided for in Exhibit E: Annual Monthly ------ ------- Year 1: $282,252.06 $23,521.01 Year 2: $289,173.81 $24,097.82 Year 3: $296,303.20 $24,691.93 Year 4: $303,646.48 $25,303.87 Year 5: $311,210.05 $25,934.17 c. Adjustment for Base Rent During Years Six (6) Through Ten (10) of the Base Term. At the end of the fifth (5th) lease year during the Base Term hereof and effective simultaneously with the commencement of beginning of the sixth (6th) lease year of the Base Term, the Base Rent shall be the greater of the following: $311,210.05 OR any increase as determined in accordance with the following provisions: (i) As promptly as practical after the end of the expiring term of this Lease Agreement, the Lessor shall compute the increase, if any, in the cost of living for the preceding initial lease period based upon the "Consumer Price Index-All Items, All Urban Consumers (1982-84 = 100)" (hereinafter defined*), published by the Bureau of Labor Statistics of the United States Department of Labor. (ii) The Index number indicated for the month of the rental commencement date under "All Items, All Urban Consumers" shall be "base Index number" and the corresponding Index number for the month preceding the rental commencement date for the fifth year of the Base Term shall be the current Index number." 5 (iii) The current Index number shall be divided by the base Index number. From the quotient thereof, there shall be subtracted the integer 1, and any resulting positive number shall be deemed to be the percentage of increase in the cost of living. (iv) The percentage of increase multiplied by $282,252.06 (initial rent) shall be the amount of rent increase payable during the Renewal Term. (v) The fixed rent, as so determined (i.e., the aggregate of and the "increase" as calculated herein) shall be due and payable to the Lessor in the same manner as the rent was payable for the original term. (vi) If publication of the Consumer Price Index shall be discontinued, the parties hereto shall thereafter accept comparable statistics on the cost of living for the City of Greenville, South Carolina, as they shall be computed and published by an agency of the United States or by a responsible financial periodical of recognized authority then to be selected by the parties hereto. In the event of (i) use of comparable statistics in place of the Consumer Price Index as above mentioned, or (ii) publication of the Index figure at other than monthly intervals, there shall be made in the method of computation herein provided for such revisions as the circumstances may require to carry out the intent of this Article. d. Adjustment for Base Rent During Years Eleven (11) Through Fifteen (15) of the Base Term. At the end of the tenth (10th) lease year during the Base Term hereof and effective simultaneously with the commencement of beginning of the eleventh (11th) lease year of the Base Term, the Base Rent shall be adjusted to reflect any increases in the Consumer Price Index (CPI-U) by multiplying the Base Rent in effect immediately prior to such adjustment by a fraction, the numerator of which shall be the Consumer Price Index (CPI-U) as of the most recent publication date prior to the beginning of the eleventh (11th ) lease year and the denominator of which shall be the Consumer Price Index (CPI-U) as of the most recent date prior to the beginning of the preceding five (5) year period (but in no event shall the Base Rent be reduced as a result of such adjustment); and the Base Rent thereby established by such adjustment shall continue in effect as the Base Rent required to be paid hereunder throughout the eleventh (11th ) through the fifteenth (15th) lease years of the Base Term. e. Adjustment for Base Rent During Years Sixteen (16) Through Twenty (20) of the Base Term. At the end of the fifteenth (15th) lease year during the Base Term hereof and effective simultaneously with the commencement of beginning of the sixteenth (16th) lease year of the Base Term, the Base Rent shall be adjusted to reflect any increases in the Consumer Price Index (CPI-U) by multiplying the Base Rent in effect immediately prior to such adjustment by a fraction, the numerator of which shall be the Consumer Price Index (CPI-U) as of the most recent publication date prior to the beginning of the sixteenth (16th ) lease year and the denominator of which shall be the 6 Consumer Price Index (CPI-U) as of the most recent date prior to the beginning of the preceding five (5) year period (but in no event shall the Base Rent be reduced as a result of such adjustment); and the Base Rent thereby established by such adjustment shall continue in effect as the Base Rent required to be paid hereunder throughout the sixteenth (16th) through the twentieth (20th) lease years of the Base Term. f. Base Rent During Renewal Terms. For each lease year of the extended terms, the Base Rent shall be subject to adjustment for increases in the Consumer Price Index as follows: Adjustment for First Extended Term: At the end of the twentieth (20th) lease year during the Base Term hereof and effective simultaneously with the commencement of the First Renewal Term, the Base Rent shall be adjusted to reflect any increases in the Consumer Price Index (CPI-U) by multiplying the Base Rent in effect immediately prior to such adjustment by a fraction, the numerator of which shall be the Consumer Price Index (CPI-U) as of the most recent publication date prior to the beginning of the First Extended Term and the denominator of which shall be the Consumer Price Index (CPI-U) as of the most recent date prior to the beginning of the preceding five (5) year period (but in no event shall the Base Rent be reduced as a result of such adjustment); and the Base Rent thereby established by such adjustment shall continue in effect as the Base Rent required to be paid hereunder throughout the First Renewal Term. Adjustment for Second Extended Term: At the end of the fifth (5th) lease year of the First Renewal Term and effective simultaneously with the commencement of the Second Renewal Term, the Base Rent shall be adjusted to reflect any increases in the Consumer Price Index (CPI-U) by multiplying the Base Rent in effect during the First Renewal Term by a fraction, the numerator of which shall be the Consumer Price Index (CPI-U) as of the most recent publication date prior to the beginning of the Second Renewal Term and the denominator of which shall be the Consumer Price Index (CPI-U) as of the most recent date prior to the beginning of the preceding five (5) year period (but in no event shall the Base Rent be reduced as a result of such adjustment); and the Base Rent thereby established by such adjustment shall continue in effect as the Base Rent required to be paid hereunder throughout the Second Renewal Term. Adjustment for Third Extended Term: At the end of the fifth (5th) lease year of the Second Renewal Term and effective simultaneously with the commencement of the Third Renewal Term, the Base Rent shall be adjusted to reflect any increases in the Consumer Price Index (CPI-U) by multiplying the Base Rent in effect during the Second Renewal Term by a fraction, the numerator of which shall be the Consumer Price Index (CPI-U) as of the most recent publication date prior to the beginning of the Third Renewal Term and the denominator of which shall be the Consumer Price Index (CPI-U) as of the most recent date prior to the beginning of the preceding five (5) year period (but in no event shall the Base Rent be reduced as a result of such adjustment); 7 and the Base Rent thereby established by such adjustment shall continue in effect as the Base Rent required to be paid hereunder throughout the Third Renewal Term. (* Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average, all items, 1982-1984 = 100, as published by the U.S. Department of Labor, Bureau of Labor Statistics, or if such index be discontinued, the generally recognized successor index.) 2.02 Late Payments. All unpaid Rent and other sums of whatever nature owed by Lessee to Lessor under this Lease and remaining unpaid ten (10) days after the due date shall bear a late penalty equal to five (5%) percent of the then amount due which shall be Additional Rent hereunder. Acceptance by Lessor of any payment from Lessee hereunder in an amount less than that which is currently due shall in no way affect Lessor's rights under this Lease and shall in no way constitute an accord and satisfaction. 2.03 Other Additional Rent Provisions. Any amounts required to be paid by Lessee under this Article II and any changes or expenses incurred by Lessor on behalf of Lessee (including any construction costs and change orders incurred by Lessor shall be considered Additional Rent. Any failure on the part of Lessee to pay such Additional Rent when and as the same shall become due shall entitle Lessor to the remedies available to it for non-payment of Base Rent. Lessee's obligations for payment of Additional Rent shall begin to accrue on the Rental Commencement Date. As used in this Lease Agreement, the term "Rent" shall include Base Rent and Additional Rent, except as otherwise expressly provided to the contrary. ARTICLE III OPERATING EXPENSES 3.01 Operating Expense Escalation. During the Base Term, the annual Rent shall be adjusted for increases in "operating expenses", (as hereinafter defined), in the following manner: (a) The Rent includes an expense stop of Four and 44/100 Dollars ($4.44) per rentable square foot equal to an annual rate of Fifty One Thousand Five Hundred Thirty Five and 08/100 Dollars ($51,535,08). The first year's Estimated CAM and Operating Expenses are attached hereto as Exhibit F. Lessee shall be responsible for its proportionate share of the cost of Operating Expenses over the expense stop amount stated herein. Those expenses which are not directly attributable to the Leased Premises shall be prorated by dividing the total number of rentable square feet in the Leased Premises (11,607 square feet) by the total number of square feet in the entire building (14,000 square feet). The Lessee's prorata share of the building is 82.91%. (b) Lessor shall furnish Lessee, annually, statements prepared by the Lessor showing Operating Expenses for the lease year. If operating expenses during the lease 8 year are greater than the expense stop amount, Lessee shall pay its share of the overage to Lessor within thirty (30) days after receiving such statements. As used in this Article, "Operating Expenses" shall include only those items customarily considered in good accounting practice to be building operating expenses, to wit normal repairs not covered by insurance, maintenance, cleaning, janitorial services, utilities, supplies, real estate taxes, common area maintenance charges, premiums for fire, casualty and liability insurance with respect to the building containing the Leased Premises, and management fees not in excess of four percent (4%) of gross collections. Operating Expenses shall not include, among other things, any expenses related to financing, depreciation, amortization, ground rents, costs of a capital nature, costs for which Lessee or other occupants of the Building are charged other than pursuant to the Operating Expense clauses, costs of procuring lessees, attorneys' fees, accounting fees, nor administrative salaries and wages. Operating Expenses shall include only those costs actually paid by Lessor. ARTICLE IV SERVICES 4.01 Services. Subject to conditions beyond Lessor's control, Lessor covenants at its expense to: (a) Furnish elevator service during Lessee's business hours. (b) Furnish hot and cold water for lavatory purposes. (c) Furnish electric current for lighting and office purposes and for parking areas. (d) Keep the sidewalks, corridors, stairways, and all other means of ingress and egress for the Leased Premises clean, in good repair and safe condition, well marked, well lighted and free of ice, snow and debris. (e) Keep all lawns, shrubbery and trees on the grounds of the building containing the Leased Premises in good order and condition and neat in appearance, and replant grass and shrubbery when necessary to maintain the grounds in good appearance and condition. (f) Provide Lessee access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week. (g) Common Area janitorial. 9 ARTICLE V HOLDING OVER 5.01 Rent for Holding Over Period. In the event Lessee remains in possession of the Leased Premises after the termination of the Base Term or any extended term, the same shall be construed to be a tenancy from month to month with said rent during hold over period to be 150% of the current term rental on the same rental as was being paid monthly at the termination of the Lease, and upon the same other terms specified herein. ARTICLE VI TAXES/ASSESSMENTS 6.01 Personal Property Taxes. Lessee shall timely pay directly to the applicable governmental taxing authorities any and all taxes with respect to any and all of Lessee's personal property which shall at any time be situated in, at or about the Leased Premises, including, but not limited to Lessee's leasehold improvements, trade fixtures, inventory and personal property. ARTICLE VI INSURANCE 7.01 Fire and Extended Coverage Insurance. During the Base Term, and any Renewal Term, Lessor covenants and agrees to maintain in full force a policy or policies of insurance on the Premises, including Improvements thereon or contents thereof, providing insurance protection against risks of direct physical loss, specifically including protection against damage or destruction by fire and other casualties excluding flood and earthquake, and vandalism insurance (formerly known as "All Risk Insurance"). Said insurance shall be in the amount equal to the full replacement value of the permanent improvements thereon under a policy or policies issued by responsible insurance companies approved by both parties and authorized to do business in the State of South Carolina. The Lessee agrees that it will not do or keep anything in or about the Leased Premises which will contravene the Lessor's policies insuring against loss or damage by fire or other hazards, or which will prevent the Lessor from procuring such policies in companies acceptable to the Lessor. 7.02 Insurance by Lessee. The Lessee covenants and agrees, at its sole cost and expense, to maintain in full force a policy of insurance on the interior of the Leased Premises and upon its personal property, fixtures, equipment and merchandise therein, providing insurance protection against risks of direct physical loss, specifically including protection against damage or destruction by fire and other casualties, excluding flood and earthquake and vandalism insurance (formerly known as All Risk Insurance). Further, Lessor covenants and agrees that it will require all other tenants of the 10 Premises to carry, at a minimum, the insurance coverage specified herein. Lessor shall provide evidence of said insurance coverage to Lessee from any and all other tenants of the Premises. 7.03 Lessee's Liability Insurance. The Lessee agrees to indemnify and/or hold and save the Lessor harmless, at all times during the primary term and any extension hereof, from and against any losses, damages, costs, or expenses on account of any claim for injury by a third party, including death or damage either to person or property sustained by the Lessor which arises out of the use and occupancy of the Leased Premises by the Lessee, its agents, employees, invitees, and customers (except those resulting from Lessor's willful, unlawful or negligent acts). Lessee shall give Lessor notice of all claims made against the Lessee that come within the scope of the indemnification in this paragraph and shall not settle any such claim without the Lessor's written consent. In connection herewith, Lessee shall, at its own expense, provide and keep in force, for the benefit and protection of the Lessor and Lessee as their respective interests may appear, and with the Lessor as an additional insured, a general liability policy or policies in standard form issued by reliable companies approved by both parties and licensed to do business in the State of South Carolina, protecting both the recovery being waived by the Lessee against Lessor, its successors and assigns against any and all liability occasioned by accident or disaster on the Leased Premises with minimum limits of $300,000 for injury to any one person and $1,000,000 per occurrence. A renewal policy shall be secured not less than ten (10) days prior to the expiration of any policy and a certificate of the insurer evidencing such insurance, with proof of payment of premium, shall be deposited with the Lessor upon the Lessor's request. 7.04 Lessor's Liability Insurance. The Lessor agrees to indemnify and/or hold and save the Lessee harmless, at all times during the Base Term and any extension hereof, from and against any losses, damages, costs, or expenses on account of any claim for injury by a third party, including death or damage either to person or property sustained by the Lessee which arises out of the use and occupancy of the Premises by the Lessor, its agents, employees, invitees, and customers (except those resulting from Lessee's willful, unlawful or negligent acts). Lessor shall give Lessee notice of all claims made against the Lessor that come within the scope of the indemnification in this paragraph and shall not settle any such claim without the Lessee's written consent. In connection herewith, Lessor shall, at its own expense, provide and keep in force, for the benefit and protection of the Lessee and Lessor as their respective interests may appear, and with the Lessee as an additional insured, a general liability policy or policies in standard form issued by reliable companies approved by both parties and licensed to do business in the State of South Carolina, protecting both the recovery being waived by the Lessor against Lessee, its successors and against any and all liability occasioned by accident or disaster on the Premises with minimum limits of $300,000 for injury to any one person and $1,000,000 per occurrence. A renewal policy shall be secured not less than ten (10) days prior to the expiration of any policy 11 and a certificate of the insurer evidencing such insurance, with proof of payment of premium, shall be deposited with the Lessee upon the Lessee's request. 7.05 Copies to Lessor. All policies required in Paragraphs 7.02, 7.03 and 7.04 shall be in such form and with such insurance company as shall be reasonably satisfactory to both parties with provisions for at least ten (10) days notice to Lessor or Lessee of cancellation. At least ten (10) days before the expiration of any such policy, Lessee shall supply Lessor with a substitute therefor or with evidence of payment of premiums therefor. In the event either party does not maintain the insurance herein called for, the other party may obtain said insurance and the other party shall reimburse the party in default for the premiums due on said insurance on demand. 7.06 Indemnity. Lessee will indemnify and save Lessor harmless from and against any and all claims, actions, damages, liability and expense in connection with loss of life, personal injury and/or damage to property which occur as a result of the operation of Lessee's business in and about the Premises not resulting from any acts or omissions of Lessor or Lessor's employees or agents. 7.07 Subrogation. Lessor and Lessee hereby grant to each other, on behalf of any insurer providing insurance to either Lessor or Lessee as required by this Lease, improvements thereon or contents thereof, a waiver of any right of subrogation by any such insurer that each may acquire against the other by virtue of payment of any loss under such insurance. Each of the parties hereby waives any rights it may have against the other party on account of any loss or damage to its property (including the Premises and its contents) which arises from any risk ordinarily covered by fire and extended coverage insurance or any other insurance required to be carried hereunder, whether or not such other party may have been negligent or at fault in causing such loss or damage. Each party shall obtain a clause or endorsement in the policies of such insurance which either party obtains in connection with the Premises or Leased Premises to the effect that the insurer waives, or shall otherwise be denied, the right of subrogation against the other party for loss covered by such insurance. 12 ARTICLE VIII REPAIRS 8.01 Repairs. All repairs to the Leased Premises, including but not limited to, the plumbing, heating, air-conditioning, electric wiring, and lighting apparatus, necessary to keep them in proper order shall be made by Lessor at Lessor's expense, unless said repairs are made necessary through the carelessness or neglect of Lessee's agents and employees, damage by fire or other casualty excepted. Any repairs, changes, or additions to the Leased Premises which may be required in order to bring the Leased Premises into compliance with any Federal, State, or municipal law, statute, ordinance, decision, rule or regulation shall be made by Lessor at Lessor's expense. 8.02 Alterations and Remodeling. After the commencement of the Base Term, with the permission and prior written consent of the Lessor, which shall not be unreasonably withheld, Lessee may make such alterations, additions, decorations and changes to the interior of the building and exterior lighting of the Leased Premises as it deems necessary for its purposes provided that the value of the buildings and improvements are not thereby diminished subject to the following conditions: (a) That if any such work increases any insurance premiums, taxes, or other costs or expenses relating to the Leased Premises, Lessee shall timely and fully pay and satisfy same. (b) That no casualty or mechanics or materialmen's claims or liens shall be created upon the Leased Premises or elsewhere by reason of or with respect to the work or a condition of the Leased Premises thereafter resulting from said work; and (c) That upon expiration or any earlier termination of the Lease, Lessee shall, at its cost and expense, upon the election of Lessor, promptly remove the alterations and repairs and restore the Leased Premises the condition existing prior to installation of the same. Any and all alterations, additions and improvements to the Leased Premises (other than inventory and trade fixtures) installed by or on behalf of Lessee shall immediately, at Lessor's option, become part of the Leased Premises and at the expiration or other termination of this Lease shall be surrendered to the Lessor. ARTICLE IX USE AND CONDUCT OF BUSINESS 9.01 Use of the Leased Premises. At the commencement of the Base Term of this Lease, the Leased Premises may be used by the Lessee for office space and related activities for Greenville First Bank. The Leased Premises shall not be used for any illegal purposes, or in violation of any valid regulation of any governmental body, nor in any manner to create any nuisance or trespass. 9.02 Nuisance. Lessee agrees not to create or allow any nuisance to exist on the 13 Premises, and to abate any nuisance that may arise, promptly and free of expense to Lessor. 9.03 Compliance with Regulations. Lessee shall comply with all laws, ordinances, orders, rules and regulations (hereinafter "Rules and Regulations" attached hereto as Exhibit G) and requirements of all federal, state and municipal governments and appropriate departments, commissions boards and officers thereof, which may be applicable to any Lessee improvements. Lessee will likewise observe and comply with the requirements of all policies of public liability, fire and all other types of insurance and all other instruments of record at any time in force with respect to the Leased Premises. 9.04 Zoning. Lessee acknowledges that the use of the Leased Premises is subject to any applicable regulations, zoning ordinances, including Planned Development Districts, if applicable, of any governmental authority and Lessee agrees to be bound by all terms and conditions imposed by such governmental authority, including any traffic restrictions, use restrictions and other conditions which plan approval is conditioned upon and all present and future zoning laws, ordinances, resolutions and regulations of any appropriate governmental authority. 9.05 Lessee's Right to Contest Regulations. Lessee shall have the right, after notice to Lessor to contest by appropriate legal proceedings, without cost or expense to Lessor, the validity of any law, ordinance, order, rule, and regulation or requirement of the nature herein referred to and to postpone Lessee's compliance with the same, provided such contest shall be promptly and diligently prosecuted by and at the expense of Lessee so that Lessor shall not thereby suffer any civil, or be subjected to any criminal, penalties or sanctions and that Lessee shall properly protect and save harmless Lessor against any liability and claims for any such non-compliance or postponement of compliance. ARTICLE X QUIET ENJOYMENT 10.01 It is a condition of this Lease that Lessor has a good and marketable title to the Premises free and clear of all liens and encumbrances except those to which Lessee has specifically consented in writing; that Lessor has the right to lease the same; that Lessor warrants and will defend Premises unto Lessee against the lawful claims of all persons whomsoever; that so long as the rents are being paid in the manner herein provided and the covenants, conditions and agreements herein being all and singularly kept, fulfilled and performed by Lessee, Lessee shall lawfully, peacefully and quietly hold, occupy and enjoy the Leased Premises during the term herein granted without any let, hindrance, ejection or molestation by Lessor or any person claiming under Lessor. 14 ARTICLE XI ENVIRONMENTAL 11.01 Lessor's Environmental Warranty. Prior to the signing of this Lease, Lessor has not caused or permitted persons with whom Lessor have contracted to cause (a) any violation of any federal, state or local law, ordinance, or regulation enacted related to environmental conditions on or about the Leased Premises, including, but not limited to soil and groundwater conditions, nor (b) engaged in the use, generation, release, manufacture, production, processing, storage, or disposal of any Hazardous Substance (as hereinafter defined) on, under, or about the Leased Premises. The term "Hazardous Substance" as used herein shall include, without limitation, flammable, explosives, radioactive materials, asbestos, polychlorinated biphenyls (PCB's), chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic products, and substances declared to be hazardous or toxic under any law or regulation promulgated by any governmental authority. 11.02 Hazardous Waste. Lessee covenants and warrants that it will not cause or permit to be brought upon the Leased Premises or installed in any buildings or improvements thereon any asbestos in any form, urea formaldehyde insulation, transformers or any other equipment which contain dielectric fluid containing levels of polychlorinated biphenyl in excess of fifty parts per million of any other chemical material or substance which is regulated as toxic or hazardous or exposure to which is prohibited, limited or regulated by any federal or state authority or which may or could pose a hazard to the health or safety of the occupants of the Leased Premises or the owners of the property adjacent to the Leased Premises. The Lessee shall not install, store, use, treat, transport or dispose of on the Leased Premises any regulated hazardous or toxic materials or waste, and in the event of any such installation, storage, use, treatment, presence, transportation or disposal during the term of this Lease, the Lessee shall remove any such hazardous materials or waste and comply with the regulations and orders of any authority having jurisdiction of the same, all at the expense of the Lessee, including necessary removal, cleanup or other remediation, and if Lessee shall fail to proceed with such removal or comply with such regulations or orders, the Lessor may declare this Lease in default. Lessee shall indemnify Lessor and hold Lessor harmless from any and all losses, damages or expenses which may be incurred by Lessor for the presence or removal from the Leased Premises of any such hazardous materials or waste caused by any activity of Lessee on the Leased Premises and the liability of the Lessee to Lessor under the covenants hereof shall survive termination of this Lease or any transfer of the leasehold estate or the fee estate by either Lessor or Lessee. 15 ARTICLE XII SIGNAGE 12.01 Lessee may furnish and install an identification sign in front of the Building, which bears the name of the business and/or logo. Such design shall be submitted to Lessor for Lessor's approval. The Lessee shall not place, erect nor maintain on any exterior surface of the Leased Premises, or anywhere outside of the Leased Premises, any sign, lettering decoration, or advertising. ARTICLE XIII DESTRUCTION If, during the Base Term of this Lease or any extension thereof, the Leased Premises is: (a) destroyed by fire or any other casualty whatsoever, or; (b) partially destroyed so as to render the Premises unfit for occupancy or Lessee's reasonable beneficial use and enjoyment or conduct of Lessee's usual business therein, or; (c) destroyed by a casualty which is not covered by Lessor's insurance, or if such casualty is covered by Lessor's insurance but a mortgagee of Lessor or other party entitled to insurance proceeds fails to make such proceeds available to Lessor in an amount sufficient for restoration of the Leased Premises (provided, however, that Lessor agrees to make a good faith effort to have such mortgagee make such proceeds available for full restoration or rebuilding); then Lessor shall make its reasonable determination as to the length of time to complete such repairs within thirty (30) days of the casualty and shall notify Lessee of same as provided herein. In the event restoration is reasonably estimated by Lessor to take more than one hundred twenty (120) days from the date of the destruction or casualty, or in the event the above described destruction or casualty should occur within the last two (2) years of the Base Term or extension thereof, then Lessor or Lessee shall have the right to terminate this Lease. In the event that the Lease is terminated in accordance with the foregoing provisions, Lessee shall surrender within thirty (30) days of notification the Leased Premises and interest therein, and Lessee shall pay rent only to the time of such destruction or casualty. In case of the total or partial damage or destruction to the Leased Premises, Lessor shall re-enter and repossess the same or any part thereof for the purpose of removing or repairing the loss or damage and shall proceed with due diligence to the repair of same unless, under the foregoing provisions of this Article XII, the Lease shall have been terminated. The Rent during the period of such repairs shall be wholly abated if all of the Premises have been thus repossessed by Lessor or otherwise made 16 unavailable to Lessee for Lessee's reasonable beneficial use and enjoyment or Lessee's conduct of Lessee's usual business therein for the purpose of repair for the period that Lessee has been dispossessed; and if only a portion of the Premises is thus repossessed or otherwise unavailable to Lessee for Lessee's reasonable beneficial use and enjoyment or Lessee's conduct of Lessee's usual business therein, the Rent shall be abated for such dispossession or unavailability pro rata, based on the portion of the Leased Premises thus repossessed or rendered unavailable during the period of repossession or unavailability. Any Rent abatement under this Article XII shall commence as of the date of the destruction. Lessor shall not be required to rebuild, repair, or replace any part of the personal property , furniture, equipment, fixtures, and other improvements which may have been placed by Lessee or other lessees within Building or Leased Premises, unless the damage thereto is caused by the sole negligence or willful act or omission or default hereunder of Lessor or Lessor's agents, employees, subtenants, assignees, or independent contractors. Any insurance which may be carried by Lessor or Lessee for damage to the Building or to the Leased Premises or to any personal property, fixtures, and related items therein shall be for the sole benefit of the party carrying such insurance and under its sole control; provided, however, Lessor shall carry insurance for the benefit of Lessor and Lessee sufficient to cover the full replacement cost of the shell of the Leased Premises and an amount equal to the initial Lessee improvements and related allowances set forth in Article VII of this Lease as well as insurance sufficient to cover Lessee's furniture, equipment, fixtures, personal property, and other improvement that Lessor shall have liability therefor under Article VII. Should Building or the Premises be destroyed or damaged by fire or other casualty that is due to the direct negligence or willful or wanton conduct of Lessee or Lessee's agents, employees, subtenants, assignees or independent contractors, Lessor may repair such damage, and there shall be no apportionment or abatement of Rent. ARTICLE XIV CONDEMNATION 14.01 Lessor, within ten (10) days of Lessor's receipt of any notice of the institution of condemnation proceedings or threat thereof with respect to all or any part of the Leased Premises, shall give written notice to Lessee of the same. Lessee shall have the right, option, to terminate this Lease within sixty (60) days after receipt of said notice from the Lessor should such condemnation affect twenty percent (20%) or more of the Leased Premises and Lessee determines that such condemnation will interfere with Lessee's ability to continue its business operations in substantially the same manner or space as existed prior to the condemnation or deed in lieu thereof. Lessee's obligation under this Lease including but not limited to Lessee's obligation to pay rent hereunder, shall cease upon Lessee's termination of this Lease pursuant to the terms of this paragraph; however, the Lessee shall be obligated to pay all rent due on or before the date of 17 termination down through the date Lessee surrenders possession of the Leased Premises to the Lessor. Lessee may assert a separate claim to the condemning authority for its damages. ARTICLE XV DEFAULT 15.01 Default by Lessee. The occurrence of any of the following events shall constitute a default under this Lease: (a) Lessee fails to pay any installment of rent within ten (10) business days after such installment is due, and fails to cure such delinquency within five (5) business days after actual receipt of written notice thereof by Lessee from Lessor: (b) Lessee fails to pay any additional item or any other charge or sum required to be paid by Lessee hereunder within thirty (30) days after actual receipt of written notice thereof by Lessee from Lessor; or (c) Lessee fails to perform or commence in good faith and proceed with reasonable diligence to perform any of its covenants under this Lease within thirty (30) days after actual receipt of written notice thereof by Lessee from Lessor. 15.02 Lessor's Remedies. In the event Lessee is in default pursuant to the conditions set forth in Section 14.01 above, Lessor, during the continuation of such default, shall have the option of pursuing either of the following remedies: (a) Lessor may terminate this Lease, in which event Lessee immediately shall surrender possession of the Leased Premises. All obligations of Lessee under the Lease, including Lessee's obligation to pay rent under the Lease, shall cease upon the date of termination except for Lessee's obligation to pay rent due and outstanding as of the date of termination. (b) Lessor, without terminating the Lease, may require Lessee to remove all property from the Leased Premises within thirty (30) days so that Lessor may re-enter and relet the premises to minimize Lessor's damages. In the event Lessee shall fail to remove all property within thirty (30) days after said demand, Lessor shall be entitled to remove Lessee's property to a storage facility, and all reasonable costs of such removal and storage shall be deemed additional rent under the Lease for which Lessee is responsible for payment. Lessor may enforce all of its rights and remedies under this Lease, including the right to recover the rent as it becomes due hereunder, provided that Lessor shall have an affirmative obligation to use Lessor's best efforts to re-let the Leased Premises and to mitigate its damages under the Lease. (c) Lessor may accelerate and declare the entire remaining unpaid rent for the balance of this Lease to be immediately due and payable forthwith and may, at 18 once, take legal action to recover and collect the same, such amount being discounted to present value using the prime rate published by a national bank acceptable to Lessee and Lessor and such amount reduced by the amount of rent Lessor will receive by reletting the premises for the remainder of the term of portion thereof. (d) If this Lease is terminated as set forth, Lessor may relet the Leased Premises (or any portion thereof) for such rent and upon such terms as Lessor is able to obtain (which may be for lower or higher rent, and for a shorter or longer term), and Lessee shall be liable for all damages sustained by Lessor, including but not limited to any deficiency in Rent for the duration of the Lease Term (or for the period of time which would have remained in the Lease Term in the absence of any termination, leasing fees, attorneys' fees, other marketing and collection costs and all expenses of placing the Leased Premises in first class rentable condition). (e) Nothing contained herein diminishes any right Lessor may have under South Carolina law to sue Lessee for damages in the event of any default by Lessee under this Lease, or from pursuing any other remedy available to Lessor at law or in equity. ARTICLE XVI BANKRUPTCY OR INSOLVENCY 16.01 In the event that Lessee shall be adjudged bankrupt or insolvent, or if any receiver shall be appointed for the business and property of Lessee, or if any assignment shall be made of Lessee's property for the benefit of creditors, then Lessor may terminate this Lease forthwith. ARTICLE XVII LESSEE'S RIGHT TO SUBLEASE AND ASSIGN 17.01 Lessee may not sublet the Leased Premises or assign this Lease without the prior written consent of the Lessor, which shall not be unreasonably withheld or delayed and if such consent is granted, Lessee shall remain liable to Lessor for the faithful performance of all of the covenants and conditions, including rental payment, required to be kept and performed under the terms of this Lease. Any assignment by operation of law as a result of a corporate merger or re-organization shall not require the previous written consent of Lessor. Notwithstanding anything contained in this Lease to the contrary and provided such transfer does not change the use as allowed in Paragraph 9.01, Lessee shall have the right, without obtaining the consent of Lessor, to assign, sublet or otherwise transfer Lessee's interest in or under this Lease to Lessee's parent corporation, any subsidiary of Lessee or to any other affiliate of Lessee (collectively, "Permitted Transfer"). In addition, Lessee shall not be required to comply with any other requirements under this Lease which relates to an assignment, subletting or other transfer of Lessee's interest hereunder (including, without limitation, payment of any transfer fee) if such assignment, subletting or other transfer is a Permitted Transfer. 20 However, no Permitted Transfer shall relieve Lessee from any obligations under this Lease. 17.02 Violation. Any violation of any provision of this Lease, whether by act or omission, by any assignee or subtenant of Lessee, shall be deemed a violation of such provision by the Lessee, it being the intention and meaning of the parties hereto that the Lessee shall assume and be liable to the Lessor for any and all acts and omissions of any and all assignees or subtenants of Lessee. If the Leased Premises or any part thereof is sublet or occupied by any person other than the Lessee, Lessor, in the event of Lessee's default, may and is hereby empowered to collect rent from the subtenant or occupant; the Lessor may apply the net amount received by it to the rent herein reserved and no such collection shall be deemed a release of the Lessee from the further performance of the covenants herein contained. ARTICLE XVIII LESSOR'S RIGHT TO MORTGAGE AND SELL 18.01 Estoppel Certificate. Within five (5) days after written request therefor by either Lessor or Lessee to the other, or in the event that upon any sale, assignment, hypothecation of the Premises, and/or the land thereunder, or a leasehold loan by Lessee of its leasehold estate herein, an estoppel statement shall be required from Lessor or Lessee. Lessor and Lessee agree to deliver to each other, in recordable form, a certificate to any proposed mortgagee or purchaser, certifying that this Lease is in full force and effect, that there are no defenses thereto, or stating those claimed by Lessor or Lessee, and as to such other matters as may be reasonably requested. 18.02 Subordination and Attornment. Upon Lessor's request, during the term of this Lease, Lessee shall execute a subordination agreement in recordable form wherein Lessee shall agree that this Lease is and shall be subordinate to the lien of any mortgages in any amount or amounts on all or any part of the land or buildings comprising the Premises, or on or against Lessor's interest or estate therein; provided that such subordination agreement shall recite that the subordination of Lessee's interests pursuant thereto are subject to the agreement by the mortgagee named in any such mortgage to recognize the Lease of Lessee in the event of foreclosure of any such mortgage if Lessee is not in default under the Lease. Lessee covenants and agrees to execute and deliver upon demand such further instruments evidencing such subordination of this Lease to the lien of any such mortgage as may be required by the Lessor within ten (10) days of demand therefor. Notwithstanding anything hereinabove contained, in the event the holder of any such mortgage shall at any time elect to have this Lease constitute a prior or superior lien to its mortgage, then and in such event upon any such mortgage holder notifying Lessee to that effect, this Lease shall be deemed prior and superior in lien to such mortgage irrespective of whether this Lease is dated prior to or subsequent to the date of such mortgage or lease. 20 If Lessor enters into one or more mortgages and Lessee is advised in writing of the name and address of the mortgagee under such mortgage, then this Lease shall not be terminated or canceled on account of any default by the Lessor in the performance of any of the terms, covenants or conditions hereof on its part contained, until Lessee shall have given written notice of such default to such mortgagee, specifying the default, in which event such mortgagee shall have the right to cure Lessor's default as otherwise provided herein and which cure shall be accepted by Lessee. Lessee shall, in the event any proceedings are brought for the foreclosure of or in the event of sale under any mortgage made by the Lessor covering the Premises, attorn to the purchaser upon any such foreclosure of sale and recognize such purchaser as the Lessor under this Lease. Further, Lessee will simultaneously with the execution of this Lease Agreement, execute the Subordination, Nondisturbance and Attornment Agreement attached hereto as Exhibit H. 18.03 Transfer of Lessor's Interest. Lessor shall have the right to convey, transfer or assign, by sale or otherwise, all or any part of its interest in this Lease or the Premises at any time and from time to time and to any person, subject to the terms and conditions of this Lease. All covenants and obligations of Lessor under this Lease shall not cease upon the execution of such conveyance, transfer or assignment, but such covenants and obligations shall run with the land and shall be binding upon any subsequent owner thereof. ARTICLE XIX SURRENDER OF PREMISES 19.01 Trade Fixtures. All equipment and every other item of property not permanently attached to the Premises and not paid for by Lessor, and any of such items leased by Lessee under bona fide leases from third party owners, are to remain and be the property of Lessee and Lessee is to have the right and privilege of removing any and all such property and equipment at any time during the continuance of this Lease or any extensions hereof and within thirty (30) days thereafter. In the event the aforesaid equipment is not removed by Lessee within said thirty (30) day period, title thereto shall automatically pass to and vest in Lessor. If said equipment is removed, Lessee shall restore the Premises to their condition prior to the removal of such property. It is further understood and agreed that the buildings and structures installed on the Premises by Lessor, may not be removed by Lessee at the termination of this Lease. 19.02 Surrender. The Lessee shall on the expiration or the sooner termination of the Lease Term surrender to Lessor the Leased Premises, including all buildings, replacements, changes, additions, and improvements constructed or placed by the 21 Lessee thereon, except for all moveable trade fixtures, equipment, and personal property belonging to the Lessee, broom-clean, free of sub-tenancies, and in good condition and repair, reasonable wear and tear excepted. ARTICLE XX MISCELLANEOUS 21.01 Lessor's Entry. The Lessor shall have the right to enter upon the Premises at all reasonable times upon twenty four (24) hours prior notice during the term of this Lease for the purposes of inspection, maintenance, repair and alteration and to show the same to prospective lessees or purchasers. 21.02 Nature and Extent of Agreement. This instrument and exhibits, Rules and Regulations and Riders, if any, attached hereto contain the complete agreement of the parties regarding the terms and conditions of the lease of the Premises, and there are no oral or written conditions, terms, understandings or other agreements pertaining thereto which have not been incorporated herein. This instrument may be amended from time to time by written addendum signed by both parties. This instrument creates only the relationship of Lessor and Lessee between the parties hereto as to the Premises; and nothing herein shall in any way be construed to impose upon either party hereto any obligations or restrictions not herein expressly set forth. The laws of the State of South Carolina shall govern the validity, interpretation, performance and enforcement of this Lease. 21.03 Partial Invalidity. If any term, covenant or condition of this Lease or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder to this Lease, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Lease shall be valid and be enforceable to the fullest extent permitted by law. 21.04 Recording. This Lease shall not be recorded, however, upon the request of either party hereto the other party shall join in the execution of a memorandum or so-called "short form" of this Lease for the purpose of recordation. Said memorandum or short form of this Lease shall describe the parties, the Premises and the term of this Lease and shall incorporate this Lease by reference. 21.05 Notices. Any notice required to Lessor or Lessee by the terms of this Lease shall be given in writing and shall be deemed given and received on the earlier of (i) the date actually received or (ii) five (5) days after deposit of the same in registered or certified United States mail, return receipt requested, postage prepaid, and addressed to the party due such notice at the address set forth below or at such other address as either Lessor or Lessee may give in writing to the other for such notices. 22 By Lessee to Lessor: Halton Properties LLC 9 Caledon Court Suite B Greenville, SC 29615 Attention: Mark A. Cothran By Lessor to Lessee: Greenville First Bank, National Bank 112 Haywood Road Greenville, SC 29615 Attention: Art Seaver 21.06 Lessor's Right to Perform Lessee's Covenants. Lessee covenants and agrees that if it shall at any time fail to pay any taxes or other charges to be paid by Lessee in accordance with the provision of Article IV, or to take out, pay for, maintain or deliver any of the insurance policies required by Lessee in Article V, or shall fail, within the time limits after the notice therein specified of any event of default has been given to make any other payment or perform any other act on its part to be made or performed, then Lessor may, but shall not be obligated so to do, and without further notice to or demand upon Lessee and without waiving or releasing Lessee from any obligations of Lessee in this Lease contained, (a) pay any taxes or other charges payable by Lessee pursuant to the provisions of Article VI, or (b) take out, pay for and maintain any of the insurance policies required by Lessee under Article VII, or (c) make any other payment or perform any other act on Lessee's part to be made or performed as in this Lease provided. 21.07 Statement of Lease Commencement Date. Lessee at Lessor's request, shall from time to time execute and deliver a written statement confirming the commencement and termination dates of the term of this Lease. 21.08 Attorneys Fees and Expenses. In the event either party commences any action (at law or in equity), the prevailing party in such action shall be entitled to an award of its costs and attorney's fees incurred against the non-prevailing party whether the action be based on contract or tort theory. 21.09 "Reasonable Consent" Provisions. To the extent any provision of this Lease may call for the "reasonable consent" of either party to be given, and where written notice is given requesting such consent as provided in Section 21.05, such consent shall be deemed "given" unless a written refusal to consent is sent to the requesting 23 party within twenty (20) business days after the mailing of the written request for consent. 21.10 Applicable Law. Any controversy or claim arising out of or relating to this Lease Agreement shall be governed by the substantive law of the State of South Carolina without consideration of the conflicts of law rules of said state. 21.11 Captions. The captions or headings at the beginning of articles and sections of this Lease are included for convenience only and in no way define, limit or describe the scope of any provision hereof. 21.12 Binding Effect. This Lease shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. 21.13 Duplicate Counterparts. This Lease may be executed in one or more counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. 21.14 Additional Documents. Each party shall, at the request of the other, execute, acknowledge, (if appropriate) and deliver such additional documents and instruments, and do such other acts as may be necessary or convenient to call out the purposes and intent of this Lease and to permit the Lessee to record this Lease and grant security interests therein. This Lease may be signed in triplicate originals by the parties. 21.15 Addendum. Modifications to this Lease Agreement, if any, are presented in Exhibit I which is attached to and made a part of this Lease Agreement. In the event of any inconsistency between the provisions contained within the body of this Lease Agreement and the Addendum, the provisions of the Addendum shall control. 24 IN TESTIMONY WHEREOF, the parties hereto have caused these presents to be executed in their respective names by their duly authorized representatives, executing this instrument in triplicate originals, as of the day and year first above written. IN THE PRESENCE OF: Lessor: Halton Properties, LLC ______________________________ By:/s/ Mark A. Cothran Witness Mark A. Cothran, Member ______________________________ Date of Execution: 12/23/99 Witness Lessee: Greenville First Bank, National Association ______________________________ By:/s/ R. Arthur Seaver Witness Print Name: R. Arthur Seaver, Jr. ______________________________ Witness Its: President Date of Execution: 12/23/99 LISTING OF EXHIBITS EXHIBIT A Survey EXHIBIT B Site Plan EXHIBIT C Building Plan EXHIBIT D Building Specifications EXHIBIT E Total Estimated Construction Costs EXHIBIT F Estimated CAM and Operating Expenses EXHIBIT G Rules and Regulations EXHIBIT H Subordination, Nondisturbance and Attornment Agreement EXHIBIT I Lessees Right of First Refusal Exhibit E The total estimated construction costs for the building shell, Greenville First Bank N.A. tenant upfit and all site improvements (page two of Exhibit E) is $2,092,858.0 (The Estimate). The Estimate does not include the tenant upfit on the approximately 2,393 SF. of unfinished space for lease. The unfinished 2,393 will have only the building shell improvements as provided in the plans and specifications Exhibits C and D. Within Sixty (60) days of Occupancy of the Leased Premises by the Lessee, Lessor will provide a final accounting of actual construction costs (Costs) for the building shell, Greenville First Bank N.A. tenant upfit and all site improvements. Lessor will notify Lessee in writing of any variances between Costs and the Estimate. Should the Costs be more than the Estimate the Lessee shall pay to lessor the difference within Seven (7) business days of such notice. Should the Costs be less than the Estimate, the lessor shall pay to lessee the difference within Seven (7) business days of such notice or credit the difference to the next scheduled rental payment. Exhibit F Halton Road estimated Operating expenses Estimated per s.f. CAM and Operating Expenses 21-Dec-99 CAM Charges Taxes $1.15 Insurance $0.09 ----- $1.24 $1.24 Water (irrigation) $0.02 Common area lighting $0.13 Landscape maintenance $0.24 Maintenance reserve $0.04 Management fee 4% of collections $0.97 ----- $1.40 $1.40 Operating Expenses Water (domestic) $0.02 Electricity $1.25 Natural gas $0.03 Janitorial (common areas only) $0.21 Elevator $0.14 Maintenance $0.10 Miscellaneous $0.05 ----- $1.80 $1.80 $4.44 Rental rate $19.88 $24.32 EX-10.6 3 AGR. WITH GREENVILLE & AMI ARCHITECTS T H E A M E R I C A N I N S T I T U T E 0 F A R C H I T E C T S - -------------------------------------------------------------------------------- AIA Document B141 Standard Form of Agreement Between Owner and Architect 1987 EDITION THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES; CONSULTATION WITH AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION. - -------------------------------------------------------------------------------- AGREEMENT made as of the day of August in the year of Nineteen Hundred and Ninety-Nine BETWEEN the Owner: Greenville First Bancshares, Inc. (Name and address) PO Box 17465 Greenville, SC 29606 and the Architect: (Name and address) AMI Architects 206 East Coffee Street Greenville, SC 29601 For the following Project: (Include detailed description of Project, location, address and scope.) 14,000 square foot headquarter banking facility located at the corner of Haywood Road and Halton Road in Greenville, South Carolina. The building will be two stories in height and have parking and drive-through paving. The Owner and Architect agree as set forth below. - -------------------------------------------------------------------------------- Copyright 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, (C) 1987 by The American Institute of Architects, 1735 New York Avenue, N.W., Washington, D.C. 20006. Reproduction of the material herein or substantial quotation of its provisions without written permission of the AIA violates the copyright laws of the United States and will be subject to legal prosecution. - -------------------------------------------------------------------------------- AIA DOCUMENT B141 o OWNER-ARCHITECT AGREEMENT o FOURTEENTH EDITION o AIA(R)o(C)1987 THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C. 20006 ARTICLE 1 ARCHITECT'S RESPONSIBILITIES 1.1 ARCHITECT'S SERVICES 1.1.1 The Architect's services consist of those services performed by the Architect, Architect's employees and Architect's consultants as enumerated in Articles 2 and 3 of this Agreement and any other services included in Article 12. 1.1.2 The Architect's services shall be performed as expeditiously as is consistent with professional skill and care and the orderly progress of the Work. Upon request of the Owner, the Architect shall submit for the Owner's approval at a schedule for the performance of the Architect's services which may be adjusted as the Project proceeds, and shall include allowances for periods of time required for the Owner's review and for approval of submissions by authorities having jurisdiction over the Project. Time limits established by this schedule approved by the Owner shall not, except for reasonable cause, be exceeded by the Architect or Owner. 1.1.3 The services covered by this Agreement are subject to the time limitations contained in Subparagraph 11.5.1 ARTICLE 2 SCOPE OF ARCHITECT'S BASIC SERVICES 2.1 DEFINITION 2.1.1 The Architect's Basic Services consist of those described in Paragraphs 2.2 through 2.6 and any other services identified in Article 12 as part of Basic Services, and include normal structural, mechanical and electrical engineering services. 2.2 SCHEMATIC DESIGN PHASE 2.2.1 The Architect shall review the program furnished by the Owner to ascertain the requirements of the Project and shall arrive at a mutual understanding of such requirements with the Owner. 2.2.2 The Architect shall provide a preliminary evaluation of the Owner's program, schedule and construction budget requirements, each in terms of the other, subject to the limitations set forth in Subparagraph 5.2.1. 2.2.3 The Architect shall review with the Owner alternative approaches to design and construction of the Project. 2.2.4 Based on the mutually agreed-upon program, schedule and construction budget requirements, the Architect shall prepare, for approval by the owner, Schematic Design Documents consisting of drawings and other documents illustrating the scale and relationship of Project components. 2.2.5 The Architect shall submit to the Owner a Preliminary estimate of Construction Cost based on current area, volume or other unit costs. 2.3 DESIGN DEVELOPMENT PHASE 2.3.1 Based on the approval Schematic Design Documents and any adjustments authorized by the Owner in the program, schedule or construction budget, the Architect shall prepare, for approval by the Owner, Design Development Documents consisting of drawings and other documents to fix and describe the size and character of the Project as to architectural, structural, mechanical and electrical systems, materials and such other elements as may be appropriate. 2.3.2 The Architect shall advise the Owner of any adjustments to the preliminary estimate of Construction Cost. 2.4 CONSTRUCTION DOCUMENTS PHASE 2.4.1 Based on the approved Design Development Documents and any further adjustments in the scope or quality of the Project or in the construction budget authorized by the Owner, the Architect shall prepare, for approval by the Owner, Construction Documents consisting of Drawings and Specifications setting forth in detail the requirements for the construction of the Project. 2 2.4.2 The Architect shall assist the Owner in the preparation of the necessary bidding information, bidding forms, the Conditions of the Contract, and the form of Agreement between the Owner and Contractor. 2.4.3 The Architect shall advise the Owner of any adjustments to previous preliminary estimates of Construction Cost indicated by changes in requirements or general market conditions. 2.4.4 The Architect shall assist the Owner in connection with the Owner's responsibility for filing documents required for the approval of governmental authorities having jurisdiction over the Project. 2.5 BIDDING OR NEGOTIATION PHASE 2.5.1 The Architect, following the Owner's approval of the Construction Documents and of the latest preliminary estimate of Construction Cost, shall assist the Owner in obtaining bids of negotiated proposals and assist in awarding and preparing contracts for construction. 2.6 CONSTRUCTION PHASE -ADMINISTRATION OF THE CONSTRUCTION CONTRACT 2.6.1 The Architect's responsibility to provide Basic Services for the Construction Phase under this Agreement commences with the award of the Contract for Construction and terminates at the earlier of the issuance to the Owner of the final Certificate for Payment or 60 days after the date of Substantial Completion of the Work, unless extended under the terms of Subparagraph 10.3.3. 2.6.2 The Architect shall provide administration of the Construction as set forth below and in the edition of AIA Document A201, General Conditions of the Contract for Construction, current as of the date of this Agreement, unless otherwise provided in this Agreement. 2.6.3 Duties, responsibilities and limitations of authority of the Architect shall not be restricted, modified or extended without written agreement of the Owner and Architect with consent of the Contractor, which consent shall not be unreasonably withheld. 2.6.4 The Architect shall be a representative of and shall advise and consult with the Owner (1) during construction until final payment to the Contractor is due, and (2) as an Additional Service at the Owner's direction from time to time during the correction period described in the Contract for Construction. The Architect shall have authority to act on behalf of the Owner only to the extent provided in this Agreement unless otherwise modified by written instrument. 2.6.5 The Architect shall visit the site at intervals appropriate to the stage of construction or as otherwise agreed by the Owner and Architect in writing to become generally familiar with the progress and quality of the Work completed and to determine in general if the Work is being performed in a manner indicating that the Work when completed will be in accordance with the Contract Documents. However, the Architect shall not be required to make exhaustive or continuous on-site inspections to check the quality or quantity of the Work. On the basis of on-site observations as an architect, the Architect shall keep the Owner informed of the progress and quality of the Work, and shall endeavor to guard the Owner against defects and deficiencies in the Work. (More extensive site representation may be agreed to as an Additional Service, as described in Paragraph 3.2) 2.6.6 The Architect shall not have control over or charge of and shall not be responsible for construction means, methods, Documents techniques, sequences or procedures, or for safety precautions and programs in connection with the Work, since these are solely the Contractor's responsibility under the Contract for Construction. The Architect shall not be responsible for the Contractor's schedules or failure to carry out the Work in accordance with the Contract Documents. The Architect shall not have control over or charge of acts or omissions of the Contractor, Subcontractors, or their agents or employees, or of any other persons performing portions of the Work. 2.6.7 The Architect shall at all times have access to the Work wherever it is in preparation or progress. 2.6.8 Except as may otherwise be provided in the Contract Documents or when direct communications have been specially authorized, the owner and Contractor shall communicate through the Architect. Communications by and with the Architect's consultants shall be through the Architect. 2.6.9 Based on the Architect's observations and evaluations of the Contractor's Applications for 3 Payment, the Architect shall review and certify the amounts due the Contractor. 2.6.10 The Architect's certification for payment shall constitute a representation to the Owner, based on the Architect's observations at the site as provided in Subparagraph 2.6.5 and on the data comprising the Contractor's Application for Payment, that the Work has progressed to the point indicated and that, to the best of the Architect's knowledge, information and belief, quality of the Work is in accordance with the Contract Documents. The foregoing representations are subject to an evaluation of the Work for conformance with the Contract Documents upon Substantial Completion, to results of subsequent tests and inspections, to minor deviations from the Contract Documents correctable prior to completion and to specific qualifications expressed by the Architect. The issuance of a Certificate for Payment shall further constitute a representation that the Contractor is entitled to payment in the amount certified. However, the issuance of a Certificate for Payment shall not be a representation that the Architect has (1) made exhaustive or continuous on-site inspections to check the quality or quantity of the Work, (2) reviewed construction means, methods, techniques, sequences or procedures, (3) reviewed copies of requisitions received from Subcontractors and material suppliers and other data requested by the Owner to substantiate the Contractor's right to payment or (4) ascertained how or for what purpose the Contractor has used money previously paid on account of the Contract Sum. 2.6.11 The Architect shall have authority to reject Work which does not conform to the Contract Documents. Whenever the Architect considers it necessary or advisable for implementation of the intent of the Contract Documents, the Architect will have authority to require additional inspection or testing of the Work in accordance with the provisions of the Contract Documents, whether or not such Work is fabricated, installed or completed. However, neither this authority of the Architect nor a decision made in good faith either to exercise or not to exercise such authority shall give rise to a duty or responsibility of the Architect to the Contractor, Subcontractors, material and equipment suppliers, their agents or employees or other persons performing portions of the Work. 2.6.12 The Architect shall review and approve or take other appropriate action upon Contractor's submittals such as Shop Drawings, Product Data and Samples, but only for the limited purpose of checking for conformance with information given and the design concept expressed in the Contract Documents. The Architect's action shall be taken with such reasonable promptness as to cause no delay in the Work or in the construction of the Owner or of separate contractors, while allowing sufficient time in the Architect's professional judgment to permit adequate review. Review of such submittals is not conducted for the purpose of determining the accuracy and completeness of other details such as dimensions and quantities or for substantiating instructions for installation or performance of equipment or systems designed by the Contractor, all of which remain the responsibility of the Contractor to the extent required by the Contract Documents. The Architect's review shall not constitute approval of safety precautions or, unless otherwise specifically stated by the Architect, of construction means, methods, techniques, sequences or procedures. The Architect's approval of a specific item shall not indicate approval of an assembly of which the item is a component. When professional certification of performance characteristics of materials, systems or equipment is required by the Contract Documents, the Architect shall be entitled to rely upon such certification to establish that the materials, systems or equipment will meet the performance criteria required by the Contract Documents. 2.6.13 The Architect shall prepare Change Orders and Construction Change Directives, with supporting documentation and data if deemed necessary by the Architect as provided in Subparagraphs 3.1.1 and 3.3.3, for the Owner's approval and execution in accordance with the Contract Documents, and may authorize minor changes in the Work not involving an adjustment in the Contract Sum or an extension of the Contract Time which are not inconsistent with the intent of the Contract Documents. 2.6.14 The Architect shall conduct inspections to determine the date or dates of Substantial Completion and the date of final completion, shall receive and forward to the Owner for the Owner's review and records written warranties and related documents required by the Contract Documents and assembled by the Contractor, and shall issue a final Certificate for Payment upon compliance with the requirements of the Contract Documents. 2.6.15 The Architect shall interpret and decide matters concerning performance of the Owner and Contractor under the requirements of the Contract 4 Documents on written request of either the Owner or Contractor. The Architect's response to such requests shall be made with reasonable promptness and within any time limits agreed upon. 2.6.16 Interpretations and decisions of the Architect shall be consistent with the intent of and reasonably inferable from the Contract Documents and shall be in writing or in the form of drawings. When making such interpretations and initial decisions, the Architect shall endeavor to secure faithful performance by both Owner and Contractor, shall not show partiality to either, and shall not be liable for results of interpretations or decisions so rendered in good faith. 2.6.17 The Architect's decisions on matters relating to aesthetic effect shall be final if consistent with the intent expressed in the Contract Documents. 2.6.18 The Architect shall render written decisions within a reasonable time on all claims, disputes or other matters in question between the Owner and Contractor relating to the execution or progress of the Work as provided in the Contract Documents. 2.6.19 The Architect's decisions on claims, disputes or other matters, including those in question between the Owner and Contractor, except for those relating to aesthetic effect as provided in Subparagraph 2.6.17, shall be subject to arbitration as provided in this Agreement and in the Contract Documents. ARTICLE 3 ADDITIONAL SERVICES 3.1 GENERAL 3.1.1 The services described in this Article 3 are not included in Basic Services unless so identified in Article 12, and they shall be paid for by the Owner as provided in this Agreement, in addition to the compensation for Basic Services. The services described under Paragraphs 3.2 and 3.4 shall only be provided if authorized or confirmed in writing by the Owner. If services described under Contingent Additional Services in Paragraph 3.3 are required due to circumstances beyond the Architect's control, the Architect shall notify the Owner prior to commencing such services. If the Owner deems that such services described under Paragraph 3.3 are not required, the Owner shall give prompt written notice to the Architect. If the Owner indicates in writing that all or part of such Contingent Additional Services are not required, the Architect shall have no obligation to provide those services. 3.2 PROJECT REPRESENTATION BEYOND BASIC SERVICES 3.2.1 If more extensive representation at the site than is described in Subparagraph 2.6.5 is required, the Architect shall provide one or more Project Representatives to assist in carrying out such additional on-site responsibilities. 3.2.2 Project Representatives shall be selected, employed and directed by the Architect, and the Architect shall be compensated therefor as agreed by the Owner and Architect. The duties, responsibilities and limitations of authority of Project Representatives shall be as described in the edition of AIA Document B352 current as of the date of this Agreement, unless otherwise agreed. 3.2.3 Through the observations by such Project Representatives, the Architect shall endeavor to provide further protection for the Owner against defects and deficiencies in the Work, but the furnishing of such project representation shall not modify the rights, responsibilities or obligations of the Architect as described elsewhere in this Agreement. 3.3 CONTINGENT ADDITIONAL SERVICES 3.3.1 Making revisions in Drawings, Specifications or other documents when such revisions are: .1 inconsistent with approvals or instructions previously given by the Owner, including revisions made necessary by adjustments in the Owner's program or Project budget; .2 required by the enactment or revision of codes, laws or regulations subsequent to the preparation of such documents; or .3 due to changes required as a result of the Owner's failure to render decisions in a timely manner. 3.3.2 Providing services required because of significant changes in the Project including, but not limited to, size, quality, complexity, the Owner's schedule, or the method of bidding or negotiating and 5 contracting for construction, except for services required under Subparagraph 5.2.5. 3.3.3 Preparing Drawings, Specifications and other documentation and supporting data, evaluating Contractor's proposals, and providing other services in connection with Change Orders and Construction Change Directives. 3.3.4 Providing services in connection with evaluating substitutions proposed by the Contractor and making subsequent revisions to Drawings, Specifications and other documentation resulting therefrom. 3.3.5 Providing consultation concerning replacement of work damaged by fire or other cause during construction, and furnishing services required in connection with the replacement of such Work. 3.3.6 Providing services made necessary by the default of the Contractor, by major defects or deficiencies in the Work of the Contractor, or by failure of performance of either the Owner or Contractor under the Contract for Construction. 3.3.7 Providing services in evaluating an extensive number of claims submitted by the Contractor or others in connection with the Work. 3.3.8 Providing services in connection with a public hearing, arbitration proceeding or legal proceeding except where the Architect is party thereto. 3.3.9 Preparing documents for alternate, separate or sequential bids or providing services in connection with bidding, negotiation or construction prior to the completion of the Construction Documents Phase. 3.4 OPTIONAL ADDITIONAL SERVICES 3.4.1 Providing analyses of the Owner's needs and programming the requirements of the Project. 3.4.2 Providing financial feasibility or other special studies. 3.4.3 Providing planning surveys, site evaluations or comparative studies of prospective sites. 3.4.4 Providing special surveys, environmental studies and submissions required for approvals of governmental authorities or others having jurisdiction over the Project. 3.4.5 Providing services relative to future facilities, systems and equipment. 3.4.6 Providing services to investigate existing conditions or facilities or to make measured drawings thereof. 3.4.7 Providing services to verify the accuracy of drawings or other information furnished by the Owner. 3.4.8 Providing coordination of construction performed by separate contractors or by the Owner's own forces and coordination of services required in connection with construction performed and equipment supplied by the Owner. 3.4.9 Providing services in connection with the work of a construction manager or separate consultants retained by the Owner. 3.4.10 Providing detailed estimates of Construction Cost. 3.4.11 Providing detailed quantity surveys or inventories of material, equipment and labor. 3.4.12 Providing analyses of owning and operating costs. 3.4.13 Providing interior design and other similar services required for or in connection with the selection, procurement or installation of furniture, furnishings and related equipment. 3.4.14 Providing services for planning tenant or rental spaces. 3.4.15 Making investigations, inventories of materials or equipment, or valuations and detailed appraisals of existing facilities. 3.4.16 Preparing a set of reproducible record drawings showing significant changes in the Work made during construction based on marked-up prints, drawings and other data furnished by the Contractor to the Architect. 3.4.17 Providing assistance in the utilization of equipment or systems such as testing, adjusting and 6 balancing, preparation of operation and maintenance manuals, training personnel for operation and maintenance, and consultation during operation. 3.4.18 Providing services after issuance to the Owner of the final Certificate for Payment, or in the absence of a final Certificate for Payment, more than 60 days after the date of Substantial Completion of the Work. 3.4.19 Providing services of consultants for other than architectural, structural, mechanical and electrical engineering portions of the Project provided as a part of Basic Services. 3.4.20 Providing any other services not otherwise included in this Agreement or not customarily furnished in accordance with generally accepted architectural practice. ARTICLE 4 OWNER'S RESPONSIBILITIES 4.1 The Owner shall provide full information regarding requirements for the Project, including a program which shall set forth the Owner's objectives, schedule, constraints and criteria, including space requirements and relationships, flexibility, expandability, special equipment, systems and site requirements. 4.2 The Owner shall establish and update an overall budget for the Project, including the Construction Cost, the Owner's other costs and reasonable contingencies related to all of these costs. 4.3 If requested by the Architect, the Owner shall furnish evidence that financial arrangements have been made to fulfill the Owner's obligation under this Agreement. 4.4 The Owner shall designate a representative authorized to act on the Owner's behalf with respect to the Project. The Owner or such authorized representative shall render decisions in a timely manner pertaining to documents submitted by the Architect in order to avoid unreasonable delay in the orderly and sequential progress of the Architect's services. 4.5 The Owner shall furnish surveys describing physical characteristics, legal limitations and utility locations for the site of the Project, and a written legal description of the site. The surveys and legal information shall include, as applicable, grades and lines of streets, alleys, pavements and adjoining property and structures; adjacent drainage; rights-of-way, restrictions, easements, encroachments, zoning, deed restrictions, boundaries and contours of the site; locations, dimensions and necessary data pertaining to existing buildings, other improvements and trees; and information concerning available utility services and lines, both public and private, above and below grade, including inverts and depths. All the information on the survey shall be referenced to a project benchmark. 4.6 The Owner shall furnish the services of geotechnical engineers when such services are requested by the Architect. Such services may include but are not limited to test borings, test pits, determinations of soil bearing values, percolation tests, evaluations of hazardous materials, ground corrosion and resistivity tests, including necessary operations for anticipating sub-soil conditions, with reports and appropriate professional recommendations. 4.6.1 The Owner shall furnish the services of other consultants when such services are reasonably required by the scope of the Project and are requested by the Architect. 4.7 The Owner shall furnish structural, mechanical, chemical, air and water pollution tests, tests for hazardous materials, and other laboratory and environmental tests, inspections and reports required by law or the Contract Documents. 4.8 The Owner shall furnish all legal, accounting and insurance counseling services as may be necessary at any time for the Project, including auditing services the Owner may require to verify the Contractor's Applications for Payment or to ascertain how or for what purposes the Contractor has used the money paid by or on behalf of the Owner. 4.9 The services, information, surveys and reports required by Paragraphs 4.5 through 4.8 shall be furnished at the Owner's expense, and the Architect shall be entitled to rely upon the accuracy and completeness thereof. 4.10 Prompt written notice shall be given by the Owner to the Architect if the Owner becomes aware of any fault or defect in the Project or nonconformance with the Contract Documents. 7 4.11 The proposed language of certificates or certifications requested of the Architect or Architect's consultants shall be submitted to the Architect for review and approval at least 14 days prior to execution. The Owner shall not request certifications that would require knowledge or services beyond the scope of this Agreement. ARTICLE 5 CONSTRUCTION COST 5.1 DEFINITION 5.1.1 The Construction Cost shall be the total cost or estimated cost to the Owner of all elements of the Project designed or specified by the Architect. 5.1.2 The Construction Cost shall include the cost at current market rates of labor and materials furnished by the Owner and equipment designed, specified, selected or specially provided for by the Architect, plus a reasonable allowance for the Contractor's overhead and profit. In addition, a reasonable allowance for contingencies shall be included for market conditions at the time of bidding and for changes in the Work during construction. 5.1.3 Construction Cost does not include the compensation of the Architect and Architect's consultants, the costs of the land, rights-of-way, financing or other costs which are the responsibility of the Owner as provided in Article 4. 5.2 RESPONSIBILITY FOR CONSTRUCTION COST 5.2.1 Evaluations of the Owner's Project budget, preliminary estimates of Construction Cost and detailed estimates of Construction Cost, if any, prepared by the Architect, represent the Architect's best judgment as a design professional familiar with the construction industry. It is recognized, however, that neither the Architect nor the Owner has control over the cost of labor, materials or equipment, over the Contractor's methods of determining bid prices, or over competitive bidding, market or negotiating conditions. Accordingly, the Architect cannot and does not warrant or represent that bids or negotiated prices will not vary from the Owner's Project budget or from any estimate of Construction Cost or evaluation prepared or agreed to by the Architect. 5.2.2 No fixed limit of Construction Cost shall be established as a condition of this Agreement by the furnishing, proposal or establishment of a Project budget, unless such fixed limit has been agreed upon in writing and signed by the parties hereto. If such a fixed limit has been established, the Architect shall be permitted to include contingencies for design, bidding and price escalation, to determine what materials, equipment, component systems and types of construction are to be included in the Contract Documents, to make reasonable adjustments in the scope of the Project and to include in the Contract Documents alternate bids to adjust the Construction Cost to the fixed limit. Fixed limits, if any, shall be increased in the amount of an increase in the Contract Sum occurring after execution of the Contract for Construction. 5.2.3 If the Bidding or Negotiation Phase has not commenced within 90 days after the Architect submits the Construction Documents to the Owner, any Project budget or fixed limit of Construction Cost shall be adjusted to reflect changes in the general level of prices in the construction industry between the date of submission of the Construction Documents to the Owner and the date on which proposals are sought. 5.2.4 If a fixed limit of Construction Cost (adjusted as provided in Subparagraph 5.2.3) is exceeded by the lowest bona fide bid or negotiated proposal, the Owner shall: .1 give written approval of an increase in such fixed limit; .2 authorize rebidding or renegotiating of the Project within a reasonable time; .3 if the Project is abandoned, terminate in accordance with Paragraph 8.3; or .4 cooperate in revising the Project scope and quality as required to reduce the Construction Cost. 5.2.5 If the Owner chooses to proceed under Clause 5.2.4.4, the Architect, without additional charge, shall modify the Contract Documents as necessary to comply with the fixed limit, if established as a condition of this Agreement. The modification of Contract Documents shall be the limit of the Architect's responsibility arising out of the establishment of a fixed limit. The Architect shall be entitled to compensation in accordance with this 8 Agreement for all services performed whether or not the Construction Phase is commenced. ARTICLE 6 USE OF ARCHITECT'S DRAWINGS, SPECIFICATIONS AND OTHER DOCUMENTS 6.1 The Drawings, Specifications and other documents prepared by the Architect for this Project are instruments of the Architect's service for use solely with respect to this Project and, unless otherwise provided, the Architect shall be deemed the author of these documents and shall retain all common law, statutory and other reserved rights, including the copyright. The Owner shall be permitted to retain copies, including reproducible copies, of the Architect's Drawings, Specifications and other documents for information and reference in connection with the Owner's use and occupancy of the Project. The Architect's Drawings, specifications or other documents shall not be used by the Owner or others on other projects, for additions to this Project or for completion of this Project by others, unless the Architect is adjudged to be in default under this Agreement, except by agreement in writing and with appropriate compensation to the Architect. 6.2 Submission or distribution of documents to meet official regulatory requirements or for similar purposes in connection with the Project is not to be construed as publication in derogation of the Architect's reserved rights. ARTICLE 7 ARBITRATION 7.1 Claims, disputes or other matters in question between the parties to this Agreement arising out of or relating to this Agreement or breach thereof shall be subject to and decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association currently in effect unless the parties mutually agree otherwise. 7.2 Demand for arbitration shall be filed in writing with the other party to this Agreement and with the American Arbitration Association. A demand for arbitration shall be made within a reasonable time after the claim, dispute or other matter in question has arisen. In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations. 7.3 No arbitration arising out of or relating to this Agreement shall include, by consolidation, joinder or in any other manner, an additional person or entity not a party to this Agreement, except by written consent containing a specific reference to this Agreement signed by the Owner, Architect, and any other person or entity sought to be joined. Consent to arbitration involving an additional person or entity shall not constitute consent to arbitration of any claim, dispute or other matter in question not described in the written consent or with a person or entity not named or described therein. The foregoing agreement to arbitrate and other agreements to arbitrate with an additional person or entity duly consented to by the parties to this Agreement shall be specifically enforceable in accordance with applicable law, in any court having jurisdiction thereof. 7.4 The award rendered by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof. ARTICLE 8 TERMINATION, SUSPENSION OR ABANDONMENT 8.1 This Agreement may be terminated by either party upon not less than seven days' written notice should the other party fail substantially to perform in accordance with the terms of this Agreement through no fault of the party initiating the termination. 8.2 If the Project is suspended by the Owner for more than 30 consecutive days, the Architect shall be compensated for services performed prior to notice of such suspension. When the Project is resumed, the Architect's compensation shall be equitably adjusted to provide for expenses incurred in the interruption and resumption of the Architect's services. 8.3 This Agreement may be terminated by the Owner upon not less than seven days' written notice to the Architect in the event that the Project is permanently abandoned. If the Project is abandoned by the Owner for more than 90 consecutive days, the Architect may terminate this Agreement by giving written notice. 9 8.4 Failure of the Owner to make payments to the Architect in accordance with this Agreement shall be considered substantial nonperformance and cause for termination. 8.5 If the Owner fails to make payment when due the Architect for services and expenses, the Architect may, upon seven days' written notice to the Owner, suspend performance of services under this Agreement. Unless payment in full is received by the Architect within seven days of the date of the notice, the suspension shall take effect without further notice. In the event of a suspension of services, the Architect shall have no liability to the Owner for delay or damage caused the Owner because of such suspension of services. 8.6 In the event of termination not the fault of the Architect, the Architect shall be compensated for services performed prior to termination, together with Reimbursable Expenses then due and all Termination Expenses as defined in Paragraph 8.7. 8.7 Termination Expenses are in addition to compensation for Basic and Additional Services, and include expenses which are directly attributable to termination. Termination Expenses shall be computed as a percentage of the total compensation for Basic Services and Additional Services earned to the time of termination, as follows: .1 Twenty percent of the total compensation for Basic and Additional Services earned to date if termination occurs before or during the predesign, site analysis, or Schematic Design Phases; or .2 Ten percent of the total compensation for Basic and Additional Services earned to date if termination occurs during the Design Development Phase; or .3 Five percent of the total compensation for Basic and Additional Services earned to date if termination occurs during any subsequent phase. ARTICLE 9 MISCELLANEOUS PROVISIONS 9.1 Unless otherwise provided, this Agreement shall be governed by the law of the principal place of business of the Architect. 9.2 Terms in this Agreement shall have the same meaning as those in AIA Document A201, General Conditions of the Contract for Construction, current as of the date of this Agreement. 9.3 Causes of action between the parties to this Agreement pertaining to acts or failures to act shall be deemed to have accrued and the applicable statutes of limitations shall commence to run not later than either the date of Substantial Completion for acts or failures to act occurring prior to Substantial Completion, or the date of issuance of the final Certificate for Payment for acts or failures to act occurring after Substantial Completion. 9.4 The Owner and Architect waive all rights against each other and against the contractors, consultants, agents and employees of the other for damages, but only to the extent covered by property insurance during construction, except such rights as they may have to the proceeds of such insurance as set forth in the edition of AIA Document A201, General Conditions of the Contract for Construction, current as of the date of this Agreement. The Owner and Architect each shall require similar waivers from their contractors, consultants and agents. 9.5 The Owner and Architect, respectively, bind themselves, their partners, successors, assigns and legal representatives to the other party to this Agreement and to the partners, successors, assigns and legal representatives of such other party with respect to all covenants of this Agreement. Neither Owner nor Architect shall assign this Agreement without the written consent of the other. 9.6 This Agreement represents the entire and integrated agreement between the Owner and Architect and supersedes all prior negotiations, representations or agreements, either written or oral. This Agreement may be amended only by written instrument signed by both Owner and Architect. 9.7 Nothing contained in this Agreement shall create a contractual relationship with or a cause of 10 action in favor of a third party against either the Owner or Architect. 9.8 Unless otherwise provided in this Agreement, the Architect and Architect's consultants shall have no responsibility for the discovery, presence, handling, removal or disposal of or exposure of persons to hazardous materials in any form at the Project site, including but not limited to, asbestos, asbestos products, polychlorinated biphenyl (PCB) or other toxic substances. 9.9 The Architect shall have the right to include representations of the design of the Project, including photographs of the exterior and interior, among the Architect's promotional and professional materials. The Architect's materials shall not include the Owner's confidential or proprietary information if the Owner has previously advised the Architect in writing of the specific information considered by the Owner to be confidential or proprietary. The Owner shall provide professional credit for the Architect on the construction sign and in the promotional materials for the Project. ARTICLE 10 PAYMENTS TO THE ARCHITECT 10.1 DIRECT PERSONNEL EXPENSE 10.1.1 Direct Personnel Expense is defined as the direct salaries of the Architect's personnel engaged on the Project and the portion of the cost of their mandatory and customary contributions and benefits related thereto, such as employment taxes and other statutory employee benefits, insurance, sick leave, holidays, vacations, pensions and similar contributions and benefits. 10.2 REIMBURSABLE EXPENSES 10.2.1 Reimbursable Expenses are in addition to compensation for Basic and Additional Services and include expenses incurred by the Architect and Architect's employees and consultants in the interest of the Project, as identified in the following Clauses. 10.2.1.1 Expense of transportation in connection with the Project; expenses in connection with authorized out-of-town travel; long-distance communication and fees paid for securing approval of authorities having jurisdiction over the Project. 10.2.1.2 Expense of reproduction, postage and handling of Drawings, Specifications and other documents. 10.2.1.3 If authorized in advance by the Owner, expense of overtime work requiring higher than regular rates. 10.2.1.4 Expense of renderings, models and mock-ups requested by the Owner. 10.2.1.5 Expense of additional insurance coverage or limits, including professional liability insurance, requested by the Owner in excess of that normally carried by the Architect and Architect's consultants. 10.2.1.6 Expense of computer-aided design and drafting equipment time when used in connection with the Project. 10.3 PAYMENTS ON ACCOUNT OF BASIC SERVICES 10.3.1 An initial payment as set forth in Paragraph 11.1 is the minimum payment under this Agreement. 10.3.2 Subsequent payments for Basic Services shall be made monthly and, where applicable, shall be in proportion to services performed within each phase of service, on the basis set forth in Subparagraph 11.2.2. 10.3.3 If and to the extent that the time initially established in Subparagraph 11.5.1 of this Agreement is exceeded or extended through no fault of the Architect, compensation for any services rendered during the additional period of time shall be computed in the manner set forth in Subparagraph 11.5.2. 10.3.4 When compensation is based on a percentage of Construction Cost and any portions of the Project are deleted or otherwise not constructed, compensation for those portions of the Project shall be payable to the extent services are performed on those portions, in accordance with the schedule set forth in Subparagraph 11.2.2, based on (1) the lowest bona fide bid or negotiated proposal, or (2) if no such bid or proposal is received, the most recent preliminary estimate of Construction Cost or detailed estimate of Construction Cost for such portions of the Project. 11 10.4 PAYMENTS ON ACCOUNT OF ADDITIONAL SERVICES 10.4.1 Payments on account of the Architect's Additional Services and for Reimbursable Expenses shall be made monthly upon presentation of the Architect's statement of services rendered or expenses incurred. 10.5 PAYMENTS WITHHELD 10.5.1 No deductions shall be made from the Architect's compensation on account of penalty, liquidated damages or other sums withheld from payments to contractors, or on account of the cost of changes in the Work other than those for which the Architect has been found to be liable. 10.6 ARCHITECT'S ACCOUNTING RECORDS 10.6.1 Records of Reimbursable Expenses and expenses pertaining to Additional Services and services performed on the basis of a multiple of Direct Personnel Expense shall be available to the Owner or the Owner's authorized representative at mutually convenient times. ARTICLE 11 BASIS OF COMPENSATION The Owner shall compensate the Architect as follows: 11.1 AN INITIAL PAYMENT of zero Dollars ($ 0 ) shall be made upon execution of this Agreement and credited to the Owner's account at final payment. 11.2 BASIC COMPENSATION 11.2.1 FOR BASIC SERVICES, as described in Article 2, and any other services included in Article 12 as part of Basic Services, Basic Compensation shall be computed as follows: (Insert basis of compensation, including stipulated sums, multiples or percentages, and identify phases to which particular methods of compensation apply, if necessary.) A stipulated sum of $ 71,126.00. See attached Architectural Fee tabulation. 11.2.2 Where compensation is based on a stipulated sum or percentage of Construction Cost, progress payments for Basic Services in each phase shall total the following percentages of the total Basic Compensation payable: (Insert additional phases as appropriate.) Schematic Design Phase: Fifteen percent (15%) $ 11,830.00 Design Development Phase: Twenty percent (20%) $ 15,774.00 Construction Documents Phase: Forty percent (40%) $ 31,548.00 Building or Negotiation Phase: zero percent ( 0%) $ 0.00 Construction Phase: Twenty percent (20%) $ 15,774.00 - -------------------------------------------------- ------------- ------------ Total Basic Compensation one hundred percent (100%) $ 74,926.00 12 11.3 COMPENSATION FOR ADDITIONAL SERVICES 11.3.1 FOR PROJECT REPRESENTATION BEYOND BASIC SERVICES, as described in Paragraph 3.2, compensation shall be computed as follows: Hourly Basis 11.3.2 FOR ADDITIONAL SERVICES OF THE ARCHITECT, as described in Articles 3 and 12, other than (1) Additional Project Representation, as described in Paragraph 3.2, and (2) services included in Article 12 as part of Additional Services, but excluding services of consultants, compensation shall be computed as follows: (Insert basis of compensation, including rates and/or multiples of Direct Personnel Expense for Principals and employees, and identify Principals and classify employees, if required. Identify specific services in which particular methods of compensation apply, if necessary.) Principal Architect $ 85.00 per hour Staff Architect $ 65.00 per hour Secretarial $ 35.00 per hour 11.3.3 FOR ADDITIONAL SERVICES OF CONSULTANTS, including additional structural, mechanical and electrical engineering services and those provided under Subparagraph 3.4.19 or identified in Article 12 as part of Additional Services, a multiple of one (1.00) times the expenses incurred by the Architect, the Architect's employees and consultants in the interest of the Project. 11.4 REIMBURSABLE EXPENSES 11.4.1 FOR REIMBURSABLE EXPENSES, as described in Paragraph 10.2, and any other items included in Article 12 as Reimbursable Expenses, a multiple of one (1.00) times the expenses incurred by the Architect, the Architect's employees and consultants in the interest of the Project. 11.5 ADDITIONAL PROVISIONS 11.5.1 IF THE BASIC SERVICES covered by this Agreement have not been completed within N/A ( ) months of the date hereof, through no fault of the Architect, extension of the Architect's services beyond that time shall be compensated as provided in Subparagraphs 10.3.3 and 11.3.2. 11.5.2 Payments are due and payable Ten (10) days from the date of the Architect's invoice. Amounts unpaid N/A ( ) days after the invoice date shall bear interest at the rate entered below, or in the absence thereof at the legal rate prevailing from time to time at the principal place of business of the Architect. (Insert rate of interest agreed upon.) (Usury laws and requirements under the Federal Truth in Lending Act, similar state and local consumer credit laws and other regulations at the Owner's and Architect's principal places of business, the location of the Project and elsewhere may affect the validity of this provision. Specific legal advice should be obtained with respect to deletions or modifications, and also regarding requirements such as written disclosures or waivers.) 11.5.3 The rates and multiples set forth for Additional Services shall be annually adjusted in accordance with normal salary review practices of the Architect. 13 ARTICLE 12 OTHER CONDITIONS OR SERVICES (Insert descriptions of other services, identify Additional Services included within Basic Compensation and modifications to the payment and compensation terms included in the Agreement.) The Architect shall only be responsible for schematic site design. The developer shall be responsible for final site design, civil engineering and landscape design. The Agreement entered into as of the day and year first above written above. OWNER ARCHITECT /s/ Arthur Seaver /s/ Keith J. Marrero - ------------------------------------- ----------------------------------- (Signature) (Signature) Arthur Seaver, President/CEO Keith J. Marrero, Principal - ------------------------------------- ----------------------------------- [Print name and title) [Print name and title) 14 EX-27.1 4 FDS
9 1090009 Greenville First Bancshares, Inc. 10KSB 12-MOS DEC-31-1999 FEB-22-1999 DEC-31-1999 5,856 1,460,000 0 0 8,317,872 0 0 0 0 10,141,693 0 0 29,322 0 0 0 11,500 10,635,200 10,141,693 0 92,676 0 92,676 0 12,049 80,627 0 0 614,956 534,329 534,329 0 0 534,329 (.46) (.46) 5.80 0 0 0 0 0 0 0 0 0 0 0
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