-----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, G8/cNRWAJVxzvMIvtJCktTTI9oQI0k0lz4gDCnT/R9JL7Yl8boZzevNlcm4NNcjF 7R86EPFL5KKpRgZrlo9Ngg== 0000950144-96-000371.txt : 19960213 0000950144-96-000371.hdr.sgml : 19960213 ACCESSION NUMBER: 0000950144-96-000371 CONFORMED SUBMISSION TYPE: S-2 CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19960212 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREENE COUNTY BANCSHARES INC CENTRAL INDEX KEY: 0000764402 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 621222567 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-2 SEC ACT: 1933 Act SEC FILE NUMBER: 333-00926 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: MAIN & DEPOT STREET CITY: GREENEVILLE STATE: TN ZIP: 37744-1120 BUSINESS PHONE: 4236395111 MAIL ADDRESS: STREET 1: P O BOX 1120 CITY: GREENEVILLE STATE: TN ZIP: 37744-1120 S-2 1 GREENE COUNTY BANCSHARES, INC. - FORM S-2 1 This is a Confirming Electronic File Copy Originally filed on January 26, 1996 As Filed with the Securities and Exchange Commission on January 26, 1996 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM S-2 Registration Statement Under the Securities Act of 1933 GREENE COUNTY BANCSHARES, INC. (Exact Name of Registrant as Specified in Its Charter) TENNESSEE 62-1222567 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) MAIN AND DEPOT STREETS GREENEVILLE, TENNESSEE 37743 423/639-5111 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) R. STAN PUCKETT, PRESIDENT MAIN AND DEPOT STREETS GREENEVILLE, TENNESSEE 37743 423/639-5111 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) __________________ Copy to: ANN W. LANGSTON GERRISH & MCCREARY, P.C. 700 COLONIAL, SUITE 200 MEMPHIS, TN 38117 901/767-0900 Approximate date of commencement of proposed sale to the public: As soon as practicable after the Effective Date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [ ] If the registrant elects to deliver its latest annual report to security holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1) of this form, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE ================================================================================================================================ Title of Each Class of Proposed Maximum Securities to be Amount to be Proposed Maximum Offering Aggregate Offering Amount of Registered Registered Price Per Share Price Registration Fee (1) - -------------------------------------------------------------------------------------------------------------------------------- Common Stock, $10 par value 6,000 shares $170.00 $1,020,000.00 $351.72 ================================================================================================================================
(1) Calculated pursuant to Rule 457(a). The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine. Exhibit Index on sequentially numbered page 34. 2 CROSS REFERENCE SHEET
Items in Part I of Form S-2 Prospectus Caption or Location - --------------------------- ------------------------------ Item 1. Forepart of the Registration Facing Page, Cross Statement and Outside Front Reference Sheet and Cover Page of Prospectus Outside Front Cover Page Item 2. Inside Front and Outside Inside Front Cover and Back Cover Pages of Prospectus Table of Contents Item 3. Summary Information, Risk Summary and Risk Factors Factors and Ratio of Earnings to Fixed Charges Item 4. Use of Proceeds Use of Proceeds Item 5. Determination of Offering Price Determination of Offering Price Item 6. Dilution * Item 7. Selling Security Holders * Item 8. Plan of Distribution Plan of Distribution Item 9. Description of Securities Description of Common to be Registered Stock Item 10. Interests of Named Experts Legal Matters and Experts and Counsel Item 11. Information with Respect Information Regarding the to the Registrant Company Item 12. Incorporation of Certain Incorporation of Certain Information by Reference Information by Reference Item 13. Disclosure of Commission Indemnification Position on Indemnification for Securities Act Liabilities
* Omitted because answer is negative or the Item is inapplicable 3 6,000 SHARES GREENE COUNTY BANCSHARES, INC. Common Stock __________ Greene County Bancshares, Inc. (the "Company"), a Tennessee corporation, hereby offers for sale 6,000 shares of its Common Stock, par value $10 per share ("Common Stock"). Prior to this offering, there has been a limited public market for the Common Stock of the Company. The 6,000 shares of Common Stock are offered at a price of $170.00 per share. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION DISCUSSED UNDER "RISK FACTORS," AT PAGE 10. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
============================================================================================================ Underwriting Proceeds to Price to Public Commissions Company (1) - ------------------------------------------------------------------------------------------------------------ Per Share.............................. $170.00 Not applicable $170.00 - ------------------------------------------------------------------------------------------------------------ Total (2).............................. $1,020,000.00 Not applicable $1,020,000.00 ============================================================================================================
(1) Before deducting offering expenses payable by the Company estimated at $49,790. (2) Assumes the sale of all 6,000 shares of Common Stock offered hereby. THE DATE OF THIS PROSPECTUS IS ________________, 1996. 4 AVAILABLE INFORMATION Green County Bancshares, Inc. is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder, and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission" or the "SEC"). Such reports and other information filed by the Company with the Commission may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, NW. Washington, DC 20549 and its regional offices located at 75 Park Place, New York, New York 10007, and Everett McKinley Dirkson Building, Room 1204, 219 South Dearborn Street, Chicago, Illinois 60604. Copies of such materials may be obtained at prescribed rates from the public reference facilities maintained by the Commission at its Washington, DC address. The Company has filed with the Commission, Washington, DC, a Registration Statement on Form S-2 ("Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Common Shares offered hereby. This Prospectus does not contain all the information set forth in the Registration Statement and the schedules and exhibits thereto, certain parts of which have been omitted pursuant to the rules of the Commission. Statements herein concerning the contents of any contract or other document are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed with the Commission as an exhibit to the Registration Statement or otherwise, each such statement being qualified in all respects by such reference. For further information about the Company and such securities, reference is made to the Registration statement and the schedules and exhibits filed as part thereof. The Registration Statement, together with schedules and exhibits, may be inspected without charge, and copied at the principal or regional offices of the Commission at the addresses indicated above. Copies also may be obtained at prescribed rates from the public reference facilities maintained by the Commission at its Washington, DC address. The Company will furnish annual reports to its stockholders which will contain audited financial statements certified by its independent public accountants. The Company may distribute unaudited quarterly reports and other interim reports to its stockholders as it deems appropriate. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents previously filed by the Company with the Commission (Commission File No. 0-14289) pursuant to the Exchange Act are hereby incorporated by reference in this Prospectus: 2 5 1. The Company's Annual Report on Form 10-K for the year ended December 31, 1994; 2. The Company's Quarterly Reports on Form 10-Q for the quarters ended March 31 and September 30, 1995 and on Form 10-QA for the quarter ended June 30, 1995; 3. The Company's Current Reports on Form 8-K dated September 11, 1995 and January 12, 1996. The Company's Annual Report on Form 10-K for the year ended December 31, 1994 incorporates by reference specific portions of the Company's Proxy Statement dated and mailed to stockholders of the Company on April 5, 1995 ("1995 Proxy Statement"), but does not incorporate other portions of the 1995 Proxy Statement. The portions of the 1995 Proxy Statement not specifically incorporated into the Annual Report on Form 10-K are NOT incorporated herein and are not a part of the Registration Statement. All documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the shares of the Company's Common Stock offered hereby shall likewise be incorporated herein by reference and shall become a part hereof from and after the time such documents are filed. Any statement contained herein or in a document incorporated herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. ON THE WRITTEN OR ORAL REQUEST OF EACH PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS. WRITTEN OR TELEPHONE REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO ALEX JOHNSON, GREENE COUNTY BANCSHARES, INC., MAIN AND DEPOT STREETS, GREENEVILLE, TENNESSEE 37743, (423) 639-5111. 3 6 NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS DOCUMENT NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. TABLE OF CONTENTS Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 The Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Summary Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Determination of Offering Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Description of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Information with Respect to the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
4 7 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements, including the notes thereto, appearing elsewhere in this Prospectus or incorporated herein by reference. THE COMPANY Greene County Bancshares, Inc. (the "Company"), a Tennessee corporation incorporated January 18, 1985, is a registered bank holding company under the Bank Holding Company Act of 1956, as amended ("BHCA"), and is the bank holding company for Greene County Bank, Greeneville, Tennessee, American Fidelity Bank, Alcoa, Tennessee, and Premier Bancshares, Inc., Niota, Tennessee, which is itself the one bank holding company for Premier Bank of East Tennessee, Niota, Tennessee ("Premier"). The Company, through its ownership of Greene County Bank, American Fidelity Bank and Premier Bancshares, Inc. (the "Banks"), is engaged in a general commercial banking business and its primary source of earnings is derived from income generated by its subsidiary banks. As of September 30, 1995, the Company had total assets of $389,046,000 and shareholders' equity of $41,835,000, which was prior to the Company's acquisition of Premier. As of September 30, 1995, Premier had total assets of $26,730,000 and shareholders' equity of $1,883,000. Unless the context otherwise requires, references herein to the Company include the Company and its wholly-owned subsidiaries, Greene County Bank, American Fidelity Bank and Premier Bancshares, Inc. on a consolidated basis. Greene County Bank was established in 1890 as a Tennessee state chartered bank. As a commercial bank, Greene County Bank provides complete banking services which include checking and savings accounts for individuals, partnerships, corporations, municipalities, banks and others; business, real estate, interim construction, personal and installment loans; collection services, safe deposit box facilities; and a number of special services. At September 30, 1995, Greene County Bank had seven full service banking offices located in Greene County, Tennessee, with two full service banking offices located in Washington County, Tennessee, one full service banking office located in Hamblen County, Tennessee, and one full service banking office located in Sullivan County, Tennessee. On November 20, 1995, Greene County Bank opened a full service branch in Hawkins County, Tennessee after acquiring the deposits of an existing branch of another bank and the facilities for this new branch location. The Company owns 100% of the stock of Greene County Bank. American Fidelity Bank is a Tennessee state chartered banking corporation organized in 1977. American Fidelity Bank also offers the customary banking services provided by most full service banks. It conducts its business from a main office located in Alcoa, Tennessee and two branch offices, one located in Maryville and another in Knoxville, Tennessee. The Company also owns 100% of the stock of American Fidelity Bank. 5 8 Premier Bancshares, Inc. is a Tennessee corporation and a registered bank holding company under the Bank Holding Company Act of 1956, as amended. Premier Bancshares, Inc. owns 100% of the stock of Premier Bank of East Tennessee. The Company acquired all the stock of Premier Bancshares, Inc. (and, thereby, indirectly all the shares of Premier Bank of East Tennessee) on January 1, 1996. The Company has accounted for this acquisition as a purchase under generally accepted accounting principles. Premier Bank of East Tennessee conducts its business from its main office in Niota, Tennessee and from its full service branch in Athens, Tennessee. See "Use of Proceeds." Management responsibility for the Banks resides with the Board of Directors and officers of each respective bank. Management services rendered to each of the Banks by the Company are intended to supplement the internal management of each of the Banks and to expand the scope of banking services normally offered by each of the Banks. The banking industry in which the Company competes through its subsidiaries is highly competitive with other banks for both loans and deposits. Other financial institutions, including savings and loans associations and credit unions, also compete with the Banks for depository accounts and loans. On September 30, 1995, Greene County Bank had total deposits of $267,484,000 and total assets of $311,707,000. Greene County Bank ranks as the largest financial institution in its market area, which is generally considered to be Greene County, Tennessee. In the Greene County area, there are six commercial banks, operating 22 branches and holding an aggregate of approximately $605,563,000 in deposits as of December 31, 1994. On September 30, 1995, American Fidelity Bank had total deposits of $68,162,000 and total assets of $75,875,000. The primary market area of American Fidelity Bank is the cities of Alcoa and Maryville and Blount and Southern Knox Counties, Tennessee. American Fidelity Bank competes primarily with five commercial banks, two of which are subsidiaries of the largest bank holding companies located in Tennessee. On September 30, 1995, Premier Bank of East Tennessee had total deposits of $21,961,000 and total assets of $24,256,000. The primary market area of Premier Bank of East Tennessee is McMinn County, Tennessee which includes the cities of Niota and Athens, Tennessee. Premier Bank competes primarily with four commercial banks and one savings and loan association in its market area. The income of the Banks, and thus the Company, is derived primarily from the interest and fees earned in connection with the Banks' lending activities, interest and dividends from investment securities and short-term investments. The main expenses of the Bank are the interest paid on deposits and operating expenses. The Banks' deposits are insured up to the applicable limits by the Federal Deposit Insurance Corporation ("FDIC"). The Company has its principal executive offices at Main and Depot Streets, Greeneville, Tennessee 37743, Telephone (423) 639-5111. 6 9 THE OFFERING Common Shares Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 Shares Common Shares Outstanding after the Offering . . . . . . . . . . . . . . . . . . . . . 448,444 (1) Estimated Net Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,020,000 (1)(2) Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Working capital and general corporate purposes, including investments in the Banks. See "Use of Proceeds." Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prospective investors in the Common Stock should consider the information discussed under the heading "Risk Factors."
(1) Assumes that all 6,000 shares offered hereby are sold, including shares issued to the New Shareholders whose shares are subject to the Rescission Offer. See "Simultaneous Rescission Offer." (2) Before deducting expenses of this offering. 7 10 GREENE COUNTY BANCSHARES, INC. SUMMARY FINANCIAL INFORMATION (1) (Dollars in thousands, except per share data)
NINE MONTHS YEARS ENDED ENDED SEPTEMBER 30, DECEMBER 31, (UNAUDITED) --------------- ---------------------- 1995 1994 1994 1993 ---- ---- ---- ---- SUMMARY OF INCOME STATEMENT DATA: Interest income $23,365 $17,282 $23,625 $21,638 Interest expense 9,660 5,968 8,497 8,197 ------- ------- ------- ------- Net interest income 13,705 11,314 15,128 13,441 Provision for loan losses 493 277 994 834 ------- ------- ------- ------- Net interest income after provision for loan losses 13,212 11,037 14,134 12,607 Non-interest income 2,094 1,554 2,538 1,966 Non-interest expense 7,996 6,614 9,660 8,035 ------- ------- ------- ------- Income before income taxes 7,310 5,977 7,012 6,538 Income tax expense 2,763 2,193 2,510 2,221 ------- ------- ------- ------- Income before cumulative effect in method of accounting for income taxes 4,547 3,784 4,501 4,317 Cumulative effect of change in method of accounting for income taxes -- -- -- (52) ------- ------- ------- ------- Net income $ 4,547 $ 3,784 $ 4,501 $ 4,265 ======= ======= ======= =======
AS OF AND FOR --------------------------------------------- NINE MONTHS YEARS ENDED ENDED SEPTEMBER 30, DECEMBER 31, (UNAUDITED) ---------------- ------------------- 1995 1994 1994 1993 ---- ---- ---- ---- PER COMMON SHARE DATA: Net income per share $10.22 $ 8.56 $ 9.56 $ 8.41 Book value per share at period end(2) $93.50 $84.33 $84.06 $79.27 SELECTED BALANCE SHEET DATA: Total assets $389,046 $332,223 $345,525 $313,577 Cash and cash equivalents $ 12,737 $ 15,885 $ 15,086 $11,120 Loans receivable, net $281,096 $222,363 $241,253 $192,127 Investment securities and other interest earning assets $ 67,487 $ 76,353 $ 70,374 $88,694 Deposits $335,646 $294,928 $298,162 $267,281 Retained earnings $ 33,653 $ 30,353 $ 30,442 $27,737 Total shareholders' equity $ 41,835 $ 37,295 $ 37,190 $35,045
8 11
AS OF AND FOR ------------------------------------------------- NINE MONTHS YEARS ENDED ENDED SEPTEMBER 30, DECEMBER 31, (UNAUDITED) ---------------- ------------------- 1995 1994 1994 1993 ---- ---- ---- ---- SELECTED FINANCIAL RATIOS AND OTHER DATA: Return on average assets 1.64%(3) 1.56%(3) 1.38% 1.41% Return on average equity 15.43%(3) 13.85%(3) 12.32% 12.34% Allowance for loan losses to total loans 1.36% 1.21% 1.41% 1.57% Allowance for loan losses as a percentage of non-accrual loans 438.00% 408.00% 531.00% 553.00% Average interest-earning assets to average interest-bearing liabilities 1.18% 1.12% 1.14% 1.13% Net yield on average earnings assets (4) 9.02% 7.60% 7.75% 7.79% Asset quality ratio (non-performing loans and other real estate owned to average total assets) (5) .29% .44% .23% 1.41% Non-interest expense to average total assets 2.78% 2.73% 2.95% 2.66% Net interest income to non-interest expense 171.00% 171.00% 157.00% 167.00% Risk-based capital ratios (fully phased-in guidelines): Tier I capital 14.86% 16.46% 15.45% 14.41% Total capital 16.24% 17.65% 16.89% 15.45% Leverage ratio (6) 10.75% 10.41% 10.76% 11.16% Period-end equity to period-end total assets 10.75% 10.76% 10.76% 11.18%
____________________ (1) Excludes any financial data regarding Premier Bancshares, Inc. and its subsidiary, Premier Bank of East Tennessee, which the Company acquired on January 1, 1996. The Company has accounted for this acquisition as a purchase under generally accepted accounting principles. (2) Common shareholders' equity divided by the number of outstanding shares of common stock at period end. (3) Annualized. (4) Represents net interest income as a percent of average total interest-earning assets. (5) Non-performing loans consist of non-accrual loans and accruing loans contractually past due 90 days or more. (6) The leverage ratio is defined as the ratio of Tier I capital to average total assets. 9 12 RISK FACTORS A prospective investor should review and consider carefully the following factors, together with the other information contained in this Prospectus, in evaluating an investment in the Common Stock. SIMULTANEOUS RESCISSION OFFER On May 31, 1995, the Company forwarded a letter to several hundred potential subscribers for common stock of the Company. The response to the letter resulted in a sale of 5,009 shares of the Company's common stock to 192 new shareholders (the "New Shareholders"). The Company received approximately $851,530 in payment for the newly issued common shares. No commissions or other fees were paid or received by the Company or any other person in connection with the sale of such shares. The Company, simultaneously with this offering, is making a rescission offer to the New Shareholders (the "Rescission Offer"). The need for the Rescission Offer arises from the sale of the common stock to the New Shareholders without registration with the Securities and Exchange Commission and the necessary state securities divisions or the availability of an exemption from registration. In the Rescission Offer the Company is offering to rescind the sale of the shares issued to the New Shareholders and to refund the consideration paid for such shares, plus interest at a rate of 10% per annum from the date of payment through the date the Company receives notice of a New Shareholder's election to rescind, less any amount of income received on such stock by the New Shareholders. The Rescission Offer is being made pursuant to the applicable securities laws in the states in which the New Shareholders reside. ASSET/LIABILITY MANAGEMENT The operations and profitability of the Banks are largely impacted by changes in interest rates and their managements' ability to control interest rate sensitivity of the Banks' assets and liabilities. Management believes that their asset/liability strategy reduces the risk of the Banks' exposure due to fluctuation in interest rates. However, there can be no assurance that the Banks' asset/liability strategies will be successful. Despite the implementation of strategies to achieve such matching objectives and to reduce the exposure of the Banks to fluctuating interest rates during this period, the results of operations of the Banks will remain subject to the level and movement of interest rates. Increases in interest rates may continue to be reflected more quickly in increases in the cost of funds for the Banks than in their interest income. 10 13 ADEQUACY OF ALLOWANCE FOR LOAN LOSSES The success of a bank depends to a significant extent upon the quality of its assets, particularly its loans. In originating loans, there is a substantial likelihood that credit losses will be experienced. The risk of loss will vary with, among other things, general economic conditions, the types of loans being made, the creditworthiness of the borrower over the term of the loan and, in the case of a collateralized loan, the quality of the collateral for the loan. Management maintains an allowance for loan losses based on, among other things, industry standards, managements' experience, historical experience with borrowers and the loan portfolio, an evaluation of economic conditions, and regular reviews of delinquencies and loan portfolio quality. Based upon such factors, management makes various assumptions and judgments about the ultimate collectability of the loan portfolio and provides an allowance for potential loan losses based upon a percentage of the outstanding balances and for specific loans when their ultimate collectability is considered questionable. Since certain lending activities involve greater risks, the percentage applied to specific loan type may vary. The Banks actively manage their past due and non-performing loans in an effort to minimize credit losses and monitor their asset quality to maintain an adequate loan loss allowance. Although management of each Bank believes that its allowance for loan losses is adequate, there can be no assurance that the allowance will prove sufficient to cover future loan losses. Further, although management uses the best information available to make determinations with respect to the allowance for loan losses, future adjustments may be necessary if economic conditions differ substantially from the assumptions used or adverse developments arise with respect to the non-performing or performing loans of either Bank. Accordingly, there can be no assurance that the allowance for loan losses will be adequate to cover loan losses or that significant increases to the allowance will not be required in the future if economic conditions should worsen. Material additions to the allowance for loan losses of the Banks would result in a decrease of the net income of the Banks and capital of the Company and the Banks and could result in the inability to pay dividends, among other adverse consequences. LIMITED TRADING MARKET There has been a limited public market for the Company's Common Stock. The offering price of the shares of the Common Stock has been determined by the Board of Directors of the Company based upon several factors and this does not necessarily bear any relationship to the Company's assets, book value, results of operations, net worth, or any other generally accepted criteria of value and should not be considered as indicative of the actual value of the Company. 11 14 COMPETITION The banking business is highly competitive, the Banks compete with other commercial banks, savings and loan associations, credit unions, finance companies and other financial entities operating locally and elsewhere. Some of these competitors have substantially greater resources and lending limits than the Banks and may offer certain services that the Banks do not provide at this time. The profitability of the Company depends upon the Banks' ability to compete in their market areas. SUPERVISION AND REGULATION Bank holding companies and banks operate in a highly regulated environment and are subject to the supervision and examination by several federal and state regulatory agencies. The Company is subject to the Bank Holding Company Act of 1956, as amended, and to regulation and supervision by the Federal Reserve, and the Banks are subject to the regulation and supervision of the Tennessee Department of Financial Institutions (the "Department") and the FDIC. These laws and regulations govern matters ranging from the regulation of certain debt obligations, changes in the control of bank holding companies, and the maintenance of adequate capital to the general business operations and financial condition of the Banks, including permissible types, amounts and terms of loans and investments, the amount of reserves against deposits, restrictions on dividends, establishment of branch offices, and the maximum rate of interest that may be charged by law. The Federal Reserve and the FDIC and the Department also possess cease and desist powers over bank holding companies and banks, respectively, to prevent or remedy unsafe or unsound practices or violations of law. These and other restrictions limit the manner in which the Company and the Banks may conduct their business and obtain financing. Furthermore, the commercial banking business is affected not only by general economic conditions, but also by the monetary policies of the Federal Reserve. These monetary policies have had and are expected to continue to have significant effects on the operating results of commercial banks. Changes in monetary or legislative policies may affect the ability of the Banks to attract deposits and make loans. LACK OF DIVERSIFICATION The sole business activity of the Company consists of its ownership of the common stock of the Banks. As a result, the Company lacks diversification as to business activities and market areas, and any event affecting the Banks will have a direct impact on the Company. 12 15 PAYMENT OF DIVIDENDS The payment of dividends by the Banks to the Company is regulated by various state and federal laws which restrict the payment of dividends under certain circumstances. In addition, such laws also impose certain minimum capital requirements which affect the amount of cash available for the payment of dividends by a regulated banking institution such as the Banks. Even if the Banks are able to generate sufficient earnings to satisfy the currently established capital requirements, there is no assurance that the Boards of Directors of the Banks might not decide or be required to retain a greater portion of the earnings of the Banks in order to maintain or achieve the capital necessary because of any (i) increase in the capital requirements established by the FDIC or the Department, (ii) significant increase in the total of risk-weighted assets held by either of the Banks, (iii) significant decreases in the income of either of the Banks, or (iv) compliance with new unforeseen federal or state regulations. In addition, in some cases, the FDIC or the Department could take the position that it has the power to prohibit the Banks from paying dividends if, in its view, such payments would constitute unsafe or unsound banking practices. Further, the determination of whether dividends are paid and their frequency and amount will depend on the financial condition and performance of the Banks and other factors deemed appropriate by the Boards of Directors of the Banks. Accordingly, there can be no assurance that any dividends will be paid in the future by the Banks or the Company. USE OF PROCEEDS The net proceeds to the Company from the sale of the Common Stock offered hereby is estimated to be $970,210, after deducting the estimated offering expenses. The net proceeds of the offering will be used for general corporate purposes, including capital contributions to the Banks, the financing of possible future acquisitions of other financial institutions, the possible repayment of borrowings, and additional working capital. On September 11, 1995, the Company entered into a Stock Purchase Agreement with William C. Adams, Sr., Ann S. Adams and William C. Adams, Jr. (the "Sellers"), the sole shareholders of Premier Bancshares, Inc., the one bank holding company for Premier Bank of East Tennessee, Niota, Tennessee. This Agreement provided for the Company's acquisition from the Sellers of 100% of the outstanding shares of Premier Bancshares, Inc. for a purchase price of $3,140,000. This acquisition was consummated on January 1, 1996 with the Company delivering cash to the Sellers of $708,582 and the Company's promissory notes to the Sellers in the aggregate principal amounts of $2,431,418. 13 16 The Company currently has no plans, understandings, arrangements or agreements, written or oral, with respect to any specific acquisition prospect, and is not presently negotiating with any other party with respect thereto. After the consummation of this offering, the net proceeds may be invested by the Company in short-term interest- bearing securities or certificates of deposits. Although the Company does not currently anticipate significant changes in the allocation of net proceeds described above, the allocation may vary as necessary to respond to changing circumstances. DETERMINATION OF OFFERING PRICE In May 1995, the Board of Directors of the Company approved offering the Common Stock of the Company at a price of $170 a share, with such price being based solely on recent trading prices in the Common Stock. In determining the offering price of $170 per share, the Board considered that from January 2, 1995 to the date of commencement of the initial offering in May 1995, there were fifteen stock transactions involving 645 shares of the Common Stock of the Company. Each of these transactions was at $170 per share. PLAN OF DISTRIBUTION On May 31, 1995, the Company forwarded a letter to several hundred potential subscribers for common stock of the Company. The response to the letter resulted in the sale of 5,009 shares of the Company's common stock to New Shareholders. The Company received approximately $851,530 in payment for the newly issued common shares. No commissions or other fees were paid or received by the Company or any other person in connection with the sale of such shares. The Company, simultaneously with this offering, is making a rescission offer to the New Shareholders. The need for the Rescission Offer arises from the sale of the common stock to the New Shareholders without registration with the Securities and Exchange Commission and the necessary state securities divisions or the availability of an exemption from registration. See "Risk Factors - Simultaneous Rescission Offer." The New Shareholders will receive the Rescission Offer along with a copy of this Prospectus. Other potential subscribers for the Common Stock will be contacted by the Company's direct distribution of a copy of this Prospectus to them. No commissions or other fees will be paid or received by the Company or any other person in connection with the sale of the Common Stock. 14 17 DESCRIPTION OF COMMON STOCK The Company is authorized to issue 1,000,000 shares of Common Stock, par value $10 per share. As of September 30, 1995, 447,453 shares of Common Stock of the Company were issued and outstanding, including approximately 5,009 shares issued to New Shareholders and subject to the Rescission Offer. See "Risk Factors - Simultaneous Rescission Offer." The holders of Common Stock are entitled to one vote per share and do not have any preemptive rights to purchase any securities subsequently issued by the Company. The absence of preemptive rights could cause the dilution of the shareholder's interest in the Company without the specific authority of the shareholders. The holders of Common Stock are entitled to receive dividends as may be declared by the Board of Directors of the Company with respect to the Common Stock out of funds legally available therefore. In the event of liquidation, dissolution or winding-up of the affairs of the Company, the holders of outstanding shares of Common Stock will be entitled to share pro rata according to their respective interests in the Company's assets and funds remaining after payment or provision for payment of all debts and other liabilities of the Company. The shareholders of the Company have no cumulative voting rights. The absence of cumulative voting rights means that Company shareholders representing a plurality of the Company's shares will be able to elect the entire Board of Directors and the remaining shareholders representing a minority of the Company's shares will not be able to elect any directors. The outstanding shares of Common Stock are, and those shares to be issued by the Company in connection with this offering will be, when issued, fully paid and nonassessable. INFORMATION WITH RESPECT TO THE COMPANY ANNUAL REPORT FOR YEAR ENDED DECEMBER 31, 1994 This Prospectus is accompanied by a copy of the Company's latest report on Form 10-K to the Securities and Exchange Commission. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE NINE MONTH PERIODS AND THREE MONTH PERIODS ENDED AS OF SEPTEMBER 30, 1995 AND 1994, RESPECTIVELY. The following is management's discussion and analysis of financial condition and results of operations of Greene County Bancshares, Inc. and Subsidiaries for the nine month periods and three month periods ended as of September 30, 1995 and 1994, respectively. 15 18 This commentary should be read in conjunction with the financial statements for the nine month periods and the three month periods ended as of September 30, 1995 and 1994, respectively, and the related notes contained herein. The Company is not aware of any recommendations by the bank regulatory authorities which if implemented would have a material effect on the Company's liquidity, capital resources or operations. EARNINGS The Company's earnings for the three months and nine months ended September 30, 1995 were $1,496,000 and $4,547,000, respectively. This represents a 19.6% and a 20.2% increase when compared to $1,251,000 and $3,784,000 in earnings for the respective periods in 1994. NET INTEREST INCOME The largest source of earnings for the Company is net interest income, which is the difference between interest income on interest-bearing assets and interest paid on deposit and other interest-bearing liabilities. The primary factors which affect net interest income are changes in volume and yields of earning assets and interest-bearing liabilities, and the ability to respond to changes in interest rates through asset/liability management. During the three and nine months ended September 30, 1995, net interest income after provision for loan losses, was $4,565,000 and $13,212,000, respectively, as compared to $3,826,000 and $11,037,000 for the same periods in 1994, increases of 19.3% and 19.7%, respectively. The increases are primarily attributable to an increase in volume of earning assets and only small increases in the effective rates paid on interest-bearing deposits. Loans produced the largest component of interest income, contributing $7,106,000 and $19,902,000 for the three and nine months ended September 30, 1995, respectively, as compared to $5,032,000 and $13,832,000 for the same periods in 1994, representing increases of 41.2% and 43.9%, respectively. The increases are attributable to both rate and volume increases of earning assets. Earnings on securities and federal funds sold provided the balance of interest income, producing $1,116,000 and $3,463,000 for the three and nine month periods ended September 30, 1995, respectively, as compared to $1,031,000 and $3,450,000 for the same periods in 1994. Total interest expense for the Company increased 62.9% and 61.9% during the three and nine month periods ended September 30, 1995, respectively, as compared to the same periods in 1994. Interest expense, which consisted primarily of interest paid on deposits, totalled $3,475,000 and $9,660,000 during the three and nine months ended September 30, 1995, respectively, as compared to $2,132,000 and $5,968,000 for the same periods in 1994. The cost of interest-bearing liabilities increased due to both rate and volume increases. 16 19 The deregulation of interest rates has given banks more opportunity to attract deposits and has created a public which is more interest rate sensitive. As a result, banks are paying interest on a continually increasing portion of their deposit base. The Company's ability to maintain a favorable spread between interest income and interest expense is a major factor in generating earnings; therefore, it is necessary to effectively manage earning assets and interest- bearing liabilities. As the percentage of interest-bearing deposits compared to total deposits increases and rates become more competitive, it becomes increasingly more difficult to maintain the Company's spread. NON-INTEREST INCOME AND EXPENSE Income that is not related to interest-bearing assets, consisting primarily of service charges, commissions and fees, has become more important as increases in levels of interest-bearing deposits make it more difficult to maintain net interest income spreads. Total other income for the three and nine month periods ended September 30, 1995 was $620,000 and $2,094,000, respectively, as compared to $548,000 and $1,554,000 for the same periods in 1994. The increases of 13.1% and 34.8% resulted in part from an increase in service charges on deposit accounts and commissions earned. Control of operating expenses also is an important aspect in managing net income. Operating expenses include personnel, occupancy, and other expenses such as data processing, printing and supplies, legal and professional fees, postage, and FDIC assessment. Total other operating expenses were $2,756,000 and $7,996,000 for the three and nine months periods ended September 30, 1995, respectively, as compared to $2,337,000 and $6,614,000 for the same periods in 1994. Personnel costs are the primary element of the Company's other operating expenses. During the three and nine months ended September 30, 1995, salaries and benefits represented $1,632,000 and $4,396,000 of other operating expenses, respectively. This was an increase of $437,000 and $1,000,000 or 36.6% and 29.4% over the same periods in 1994. These increases were due to opening new branches requiring increased staff levels, and increased employee benefit costs, including heath insurance and pension costs. Other operating expenses during the three and nine month periods ended September 30, 1995 were $1,124,000 and $3,600,000, a decrease of $18,000 and an increase of $400,000, respectively, from the same periods in 1994. LOANS At September 30, 1995, loans, net of unearned income and allowance for loan losses, were $281,100,000 compared to $241,300,000 for the same period in 1994. This increase is primarily due to increases in commercial lending. Nonaccural loans increased by $236,382 during the nine month period ended September 30, 1995. This change is deemed to be immaterial by management. 17 20 PROVISION AND ALLOWANCE FOR LOAN LOSSES Because the loan portfolio represents the Company's largest earning asset, the Company continually monitors the quality of its loan portfolio. Greene County Bancshares, Inc. operates in a diverse economy of manufacturing and agriculture and, accordingly, most loans are made to commercial enterprises or consumers who are directly supported by these enterprises. During the three and nine month periods ended September 30, 1995, the Company charged-off $173,000 and $436,000 in loans, and recovered $90,000 and $376,000 in charged-off loans, respectively. All loans identified by management or regulatory authorities as losses are charged-off against the allowance for loan losses. All other loans classified for regulatory purposes do not require disclosure since in management's opinion they do not (i) represent or result from trends or uncertainties which management expects to materially impact future operating results, liquidity or capital resources, or (ii) represent material credits which cause management to have serious doubts as to the ability of such borrowers to comply with the loan repayment terms. The Company's allowance for loan losses increased to $3,880,000 at September 30, 1995 from $2,694,000 for the same period in 1994. This increase is due to an overall increase in the total loan portfolio. INVESTMENTS The Company maintains an investment portfolio to provide liquidity and earnings. Investments at September 30, 1995 with a carrying value of $67,500,000 had a market value of $67,800,000. During the same period in 1994, investments totalled $76,400,000 with a market value of $76,400,000. This decrease was used to fund increases in the loan portfolio. In 1993, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 115 (SFAS 115), "Accounting for Certain Investments in Debt and Equity Securities." SFAS 115 requires that investments in certain debt and equity securities be classified as either Held to Maturity (reported at amortized cost), Trading (reporting at fair value with unrealized gains and losses included in earnings), or Available for Sale (reported at fair value with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders' equity). SFAS 115 was required to be implemented for fiscal years beginning after December 15, 1993. Management adopted SFAS 115 on January 1, 1994 and currently classifies a portion of the portfolio as available for sale. DEPOSITS The funds to support the Company's asset growth have been provided by increased deposits, which amounted to $335,600,000 at September 30, 1995. This represents a 18.2% increase from the deposits at September 30, 1994 of $283,900,000. The increase is primarily the result of Greene County Bancshares, Inc. aggressive efforts to attract new time deposit customers, along with the opening of new branches. 18 21 STOCKHOLDERS' EQUITY AND CAPITAL ADEQUACY Sufficient levels of capital are necessary to sustain growth and absorb losses. The Company exceeds all regulatory capital requirements. The Company's primary source of new capital is undivided profits. The Federal Reserve Board, the FDIC and other agencies which regulate financial institutions have adopted capital adequacy standards applicable to financial institutions. These standards are intended to reflect the degree of risk associated with both on and off balance sheet items and to assure that even whose institutions that invest predominately in low risk assets, maintain a certain minimum level of capital. The following table provides the Company's best collective understanding of the regulatory capital requirements as currently published. These understandings are based upon regulations, guidelines and interpretations now in effect or proposed, all of which are subject to change.
Capital Ratio's at September 30, 1995 ------------------------------------- Required Minimum Ratio Company's Ratio ---------------------- --------------- Tier 1 risk-based capital 4.00% 14.86% Total risk-based capital 8.00% 16.24% Leverage Ratio 3.00% 10.75%
The Company believes it was in compliance with all minimum regulatory capital guidelines at September 30, 1995 and continues to be so. LIQUIDITY AND GROWTH Liquidity refers to the ability of the Company to generate sufficient funds to meet its financial obligations and commitments without significantly impacting net interest income. One of the Company's objectives is to maintain a high level of liquidity, and this goal continues to be met. Maintaining liquidity ensures that funds will be available for reserve requirements, customer demand for loans, withdrawal of deposit balances and maturities of other deposits and liabilities. These obligations can be met by existing cash reserves of funds from maturing loans and investments, but in the normal course of business are met by deposit growth. Increased deposits and retained earnings also are the sources for the Company's continued growth of liquidity. During the nine month period ended September 30, 1995, operating activities of the Company provided $5,574,000 of cash flow. Net income of $4,547,000, adjusted for non-cash operating activities, provided the majority of cash generated from operations. 19 22 Investing activities, predominantly lending, used $45,817,000 of the Company's cash flow. This resulted in a $3,063,000 net increase in the investment portfolio, whereas loans originated, net of principal collected, used $39,843,000 in funds. Net cash inflows of $37,894,000 were provided by financing activities. Net deposit growth accounted for $37,484,000 of the increase, along with an increase in securities sold under agreements to repurchase of $895,000, and the sale to the New Shareholders of common stock of $851,000 which is subject to the Rescission Offer. Offsetting this increase were the cash dividends paid to shareholders of $1,336,000. The Company's liquid assets include investment securities, federal funds sold, and cash and due from banks. These assets represented 26.7% of total deposits at September 30, 1995, a decrease from 33.3% at September 30, 1994. INTEREST SENSITIVITY Deregulation of interest rates and short-term, interest-bearing deposits which are more volatile have created a need for shorter maturities of earnings assets. An increasing percentage of commercial and installment loans are being made with variable rates or shorter maturities to increase liquidity and interest rate sensitivity. The difference between interest sensitive asset and interest sensitive liability repricing within time periods is referred to as the interest rate sensitivity gap. Gaps are identified as either positive (interest sensitive assets in excess of interest sensitive liabilities) or negative (interest sensitive liabilities in excess of interest sensitive assets). The Company monitors its interest rate sensitivity gap on a monthly basis to maintain a positive position. LEGAL MATTERS The validity of the shares of Common Stock offered hereby will be passed upon for the Company by Gerrish & McCreary, P.C, Memphis, Tennessee. EXPERTS The balance sheet as of December 31, 1994 and the statement of income, shareholders' equity, and cash flow for the year ended December 31, 1994, incorporated by reference and delivered with this Prospectus, have been included herein in reliance on the report of Coopers & Lybrand L.L.P., independent accountants, given on the authority of that firm as experts in accounting and auditing. The balance sheet as of December 31, 1993 and the statements of income, changes in shareholders' equity, and cash flows for each of the two years in the period ended December 31, 1993, incorporated by reference and delivered with this Prospectus, have been so incorporated in reliance on the report of Price Waterhouse LLP, independent accountants, given on the authority of said firm as experts in accounting and auditing. 20 23 GREENE COUNTY BANCSHARES, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets - September 30, 1995 and December 31, 1994. Condensed Consolidated Statements of Earnings - For the three months ended September 30, 1995 and 1994 and for the nine months ended September 30, 1995 and 1994. Condensed Consolidated Statement of Changes in Stockholders' Equity for the nine months ended September 30, 1995. Condensed Consolidated Statements of Cash Flows - For the nine months ended September 30, 1995 and 1994. Notes to Condensed Consolidated Financial Statements. F - 1 24 GREENE COUNTY BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(UNAUDITED) * SEPTEMBER 30, DECEMBER 31, 1995 1994 ASSETS (IN THOUSANDS) ------ -------- -------- Cash and Due from Banks $ 12,737 $ 15,086 Federal Funds sold 9,500 3,550 Securities available-for-sale 33,381 38,109 Securities held-to-maturity (with a market value of $34,379 on September 30, 1995 and $32,215 on December 31, 1994). 34,106 32,265 Loans 284,976 244,700 Less: Allowance for Loan Losses 3,880 3,447 -------- -------- Net Loans 281,096 241,253 -------- -------- Bank Premises and Equipment, Net of Accumulated Depreciation 7,939 7,042 Other Assets 10,287 8,220 -------- -------- $389,046 $345,525 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Deposits $335,646 $298,162 Federal funds purchased and Securities sold under agreements to repurchase 4,774 3,879 Other Borrowings 3,509 3,688 Other Liabilities 3,282 2,606 -------- -------- Total Liabilities 347,211 308,335 -------- -------- STOCKHOLDERS' EQUITY -------------------- Common Stock, par value $10, authorized 1,000,000 shares; issued and outstanding 447,453 and 442,444 shares on September 30, 1995 and December 31, 1994, respectively 4,474 4,424 Surplus 3,716 2,915 Retained Earnings 33,653 30,442 Net unrealized holding gains (losses) on available-for-sale securities (8) (591) -------- -------- Total Stockholders' Equity 41,835 37,190 -------- -------- $389,046 $345,525 ======== ========
* Condensed from Audited Financial Statements. See accompanying notes to Consolidated Financial Statements (Unaudited) F - 2 25 GREENE COUNTY BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED)
THREE MONTHS NINE MONTHS ENDED ENDED SEPTEMBER 30 SEPTEMBER 30 (DOLLARS IN THOUSANDS EXCEPT PER SHARE) 1995 1994 1995 1994 --------------------------------------- ---- ---- ---- ---- Interest Income: Interest and Fees on Loans $ 7,106 $ 5,032 $19,902 $13,832 Interest on Investment Securities 1,024 955 3,082 3,285 Interest on Federal Funds Sold 92 76 381 165 ------- ------- ------- ------- Total Interest Income 8,222 6,063 23,365 17,282 Interest Expense: Interest on Deposits 3,371 2,015 9,335 5,662 Interest on Short Term Borrowings 104 117 325 306 ------- ------- ------- ------- Total Interest Expense 3,475 2,132 9,660 5,968 ------- ------- ------- ------- Net Interest Income 4,747 3,931 13,705 11,314 Provision for Loan Losses 182 105 493 277 ------- ------- ------- ------- Net Interest Income after Provision for Loan Losses 4,565 3,826 13,212 11,037 ------- ------- ------- ------- Other Income: Income from Fiduciary Activities 10 11 28 41 Service Charges on Deposit Accounts 430 415 1,326 1,248 Security Gains (Losses) 0 33 6 (35) Other Income 180 89 734 300 ------- ------- ------- ------- 620 548 2,094 1,554 Other Expenses: Salaries and Employee Benefits 1,632 1,195 4,396 3,396 Premises and Fixed Assets Expense 483 293 1,247 864 Other Operating Expenses 641 849 2,353 2,354 ------- ------- ------- ------- 2,756 2,337 7,996 6,614 ------- ------- ------- ------- Earnings Before Income Taxes 2,429 2,037 7,310 5,977 Income Taxes 933 786 2,763 2,193 ------- ------- ------- ------- Net Income $ 1,496 $ 1,251 $ 4,547 $ 3,784 ======= ======= ======= ======= Average Number of Shares 446,282 442,253 445,110 442,253 Per Share of Common Stock: Net Earnings $ 3.35 $ 2.83 $ 10.22 $ 8.56 ------- ------- ------- ------- Dividends $ 1.00 $ 0.88 $ 3.00 $ 2.64 ------- ------- ------- -------
See accompanying notes to Consolidated Financial Statements (Unaudited) F - 3 26 GREENE COUNTY BANCSHARES, INC. CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (IN THOUSANDS)
NET UNREALIZED DEPRECIATION ON AVAILABLE COMMON RETAINED FOR SALE STOCK SURPLUS EARNINGS SECURITIES TOTAL ----- ------- -------- ---------- ----- January 1, 1995 $4,424 $2,915 $30,442 $ (591) $37,190 Issuance of 5,009 shares 50 801 - - 851 Net income - - 4,547 - 4,547 Change in unrealized depreciation, net of tax - - - 583 583 Dividends paid - - (1,336) - (1,336) ------ ------ ------- ------ ------- September 30, 1995 $4,474 $3,716 $33,653 $ (8) $41,835 ====== ====== ======= ====== =======
See accompanying notes to Condensed Consolidated Financial Statements (Unaudited). F - 4 27 GREENE COUNTY BANCSHARES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED 9/30/95 AND 9/30/94 (IN THOUSANDS)
NINE MONTHS ENDED SEPT 30, SEPT 30, 1995 1994 ---- ---- NET CASH PROVIDED BY OPERATING ACTIVITIES: Net Income $ 4,547 $ 3,784 Adjustments to reconcile net income to net cash provided by operating activities: Provision for Loan Losses 493 277 Provision for Depreciation & Amortization 500 387 Amortization of investment security discounts, net of accretion 256 828 Increase in interest receivable (852) (347) Decrease in unearned income (372) (1,214) Increase in other assets (2,067) (943) Increase in Accrued Interest Payable and other 3,069 8,384 ------- ------- Net cash provided by operating activities 5,574 11,156 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Net (increase) decrease of securities and federal funds (3,063) 12,341 Net increase in loans (39,843) (30,236) Proceeds (improvements) other real estate owned and other (1,751) 1,020 Fixed assets additions (1,160) (911) ------- ------- Net cash used by investing activities (45,817) (17,786) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in demand deposits, NOW, money market and savings accounts 37,484 16,629 Cash dividends paid (1,336) (1,168) Increase (decrease) in securities sold under agreements to repurchase 895 (1,680) Proceeds from issuances of common stock 851 14 ------- ------- Net cash provided by financing activities 37,894 13,795 ------- ------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,349) 7,165 CASH AND CASH EQUIVALENTS AT JANUARY 1, 1995 15,086 11,020 ------- ------- CASH AND CASH EQUIVALENTS AT SEPTEMBER 30, 1995 $12,737 $18,185 ======= =======
See accompanying notes to Condensed Consolidated Financial Statements (Unaudited) F - 5 28 GREENE COUNTY BANCSHARES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1 - PRINCIPLES OF CONSOLIDATION AND PRESENTATION The consolidated financial statements include the accounts of Greene County Bancshares, Inc. (the "Company") and its wholly owned subsidiaries, Greene County Bank and American Fidelity Bank. All material intercompany balances and transactions have been eliminated in the consolidation. SUMMARY OF ACCOUNTING POLICIES The accompanying Condensed Consolidated Financial Statements have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying financial statements contain all adjustments, consisting only of normal recurring accruals, necessary to summarize fairly the consolidated financial position of the Company as of September 30, 1995 and the results of operations, stockholders' equity and cash flows for the periods presented. 2 - ALLOWANCE FOR LOAN LOSSES Transactions in the Allowance for Loan Losses were as follows:
NINE MONTHS ENDED SEPTEMBER 30, (IN THOUSANDS) 1995 1994 -------------- ---- ---- Balance, January 1 $3,447 $2,962 Add (Deduct): Losses charged to allowance (436) (1,067) Recoveries credited to allowance 376 522 Provision for loan losses 493 277 ------ ------ Balance, September 30 $3,880 $2,694 ====== ======
F - 6 29 PART II. INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The expenses of this offering include: SEC Registration Fees $ 351.72 Accounting Fees and Expenses* 12,500.00 Costs of Printing and Engraving* 3,500.00 Legal Fees and Expenses* 30,000.00 Blue Sky Fees and Expenses 2,438.33 Miscellaneous Expenses* 1,000.00 ---------- Total $49,790.05 ==========
(*) Indicates estimated amount ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Tennessee Business Corporation Act (the "Tennessee Act") empowers a corporation to indemnify an individual made a party to a proceeding because he is or was a director against liability incurred in the proceeding if: (i) he conducted himself in good faith; and (ii) he reasonably believed: (a) in the case of conduct in his official capacity with the corporation, that his conduct was in its best interests; (b) in all other cases, that his conduct was at least not opposed to its best interests; and (c) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. The termination of a proceeding by a judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the required standard of conduct. A corporation may not indemnify a director in connection with: (i) a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or (ii) any other proceeding charging improper personal benefit to him, whether or not involving action in his official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him. Indemnification is limited to reasonable expenses incurred in connection with the proceeding. The Tennessee Act further provides that unless limited by its charter, a corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he was a party because he is or was a director of the corporation against reasonable expenses incurred by him in connection with the proceeding. The Tennessee Act also provides that a corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of II - 1 30 final disposition of the proceeding if the director furnishes the corporation a written: (i) affirmation of his good faith belief that he has met the required standard of conduct; and (ii) undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that he is not entitled to indemnification. In addition, a corporation may pay for or reimburse the reasonable expenses incurred if a determination is made that the facts then known to those making the determination would not preclude indemnification. A corporation may not indemnify a director unless authorized in the specific case after the proper determination has been made by the Board of Directors, by special legal counsel or by the shareholders owning the requisite number of shares. A corporation also may indemnify and advance expenses to an officer, employee or agent of the corporation who is not a director to the same extent as a director. The Charter of Greene County Bancshares, Inc. contains the following indemnification provision: The corporation from time to time may provide either directly, or indirectly through the purchase of insurance, for the indemnification of directors, officers, employees and agents of the corporation and of any of its subsidiaries to the fullest extent permitted by law. The directors and officers of the Company are covered by an insurance policy in the amount of $5,000,000 by the CNA insurance company. ITEM 16. EXHIBITS
Exhibit Number Description of Exhibit ------ ---------------------- 3.1 Charter of the Company, as amended 3.2 Bylaws of the Company, as amended 4.1 See Exhibits 3.1 and 3.2 for provisions of the Charter, as amended, and the Bylaws, as amended, of the Company defining rights of holders of the Company's Common Stock 4.2 Form of Rescission Offer 5 Opinion of Gerrish and McCreary, P.C. re: legality 10.1 Employment Agreement between Company and R. Stan Puckett* 10.2 Employment Agreement between Company and Davis Stroud** 10.3 Employment Agreement between Company, Premier Bank of East Tennessee and William C. Adams, Jr., dated January 1, 1996. 10.4 Noncompetition Agreement between Company and William C. Adams, Sr., dated January 1, 1996. 10.5 Noncompetition Agreement between Company and William C. Adams, Jr., dated January 1, 1996.
II - 2 31
Exhibit Number Description of Exhibit ------ ---------------------- 21 Subsidiaries of the Company 23.1 Consent of Coopers & Lybrand L.L.P. 23.2 Consent of Price Waterhouse LLP 23.3 Consent of Gerrish and McCreary, P.C. (contained in Exhibit 5 to the Registration Statement) 24 Power of Attorney (contained in the Signature section of the Registration Statement) * Incorporated herein by reference to exhibits filed with Form 10-K Annual Report for year ended December 31, 1994. ** Incorporated herein by reference to exhibits filed with Form S-14 Registration Statement under the Securities Act of 1933, Registration No. 2-96273.
ITEM 17. UNDERTAKINGS Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act"), may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company, will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The Company hereby undertakes that for purposes of determining any liability under the Securities Act, the Company will treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Company under Rule 434(b)(1), or (4), or 497(h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective. The Company hereby undertakes that for purposes of determining any liability under the Securities Act, the Company will treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and the offering of the securities at that time as the initial bona fide offering of those securities. II - 3 32 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, Greene County Bancshares, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-2 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Greeneville, State of Tennessee, on January 23, 1996. GREENE COUNTY BANCSHARES, INC. By: /s/ R. Stan Puckett --------------------------- R. Stan Puckett President POWER OF ATTORNEY We, the undersigned directors and officers of Greene County Bancshares, Inc., do hereby constitute and appoint R. Stan Puckett our true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for us and in our name, place and stead, in any and all capacities, to sign any and all amendments to this Registration Statement and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and we do hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Name Capacity Date - ---- -------- ---- /s/ R. Stan Puckett President January 23, 1996 - ------------------------------------------- and Director R. Stan Puckett /s/ Alex Johnson Chief Financial Officer January 23, 1996 - ------------------------------------------- Alex Johnson /s/ Phil M. Bachman, Jr. Director January 23, 1996 - ------------------------------------------- Phil M. Bachman, Jr. /s/ Helen Horner Director January 23, 1996 - ------------------------------------------- Helen Horner
II - 4 33
Name Capacity Date - ---- -------- ---- /s/ J.W. Douthat Director January 23, 1996 - ------------------------------------------- ---------------- J.W. Douthat /s/ Harrison Lamons Director January 23, 1996 - ------------------------------------------- ---------------- Harrison Lamons /s/ Terry Leonard Director January 23, 1996 - ------------------------------------------- ---------------- Terry Leonard /s/ Ralph T. Brown Director January 23, 1996 - ------------------------------------------- ---------------- Ralph T. Brown /s/ James A. Emory Director January 23, 1996 - ------------------------------------------- ---------------- James A. Emory Director - ------------------------------------------- ---------------- Patrick Norris /s/ Jerald K. Jaynes Director January 23, 1996 - ------------------------------------------- ---------------- Jerald K. Jaynes /s/ Charles S. Brooks Director January 23, 1996 - ------------------------------------------- ---------------- Charles S. Brooks /s/ Davis Stroud Director January 23, 1996 - ------------------------------------------- ---------------- Davis Stroud /s/ W.T. Daniels Director January 23, 1996 - ------------------------------------------- ---------------- W.T. Daniels
II - 5 34 EXHIBIT INDEX
Exhibit Number Description of Exhibit ------ ---------------------- 3.1 Charter of the Company, as amended 3.2 Bylaws of the Company, as amended 4.1 See Exhibits 3.1 and 3.2 for provisions of the Charter, as amended, and the Bylaws, as amended, of the Company defining rights of holders of the Company's Common Stock 4.2 Form of Rescission Offer 5 Opinion of Gerrish and McCreary, P.C. re: legality 10.1 Employment Agreement between Company and R. Stan Puckett* 10.2 Employment Agreement between Company and Davis Stroud** 10.3 Employment Agreement between Company, Premier Bank of East Tennessee and William C. Adams, Jr., dated January 1, 1996. 10.4 Noncompetition Agreement between Company and William C. Adams, Sr., dated January 1, 1996. 10.5 Noncompetition Agreement between Company and William C. Adams, Jr., dated January 1, 1996. 21 Subsidiaries of the Company 23.1 Consent of Coopers & Lybrand L.L.P. 23.2 Consent of Price Waterhouse LLP 23.3 Consent of Gerrish and McCreary, P.C. (contained in Exhibit 5 to the Registration Statement) 24 Power of Attorney (contained in the Signature section of the Registration Statement) * Incorporated herein by reference to exhibits filed with Form 10-K Annual Report for year ended December 31, 1994. ** Incorporated herein by reference to exhibits filed with Form S-14 Registration Statement under the Securities Act of 1933, Registration No. 2-96273.
EX-3.1 2 CHARTER OF THE COMPANY, AS AMENDED 1 EXHIBIT 3.1 STATE OF TENNESSEE (ART) Department of State Certificate The undersigned, as Secretary of State of the State of Tennessee, hereby certifies that the attached document was received for filing on behalf of GREENE COUNTY BANCSHARES, INC. was duly executed in accordance with the Tennessee General Corporation Act, was found to conform to law, and was filed by the undersigned, as Secretary of State, on the date noted on the document. Therefore, the undersigned, as Secretary of State, and by virtue of the authority vested in him by law, hereby issues this certificate and attaches hereto the document which was duly filed on January 18th, 1985. /s/ ----------------------------- Secretary of State /s/ ----------------------------- Deputy 2 CHARTER OF GREENE COUNTY BANCSHARES, INC. The undersigned natural person, having capacity to contract and acting as the Incorporator of a corporation under the Tennessee General Corporation Act, adopts the following Charter for such corporation: 1. The name of the Corporation is Greene County Bancshares, Inc. 2. The duration of the corporation is perpetual. 3. The address of the principal office of the corporation in the State of Tennessee shall be Main and Depot Streets, Greeneville, Greene County, Tennessee. 4. The corporation is for profit. 5. The purposes for which the corporation is organized are: (a) To carry on the business of a bank holding company, as defined in the Federal Bank Holding Company Act of 1956, as amended, and to do all acts and things now and hereinafter permitted to be done by such a company. (b) To acquire by purchase, subscription, or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge, or otherwise dispose of or deal in and with any and all securities, as such term is hereinafter defined, issued or created by any corporation, firm, association or other entity, public or private, whether formed under the laws of the United States of America or of any state, commonwealth, territory, dependency or possession thereof, or of any foreign country or of any governmental subdivision, territory, 3 dependency, possession or municipality thereof, or issued or created by the United States of America or any state or commonwealth thereof or any foreign country, or by any agency, subdivision, territory, dependency, possession or municipality of any of the foregoing; and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon. The term "securities" as used in this Charter shall mean any and all notes, stocks, treasury stocks, bonds, debentures, evidences of indebtedness, certificates of interest or participation in any profit-sharing agreement, collateral trust certificates, preorganization certificates or subscriptions, transferable shares, investment contracts, voting trust certificates, certificates of deposit for a security, or, in general, any interests or instruments commonly known as "securities" or any and all certificates of interest or participation in, temporary or interim certificates for, receipts for, guaranties of, or warranties or rights to subscribe to or purchase, any of the foregoing. (c) To make, establish and maintain investments in securities, and to supervise and manage such investments. (d) To cause to be organized under the laws of the United States of America or of any state, commonwealth, territory, dependency or possession thereof, or of any foreign country or of any political subdivision, territory, dependency, possession or municipality thereof, one or more corporations, firms, organizations associations or other entity. 4 dissolved, wound up, liquidated, merged or consolidated. (e) To acquire by purchase or exchange, or by transfer to, or by merger or consolidation with, the corporation or any corporation, firm organization, association, or other entity owned or controlled, directly or indirectly, by the corporation, or to otherwise acquire, the whole or any part of the business, good will, rights, or other assets of any corporation, firm, organization, association or other entity; to operate and/or carry on the business of same, and to undertake or assume in connection therewith the whole or any part of the liabilities and obligations thereof; to effect any such acquisition in whole or in part by delivery of cash or other property, including securities issued by the corporation, or by any other lawful means. (f) To aid by loan, subsidy, guaranty or in any other lawful manner any corporation, firm, organization, association or other entity of which any securities are in any manner directly or indirectly held by the corporation or in which the corporation or any such corporation, firm, organization, association or entity may be or become otherwise interested; to guarantee the payment of dividends of any stock issued by any such corporation, firm, organization, association or entity; to guarantee with or without recourse against any such corporation, firm or organization, association or entity or to assume the payment of the principal of, or the interest on, any obligations issued or incurred by such corporation, firm, organization, association or entity, to do any and all other acts and things 5 for the enhancement, protection or preservation of any securities which are in any manner, directly or indirectly held, guaranteed or assumed by the corporation, and to do any and all acts and things designed to accomplish any such purpose. (g) To borrow money for any business, object or purpose of the corporation from time to time, without limit as to amount; to issue any kind of evidence of indebtedness, whether or not in connection with borrowing money, including evidences of indebtedness convertible into stock of the corporation, to secure the payment of any evidence of indebtedness by the creation of any interest in any of the property or rights of the corporation, whether at that time owned or thereafter acquired. (h) To render service, assistance, counsel and advice to, and to act in any capacity as representative or agent (whether managing, operating, financial, purchasing, selling, advertising or otherwise) of, any corporation, firm, organization, association, or other entity. (i) To engage in any lawful business and in connection therewith to do any lawful act in furtherance of or otherwise necessary or convenient to such business. The corporation shall possess and may exercise all powers and privileges necessary or convenient to effect any or all of the foregoing purposes, or to further any or all of the foregoing powers, and the enumeration herein of any specific purposes or powers shall not be held to limit or restrict in any manner the exercise by the corporation of the general powers of the 6 State of Tennessee conferred upon corporations formed under the Tennessee General Corporation Act. 6. The maximum number of shares which the corporation shall have the authority to issue is (a) One Hundred Thirty (130) shares of Organizational Common Stock with a par value of Ten Dollars ($10.00) per share, which stock shall be callable by the corporation at any time at the par value thereof by action of a majority of the board of directors. (b) Three Hundred Thousand (300,000) shares of Common Stock, with a par value of Ten Dollars ($10.00) per share. 7. The corporation will not commence business until consideration of One Thousand Dollars ($1,000.00) has been received for the issuance of shares. 8. (a) The Board of Directors may take, on written consent without a meeting, any action which it could take by means of a regularly called and held meeting, provided that such written consent sets forth the action so taken and is signed by all of the Directors. (b) The Board of Directors shall have the power by majority vote of the Directors present at a meeting at which a quorum is present to adopt, amend, or repeal any of the By-Laws of the Corporation, but any By-Law adopted by the Board may be amended or repealed by affirmative vote of the holders of a majority of all outstanding shares entitled to vote thereon. (c) The corporation from time to time may provide either directly, or indirectly through the purchase of insurance, for the indemnification of directors, officers, employees and agents of the corporation and of any of its subsidiaries to the fullest extent permitted by law. (d) The indemnification of the corporation shall not have preemptive rights. (e) The Board of Directors shall have authority to issue bonds, debentures, notes or other obligations of this corporation and to fix all the terms thereof, including without limitation the convertibility or nonconvertibility thereof. 7 (f) Any part of the authorized capital stock and any bonds, debentures, notes or other obligations of the corporation may at any time, to the extent permitted by law, be issued, optioned or reserved for sale, sold or disposed of by the corporation pursuant to appropriate action by the Board of Directors, to such parties and upon such terms as the board shall deem proper. (g) The corporation shall have the right to purchase its own shares and to pay dividends and make distributions of property to the extent of unreserved and unrestricted earned or capital surplus available therefor. DATED: January 18, 1985 /s/ --------------------------- John L. Unger, Incorporator State of Tennessee, Greene County Register's Office This instrument recorded in Charter book page Received for record at 3:48 p.m. on the 14th day of February, 1985. State Tax X C.F. X Rec'd Fee 5.00 Total 5.00. Noted in Book A Page No. 8 ARTICLES OF AMENDMENT TO THE CHARTER OF GREENE COUNTY BANCSHARES, INC. Pursuant to the provisions of Section 48-303 of the Tennessee General Corporation Act, the undersigned Corporation adopts the following articles of amendment to its charter: 1. The name of the Corporation is Greene County Bancshares, Inc. 2. The amendment adopted is: A new Section 9 shall be added to the charter in the form set forth below: "9.A. Voting Requirement. In addition to any affirmative vote required by law or any other Section of this Charter, and except as otherwise expressly provided in Subsection B of this Section 9, any Business Combination (as defined herein) shall require an affirmative vote of (i) eighty percent (80%) of the votes entitled to be cast by all holders of Voting Stock (as defined herein) voting together as a single class at a meeting of shareholders called for such purpose and in addition thereto, (ii) a majority of the votes entitled to be cast by all holders of Voting Stock, other than shares of Voting Stock which are Beneficially Owned (as defined herein) by the Interested Shareholder (as defined herein), voting together as a single class at a meeting of shareholders called for such purpose. Such affirmative vote shall be required notwithstanding the fact that a vote would not otherwise be required, or that a lesser percentage may be specified by law or in any agreement with any national securities exchange or otherwise. B. When Voting Requirement Not Applicable. The provisions of Subsection A of this Section 9 shall not be applicable to any Business Combination which shall have been approved by a majority of the Disinterested Directors (as defined herein) or as to which all of the conditions specified in subsections B(1), B(2) and B(3) shall have been met: (1) Fair Prices. The aggregate amount per share of the cash and the Fair Market Value (as defined herein), as of the Announcement Date (as defined herein), of the consideration other than cash to be received in such Business Combination by holders of shares of the respective classes and series of outstanding capital stock of the Corporation shall be at least equal to the highest of the following: (a) if applicable, the highest per share price (adjusted for any subsequent stock dividends, splits, combinations, recapitalizations, reclassifications or other such reorganizations) paid to acquire any shares of such respective classes and series Beneficially Owned (as defined herein) by the Interested Shareholder 9 defined herein); (b) The highest per share price (adjusted for any subsequent stock dividends, splits, combinations, recapitalizations, reclassifications or other such reorganizations) paid to acquire any shares of such respective classes and series Beneficially Owned by the interested Shareholder in the transaction in which the Interested Shareholder became an Interested Shareholder; (c) The Fair Market Value per share of such respective classes and series on the Announcement Date (as defined herein); (d) The Fair Market Value per share of such respective classes and series on the Determination Date (as defined herein) (e) The amount per share of any preferential payment to which shares of such respective classes and series are entitled in the event of a liquidation, dissolution or winding up of the Corporation. (2) Form of Consideration. The consideration to be received by holders of each particular class and series of outstanding capital stock of the Corporation in a Business Combination shall be (i) cash or (ii) if the majority of the shares of any particular class or series of the capital stock of the Corporation Beneficially Owned by the Interested Shareholder shall have been acquired for a consideration in a form other than cash, the same form of consideration used to acquire the largest number of shares of such class or series previously acquired and Beneficially Owned by the Interested Shareholder. (3) Other Requirements. After such interested Shareholder has become an Interested Shareholder and prior to the consummation of such Business Combination, except as approved by a majority of the Disinterested Directors, there shall have been: (a) No failure to declare and pay in full, when and as due, any dividends on any class or series of Preferred Stock (as defined herein) (whether cumulative or not), except on any class or series of Preferred Stock as to which dividends were in arrears on the Determination Date; (b) No reduction in the periodic rate of dividends on the Corporation's Common Stock below the dividends paid during the dividend period of the Corporation ended immediately prior to the Determination Date, except any reduction in dividends necessary to fairly reflect any stock dividend, split, recapitalization, reclassification or other such reorganization; 2 10 (c) No failure to increase the periodic rate of any dividends per share paid on the Corporation's Common Stock to fairly reflect any stock combination, recapitalization, reclassification or other such reorganization which has the effect of reducing the number of outstanding shares of Common Stock; (d) No increase in the number of shares of the capital stock of the Corporation Beneficially Owned by the Interested Shareholder, except (i) as a part of the transaction that resulted in the Interested Shareholder becoming an Interested Shareholder or (ii) to consummate the Business Combination in compliance with the provisions of this Section 9; (e) No loans, advances, guarantees, pledges or other financial assistance or tax credits or other tax advantages provided by the Corporation or its subsidiaries for the benefit, directly or indirectly, of the Interested Shareholder, whether in anticipation of or in connection with such Business Combination or otherwise; (f) No material change in the Corporation's business or capital structure or the business or capital structure of any subsidiary of the Corporation effected, directly or indirectly, by or for the benefit of the Interested Shareholder; and (g) A proxy or information statement mailed at least thirty (30) days prior to the completion of the Business Combination to all the holders of Voting Stock (whether or not shareholder approval of the Business Combination is required) which proxy or information statement shall (i) describe the Business Combination, (ii) include in a prominent place the recommendations, if any, of a majority of the Disinterested Directors as to the advisability or inadvisability of the Business Combination, (iii) if deemed advisable by a majority of the Disinterested Directors, include an opinion of a reputable investment banking firm or other expert as to the fairness or unfairness of the terms of the Business Combination from the point of view of the shareholders other than the Interested Shareholder (such investment banking firm to be selected by a majority of the Disinterested Directors and to be paid a reasonable fee for their services by the Corporation upon receipt of such opinion), and (iv) be responsive to the pertinent provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, or any laws supplementing or superseding such Act, rules and regulations, whether or not such proxy or information statement is required by law to be furnished to any holders of Voting Stock. 3 11 C. Definitions. As used in this Section 9: (1) "Business Combination" means any of the transactions described below: (a) Any merger or consolidation of the Corporation or any Subsidiary (as defined herein) with (i) any Interested Shareholder or (ii) any corporation (whether or not itself an Interested Shareholder) which is, or after such merger or consolidation would be, an Affiliate (as defined herein) of an Interested Shareholder; (b) Any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions, (i) to or with any Interested Shareholder or any Affiliate of any Interested Shareholder of any assets (including securities) of the Corporation or any Subsidiary having an aggregate Fair Market Value of $1,000,000 or more or (ii) to or with the Corporation or any Subsidiary of any assets (including securities) of any Interested Shareholder or any Affiliate of an Interested Shareholder having an aggregate Fair Market Value of $1,000,000 or more; (c) The issuance or transfer by the Corporation or any Subsidiary in one transaction or a series of transactions, of any securities of the Corporation or any Subsidiary to any Interested Shareholder or an Affiliate of any Interested Shareholder in exchange for cash, securities or other property, or a combination thereof, having an aggregate Fair Market Value of $1,000,000 or more; (d) The adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of an Interested Shareholder or any Affiliate of any Interested Shareholder; (e) Any reclassification of securities (including any reverse stock split) or any recapitalization or reorganization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Shareholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity securities of the Corporation or any Subsidiary (including securities convertible into equity securities) which is directly or indirectly owned by any Interested Shareholder or any Affiliate of any Interested Shareholder; (f) Any other transaction or series of transactions that is similar in purpose or effect to those referred to in (a) through (e) of this Subsection C(1). 4 12 (2) "Voting Stock" means the Common Stock and those classes of Preferred Stock which would then be entitled to vote in the election of directors. (3) "Beneficially Owned," with respect to any securities, means the right or power (directly or indirectly through any contract, understanding or relationship) (i) to vote or direct the voting of such securities, (ii) to dispose or direct the disposition of such securities, or (iii) to acquire such voting or investment power, whether such right or power is exercisable immediately or only after the passage of time. (4) "Interested Shareholder" means any Person (as defined herein) or member of a Group of Persons (as defined herein) who or which, together with any Affiliate or Associate (as defined herein) of such Person or member, Beneficially Owns (within the meaning of subsection C(3) above) ten percent or more of the outstanding Voting Stock of the Corporation. (5) "Person" means any individual, firm, corporation, partnership, joint venture or other entity. (6) "Group of Persons" means any two or more Persons who or which are acting or have agreed to act together for the purpose of acquiring, holding, voting or disposing of any Voting Stock of the Corporation. (7) "Disinterested Director" means any member of the board of directors of the Corporation who is not an Interested Shareholder or an Affiliate or Associate of an Interested Shareholder and who (i) was a member of the board of directors prior to the time the Interested Shareholder became an Interested Shareholder or (ii) was elected or recommended to succeed a Disinterested Director by a majority of the Disinterested Directors then on the board of directors. (8) "Fair Market Value" means: (i) in the case of stock, the highest sale price during the 30-day period immediately preceding the date in question of a share of such stock on the NASDAQ National Market System, or if such stock is listed on an exchange registered under the Securities Exchange Act of 1934, on the principal exchange on which such stock is listed, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by a majority of the Disinterested Directors in good faith; and (ii) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by a majority of the Disinterested Directors in good faith. (9) "Pre-announcement Period" means the two-year period ending at 11:59 P.M., Greeneville time, on the Announcement Date. (10) "Announcement Date" means the date of the first public announcement of the proposal of the Business Combination. 5 13 (11) "Determination Date" means the date on which the Interested Shareholder becomes an Interested Shareholder. (12) "Subsidiary" means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation. (13) "Affiliate," used to indicate a relationship with a specified Person, means another Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified Person. (14) "Associate," used to indicate a relationship with a specified Person, means (i) any corporation or other similar organization (other than the Corporation or a Subsidiary) of which such specified Person is an officer or partner or is, directly or indirectly, the beneficial owner of ten percent or more of any class of equity securities, (ii) any trust or estate in which such specified Person has a substantial beneficial interest or as to which such specified Person serves as trustee or in a similar fiduciary capacity, (iii) any relative or spouse of such specified Person, or any relative of such spouse who has the same home as such Person and (iv) any other Person or Affiliate of a Person who directly or indirectly has received more than $50,000 for services or property from the specified Person or from an Affiliate of the specified Person during any year of the preceding five calendar years or who can reasonably be expected to receive more than such amount in the current calendar year under any existing agreement or agreements or understandings with such specified Person or an Affiliate of such specified Person. (15) "Preferred Stock" means all classes or series of the Corporation's capital stock other than Common Stock. D. Powers of Disinterested Directors. A majority of the Disinterested Directors of the Corporation shall have power and duty to determine, on the basis of information known to them after reasonable inquiry, all facts necessary to determine compliance with this Section 9, including without limitation (i) whether a Person is an Interested Shareholder, (ii) the number of shares of Voting Stock beneficially owned by any Person, (iii) whether a Person is an Affiliate or Associate of another, (iv) whether the requirements of Section B have been met with respect to any Business Combination, and (v) whether the assets which are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the Corporation or any Subsidiary in any Business Combination has, an aggregate Fair Market Value of $1,000,000 or more. The good faith determination of a majority of the Disinterested Directors on such matters shall be conclusive and binding for all purposes of this Section 9. E. No Effect on Preferential Rights. The provisions of this Section 9 shall not affect in any way the amount or form of consideration that any 6 14 holder of shares of the Corporation's capital stock is entitled to receive upon the liquidation or dissolution of the Corporation or any other preferential rights of the holders of such shares. F. No Effect on Fiduciary Obligations of Interested Shareholders. Nothing contained in this Section 9 shall be construed to relieve any Interested Shareholder from any fiduciary obligation imposed by law. G. Amendment or Repeal. In addition to any affirmative vote required by law, an affirmative vote at least equal to the vote of eighty percent (80%) of the votes entitled to be cast by all holders of Voting Stock voting together as a single class, and, in addition thereto (ii) a majority of the votes entitled to be cast by all holders of Voting Stock, other than shares of Voting Stock which are Beneficially Owned by an Interested Shareholder, voting together as a single class, shall be required to amend or repeal, or adopt any charter provisions inconsistent with, this Section 9. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise." 3. The amendment was duly adopted by written consent action of the shareholders of the Corporation on February 19, 1985. 4. This amendment will be effective when these articles are filed by the Secretary of State. DATED: February 19, 1985 GREENE COUNTY BANCSHARES, INC. By: /s/ -------------------------- State of Tennessee, Greene County Register's Office This instrument recorded in Charter book 13 page 703 Received for record at 3:35 p.m. on the 9th day of April, 1985. State Tax X C.F. X Rec'd Fee 25.00 Total 25.00 Noted in Book A Page 335 No. 8852 Ted Holt, Charlotte Wallace Deputy EX-3.2 3 BYLAWS OF THE COMPANY, AS AMENDED 1 EXHIBIT 3.2 BYLAWS OF GREENE COUNTY BANCSHARES, INC. OFFICE 1. Principal Office The principal office of the Corporation shall be in Greeneville, Tennessee, and the Corporation shall have such other offices at such other places within or without the State of Tennessee as the Board of Directors may from time to time determine or as the business of the Corporation may require. SHAREHOLDERS' MEETING 2. Annual Meeting An annual meeting of the shareholders of the Corporation shall be held on such date as may be determined by the Board of Directors. The business to be transacted at such meeting shall be the election of directors and such other business as shall be properly brought before the meeting. If the election of directors shall not be held on the day designated by the Board of Directors for any annual meeting, or at any adjournment of such meeting, the Board of Directors shall call a special meeting of the shareholders as soon as conveniently possible thereafter. At such special meeting the election of directors shall take place and such election and any other business transacted thereat shall have the same force and effect as if transacted at an annual meeting duly called and held. 3. Special Meetings Special meetings of the shareholders, unless otherwise required by law, may be called at any time by the Chairman, President or Secretary and shall be called by the Chairman, President or Secretary at the request in writing of a majority of the Board of Directors or of shareholders owning 10% or more of the entire capital stock of the Corporation issued and outstanding and entitled to vote at such meeting. Such request must state the purpose for which the meeting is called and the person or persons calling the meeting. 2 4. Place of Meetings Annual and special meetings of the shareholders shall be held at the Corporation's principal office or at such other place within or without the State of Tennessee as may be designated by the Board of Directors. 5. Notice of Meetings; Waiver (a) Annual Meetings. Written or printed notice stating the place, day and hour of the annual meeting of shareholders shall be given in person or by mail to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be delivered not less than ten (10) days nor more than sixty (60) days before the meeting. Mailed notice shall be deemed to be delivered when deposited, with postage prepaid, in the United States mail addressed to the shareholder at his address as it appears on the records of the Corporation at the close of business on the record date established for such meeting. If delivered personally, such notice shall be delivered not less than five (5) nor more than sixty (60) days before the date of the meeting and shall be deemed delivered when actually received by the shareholder. (b) Special Meetings. Written or printed notice of every special meeting of shareholders shall be given in person or by mail to each shareholder of record entitled to vote at such meeting. Such notice shall state the place, day, hour, purpose or purposes for which the meeting is called, and the person or persons calling the meeting. If mailed, such notice shall be delivered not less than ten (10) days nor more than sixty (60) days before the meeting. Mailed notice shall be deemed to be delivered when deposited, with postage prepaid, in the United States mail addressed to the shareholder at his address as it appears on the records of the Corporation at the close of business on the record date established for such meeting. If delivered personally, such notice shall be delivered not less than five (5) nor more than sixty (60) days before the date of the meeting and shall be deemed delivered when actually received by the shareholder. (c) Waiver. A shareholder may waive the notice of either an annual or a special meeting by the submission by the shareholder or his proxy holder of a written waiver of notice either before or after such meeting. 2 3 6. Quorum Except as otherwise required by law or provided in these Bylaws, a quorum at any meeting of shareholders shall consist of the holders of record of a majority of the shares issued and outstanding and entitled to vote thereat, present in person or by proxy. If, however, such majority shall not be present or represented at any meeting of the shareholders, the shareholders present in person or by proxy and entitled to vote thereat shall have power to adjourn the meeting from time to time, and to any other place, without notice other than announcement at the meeting of the time and place to which the meeting is adjourned. At any adjourned meeting at which the requisite amount of voting stock to constitute a quorum shall be represented, any business may be transacted which might have been transacted at the meeting as originally called. 7. Record Date The record date for the determination of shareholders entitled to notice of and entitled to vote at any meeting of shareholders or any adjournment thereof, shall be such date as shall be determined by the Board of Directors, but which in any event shall not be less than ten (10) days prior to the date of such meeting. If the Board of Directors does not fix such record date, the record date for the determination of shareholders entitled to notice of and entitled to vote at any meeting of shareholders of any adjournment thereof shall be the close of business on the day next preceding the day on which notice is given. 8. Voting of Shares Unless otherwise provided in the Charter, each shareholder of the Corporation shall be entitled, at each meeting of the shareholders and upon each proposal presented at such meeting, to one vote for each share of the capital stock having voting power registered in his name on the books of the Corporation on the record date. Each shareholder having the right to vote shall be entitled to vote in person or by proxy appointed by an instrument in writing executed by such shareholder or his duly authorized attorney-in-fact and bearing a date not more than eleven (11) months prior to said meeting, unless said instrument provides for a longer period. Unless the Charter, these Bylaws or applicable law specifically provide otherwise, the affirmative vote of a majority of shares represented and entitled to vote at a meeting at which quorum is present shall be the act of the 3 4 shareholders, except that directors shall be elected by a plurality of the votes cast in the election. At each election of directors, every shareholder shall have the right to vote the number of shares which he is entitled to vote at such meeting for as many persons as there are directors to be elected at said meeting, but cumulative voting for such nominees shall not be permitted unless the Charter otherwise provides. 9. Presiding Officer Meetings of the shareholders shall be presided over by the Chairman, or if he is not present, by the President, or if he is not present, by a Vice President, or if neither the Chairman, President nor a Vice President is present, by a chairman to be chosen by a majority of the shareholders entitled to vote at such meeting. The Secretary of the Corporation or, in his absence, an Assistant Secretary shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present, the shareholders entitled to vote at such meeting shall choose any person present to act as secretary of the meeting. DIRECTORS 10. Powers and Duties The business and affairs of the Corporation shall be managed by the Board of Directors. In addition to the powers and authority expressly conferred upon them by these Bylaws, the Board may exercise all the powers of the Corporation and do all lawful acts and things as are not by applicable law, by the Charter of the Corporation or by these Bylaws directed or required to be exercised or done by the shareholders. 11. Number, Classification, Term, Qualification, and Vacancies (a) Number. The Board of Directors shall consist of not less than three (3) or more than fifteen (15) members, unless all of the outstanding stock of the Corporation is owned of record by less than three (3) shareholders, in which case the number of directors may be less than three (3), but not less than the number of shareholders of record. Subject to the provisions of paragraph 11 (c), the exact number within such maximum and minimum numbers shall be determined from time to time by resolution adopted by majority of the entire Board of Directors. 4 5 (b) Term of Office. Except as otherwise provided by law or by these bylaws, the directors of the Corporation shall be elected at the annual meeting of shareholders in each year, and shall hold office for a period of one year or until their successors are duly elected and qualified. (c) Increase in Number. The number of members of the Board of Directors may be increased from time to time by either the directors or the shareholders. The number of directors may be increased by the Board of Directors upon the affirmative vote of a majority of the entire Board. If the number of directors is increased by the Board, a vacancy or vacancies caused by such increase shall be filled by the vote of a majority of the directors then in office although less than a quorum exists. The number of directors may also be increased by the shareholders at any meeting thereof by a majority vote of the shares represented and entitled to vote. If the number of directors be increased by action of the shareholders, a vacancy or vacancies caused by such increase shall be filled by the shareholders in the same manner as at an annual meeting. (d) Decrease in Number. The number of members of the Board of Directors may be decreased by either the directors or the shareholders at any time there is an unfilled vacancy or there are unfilled vacancies on the Board of Directors, provided that the number of members may be decreased only to the extent of the number of vacancies on the Board of Directors existing at that time. If the number of directors is decreased by the Board, such action shall be taken by the vote of a majority of the directors then in office although less than a quorum exists. If the number of directors is decreased by the shareholders, such action shall be taken by a majority vote of the shares represented at any meeting and entitled to vote thereat. (e) Vacancies. In case there are vacancies on the Board of Directors, other than vacancies created by the removal of a director or directors (which shall be governed by paragraph 15(c)) and other than vacancies created by an increase in the number of directors (which shall be governed by paragraph 11(b)), the remaining directors may by a majority vote of the directors then in office elect a successor or successors who shall hold office until the next annual meeting of shareholders and until his or their successors are elected and qualified. 5 6 (f) Qualification. Directors must be of legal age but need not be shareholders of the Corporation. (g) Retirement of Directors. The mandatory retirement age for Directors of the Corporation shall be the first day of the month following their 75th birthday. The Board of Directors, at its discretion, may name retired directors to the classification of Director Emeritus, who could attend meetings and have no vote or liability for serving. 12. Quorum A majority of the total number of directors in office shall constitute a quorum for the transaction of business. If, at any meeting of the Board of Directors, there shall be less than a quorum present, a majority of those present may adjourn the meeting, without further notice, from time to time until a quorum shall have been obtained. 13. Manner of Acting The act of a majority of the directors present at a meeting at which a quorum is present shall, unless otherwise provided by applicable law or these Bylaws, be the act of the Board of Directors. Any action required or permitted to be taken at a meeting of directors may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the directors. Such written consent shall have the same force and effect as a unanimous vote at a meeting of the Board of Directors. 14. Meetings; Notice Meetings of the Board of Directors may be held either within or without the State of Tennessee. Notice of a meeting of the Board of Directors need not state the purpose of, nor the business to be transacted at, such meeting. (a) Regular Meetings. Regular meetings of the Board of Directors shall be held at such times as are fixed from time to time by resolution of the Board, and may be held without notice of the time or place therefor. (b) Special Meetings. Special meetings may be held at any time upon call of the Chairman, the President, a Vice President or any two (2) directors. Notice of the time and place of each special meeting shall be given to each director at either his business or residence address, as shown by the records of the Corporation, at least forty-eight (48) hours prior thereto if mailed and on the day prior thereto if delivered or given in person or by telephone or telegraph. If mailed, such notice shall be deemed to be delivered when deposited, so addressed and with postage 6 7 prepaid, in the United States mail. If notice is given by telegram, such notice shall be deemed to be delivered when the telegram, so addressed, is delivered to the telegraph company. If notice is given in person, such notice shall be deemed to have been given when it is hand delivered to the director at his business or residence address. Any director may waive notice of any meeting before, at or after such meeting and the attendance of a director at a meeting shall constitute a waiver of notice of such meeting except when a director attends for the sole, express purpose of objecting to the transaction of business thereat, on the ground that the meeting is not lawfully called or convened, and so states in writing prior to the conduct of any business at the meeting. 15. Removal (a) By Shareholders. Unless the Charter otherwise provides, at any meeting of the shareholders, the entire Board of Directors or any number of directors may be removed from office, with or without cause, by a majority vote of the shares represented and entitled to vote thereat. (b) By Directors. At any meeting of the Board of Directors, any director or directors may be removed from office for cause, as that term is defined by applicable law, by a majority of the entire Board of Directors. (c) Replacement. When any director or directors are removed, new directors may be elected to fill the vacancies created thereby at the same meeting of the shareholders or Board of Directors, as the case may be, for the unexpired term of the director or directors removed. If the shareholders fail to elect persons to fill the unexpired term or terms of the director or directors removed by them, such unexpired terms shall be considered vacancies on the Board to be filled by the remaining directors as provided in paragraph 11(d). 16. Compensation Directors, and members of any committee of the Board of Directors, shall be entitled to such reasonable compensation for their services as directors and members of any such committee as shall be fixed from time to time by resolution of the Board of Directors, and shall also be entitled to reimbursement for any reasonable expenses incurred in attending such meetings. Any director receiving compensation under these provisions shall not be barred from serving the Corporation in any other capacity and receiving reasonable compensation for such other services. 7 8 COMMITTEES 17. Finance Committee There may be, if so determined by a resolution adopted by a majority of the entire Board of Directors, a Finance Committee of the Board consisting of two (2) or more directors. The Board of Directors may delegate to such Finance Committee all the power and authority of the Board that it deems desirable, except for any matters which cannot by law be delegated by the Board of Directors. Unless specifically authorized by the Board, the Finance Committee shall not have the power to adopt, amend or repeal these Bylaws, to submit to shareholders any matter that by law requires their authorization, to fill vacancies in the Board of Directors or in any committee or to declare dividends or make other corporate distributions. 18. Other Committees The Board of Directors may create such other committees as it may determine to be helpful in discharging its responsibilities for the management and administration of the Corporation. Each such committee shall consist of such persons, whether directors, officers of others, as may be elected thereto by the Board of Directors, and each committee shall perform such functions as may be lawfully assigned to it by the Board of Directors. OFFICERS 19. Number The officers of the Corporation shall be a Chairman, a President, a Secretary and such other officers as may be from time to time elected by the Board of Directors. One person may hold more than one office except the President may not hold the office of Secretary. 20. Election and Term of Office The principal officers shall be elected annually by the Board of Directors at the first meeting of the Board following the shareholders' annual meeting, or as soon thereafter as is conveniently possible. Subordinate officers may be elected from time to time. Each officer shall serve at the pleasure of the Board for such term as the Board of Directors may set and until his successor shall have been elected and qualified, or until his death, resignation or removal. 8 9 21. Removal Any officer may be removed from office by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall not prejudice the contract rights, if any, of the persons so removed. 22. Vacancies Any vacancy in an office from any cause may be filled for the unexpired portion of the term by the Board of Directors. 23. Duties (a) Chairman. The Chairman shall preside at all meetings of the shareholders and the Board of Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. (b) President. The President shall be the Chief Executive Officer of the Corporation and shall have general supervision over the active management of the business of the Corporation. He shall have the general powers and duties of supervision and management usually vested in the office of the President of a corporation and shall perform such other duties as the Board of Directors may from time to time prescribe. (c) Vice President. The Vice President or Vice Presidents (if any) shall be active executive officers of the Corporation, shall assist the President in the active management of the business, and shall perform such other duties as the Board of Directors may from time to time prescribe. (d) Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose; he shall perform like duties for any committee when required. The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and of the Board of Directors when required, and unless directed otherwise by the Board of Directors, shall keep a stock record containing the names of all persons who are shareholders of the Corporation, showing their place of residence and the number of shares held by them respectively. The Secretary shall perform such other duties as may be prescribed from time to time by the Board of Directors. (e) Cashier. The Cashier shall have the custody of the Corporation's funds and securities, shall keep or cause to be kept full and accurate account of receipts and disbursements in books belonging to the Corporation, and shall deposit or cause to be deposited all moneys and 9 10 other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Cashier shall disburse or cause to be disbursed the funds of the Corporation as required in the ordinary course of business or as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the President and directors at the regular meetings of the Board, or whenever they may require it, an account of all of his transactions as Cashier and the financial condition of the Corporation. He shall perform such other duties as may be incident to his office or as prescribed from time to time by the Board of Directors. The Cashier shall give the Corporation a bond, if required by the Board of Directors, in a sum and with one or more sureties satisfactory to the Board for the faithful performance of the duties of his office and for the restoration to the Corporation in case of his death, resignation, retirement, or removal from office, of all books, paper, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation. (f) Other Officers. Other officers appointed by the Board of Directors shall exercise such powers and perform such duties as may be delegated to them. (g) Delegation of Duties. In case of the absence or disability of any officer of the Corporation or of any person authorized to act in his place, the Board of Directors may from time to time delegate the powers and duties of such officer to any officer, or any director, or any other person whom it may select, during such period of absence or disability. 24. Indemnification of Officers and Directors The Corporation shall indemnify each present and future director and officer of the Corporation, or any person who may have served at its request as a director or officer of another company (and, in either case, his heirs, executors and administrators) to the full extent allowed by the laws of the State of Tennessee, both as now in effect and as hereafter adopted. CERTIFICATES FOR SHARES OF STOCK 25. Form (a) Stock Certificates. The interest of each shareholder of the Corporation shall be evidenced by a certificate or certificates for shares of stock. The certificate shall include the following on its 10 11 face: (i) the Corporation's name, (ii) the fact that the Corporation is organized under the laws of the State of Tennessee, (iii) the name of the owner of record of the shares represented thereby, (iv) the number of shares represented thereby, (v) the class of shares and the designation of the series, if any, which the certificate represents, (vi) the par value of each share or a statement that the shares are without par value, and (vii) such other information as applicable law may require or as may be lawful. (b) Signatures. The certificates for stock shall be signed by the Chairman, the President or a Vice President, and by the Secretary, an Assistant Secretary, the Cashier, or an Assistant Cashier. Where any certificate is manually countersigned by a transfer agent or registered by a registrar who is not an officer or employee of the Corporation, the signatures of the Chairman, the President, Vice President, Secretary, Assistant Secretary, and/or Cashier upon such certificate may be facsimiles, engraved or printed. In case any officer who has signed, or whose facsimile signature has been placed upon, any certificate shall have ceased to be such before the certificate is issued, it may be issued by the Corporation with the same effect as if such officer had not ceased to be such at the time of its issue. 26. Subscriptions for Shares Subscriptions for shares of the Corporation shall be valid only if they are in writing, signed and delivered by the subscriber. Unless the subscription agreement provides otherwise, subscriptions for shares, regardless of the time when they are made, shall be paid in full at such time, or in such installments and at such periods, as shall be determined by the Board of Directors. All calls for payments on subscriptions shall be uniform as to all shares of the same class or of the same series. 27. Transfers Transfers of shares of the capital stock of the Corporation shall be made only on the books of the Corporation by (i) the holder of record thereof, (ii) by his legal representative, who shall furnish proper evidence of authority to transfer, or (iii) his attorney, authorized by a power of attorney duly executed and filed with the Secretary of the Corporation or a duly appointed transfer agent. Such transfers shall be made only upon surrender of the certificate or certificates for such shares properly endorsed and with all taxes thereon paid. 11 12 28. Lost, Destroyed, or Stolen Certificates No certificate for shares of stock of the Corporation shall be issued in place of any certificate alleged to have been lost, destroyed, or stolen except on production of evidence, satisfactory to the Board of Directors, of such loss, destruction or theft, and, if the Board of Directors so requires, upon the furnishing of an indemnity bond in such amount (but not to exceed twice the value of the shares represented by the certificate) and with such terms and such surety as the Board of Directors may in its discretion require. CORPORATE ACTIONS 29. Contracts Unless otherwise required by the Board of Directors, the Chairman, the President or any Vice President shall execute contracts or other instruments on behalf of and in the name of the Corporation. The Board of Directors may from time to time authorize any other officer or officers or agent or agents to enter into any contract or execute any instrument in the name of and on behalf of the Corporation as it may deem appropriate, and such authority may be general or confined to specific instances. 30. Loans No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name unless authorized by the Board of Directors. Such authority may be general or confined to specific instances. 31. Checks, Drafts, etc. Unless otherwise required by the Board of Directors, all checks, drafts, bills of exchange and other negotiable instruments of the Corporation shall be signed by either the Chairman, the President, a Vice President or such other officer or agent of the Corporation as may be authorized so to do by the Board of Directors. Such authority may be general or confined to specific business, and, if so directed by the Board, the signatures of two or more such officers may be required. 12 13 32. Deposits All funds of the Company not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks or other depositories as the Board of Directors may authorize. 33. Voting Securities Held by the Corporation Unless otherwise required by the Board of Directors, the Chairman or the President shall have full power and authority on behalf of the Corporation to attend any meeting of security holders, or to take action on written consent as a security holder, of other corporations in which the Corporation may hold securities. In connection therewith the Chairman or the President shall possess and may exercise any and all rights and powers incident to the ownership of such securities which the Corporation possesses. The Board of Directors may, from time to time, confer like powers upon any other person or persons. 34. Dividends The Board of Directors may, from time to time, declare, and the Corporation may pay, dividends on its outstanding shares of capital stock in the manner and upon the terms and conditions provided by applicable law. The record date for the determination of shareholders entitled to receive the payment of any dividend shall be determined by the Board of Directors, but which in any event shall not be less than ten (10) days prior to the date of such payment. FISCAL YEAR 35. The fiscal year of the Corporation shall be determined by the Board of Directors, and in the absence of such determination, shall be the calendar year. CORPORATE SEAL 36. The Corporation shall not have a corporate seal. 13 14 AMENDMENT OF BYLAWS 37. These Bylaws may be altered, amended or repealed, and new Bylaws may be adopted at any meeting of the shareholders by the affirmative vote of a majority of the stock represented at such meeting, or by the affirmative vote of a majority of the members of the Board of Directors who are present at any regular or special meeting; provided, however, that any amendment to these Bylaws changing the number of directors, if adopted by the Board of Directors, shall require the affirmative vote of a majority of the members of the entire Board of Directors. 14 EX-4.2 4 FORM OF RECISSION OFFER 1 EXHIBIT 4.2 TENNESSEE FORM OF NOTICE OF RESCISSION OFFER GREENE COUNTY BANCSHARES, INC. MAIN AND DEPOT STREETS GREENEVILLE, TENNESSEE 37743 BY CERTIFIED MAIL RETURN RECEIPT REQUESTED [Name and Address of New Shareholder] Re: Offer of Rescission Dear _______________: On ______________, 1995, Greene County Bancshares, Inc. (the "Company") sold to you _______ shares of its Common Stock, par value $10 per share (the "Shares"), at a price of $170 per share. The Tennessee Securities Act of 1980, as amended (the "Act"), provides in Section 48-2-104 that it is unlawful for any person to sell any security in Tennessee unless the security is registered or exempt from the registration requirements under the Act. The Shares sold to you were neither registered nor exempt from registration; therefore, the offer and sale of these Shares were made in violation of Sections 48-2-104 and 48-2-107 of the Act. Pursuant to Section 48-2-122 of the Act and the November 14, 1986 Policy Statement of the Tennessee Securities Division on rescission offers, the Company is offering to rescind the sale of its common stock to you and refund to you, upon tender of the stock certificate for the Shares, the consideration you paid for the stock, plus interest at a rate of 10% per annum from the date of payment through the date the Company receives notice of your election to rescind, less any amount of income you have received on the stock. This rescission offer will remain open for 30 days from the date you receive this letter. Should you elect to rescind, you must respond within 30 days to the Company, Attention: Alex Johnson, Chief Financial Officer of the Company, by so indicating on the enclosed "Election Form" and by tendering your original stock certificates. The "Election Form" must be returned to the Company by certified mail, return receipt requested. The Company will promptly tender the amount owed to you under the terms of this rescission offer. A Prospectus is enclosed regarding the offer of the Shares pursuant to a registration statement that has been filed with and declared effective by the Securities and Exchange Commission. The 2 registration statement also has been filed with the Tennessee Securities Division and its effectiveness with that Division is conditioned upon the concurrent delivery of this rescission offer with the enclosed Prospectus. The Prospectus describes the offer, the Shares and the Company. You should review the Prospectus carefully before you decide if you want to elect to retain your Shares. Should you elect to retain your shares, please record your election on the enclosed "Election Form," sign the Rejection of Rescission, along with the Acknowledgement that you received and have had the opportunity to review the Prospectus, and the Confirmation of your decision to purchase the Shares, and return the "Election Form" to the Company, Attention: Alex Johnson, Chief Financial Officer of the Company. The "Election Form" must be returned to the Company by certified mail, return receipt requested. If upon the expiration of 30 days from your receipt of this letter, the Company has not received a response requesting rescission, this offer of rescission will be deemed to have been rejected, and the Company will be entitled to assume that you have received the Prospectus regarding the shares, have had the opportunity to review it and have elected to retain your shares. You may wish to consult with independent counsel before deciding whether to accept or reject this rescission offer in order to be fully informed about the tax and legal consequences related to either choice. Very truly yours, GREENE COUNTY BANCSHARES, INC. 3 GREENE COUNTY BANCSHARES INC. BOX 1120 GREENEVILLE, TENNESSEE 37744 PLEASE EXECUTE EITHER THE DEMAND FOR RESCISSION OR REJECTION OF RESCISSION AND ACKNOWLEDGEMENT OF RECEIPT OF PROSPECTUS AND CONFIRMATION OF PURCHASE - -------------------------------------------------------------------------------- DEMAND FOR RESCISSION The undersigned elects to rescind my investment in the common stock of Greene County Bancshares Inc. AA (the "Company") of $_______ made by me on ________ and hereby accepts the rescission offer of the Company to repurchase all my shares in accordance with the Notice of Rescission Offer. - ------------------------------ Name of Investor (Please Print) - ------------------------------- --------------- Signature Date Please provide the address to which your check should be sent in the event of your rescission. -------------------------- -------------------------- -------------------------- - -------------------------------------------------------------------------------- REJECTION OF RESCISSION ACKNOWLEDGEMENT OF RECEIPT OF PROSPECTUS AND CONFIRMATION OF PURCHASE The undersigned elects not to rescind my investment in the common stock of Greene County Bancshares Inc. of $______ made by me on _________ and hereby rejects such rescission in accordance with the Notice of Rescission Offer dated ________; and acknowledges that I have received and had the opportunity to review the Prospectus for Common Stock of the Company dated ________ 1995, and confirms my decision to purchase ________ shares of Common Stock of the Company. - ------------------------------- Name of Investor (Please Print) - ------------------------------- -------------- Signature Date RETURN BY CERTIFIED MAIL RETURN RECEIPT REQUESTED TO: Greene County Bancshares Inc. Attention: Alex Johnson Box 1120 Greeneville, Tennessee 37744 IF NO CHOICE IS MADE PRIOR TO THE EXPIRATION OF 30 DAYS FROM YOUR RECEIPT OF THIS RESCISSION OFFER THIS RESCISSION OFFER WILL BE DEEMED TO HAVE BEEN REJECTED AND THE COMPANY WILL BE ENTITLED TO ASSUME THAT YOU HAVE RECEIVED AND HAD THE OPPORTUNITY TO REVIEW THE PROSPECTUS AND HAVE ELECTED TO RETAIN YOUR SHARES. EX-5 5 OPINION OF GERRISH AND MCCREARY, P.C. 1 EXHIBIT 5 GERRISH & McCREARY, P.C. Attorneys 700 Colonial Road, Suite 200 Memphis, Tennessee 38117 P.O. Box 242120 Memphis, Tennessee 38124-2120 Telephone: (901) 767-0900 Telecopier:(901) 684-2339 January 23, 1996 Greene County Bancshares, Inc. Main and Depot Streets Greeneville, TN 37743 Gentlemen: You have requested our opinion as to the legality of the shares of Common Stock to be issued by Greene County Bancshares, Inc. (the "Company") in connection with its offering of 6,000 shares of its Common Stock pursuant to a Registration Statement on Form S-2, as filed with the Securities and Exchange Commission (the "Offering"). Except as indicated below, we have examined such corporate records and other documents and have made such examinations of law as we have deemed relevant. Based on and subject to the above, and subject to the qualifications below, it is our opinion that the authorized and outstanding shares of Common Stock of the Company will be validly authorized and issued, fully paid and nonassessable when issued to purchasers of the Offering. In arriving at this opinion, we have relied upon the corporation documentation of the Company, and our opinion is based upon the foregoing and upon such examination of federal and Tennessee laws (to which our opinion is limited) as we have deemed appropriate, and subject to the discussions and qualifications stated herein. We hereby consent to the inclusion in whole or in part of, or reference to, this opinion in connection with the Registration Statement on Form S-2 regarding the shares of Common Stock of the Company, which has been filed with the Securities and Exchange Commission. Very truly yours, GERRISH & McCREARY, P.C. /s/ Gerrish & McCreary, P.C. - ---------------------------- mg EX-10.3 6 EMPLOYMENT AGREEMENT/PREMIER BANK & MR. ADAMS, SR 1 EXHIBIT 10.3 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT, effective the 1st day of January, 1996, is made by and between PREMIER BANK OF EAST TENNESSEE (the "Bank"), GREENE COUNTY BANCSHARES, INC. ("Bancshares") and WILLIAM C. ADAMS, JR. (the "Executive"). WITNESSETH: WHEREAS, Bancshares owns 100% of the outstanding common stock of the Bank; and WHEREAS, the Bank, Bancshares and the Executive desire to enter into an employment relationship with the other; and WHEREAS, the Bank and the Executive each deem it necessary and desirable to execute a written document setting forth the terms and conditions of said relationship. NOW, THEREFORE, in consideration of the employment of the Executive by the Bank, of the mutual covenants, promises and agreements herein made, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. EMPLOYMENT. The Bank hereby employs Executive's full-time services as President, Chief Executive Officer and Director of Bank, for a term of one year commencing on January 1, 1996 (the "Commencement Date"). Executive hereby accepts such employment. This Employment Agreement shall automatically be extended for additional one year terms one year from the Commencement Date and annually thereafter, unless terminated by thirty (30) days advance written notice given by either the Executive or the Bank. Executive shall diligently perform the duties customarily performed by such officer, subject to the authority of the Board of Directors (the "Board") of the Bank, and shall hold and perform all of the responsibilities and duties prescribed by the Board and by the Bylaws of the Bank. During the term of this Agreement, Executive will devote his full time and effort to his duties hereunder, to the exclusion of all other employment or business interests other than passive personal investments, charitable, religious or civic activities. 2. BASE SALARY. As compensation for his services to the Bank, the Bank agrees to pay Executive an annual salary of Seventy Five Thousand and No/100 Dollars ($75,000.00) commencing on the Commencement Date (the Base Salary"). The annual salary shall be paid according to the normal payroll practices of the Bank for other employees. Effective one year from the Commencement Date, Executive shall be paid such Base Salary, which shall not be less than Seventy Five Thousand and No/100 Dollars, and compensation as the Board of the Bank may recommend. Any such salary and compensation recommended by the Board of the Bank must be ratified and approved by Greene County Bancshares, Inc. 2 Payment will be in accordance with the Bank's payroll policies in effect from time to time. In addition Executive will receive the normal Bank Board fee for attendance at board of directors and committee meetings. 3. BONUS. (a) Employee shall be entitled to receive an additional annual bonus compensation (the "Bonus") determined by the Executive and the President of Greene County Bank after taking into consideration the earnings and growth of the Bank. For the five consecutive years following the Commencement Date, the Bonus shall amount to not less than twenty percent (20%) of the Base Salary nor greater than thirty-five percent (35%) of the Base Salary. (b) In addition, the Bank, in its discretion, may, with respect to any year during the term hereof, award a bonus or bonuses to the Executive in addition to the Bonus provided for in Section 3(a). The compensation provided for in this Section and Section 3(a) shall be in addition to any pension or profit sharing payments set aside or allocated for the benefit of the Executive. 4. BENEFITS. The Bank agrees to provide Executive with the following benefits, commencing with the Commencement Date, or as soon thereafter as practicable, and continuing for so long as Executive is employed under this Employment Agreement or any extension thereof: (a) An insurance program (or similar programs) which is maintained for all Bank personnel. In addition, the Bank shall provide major medical, hospitalization, disability and dental insurance paid consistent with normal practices for executive employees for the benefit of the Executive and Executive's dependents. (b) An annual paid vacation according to normal policies of the Bank for senior executives. (c) Use of a six-passenger sedan automobile including all operating and maintenance expenses. (d) Reimbursement of monthly dues and Bank-related expenses of Executive at Springbrook Country Club. (e) Participation in the Bank's 401-K Plan; (f) Other benefits as the Board may approve from time to time. 5. INVESTMENT IN STOCK OF BANCSHARES. Bancshares and the Executive agree and acknowledge that upon the date of this Employment Agreement, Executive shall -2- 3 immediately become a fully vested participant in the existing Greene County Bancshares, Inc. Senior Management Stock Option Plan. 6. EXPENSES. Executive is authorized to incur necessary and customary expenses in connection with the business of the Bank, including expenses for entertainment, trade association meetings, travel, promotion and similar matters. The Bank will pay or reimburse Executive, pursuant to Bank policy, for such expenses upon presentation by Executive of the appropriate records which verify such expenses. 7. TERMINATION. This Agreement shall terminate upon the first to occur of the following: (a) The death of Executive; (b) Termination by Bank "for cause," as defined in paragraph 8; (c) Termination by Executive; provided, that Executive shall give not less than thirty (30) days' written notice of termination. Upon receipt of notice of intended termination given by Executive, the Bank reserves the right to terminate the Executive's employment effective immediately, provided that in such instance, the Bank shall pay an amount equal to Executive's Base Salary due for the remainder of the thirty (30) day notice period to the termination date, or thirty (30) days, whichever is less. In the event of termination for any cause outlined in 8(a) through (c), no severance or other payment shall be made to Executive; however, nothing contained in this paragraph 8 shall be construed to abrogate the obligations to Executive, or his personal representative, or his heirs, as the case may be, in respect to all rights which shall accrue prior to termination. 8. TERMINATION FOR CAUSE. As used in paragraph 8(c), termination "for cause" shall include acts of dishonesty; conviction of a felony; breach of this Agreement by Executive; or willful or gross negligence in carrying out the activities for which employed. "For cause" is not intended to include disagreements over management philosophy or other such intangibles. 9. DISCLOSURE OF CONFIDENTIAL INFORMATION. Executive acknowledges that the Bank possesses certain methods of operation and information concerning its business affairs, including customer lists and other customer information, which are valuable, special and unique assets of its business. Without prior Board approval, Executive agrees not to disclose, during or after the term of his employment, any such information, or any part thereof to any bank, person, firm, corporation, association or other entity for any reason or purpose whatsoever. -3- 4 10. NON-INTERFERENCE WITH PERSONNEL RELATIONS. Except for Executive's personal executive secretary, Executive shall not, directly or indirectly, during his employment and for a period of twenty-four (24) months immediately following the termination of his employment with the Bank, knowingly solicit, entice or persuade any other employees or agents of the Bank to leave the services of the Bank to engage in the business of providing banking or investment banking services for any corporation, partnership, association trust or other entity or person carrying on business in McMinn County, Tennessee. 11. ASSIGNMENT. The rights and obligations of the Bank and Executive (except the Executive's obligation to perform services) under this Agreement shall inure to the benefit of and shall be binding upon their respective successors, if any. The rights and obligations of Executive under this Agreement shall inure only to the benefit of Executive, are not assignable by Executive to any other person or entity by virtue of the unique and personal nature of Executive's services. 12. ENTIRE AGREEMENT. Except for the Employment Agreement with Greene County Bancshares, Inc. and Noncompetition Agreement executed contemporaneously herewith, this Agreement contains the entire agreement between the parties and supersedes all prior discussion, understanding and commitments, whether oral or written. This Agreement cannot be amended or modified except by subsequent written agreement signed by all parties hereto. 13. ATTORNEYS' FEES AND COSTS. If an action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which he may be entitled. 14. CONTROLLING LAW. This Agreement is being executed in and will be performed in the State of Tennessee and shall be construed, controlled and interpreted according to the laws of Tennessee. -4- 5 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. PREMIER BANK OF EAST TENNESSEE By: /s/ William C. Adams, Sr. --------------------------------------- Its: Chairman --------------------------------------- EXECUTIVE: /s/ William C. Adams, Jr. -------------------------------------------- WILLIAM C. ADAMS, JR. GREENE COUNTY BANCSHARES By: /s/ Stan Puckett ---------------------------------------- Its: President ---------------------------------------- -5- EX-10.4 7 NONCOMPETITION AGREE. - CO. & MR. ADAMS, SR 1 EXHIBIT 10.4 NONCOMPETITION AGREEMENT THIS NONCOMPETITION AGREEMENT, made as of this 1st day of January , 1996, by and between GREENE COUNTY BANCSHARES, INC. of Greeneville, Tennessee, a bank holding company (the "Company"), and WILLIAM C. ADAMS, SR. ("Adams"). W I T N E S S E T H: WHEREAS, the Company is a bank holding company controlling substantially all of the issued and outstanding stock of Premier Bank of East Tennessee, a Tennessee commercial bank (the "Bank"); WHEREAS, the Adams is the former Chairman of the Board and director of the Bank; and WHEREAS, the parties intend that this Agreement shall provide Adams with an economic incentive not to compete with the Bank and the Company. NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows: 1. Compensation for Noncompetition Agreement. Company agrees to pay to Adams subject to the terms and conditions set forth in this Agreement an amount for his agreement not to engage in competition with the Company or the Bank. Company shall pay to Adams as Noncompetition Compensation an amount equal to $30,000 payable in three equal installments of $10,000. The first payment shall be made on January 1, 1996 and then annually thereafter until paid in full. 2. Noncompetition. Adams covenants and agrees that for a period of five (5) years from the date of this Agreement he will not directly or indirectly engage in competition with Company or Bank either as an individual or as a partner, joint venturer, officer, director, stockholder, employee, consultant or agent within the Company or Bank's "Primary Service Area" which is defined as and includes the counties in Tennessee where the Company operates a subsidiary bank engaged in the business of commercial banking. This covenant of Adams shall be construed as an agreement independent of any other provision of this Agreement, and the existence of any claim or cause of action of Adams against Company or Bank based on this Agreement or otherwise shall not constitute a defense to the enforcement by Company or Bank of this covenant. Adams further agrees that during such period he will not (either directly or indirectly, such as a beneficiary of a trust) be the owner of more than a one percent (1%) ownership interest of (i) the outstanding capital stock of any corporation, or (ii) a member of any partnership, or (iii) an owner of any other business, any of the aforesaid which engages in any type of business or activity which is of the type 2 engaged in by the Company or the Bank. Except as set forth herein, nothing shall prohibit Adams from obtaining employment with any business or activity which is of the type engaged in by the Bank at the time of Adams's Termination of employment in which Adams does not have more than a one percent (1%) ownership interest; provided Adams's employment does not involve Adams's activities occurring within the Bank's Primary Service Area. In the event that the provisions of the paragraph 2 should ever be deemed to exceed the time or geographic limitations permitted by the applicable laws of the State, then such provision shall be reformed to the maximum time limitations permitted by the applicable laws of such State. 3. Forfeiture. In the event that Adams shall violate his covenant not to compete pursuant to paragraph 2 of this Agreement or shall violate the terms of any confidential information, or invention disclosure or assignment agreements entered into with Company, then this Agreement shall immediately terminate and Adams shall forfeit all rights under this Agreement to Noncompetition Compensation and installments of Noncompetition Compensation which have not yet been paid pursuant to paragraph 1. The assertion of any such forfeiture by Company shall not preclude or waive its right to use any and all other remedies. The right to assert a forfeiture is given in addition to any other rights Company may have by law, statute, ordinance or otherwise. 4. Amendment and Termination. The Board of Directors of Company may terminate this Agreement at any time in its sole and absolute discretion; provided, however, no such termination shall, without the written agreement of Adams, terminate or reduce Adams's right to compensation pursuant to this Agreement. No oral amendment of this Agreement shall be binding on the parties. Except as above provided, this Agreement cannot be amended, supplemented or modified except by an instrument in writing signed by the party against whom enforcement of such amendment, supplement or modification is sought. 5. No Term of Years. Nothing contained in this Agreement shall be construed to be a contract of employment for any term of years, nor as conferring upon Adams the right to continue in the employment of Company in any capacity, except as Company and Adams may otherwise agree separate and apart from this Agreement or as may be otherwise provided by law. Nothing contained in this Agreement shall be deemed to exclude Adams from any supplemental compensation, bonus, pension, group term life insurance, health insurance, other insurance, severance pay or other benefits to which he otherwise might be or become entitled as an employee. 6. Unsecured Obligation. Company's obligations to Adams under this Agreement are general unsecured obligations of Company. Adams shall not have any interest in any fund or specific asset of Company by reason of this Agreement. No trust fund shall be created in connection with this Agreement or any amount of compensation that shall become payable hereunder, and all payments to Adams shall be made from the general assets of Company. -2- 3 7. Tax Withholding. Company shall have the right to deduct from all cash payments to be made under this Agreement any federal, state or local taxes required by law to be withheld with respect to such payments. 8. Remedies. The parties hereto acknowledge and agree that upon the occurrence of a breach by Adams of his covenant not to compete, the remedies available at law to Company shall be inadequate, and Company shall be entitled to specific performance of Adams's covenant not to compete. Nothing herein shall be construed as prohibiting Company from pursuing any and all other remedies available to it for any such breach of Adams's covenant not to compete, including the enforcement of the forfeiture provisions in paragraph 3 and/or the recovery of monetary damages. In the event that it is necessary for either party to employ legal counsel to enforce his or its rights under this Agreement or to protect his or its interest herein, the party determined to be in breach shall reimburse the damaged party for any and all reasonable legal fees, expenses or court costs arising from such legal proceeding. The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. The rights and remedies provided by this Agreement are cumulative and the use of any one remedy by any party shall not preclude or waive his or its right to use any and all remedies. Such rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise. 9. Severability. Each provision of this Agreement is intended to be severable and the invalidity, illegality or unenforceability of any portion of this Agreement shall not affect the validity, legality or enforceability of the remainder of this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be automatically added as a part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and still be legal, valid and enforceable. 10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee. 11. Non-assignability. Adams's rights under this Agreement shall not be transferable or subject to assignment during Adams's lifetime. Furthermore, Adams shall not have the right or power to anticipate, accelerate, convey, assign or otherwise alienate, hypothecate, pledge or otherwise encumber any of his rights under this Agreement, except as expressly provided in paragraph 12. 12. Beneficiary. Adams shall have the right to designate a beneficiary to receive any amounts which become payable to Adams under this Agreement after the date of this death. Any such beneficiary designation shall be made in the form of Exhibit "B" attached hereto, executed by Adams and delivered to Company prior to the date of Adams's death. Adams shall have the right at any time to revoke or change any such beneficiary designation by a similar instrument delivered to Company. 13. Successors and Assigns. Subject to the foregoing limitations on assignment by Adams, this Agreement shall be binding upon and inure to the benefit of the respective -3- 4 parties hereto and their executors, administrators, heirs, personal representatives, successors and assigns. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. GREENE COUNTY BANCSHARE, INC. By: /s/ Stan Puckett ------------------------------------- Title: President ---------------------------------- W.C. ADAMS, SR.: /s/ William C. Adams, Sr. ----------------------------------------- -4- EX-10.5 8 NONCOMPETITION AGREE. - CO. & MR. ADAMS, JR 1 EXHIBIT 10.5 NONCOMPETITION AGREEMENT THIS NONCOMPETITION AGREEMENT, made as of this 1st day of January, 1996, by and between GREENE COUNTY BANCSHARES, INC. of Greeneville, Tennessee, a bank holding company (the "Company"), and WILLIAM C. ADAMS, JR. ("Employee"). WITNESSETH: WHEREAS, the Company is a bank holding company controlling substantially all of the issued and outstanding stock of Premier Bank of East Tennessee, a Tennessee commercial bank (the "Bank"); WHEREAS, the Employee is the president and chief executive officer of the Bank and a director of the Bank; and WHEREAS, the parties intend that this Agreement shall provide Employee with an economic incentive not to compete with the Bank and the Company. NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows: 1. Compensation for Noncompetition Agreement. In addition to such other regular compensation, bonuses and fringe benefits that Company or Bank may from time to time agree to pay or provide to Employee, Company agrees to pay to Employee subject to the terms and conditions set forth in this Agreement an additional amount for his agreement not to engage in competition with the Company or the Bank. Company shall pay to Employee as Noncompetition Compensation an amount equal to $200,000 payable in five equal installments of $40,000. The first payment shall be made on January 1, 1996 and then annually thereafter until paid in full. The Noncompetition Compensation payments shall be made to Employee notwithstanding his termination from employment during the term of this Agreement. 2. Noncompetition. Employee covenants and agrees that for a period of five (5) years from the date of this Agreement he will not directly or indirectly engage in competition with Company or Bank either as an individual or as a partner, joint venturer, officer, director, stockholder, employee, consultant or agent within the Company or Bank's "Primary Service Area" which is defined as and includes the counties in Tennessee where the Company operates a subsidiary bank engaged in the business of commercial banking. In the event Employee is terminated from his employment for cause as herein defined, Employee agrees that for a period of two (2) years from date of termination he will not directly or indirectly engage in competition with Company or Bank either as an individual or as a partner, joint venturer, officer, director, stockholder, employee, consultant or agent within 2 the Company or Bank's "Primary Service Area" which is defined as and includes the counties in Tennessee where the Company operates a subsidiary bank engaged in the business of commercial banking. Termination "for cause" shall include acts of dishonesty; conviction of a felony; breach of this Agreement by Executive; or willful or gross negligence in carrying out the activities for which employed. "For cause" is not intended to include disagreements over management philosophy or other such intangibles. This covenant of Employee shall be construed as an agreement independent of any other provision of this Agreement, and the existence of any claim or cause of action of Employee against Company or Bank based on this Agreement or otherwise shall not constitute a defense to the enforcement by Company or Bank of this covenant. Employee further agrees that during such period he will not (either directly or indirectly, such as a beneficiary of a trust) be the owner of more than a one percent (1%) ownership interest of (i) the outstanding capital stock of any corporation, or (ii) a member of any partnership, or (iii) an owner of any other business, any of the aforesaid which engages in any type of business or activity which is of the type engaged in by the Company or the Bank at the time of Employee's termination of employment. Except as set forth herein, nothing shall prohibit Employee from obtaining employment with any business or activity which is of the type engaged in by the Bank at the time of Employee's Termination of employment in which Employee does not have more than a one percent (1%) ownership interest; provided Employee's employment does not involve Employee's activities occurring within the Bank's Primary Service Area. In the event that the provisions of this paragraph 2 should ever be deemed to exceed the time or geographic limitations permitted by the applicable laws of the State, then such provision shall be reformed to the maximum time limitations permitted by the applicable laws of such State. 3. Forfeiture. In the event that Employee shall violate his covenant not to compete pursuant to paragraph 2 of this Agreement or shall violate the terms of any confidential information, or invention disclosure or assignment agreements entered into with Company, then this Agreement shall immediately terminate and Employee shall forfeit all rights under this Agreement to Noncompetition Compensation and installments of Noncompetition Compensation which have not yet been paid pursuant to paragraph 1. The assertion of any such forfeiture by Company shall not preclude or waive its right to use any and all other remedies. The right to assert a forfeiture is given in addition to any other rights Company may have by law, statute, ordinance or otherwise. 4. Amendment and Termination. The Board of Directors of Company may terminate this Agreement at any time in its sole and absolute discretion; provided, however, no such termination shall, without the written agreement of Employee, terminate or reduce Employee's right to compensation pursuant to this Agreement. No oral amendment of this Agreement shall be binding on the parties. Except as above provided, this Agreement cannot be amended, supplemented or modified except by an instrument in writing signed by the party against whom enforcement of such amendment, supplement or modification is sought. 5. No Term of Years. Nothing contained in this Agreement shall be construed to be a contract of employment for any term of years, nor as conferring upon Employee the right to continue in the employment of Company in any capacity, except as Company and - 2 - 3 Employee may otherwise agree separate and apart from this Agreement or as may be otherwise provided by law. It is expressly understood by the parties that this Agreement relates exclusively to additional noncompetition compensation for Employee's services and is not intended to be a comprehensive employment contract. Nothing contained in this Agreement shall be deemed to exclude Employee from any supplemental compensation, bonus, pension, group term life insurance, health insurance, other insurance, severance pay or other benefits to which he otherwise might be or become entitled as an employee. 6. Unsecured Obligations. Company's obligations to Employee under this Agreement are general unsecured obligations of Company. Employee shall not have any interest in any fund or specific asset of Company by reason of this Agreement. No trust fund shall be created in connection with this Agreement or any amount of compensation that shall become payable hereunder, and all payments to Employee shall be made from the general assets of Company. 7. Tax Withholding. Company shall have the right to deduct from all cash payments to be made under this Agreement any federal, state or local taxes required by law to be withheld with respect to such payments. 8. Remedies. The parties hereto acknowledge and agree that upon the occurrence of a breach by Employee of his covenant not to compete, the remedies available at law to Company shall be inadequate, and Company shall be entitled to specific performance of Employee's covenant not to compete. Nothing herein shall be construed as prohibiting Company from pursuing any and all other remedies available to it for any such breach of Employee's covenant not to compete, including the enforcement of the forfeiture provisions in paragraph 3 and/or the recovery of monetary damages. In the event that it is necessary for either party to employ legal counsel to enforce his or its rights under this Agreementor to protect his or its interest herein, the party determined to be in breachshall reimburse the damaged party for any and all reasonable legal fees, expenses or court costs arising from such legal proceeding. The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. The rights and remedies provided by this Agreement are cumulative and the use of any one remedy by any party shall not preclude or waive his or its right to use any and all remedies. Such rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise. 9. Severability. Each provision of this Agreement is intended to be severable and the invalidity, illegality or unenforceability of any portion of this Agreement shall not affect the validity, legality or enforceability of the remainder of this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be automatically added as a part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and still be legal, valid and enforceable. 10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee. - 3 - 4 11. Non-assignability. Employee's rights under this Agreement shall not be transferable or subject to assignment during Employee's lifetime. Furthermore, Employee shall not have the right or power to anticipate, accelerate, convey, assign or otherwise alienate, hypothecate, pledge or otherwise encumber any of his rights under this Agreement, except as expressly provided in paragraph 12. 12. Beneficiary. Employee shall have the right to designate a beneficiary to receive any amounts which become payable to Employee under this Agreement after the date of his death. Any such beneficiary designation shall be made in the form of Exhibit "B" attached hereto, executed by Employee and delivered to Company prior to the date of Employee's death. Employee shall have the right at any time to revoke or change any such beneficiary designation by a similar instrument delivered to Company. 13. Successors and Assigns. Subject to the foregoing limitations on assignment by Employee, this Agreement shall be binding upon and inure to the benefit of the respective parties hereto and their executors, administrators, heirs, personal representatives, successors and assigns. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. GREENE COUNTY BANCSHARES, INC. BY: /s/ --------------------------------------- TITLE: President ------------------------------------ EMPLOYEE: /s/ ------------------------------------------ EX-21 9 SUBSIDIARIES OF THE COMPANY 1 EXHIBIT 21 Subsidiaries of Greene County Bancshares, Inc. GREENE COUNTY BANK AMERICAN FIDELITY BANK PREMIER BANCSHARES, INC. EX-23.1 10 CONSENT OF COOPERS & LYBRAND LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS Board of Directors Greene County Bancshares, Inc. We consent to the incorporation by reference in the registration statement of Greene County Bancshares, Inc. on Form S-2 of our report dated January 27, 1995, on our audit of the consolidated financial statements of Greene County Bancshares, Inc. as of December 31, 1994, and for the year then ended, which report is included in the 1994 Annual Report on Form 10-K. /s/ Coopers & Lybrand L.L.P. COOPERS AND LYBRAND L.L.P. Knoxville, Tennessee January 19, 1996 EX-23.2 11 CONSENT OF PRICE WATERHOUSE LLP 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS Board of Directors Greene County Bancshares, Inc. We consent to the incorporation by reference in the registration statement of Greene County Bancshares, Inc. on Form S-2 of our report dated January 27, 1995, on our audit of the consolidated financial statements of Greene County Bancshares, Inc. as of December 31, 1994, and for the year then ended, which report is included in the 1994 Annual Report on Form 10-K. /s/ Coopers & Lybrand L.L.P --------------------------- COOPERS & LYBRAND L.L.P Knoxville, Tennessee January 19, 1996 -----END PRIVACY-ENHANCED MESSAGE-----