DEF 14A 1 proxy02.htm PROXY 09-30-02 proxy02

FIRST GEORGIA HOLDING, INC.

PROXY

SOLICITED BY THE BOARD OF DIRECTORS

FOR THE ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON JANUARY 21, 2003

The undersigned shareholder of First Georgia Holding, Inc. (the "Company") hereby appoints B.W. Bowie, Terry K. Driggers, Roy K. Hodnett, as proxies with full power of substitution, acting by majority or by any of them if only one be present and acting, to vote all shares of common stock of the Company which the undersigned would be entitled to vote if personally present at the Annual Meeting of Shareholders (the "Meeting") to be held at the main offices of First Georgia Bank, at 1703 Gloucester Street, Brunswick, Georgia on Tuesday, January 21, 2003 at 5:00 P.M. Eastern Standard Time, and at any adjournments thereof, upon the proposals described in the accompanying Notice of the Annual Meeting and the Proxy Statement relating to the Meeting (the "Proxy Statement"), receipt of which is hereby acknowledged.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSALS.

PROPOSAL ONE: Election of Directors

_________FOR all nominees listed ________WITHHOLD AUTHORITY

below (except as marked to To vote for all

to the contrary below) nominees listed below

 

INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through the nominee's name in the list below.

HENRY S. BISHOP

E. RAYMOND MOCK

This Proxy will be voted as directed, but if no direction to the contrary is indicated, it will be voted FOR the proposals. Discretionary authority is hereby conferred as to all other matters which may come before the Meeting.

 

Dated: ________

___________________________

Signature of Shareholder

____________________________

Additional signature (if held jointly)

 

If stock is held in the name of more than one person, all holders should sign. Signatures should correspond exactly with the name or names appearing on the stock certificate(s). When signing as attorney, executor, administrator, trustee, guardian, or custodian please indicate the capacity in which you are acting. Please mark, date and sign the Proxy, then return it in the enclosed return-addressed envelope. No postage is necessary.

PLEASE RETURN PROXY BY JANUARY 18, 2003

FIRST GEORGIA HOLDING, INC.

1703 Gloucester Street

Brunswick, Georgia 31520

(912) 267-7283

December 20, 2002

 To the Shareholders of FIRST GEORGIA HOLDING, INC.:

You are cordially invited to attend the Annual Meeting of Shareholders of First Georgia Holding, Inc. (the "Company") to be held on January 21, 2003 at the main office of First Georgia Bank, F.S.B. at 1703 Gloucester Street, Brunswick, Georgia. Enclosed is the Official Notice of the Annual Meeting, the Proxy Statement of management of the Company, and the Company's 2002 Annual Report.

The principal business of the meeting will be to elect the Company's Class II Directors to serve a term of three years. We will also review the operations of the Company and the Bank for the past year.

Whether or not you plan to attend the meeting, please mark, date and sign the enclosed form of proxy, and return it to the Company in the envelope provided as soon as possible.

Very truly yours,

 

 

Henry S. Bishop

Chairman

FIRST GEORGIA HOLDING, INC.

1703 Gloucester Street

Brunswick, Georgia 31520

(912) 267-7283

NOTICE OF ANNUAL MEETING

To be Held on January 21, 2003

 

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of First Georgia Holding, Inc. (the "Company") will be held on January 21, 2003 at 5:00 p.m. Eastern Standard Time at the main office of First Georgia Bank, F.S.B. (the "Bank") at 1703 Gloucester Street, Brunswick, Georgia, for the following purposes, all of which are more completely set forth in the accompanying Proxy Statement:

(1) To elect the Class II Directors to serve a term of three years.

(2) To transact such other business as may properly come before the meeting.

The Board of Directors has fixed the close of business on December 2, 2002 as the record date for the determination of shareholders entitled to notice of and to vote at the meeting.

All shareholders are requested to mark, date, sign and return the enclosed form of proxy as soon as possible. If you attend the meeting and wish to vote your shares in person, you may do so at any time before the proxy is exercised.

BY ORDER OF THE BOARD OF DIRECTORS

 

 Henry S. Bishop

Chairman

 

FIRST GEORGIA HOLDING, INC.

1703 Gloucester Street

Brunswick, Georgia 31520

PROXY STATEMENT

 

INTRODUCTION

Time and Place of Meeting

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of First Georgia Holding, Inc. (the "Company"), for use at the annual meeting of shareholders to be held on January 21, 2003 at 5:00 PM, at the main office of First Georgia Bank, F.S.B. (the "Bank") at 1703 Gloucester Street, Brunswick, Georgia, and at any adjournments thereof.

Record Date and Mailing Date

The close of business on December 2, 2002 has been fixed as the record date for the determination of shareholders entitled to notice of and to vote at the meeting. This Proxy Statement and the form of proxy were first mailed to shareholders on or about December 23, 2002. If the enclosed form of proxy is properly executed, returned and not revoked, it will be voted in accordance with specifications made by the shareholder. If the form of proxy is signed and returned, but specifications are not made, the proxy will be voted FOR the election of directors.

Number of Shares Outstanding

As of the close of business on the record date, the Company had 10,000,000 shares of common stock, $1.00 par value (the "Stock") authorized, of which 7,751,712 shares were issued and outstanding. Each such share is entitled to one vote on matters to be presented at the meeting.

Proposal to Be Considered

Shareholders will be asked to elect two persons to serve as Class II directors for a three-year period. The nominees for class II directors as well as the continuing directors are described beginning on page 5. The Board of Directors recommended a vote for approval of the proposal.

 

VOTING AT THE ANNUAL MEETING

Procedures for Voting by Proxy

If you properly sign, return and do not revoke your proxy, the persons named as proxies will vote your shares according to the instructions you have specified on the proxy card. If you sign and return your proxy card but do not specify how the persons appointed as proxies are to vote your shares, your proxy will be voted FOR the election of the nominated directors and in the best judgement of the persons appointed as proxies as to all other matters properly brought before the meeting. If any nominee for election to the Board of Directors named in this proxy statement becomes unavailable for election for any reason, the proxy will be voted for a substitute nominee selected by the Board of Directors. You can revoke your proxy by delivering to G.F. Coolidge, III, Secretary of the Company, at the Company's address as listed above, either a written revocation of your proxy or a duly executed proxy bearing a later date or by attending the meeting and voting in person.

Requirements for Shareholder Approval

A quorum will be present if a majority of the outstanding shares of common stock are present in person or by valid proxy. We will count abstentions and broker non-votes, which are described below, in determining whether a quorum exists. Only those votes actually cast for the election of a Director, however, will be counted for purposes of determining whether a particular Director nominee receives sufficient votes to be elected. To be elected, a director must receive more votes than any other nominee for the same seat on the Board of Directors. As a result, if you withhold your vote as to one or more directors, it will have no effect on the outcome of the election unless you cast that vote for a competing nominee. At the present time, we do not know of any competing nominees. If any nominee for election to the Board of Directors named in this Proxy Statement becomes unavailable for election for any reason, the proxy will be voted for a substitute nominee selected by the Board of Directors.

Effect of Abstentions

A shareholder who is present in person or by proxy at the Annual Meeting and who abstains from voting on any proposal will be included in the number of shareholders present at the Annual Meeting for the purpose of determining the presence of a quorum. Abstentions do not count as votes in favor of or against given matter.

Effect of Broker Non-Votes

Brokers who hold shares for the accounts of their clients may vote these shares either as directed by their clients or in their own discretion if permitted by the exchange or other organization of which they are members. Companies listing their securities on the New York Stock Exchange are permitted to vote their clients' proxies in their own discretion as to the election of directors. Proxies that brokers do not vote on one or more proposals but that they do vote on others are referred to as "broker non-votes" with respect to the proposal(s) not voted upon. Broker non-votes are included in determining the presence of a quorum. A broker non-vote, however, does not count as a vote in favor of or against a particular proposal for which the broker has no discretionary voting authority.

Approval of any other matter that may properly come before the annual meeting requires the affirmative vote of a majority of shares of common stock present in person or by proxy and entitled to vote on the matter. Abstentions and broker non-votes will be counted in determining the minimum number of votes required for approval and will, therefore, have the effect of negative votes.

 

PROPOSAL ONE

ELECTION OF DIRECTORS

General

Pursuant to the Company's Articles of Incorporation, its Board of Directors is divided into three classes: Class I, Class II and Class III. At each Annual Meeting of shareholders, Directors elected to succeed those in the Class whose terms then expire are elected for three-year terms so that the term of office of one class of Directors expires each year. The terms of Directors in the first Class (I) expire at the 2005 Annual Meeting; the terms of Directors in the second Class (II) expire at the 2003 Annual Meeting; and the terms of Directors in the third Class (III) expire at the 2004 Annual Meeting.

The Board of Directors proposes that Henry S. Bishop and E. Raymond Mock be elected as Class II Directors to serve a term of three years and until their respective successors are elected and qualified.

The table set forth on the following page shows for each Director (a) his class and term of office, (b) his name, (c) his age at December 31, 2002, (d) the year he was first elected as a Director of the Company, (e) any positions held by him with the Company or the Bank other than as a Director, and (f) his business experience for the last five years:

Director Nominees

Class II

Term to Expire at the 2006 Annual Meeting

Name

Age

Year First Elected

Positions with Company and Business Experience

Henry S. Bishop

60

1988

Chairman of the Board; President of the Company; President and CEO of the Bank

E. Raymond Mock

68

1988

Owner, Piggly Wiggly food stores of St. Simons Island and Nahunta

 

Incumbent Directors

Class I

Term to Expire at the 2005 Annual Meeting

Name

Age

Year First Elected

Positions with Company and Business Experience

B. W. Bowie

74

1994

Retired Senior Vice President, General Manager and Director of Federal Paperboard Company, Montvale, New Jersey (a company which manufactures paper products); Director of Gravure Packing Company

Terry K Driggers

48

1995

President, Driggers Construction Company (a commercial construction company)

Roy K. Hodnett

82

1995

President, T.H.E. Island Group, T.H.E Hotel Group, T.H.E. Island Inn (a real estate management company)

Class III

Term to Expire at the 2004 Annual Meeting

Name

Age

Year First Elected

Positions with Company and Business Experience

William J. Stembler

56

2002

President, Georgia Theatre Company

D. Lamont Shell

70

1994

President, Sea-Shell, Inc. (an engraving company)

James D. Moore

67

1988

President, J.D. Moore, Inc. (a petroleum jobber)

 

Meetings and Committees

During the year ended September 30, 2002, the Board of Directors of the Company held two (2) meetings. During the same period, the Board of Directors of the Bank held twelve (12) meetings. During his term as a director during 2002, each director attended at least 75% of the aggregate of (a) the total number of meetings of the Boards of Directors of the Company and the Bank, and (b) the total number of meetings held by Committees of which he was a member.

The Board of Directors of the Company has not established any standing committees. The Board of Directors of the Bank, however, has established various standing committees, including an Audit Committee and a Compensation Committee.

The Audit Committee's functions include (a) providing assistance to the Board of Directors in fulfilling its responsibilities for examinations of the Company and the Bank by regulatory agencies and independent auditors, (b) determining that the Company and the Bank have adequate administrative, operating and internal accounting controls and that they are operating in accordance with prescribed procedures, and (c) serving as an independent party in the review of the financial information of the Company and the Bank prior to its distribution to the Company's shareholders and the public. The Board of Directors has adopted a written charter for the Audit Committee. The current members of the Audit Committee are James D. Moore, Raymond Mock, Jr. and D. Lamont Shell, all of whom are independent directors. The Audit Committee meetings are called by the Audit Committee Chairman or the Company's internal auditor. During 2002, the Audit Committee met four (4) times.

The Audit Committee Report dated December 16, 2002 confirms that the Audit Committee has reviewed and discussed the financial statements for the fiscal year ended September 30, 2002 with management, has discussed with the independent auditors the matters required to be discussed by SAS 61, has received the written disclosures and the letter from the independent accountants required by Independent Standards Board Standard Number 1, and has discussed with the independent accountant the independent accountant's independence. Further, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in the Company's Annual Report on Form 10-KSB for the fiscal year ended September 30, 2002. A copy of the Audit Committee Report is attached as Appendix A to this Proxy Statement.

The Compensation Committee's functions are to review the compensation of all employees and make its recommendations regarding compensation to the full Board of Directors. The Board of Directors also awards discretionary bonuses to employees generally at the end of the Bank's fiscal year based on the Bank's performance for the year and the recommendation of the Compensation Committee. The current members of the Compensation Committee are B.W. Bowie, Roy Hodnett, and William J. Stembler. The Compensation Committee meetings are called by the Compensation Committee Chairman or the President of the Bank. During fiscal year 2002, the Compensation Committee met one (1) time.

The Bank does not currently have a standing nominating committee.

OWNERSHIP OF STOCK

Principal Holders of Stock

On December 2, 2002, the Company had 7,751,712 shares of Stock outstanding, which were held by 343 shareholders of record. The following table sets forth the persons who beneficially owned, as of December 2, 2002 more than 5% of the outstanding shares of Stock to the best information and knowledge of the Company. Unless otherwise indicated, each person is the record owner of and has sole voting and investment powers over his shares.

Name and address of

Beneficial Owner

Amount and Nature of

Beneficial Ownership

Percentage of Total (1)

Henry S. Bishop

1703 Gloucester Street

Brunswick, GA 31520

948,062(2)

11.77%

James A. Bishop

P.O. Box 1396

Brunswick, GA 31520

771,205(3)

9.57%

Roy K. Hodnett

Box 1

St. Simons Island, GA 31522

847,594(4)

10.52%

(1) Percentages are calculated assuming the exercise of options to purchase an aggregate of 300,000 shares, resulting in total outstanding shares of 8,051,712.

(2) Consists of 750,762 shares held of record by Mr. Bishop, 17,300 held by a company in which Mr. Bishop has a controlling interest and an aggregate of 180,000 shares subject to presently exercisable options.

(3) Consists of 352,726 shares held of record by Mr. Bishop, 255,215 shares held of record by Mr. Bishop's spouse and 163,264 shares held of record by James A. Bishop Trustee a Professional Corporation Target Benefit Pension Plan dated 11/15/81.

(4) Consists of 709,968 shares held of record jointly by Mr. Hodnett and his spouse, 32,898 held of record by Synovus as Trustee for Mr. Hodnett's IRA/HR10 accounts, 90,000 held of record by the Roy and Anne Hodnett Family Trust, and 14,728 held of record by Synovus as Trustee for Mr. Hodnett's spouse's IRA.

Stock Owned by Management

The following table sets forth the number and percentage ownership of shares of Stock beneficially owned by each existing Director of the Company and by all Directors and executive officers of the Company as a group as of December 2, 2002. Unless otherwise indicated, each person is the record owner of and has sole voting and investment powers over his or her shares.

Name and address of

Beneficial Owner

Amount and Nature of

Beneficial Ownership

Percentage of Total (1)

Henry S. Bishop

1703 Gloucester Street

Brunswick, GA 31520

948,062(2)

11.77%

B.W. Bowie

16 Kings Way

St. Simons Island, GA 31522

491,599(3)

6.10%

Terry K. Driggers

112 River Way

Brunswick, GA 31520

202,906

2.52%

Roy K. Hodnett

Box 1

St. Simons Island, GA 31522

847,594(4)

10.52%

E. Raymond Mock

4003 Riverside Drive

Brunswick, GA 31520

63,652

0.79%

James D. Moore

P.O. Box 1078

Brunswick, GA 31520

55,670

0.69%

D. Lamont Shell

P.O. Box 1279

Brunswick, GA 31521

9,312

0.12%

William J. Stembler

500 Sea Island Road

St. Simons Island, GA 31522

52,100

0.65%

All Directors and Executive officers as a

Group (9 persons, all of whom are also

Shareholders)

2,880,842(5)

35.76

(1) Percentages are calculated assuming the exercise of options to purchase an aggregate of 300,000 shares, resulting in total outstanding shares of 8,051,712.

(2) Consists of 750,726 shares held of record by Mr. Bishop, 17,300 held by a company in which Mr. Bishop has a controlling interest and an aggregate of 180,000 shares subject to presently exercisable options.

(3) Consists of 485,960 shares held of record by Mr. Bowie and 5,639 shares held of record by his minor child.

(4) Consists of 709,968 shares held of record jointly by Mr. Hodnett, 32,898 held of record by Synovus as Trustee for Mr. Hodnett's IRA/HR10 accounts, 90,000 held of record by the Roy and Anne Hodnett Family Trust, and 14,728 held of record by Synovus as Trustee for Mr. Hodnett's spouse's IRA.

(5) Includes an aggregate of 209,947 shares subject to presently exercisable options.

 

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

To the Company's knowledge, its directors, executive officers, and greater than 10% of shareholders complied during 2001with all applicable Section 16(a) filing requirements.

EXECUTIVE OFFICERS

The table set forth below shows for each executive officer of the Company (a) the person's name, (b) his age at December 31, 2002, (c) the year he was first elected as an officer of the Company (which was organized in 1988), and (d) his present positions with the Company and the Bank and other business experience for the past five years if he has been employed by the Company or the Bank for less than five years.

Name

Age

Year First Elected

Position with the Company and the Bank

Henry S. Bishop

60

1988

Chairman of the Board, President and Chief Executive Officer of the Company and the Bank

G.F. Coolidge III

53

1991

Secretary/Treasurer of the Company; Executive Vice President and Chief Operating Officer of the Bank

 

EXECUTIVE COMPENSATION

Summary of Cash and Certain Other Compensation

The following table sets forth the total compensation paid to each executive officer where cash compensation exceeded $100,000 in fiscal 2002.

Summary Compensation Table

Annual Compensation

Name and Principal

Position

 Year

Salary

Bonus

All Other

Compensation

Henry S. Bishop

Chief Executive Officer

2002

172,500

164,822

13,650

2001

172,500

39,822

15,000(2)

2000

172,500

33,185

10,809(2)

G.F Coolidge III

Chief Operating Officer

2002

87,400

20,178

3,934(3)

2001

87,400

20,178

3,934(3)

2000

87,400

16,815

2,950(3)
  1. Consists of contributions of $7,650 by the Bank to the 401(k) account of Mr. Bishop and $6,000 in directors' fees.
  2. Consists of contributions by the Bank to the 401(k) account of Mr. Bishop.
  3. Consists of contributions by the Bank to the 401(k) account of Mr. Coolidge.

Both Mr. Bishop and Mr. Coolidge received certain other benefits from the Bank. In each case, the total value of the benefits was less than 10% of his annual salary and bonus.

The table on the following page contains, with respect to the persons named in the Summary Compensation Table, information concerning the number of stock options currently held, the number currently exercisable, and the value of the exercisable options. The Company granted no stock options during fiscal 2002.

Option Exercises During Last Fiscal Year

Name

Shares Acquired On Exercise

Value Realization

Henry S. Bishop

0

N/A

G.F. Coolidge, III

37,979

$117,355(1)

(1) Calculated by subtracting the exercise price ($.66 per share) from the market value of the stock on March 11, 2002, the date of exercise ($3.75).

Fiscal Year End -Option Values

Name

Number of Unexercised

Options at 9/30/02

(# Exercisable/Unexercisable)

Value of Unexercised

In-the-money Options

At 9/30/02 (1)

($ Exercisable/Unexercisable)

Henry S. Bishop

180,000/0

$0/0

G.F. Coolidge III

60,000/0

$0/0

(1) Calculated by subtracting the exercise price ($6.51 for Mr. Bishop's options and $5.92 for Mr. Coolidge's options) from the market value of the Stock at September 30, 2002 ($3.85) and multiplying the resulting figure by the number of shares subject to in-the-money options.

Change in Control Agreements

Both Mr. Bishop and Mr. Coolidge have Change in control Agreements with the Company dated November 18, 2002. The agreements provide that in the event of a change of control of the Company (defined as the acquisition of more than 25% of any class of voting securities of the Company, the change of more than a majority of the directors, unless a new director is approved by at least 2/3 of the incumbent directors, the merger of the Company into another, or the sale or transfer of all or substantially all of the assets of the Company), and the termination of either within three months before 12 months following a change in control. Messrs. Bishop and Coolidge shall receive an amount equal to three times the sum of (a) his annul base salary in effect at the time of the termination, and (b) the largest bonus amount received within the three calendar years preceding the calendar year in which the change in control occurs.

Compensation of Directors

The Bank pays each director $500 per Board meeting for his service as a Bank Director. Each director also receives an additional $100 per Bank Committee meeting attended. Directors of the Company are not separately compensated for their service as Directors of the Company nor for their service as members of committees.

Certain Other Transactions

The Company's directors, executive officers and principal shareholders, together with their immediate family members and the companies associated with them, have engaged in banking transactions with the Bank and are expected to continue such relationships in the future. In the opinion of management, the extensions of credit made by the Bank to such individuals since October 1, 2001 (a) were made in the ordinary course of business, (b) were made on substantially the same terms, including interest rate, collateral and repayment terms, as those prevailing at the time for comparable transactions with other persons, and (c) did not involve more than a normal risk of collectibility or present other unfavorable features.

James A. Bishop, an attorney and a principal shareholder of the Company, and Henry S. Bishop, President of the Company, are brothers. For the year ended September 30, 2002 the Bishop Law Firm received legal fees of $52,812 from the Company or the Bank for general representation.

 

SHAREHOLDER PROPOSALS

Any proposal which an eligible shareholder wishes to have presented at the next annual meeting of shareholders, expected to be held in January, 2004, must be received at the main office of the Company, 1703 Gloucester Street, Brunswick, Georgia 31520, no later than August 23, 2003. If such proposal is in compliance with all of the requirements of Rule 14a-8 of the Securities Exchange Act of 1934, as amended, it will be included in the Proxy Statement and set forth on the form of proxy issued for the next annual meeting of shareholders. It is suggested that any such proposals be sent by certified mail, return receipt requested. A shareholder must notify the Company before October 23, 2003 if the shareholder has a proposal to present other than by inclusion in the Company's proxy material. Failure to submit such a proposal in a timely basis will enable the proxies appointed by management to exercise their discretionary voting authority when the proposal is raised at the annual meeting of shareholders without any discussion of the matter in the proxy statement.

ACCOUNTING MATTERS

Deloitte & Touche, LLP, Jacksonville, Florida, independent certified public accountants, audited the financial statements of and provided various services to the Company and the Bank as of and for the year ended September 30, 2002. The firm of Deloitte & Touche, LLP has served as the Company's auditors since 1997. A representative of Deloitte & Touche LLP is expected to be present at the meeting to respond to any appropriate questions and to make a statement if the representative desires to do so.

Fees Paid to Principal Auditor

The company will pay a total of $81,087 to Deloitte & Touche LLP, for services rendered in connection with the audit of the Company's financial statements for the fiscal year ended September 30, 2002 and the reviews of the interim financial statements.

Financial Information Systems design and Implementation Fees

There were no fees paid to Deloitte & Touche LLP, for services rendered in connection with financial information systems design and implementation during the fiscal year ended September 30, 2002.

All Other Fees

All other fees to be paid for services, primarily tax services, rendered in 2002 by Deloitte & Touche LLP, other than those above will be $39,352.

OTHER MATTERS

The Board of Directors of the Company knows of no other matters which may be brought before the Annual Meeting. If, however, any matter other than the election of directors or any matters incident thereto should properly come before the Annual Meeting, votes will be cast pursuant to the proxies in accordance with the best judgment of the proxy holders.

EXPENSES AND SOLICITATION OF PROXIES

All expenses of the proxy solicitation will be paid directly or indirectly by the Company. In addition to solicitation by mail, certain directors, officers and regular employees of the Company and the Bank may solicit proxies by telephone, telegram or personal interview for which they will receive no compensation in addition to their regular salaries. The Company may request brokerage houses and custodians, nominees and fiduciaries to forward soliciting material to the beneficial owners of the Stock held of record by such persons, and if requested will reimburse them for their reasonable out-of-pocket expenses in connection therewith.

 

AVAILABLE INFORMATION

Shareholders may obtain, without charge, a copy of the 2002 Annual Report on Form 10-KSB of the Company. Written requests should be addressed to:

Wendi O'Connor

First Georgia Holding, Inc.

P.O. Box 2257

Brunswick, GA 31521

APPENDIX A

First Georgia Bank

Audit Committee Report

In accordance with its written charter adopted by the Board of Directors (Board), the Audit Committee of the Board (Committee) assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the company. During fiscal year 2002, the Committee met four times, and the Committee chair, as representative of the Committee, discussed the interim financial information contained in each quarterly earnings announcement with the CFO, controller and independent auditors prior to public release.

In discharging its oversight responsibility as to the audit process, the Audit Committee obtained from the independent auditors a formal written statement describing all relationships between the auditors and the Company that might bear on the auditors' independence consistent with Independence Standards Board Standard No. 1, "Independence Discussions with Audit Committees," discussed with the auditors any relationships that may impact their objectivity and independence and satisfied itself as to the auditors' independence. The Committee also discussed with management, the internal auditors and the independent auditors the quality and adequacy of the Company's internal controls and the internal audit function's organization, responsibilities, budget and staffing and concurred in the appointment of a new director of internal audit. The Committee reviewed with both the independent and the internal auditors their audit plans, audit scope, and identification of audit risks.

The Committee discussed and reviewed with the independent auditors all communications required by generally accepted auditing standards, including those described in Statement on Auditing Standards No. 61, as amended, "Communication with Audit Committees" and, with and without management present, discussed and reviewed the results of the independent auditors' examination of the financial statements. The Committee also discussed the results of the internal audit examinations.

The Committee reviewed the audited financial statements of the Company as of and for the fiscal year ended September 30, 2002, with management and the independent auditors. Management has the responsibility for the preparation of the Company's financial statements and the Independent auditors have the responsibility for the examination of those statements.

Based on the above mentioned review and discussions with management and the independent auditors, the Committee recommended to the Board that the Company's audited financial statements be included in its Annual Report on Form 10-KSB for the fiscal year ended September 30, 2002, for filing with the Securities and Exchange Commission. The Committee also recommended the reappointment, subject to shareholder approval, of the independent auditors and the Board concurred in such recommendation.

 

Date: December 16, 2002

Committee Members:

/s/ D. Lamont Shell

 

/s/ James D. Moore

 

/s/ Raymond Mock, Jr.

: