UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ______ to ________
Comission File Number: 0-22911
SOUTHERN SECUTITY BANK CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 65-0325364
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
3475 Sheridan Street, Hollywood, Florida 33021
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (954) 985-3900
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.01 par value
Title of each class
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
__X__ No ______
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained to the best of registrant's knowledge, in definitive proxy or
information statements, incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. __[ ]__
State issuer's revenues for the most recent fiscal year $1,579,285
State the aggregate market value of the voting and non voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity as a
specified date within the past 60 days: - - There is no public market for the
registrant's common equity. Based solely upon the offering price in certain
private sales of the registrant's common equity made within the last 90 days,
the approximate market value of common equity held by non affiliates as of March
23, 1998 would have been $7,125,095. Solely for the purpose of this calculation,
all directors, officers and holders of more than 5% of the registrant's
outstanding common stock have been deemed to be affiliates.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: (i) Class A Voting Common Stock -
5,266,396; (ii) Class B Non-Voting Common Stock - None.
DOCUMENTS INCORPORATED BY REFERENCE: None
Transitional Small Business Disclosure Format (check one):
Yes___; No X
<PAGE>
PART I
Item 1. Description of Business
General
Southern Security Bank Corporation (the "Holding Corporation") is a bank
holding company that owns 96.6% of outstanding capital stock of Southern
Security Bank (the "Bank"). The Holding Corporation is organized under the law
of Delaware, while the Bank is a Florida State Chartered Bank that is a member
of the Federal Reserve System whose deposits are insured by the Federal Deposit
Insurance Corporation ("FDIC"). The Bank provides a full range of commercial
banking and consumer banking services to businesses and individuals. On December
31, 1997, the Holding Corporation and its subsidiary Bank (collectively,
referred to herein as the "Company") had consolidated total assets of
$_________, total deposits of $__________, net loans of $__________, and
stockholders equity of $_______.
The Company, including the Bank and the offices of the Holding
Corporation, is located at 3475 Sheridan Street, Hollywood, Florida 33021. Its
telephone number is (954) 985-3900.
Historical Development
The predecessor of the Holding Corporation was incorporated under the law
of Florida on April 8, 1992 under the name PCM Acquisition Group, Inc ("PCM").
PCM was reorganized under the Florida law under the name Southern Security Bank
Corporation ("SSB") on June 28, 1993, for the purpose of acquiring control of
the Bank, which was then known as Florida First International Bank. The Holding
Corporation completed the acquisition of the Bank on December 16, 1993 (the
"Acquisition") through the purchase of 96.6% of its outstanding common stock.
Subsequent to the date of Acquisition, the name of the Bank was changed to
Southern Security Bank. During the period since the Acquisition, management has
strived to bring the Bank into compliance with regulatory guidelines and to
position the Company for growth. Classified and non-performing assets were
liquidated as quickly as possible consistent with the avoidance of undue losses.
New procedures were adopted and old procedures were updated and rewritten for
the purpose of verifying the quality of all new loans. Management believes that
the following Bank statistics are indicative of the progress that has been
achieved since the time of the Acquisition.
At 12/16/93 At 12/31/97
Net Loan Portfolio Balance at end of Period $ 6,951,096 $ __________
Charge-Off Devalued/Impaired Earning Assets $ 1,202,000 $ __________
Total Classified Assets and Owned Real Estate $ 3,970,999 $ __________
Total Assets of Bank affiliate 12/16/93 and 12/31/97 $13,089,724 $ __________
Total Capital of Bank affiliate 12/16/93 and 12/31/97 $ 288,381 $ __________
Total Classified Loans as a Percent of Total Loans 48.46% ____%
On November 10, 1997, SSB was merged (the "Merger") with Southern Security
Financial Corporation, a Delaware corporation ("SSF"), with the Holding
Corporation being the surviving corporation under the name Southern Security
Bank Corporation. Prior to the Merger, SSF had 279 shareholders of record, no
substantial assets and no operating history. The Class A Common Stock of SSF was
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), on September 29, 1997. As a result of the Merger, the former shareholders
of the Company obtained 95% of the outstanding capital stock of the Holding
Corporation, and the former shareholders of SSF obtained 4.9% of the outstanding
capital stock of the Holding Corporation. The Merger was effected for the
purpose of placing the Holding Corporation in a posture to aid in the eventual
development of a trading market in the Company's Class A Common Stock through:
(i) registering the Class A Common Stock under the 1934 Act; (ii) increasing the
number of stockholders from 110 to 389; and (iii) reincorporating the Holding
Corporation under the law of Delaware.
The Bank
The Bank, which is the sole subsidiary of the Holding Corporation,
is a state chartered banking association engaging in a general commercial and
consumer banking business. The Bank's services are provided through its
full-service community banking office. The Bank engages in general commercial
banking providing a wide range of loan and deposit services. As of December 31,
1997, the Bank had approximately 1,100 deposit accounts and 500 loans
outstanding. Retail services offered by the Bank include installment loans,
credit cards, checking accounts, savings accounts, NOW accounts, and various
types of time-deposit instruments. Mortgage lending activities include
commercial, industrial, and residential loans secured by real estate. Commercial
lending activities include originating secured and unsecured loans and lines of
credit, and providing cash management and accounts receivable financing services
to a variety of businesses. The Bank also operates a merchant credit card
program. The Bank's installment loan department makes direct auto, home equity,
home improvement, and personal loans to individuals. The Bank also offers safe
deposit box services.
Correspondent Banking. Correspondent banking involves one bank
providing services to another bank which cannot provide that service for itself
for economic or organizational reasons. The Bank purchases correspondent
services offered by larger banks, including check collections, purchase of
federal funds, security safekeeping, investment service, coin and currency
supplies, overline and liquidity loan participations, and sales of loans to or
loan participation with correspondent banks. The Bank also sells loan
participations to correspondent banks with respect to loans which exceed the
Bank's lending limit. The Bank has established correspondent relationships with
Compass Bank of Birmingham, Alabama and Independent Bankers Bank of Orlando,
Florida with respect to the foregoing services. As compensation for services
provided by a correspondent, the Bank maintains certain balances with the
correspondent in non-interest bearing accounts. Such compensating balances are
not considered significant to the Bank's operations.
Market Area
The Bank has one office, which is located in Hollywood, Florida. The
Bank considers its primary market and service area to be the City of Hollywood
and surrounding towns of Broward and Palm Beach Counties. The population of
Hollywood is approximately 125,000, with 53,000 households, and a civilian labor
force of 60,000. The density of population is approximately 4,463 persons per
square mile. Public school enrollment is at 20,000, with a pupil to teacher
ratio of 19.5 to one. Real estate property assessed valuations are approximately
$5.8 billion. Boca Raton, where the Company proposes to open a new main office,
has a population of approximately 66,000, with 27,000 households, and a total
civilian labor force of 32,000. The density of population is approximately 2,262
persons per square mile. Public school enrollment is 12,800, with a pupil to
teacher ratio of 17.6 to one. Real estate property assessed valuation is
approximately $8.3 billion.
Employees
The Company has 12 full time employees at the Bank level and three
employees at the Holding Corporation level. The Company's employees are not
unionized, and the Company considers its employee relations to be excellent.
Supervision and Regulation
Upon its initial acquisition (change of control occurred 12/16/93)
of a financial institution, the Company "obtained" a charter from the State of
Florida for a State bank and a member of the Federal Reserve System. As a
Fed-member State Bank, the Bank is be subject to the provisions of the Federal
Reserve Bank regulations and administrative practices and the Florida Banking
Code which is administered by the Florida Department of Banking and Finance (the
"FDBF"). The Bank has its deposit obligations insured by the Federal Deposit
Insurance Company ("FDIC") in the maximum individual amounts of $100,000 each,
and is subject to regulation by the FDIC. The FDBF supervises and regulates all
areas of the Bank's operations, including, without limitation, its loans,
mortgages, issuance of securities, annual shareholders meetings, capital
adequacy requirements, payment of dividends and the establishment or termination
of branches. As a state-chartered banking institution in the State of Florida,
the Bank is empowered by statute, subject to limitations expressed therein, to
take savings and time deposits, to accept checking accounts, to pay interest on
such deposits, to make loans on residential and other real estate, to make
consumer and commercial loans, to invest, with certain limitations, in equity
securities and in debt obligations of Companies and to undertake other various
banking services on behalf of its customers.
Bank Holding Company Regulation. The Holding Corporation is a
one-bank holding company, registered with the Federal Reserve Board under the
Bank Holding Company Act of 1956, as amended (the "BHC Act"). As such, the
Holding Corporation and the Bank are subject to the supervision, examination,
and reporting requirements of the BHC Act and the regulations of the Board of
Governors of the Federal Reserve System (the "FRB"). The Holding Corporation is
required to file quarterly and annual reports with the FRB and such additional
information as the FRB may require pursuant to the BHC Act. The FRB may conduct
examinations of the Holding Corporation and the Bank. Under FRB regulations, the
Holding Corporation is required to serve as a source of financial and managerial
strength to the Bank and may not conduct its operations in an unsafe or unsound
manner. In addition, it is the FRB's policy that in serving as a source of
strength to its subsidiary banks, a bank holding company should stand ready to
use available resources to provide adequate capital funds to its subsidiary
banks during periods of financial stress or adversity and should maintain the
financial flexibility and capital- raising capacity to obtain additional
resources for assisting its subsidiary banks. A bank holding company's failure
to meet its obligations to serve as a source of strength to its subsidiary banks
will generally be considered by the FRB to be an unsafe and unsound banking
practice or a violation of the FRB's regulations or both. The BHC Act requires
every bank holding company to obtain the prior approval of the FRB before (i) it
may acquire direct or indirect ownership or control of any voting shares of any
bank if, after such acquisition, the bank holding company will directly or
indirectly own or control more than 5% of the total voting shares of the bank,
(ii) it or any of its subsidiaries, other than a bank, may acquire all or
substantially all of the assets of the bank, or (iii) it may merge or
consolidate with any other bank holding company. The BHC Act further provides
that the Federal Reserve may not approve any transaction that would result in a
monopoly or would be in furtherance of any combination or conspiracy to
monopolize or attempt to monopolize the business of banking in any section of
the United States, or the effect of which may be substantially to lessen
competition or to tend to create a monopoly in any section of the country, or
that in any other manner would be in restraint of trade, unless the anti-
competitive effects of the proposed transaction are clearly outweighed by the
public interest in meeting the convenience and needs of the community to be
served. The Federal Reserve is also required to consider the financial and
managerial resources and future prospects of the bank holding companies and
banks concerned and the convenience and needs of the community to be served.
The BHC Act generally prohibits the Holding Corporation from
engaging in activities other than banking or managing or controlling banks or
other permissible subsidiaries and from acquiring or retaining direct or
indirect control of any company engaged in any activities other than those
activities determined by the FRB to be so closely related to banking or managing
or controlling banks as to be a proper incident thereto. In determining whether
a particular activity is permissible, the FRB must consider whether the
performance of such an activity reasonably can be expected to produce benefits
to the public, such as greater convenience, increased competition, or gains in
efficiency, that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interests, or
unsound banking practices. For example, factoring accounts receivable, acquiring
or servicing loans, leasing personal property, conducting discount securities
brokerage activities, performing certain data processing services, acting as
agent or broker in selling credit life insurance and certain other types of
insurance in connection with credit transactions, and performing certain
insurance underwriting activities all have been determined by the FRB to be
permissible activities of bank holding companies. Despite prior approval, the
FRB has the power to order a bank holding company or its subsidiaries to
terminate any activity or to terminate its ownership or control of any
subsidiary when it has reasonable cause to believe that continuation of such
activity or such ownership or control constitutes a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company.
Bank Regulation. The Bank is chartered under the laws of the State
of Florida and its deposits are insured by the FDIC to the extent provided by
law. The Bank is subject to comprehensive regulation, examination and
supervision by the FDBF and the FRB and to other laws and regulations applicable
to banks. Such regulations including limitations on loans to a single borrower
and to its directors, officers and employees; restrictions on the opening and
closing of branch offices; the maintenance of required capital and liquidity
ratios; the granting of credit under equal and fair conditions; and the
disclosure of the costs and terms of such credit. The Bank is examined
periodically by both the FDBF and the FRB, to each of whom it submits periodic
reports regarding its financial condition and other matters. Both the FDBF and
the FRB have a broad range of powers to enforce regulations under their
respective protection of the safety and soundness of the Bank, including the
institution of cease and desist orders and the removal of directors and
officers. These regulatory agencies also have the authority to approve or
disapprove mergers, consolidations, and similar corporate actions. There are
various statutory and contractual limitations on the ability of the Bank to pay
dividends, extend credit, or otherwise supply funds to the Holding Corporation.
The FDIC and the FDBF also have the general authority to limit the
dividends paid by insured banks and bank holding companies if such payment may
be deemed to constitute an unsafe and unsound practice. Dividends and management
fees from the Bank constitute the sole source of funds for dividends to be paid
by the Holding Corporation. Under Florida law applicable to banks and subject to
certain limitations, after charging off bad debts, depreciation and other
worthless assets, if any, and making provisions for reasonably anticipated
future losses on loans and other assets, the board of directors of a bank may
declare a dividend of so much of the bank's aggregate net profits for the
current year combined with its retained earnings (if any) for the preceding two
years as the board shall deem to be appropriate and, with the approval of the
FDBF, may declare a dividend from retained earnings for prior years. Before
declaring a dividend, a bank must carry 20% of its net profits for any preceding
period as is covered by the dividend to its surplus fund, until the surplus fund
is at least equal to the amount of its common stock then issued and outstanding.
No dividends may be paid at any time when a bank's net income from the preceding
two years is a loss or which would cause the capital accounts of the bank to
fall below the minimum amount required by law, regulation, order or any written
agreement with the FDBF or a federal regulatory agency. Florida law applicable
to companies (including the Holding Corporation) provides that dividends may be
declared and paid only if, after giving it effect, (i) the company is able to
pay its debts as they become due in the usual course of business, and (ii) the
company's total assets would be greater than the sum of its total liabilities
plus the amount that would be needed if the company were to be dissolved at the
time of the dividend to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those receiving the
dividend.
The Bank is subject to agreements with the FRB and with the State
Comptroller and Banking Commissioner of Florida pursuant to which the Bank is
prohibited from declaring or paying any dividends without their prior written
consent. Under federal law, federally insured banks are subject, with certain
exceptions, to certain restrictions on any extension of credit to their parent
holding companies or other affiliates, on investment in the stock or other
securities of affiliates, and on the taking of such stock or securities as
collateral from any borrower. In addition, such banks are prohibited from
engaging in certain tie-in arrangements in connection with any extension of
credit or the providing of any property or service.
The FDIC Improvement Act of 1991 ("FDICIA") made a number of reforms
addressing the safety and soundness of deposit insurance funds, supervision,
accounting, and prompt regulatory action, and implemented other regulatory
improvements. FDICIA also recapitalized the Bank Insurance Fund ("BIF"), under
which the Bank pays a quarterly statutory assessment. Under FDICA, annual
full-scope, on-site examinations are required of all insured depository
institutions. The cost for conducting an examination of an institution may be
assessed to that institution, with special consideration given to affiliates and
any penalties imposed for failure to provide information requested. Insured
state banks also are precluded from engaging as principal in any type of
activity that is impermissible for a national bank, including activities
relating to insurance and equity investments. FDICIA also recodifies current law
restricting extensions of credit to insiders under the Federal Reserve Act. The
policies of regulatory authorities have had a significant effect on the
operating results of commercial banks in the past, and may be expected to do so
in the future. An important function of the FRB System is to regulate aggregate
national credit and money supply through such means as open market dealings in
securities, establishment of the discount rate on bank borrowing, changes in
reserve requirements against bank deposits, and limitations on the deposits on
which a bank may pay interest. Policies of these agencies may be influenced by
many factors including inflation, unemployment, short-term and long-term changes
in the international trade balance, and fiscal policies of the United States
Government. Loans made by the Bank are also subject to numerous other federal
and state laws and regulations, including the Truth in Lending Act, the
Community Reinvestment Act, the Equal Credit Opportunity Act, the Real Estate
Settlement Procedures Act, and the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989. The federal bank regulatory agencies have an array of
powers to enforce laws, rules, regulations and orders. Among other things, the
agencies may require that institutions cease and desist from certain activities,
may preclude persons from participating in the affairs of insured depository
institutions, may suspend or remove deposit insurance, and may impose civil
money penalties against institution-affiliated parties for certain violations.
The foregoing is a brief summary of certain statutes, rules, and regulations
affecting the Company and the Bank. Numerous other statutes and regulations have
an impact on the operations of the Company and the Bank. Supervision,
regulation, and examination of banks by the bank regulatory agencies are
intended primarily for the protection of depositors, not shareholders.
Commitments to Florida Department of Banking and Finance. The
Company entered into specific agreements with the FRB and the FDBF when it
initially offered securities prior to the acquisition of the Bank, including the
following: (1) The Bank may not pay dividends or management fees for the purpose
of paying the salaries or employment contracts of Wilson or Modder without prior
approval from the FDBF; (2) the Bank may not pay dividends to its shareholders
without the approval of the FDBF; (3) the Company confirmed that the employment
contracts between Modder and Wilson are with the Holding Company and are not
obligations of the Bank; (4) Messrs. Wilson and Modder will not become officers
of the Bank without prior approval of the FDBF; and (5) the FDBF did not and
will not approve or disapprove the disclosure materials for any offering of
securities or any aspects of the employment agreements between Modder, Wilson,
and the Company.
Insurance of Deposits. The Bank's deposit accounts are insured by
the FDIC up to a maximum of $100,000 per insured depositor. The FDIC issues
regulations, conducts periodic examinations, requires the filing of reports and
generally supervises the operation of its insured banks. Any insured bank which
is not operated in accordance with or does not conform to FDIC regulations,
policies and directives may be sanctioned for non-compliance. Proceedings may be
instituted against any insured bank or any director, officer, or employee of
such bank engaging in unsafe and unsound practices, including the violation of
applicable laws and regulations. The FDIC has the authority to terminate
insurance of accounts pursuant to procedures established for that purpose.
Bank Branching. Florida banks are permitted by statute to branch
statewide. Such branch banking, however, is subject to prior approval by the
FDBF and the FDIC. Any approval by the FDBF and the FDIC of branching by the
Bank would take into consideration several factors, including the Bank's level
of capital, the prospects and economics of the proposed branch office, and other
considerations deemed relevant by the FDBF and the FDIC for purposes of
determining whether approval should be granted to open a branch office.
Competition
The Company operates in a competitive environment, where it must
compete with numerous other financial entities. In one or more aspects of its
business, the Company competes with other commercial banks, savings and loan
associations, credit unions, finance companies, mutual funds, insurance
companies, brokerage and investment banking companies, and other financial
intermediaries operating in the Company's market area. Most of these
competitors, some of which are affiliated with bank holding companies, have
substantially greater resources and lending limits, and may offer certain
services that the Bank does not currently provide. In addition, many of the
Bank's non-bank competitors are not subject to the same extensive federal
regulations that govern bank holding companies and federally insured banks.
The primary factors in the competition for deposits are interest
rates, personalized services, the quality and range of financial services,
convenience of office locations and office hours. Competition for deposits comes
primarily from other commercial banks, savings associations, credit unions,
money market mutual funds and other investment alternatives. Competition for
loans emanates from other commercial banks, savings associations, mortgage
banking firms, credit unions and other financial intermediaries. Many of the
financial institutions operating in the Company's market area offer certain
services, such as trust, investment and international banking, which the Company
does not offer. To compete, the Bank relies upon specialized services,
responsive handling of customer needs, and personal contacts by its officers,
directors and staff. In those instances where the Company is unable to provide
services a customer needs, it seeks to arrange for those services to be provided
by other banks with which it has a correspondent relationship.
Since September 1995, certain bank holding companies are authorized
to acquire banks throughout the United States. In addition, since June 1,
1997, certain banks are permitted to merge with banks organized under the
law of other states. These changes, together with economic developments in the
United States, have lead to a period of consolidation in the banking industry,
and may be expected to lead to even greater competition for the Company and for
the Company to be placed in competition in the future with financial
institutions with which it does not currently compete. As a result, the Company
may be expected to encounter intense competition within its market area for the
foreseeable future.
Plan of Development
The long-term business plan of the Company is to strengthen the capital
base of the Bank and then to generate additional capital through leveraging of
the earning assets which could be used in conjunction with the Bank's charter as
a vehicle to branch into other affluent banking markets. In December, 1997, the
Company commenced a private offering for $5 million of common stock. Although
the Bank has not achieved break-even earnings level, management believes that if
at least $1 million in additional equity for the Bank is received in this
Offering, then the Bank will have a sufficient capital base to achieve and
sustain profitable operations.
Item 2. Description of Property
The Company's headquarters and full service community banking office is
located at 3475 Sheridan Street, Hollywood, Florida 33021. At that location, the
Company leases 5,212 square feet of space for its banking and office
requirements under a lease which runs until December 31, 2013. Management
believes that its leased facilities are adequate and well suited to its current
operations.
Item 3. Legal Proceedings
The Company is not a party to, nor is its property the subject of, any material
pending legal proceeding.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of 1997, no matter was submitted to a vote of the
Company's shareholders.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
(a) There is no public trading market for the Company's common
equity.
(b) On March 1, 1998, there were 390 holders of record of the
Company's Class A Voting Common Stock, and no shares of the Company's Class B
Non Voting Common Stock were issued or outstanding.
(c) Dividends. The Company has not paid any dividends on its Common
Stock since its inception and has no present intention of paying dividends to
its shareholders in the foreseeable future. The Company currently intends to
reinvest earnings, if any, in the development and expansion of its business. The
determination of the Board of Directors of the Holding Company to declare
dividends in the future will depend upon the earnings, capital requirements, and
financial position of the Company, and upon other factors they may deem
relevant. The ability of the Holding Corporation to pay dividends is subject to
statutory restrictions on cash dividends applicable to Florida corporations.
Further, the Holding Corporation's only current source of income on which to pay
dividends is through the payment of dividends or management fees by the Bank.
The Bank may not declare or pay dividends on its common stock if such payment
would cause it to be in violation of restrictions in the Florida Banking Code on
the payment of dividends by Florida state banking corporations, such as the
Bank. The Company is also subject to certain regulatory restrictions imposed by
the Federal Reserve Board on the payment of dividends by member banks to their
stockholders, and by the terms of agreements with the FRB and the State
Comptroller and Banking Commissioner of Florida.
(d) Sales of unregistered securities. On November 10, 1997,
Southern Security Bank Corporation, a Florida corporation ("SSB"), was merged
with and into the registrant (the "Merger"). As a result of the Merger,
4,970,204 shares of Class A Common Stock of SSB were converted into the same
number of shares of Class A Common Stock of the registrant. A description of the
Merger is presented in the registrant's Form 8-K Report filed with the
Securities and Exchange Commission on November 25, 1997 and its Form 8-K/A filed
on February 2, 1998. To the extent that the Merger constituted a "sale" as
provided in Rule 145 under the Securities Act of 1933 (the "Act"), it was made
in reliance on the exemption from registration provided by Section 4(2) of the
Act. Facts considered relevant to the availability of the exemption provided by
Section 4(2) include: (i) the Board of Directors of SSB, who considered and
approved the Merger on behalf of SSB as directors, voted their shares of SSB to
approve the Merger, and such shares were by themselves provided a sufficient
vote to cause the Merger to be approved by SSB; and (ii) no shareholder of SSB
has resold any of the shares of the registrant received in the Merger, and
Management believes that no such shares will be re-sold except based upon
registration or an appropriate exemption from registration. Management believes
that other than any securities sold in the Merger, no other shares were sold by
the registrant during its fiscal year ended December 31, 1997.
Item 6. Management's Discussion and Analysis or Plan of Operation
[TO BE FILED BY AMENDMENT]
Item 7. Financial Statements
[TO BE FILED BY AMENDMENT]
Item 8. Changes in Accountants and Disagreements with Accountants on Accounting
and Financial Disclosure
On September 24, 1996, the Board of Directors selected McGladrey &
Pullen, LLP ("McGladrey & Pullen") as the Company's independent public
accountants for the 1996, 1997 and 1998 fiscal years. Deloitte & Touche, LLP.
("Deloitte") had been under a three year commitment with the Company for the
production of audited financial statements for the Bank for the years 1993, 1994
and 1995, which commitment expired with the completion of the 1995 audit. After
a review of several competitive audit proposals, the Board of Directors decided
by unanimous vote at its September 24, 1996 Board meeting that McGladrey &
Pullen would be the accountants for the Company for the next three years,
beginning with the 1996 audit. Deloitte was the independent accounting firm
which audited the financial statements of the Bank for each fiscal year from
1993 through 1995. Deloitte's reports on the Bank's financial statements for the
past two fiscal year's did not contain an adverse opinion or disclaimer of
opinion, and was not qualified or modified for uncertainty, audit scope, or
accounting principles.
1. During the Company's two most recent fiscal years and any subsequent
interim period preceding the date of the selection of McGladrey & Pullen, there
were no disagreements between the Company and Deloitte on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
the Deloitte, would have caused it to make reference to the subject matter of
the disagreement in connection with its report.
2. During the Company's two most recent fiscal years and any subsequent
interim period preceding the date of the selection of McGladrey & Pullen, none
of the following events occurred: (a) Deloitte advised the Company that the
internal controls necessary for the Bank to develop reliable financial
statements did not exist; (b) Deloitte having advised the Bank that information
has come to its attention that had led it to no longer be able to rely on
management's representations, or that made it unwilling to be associated with
the financial statements prepared by management; (c) (1) Deloitte having advised
the Bank of the need to expand significantly the scope of its audit, or that
information had come to its attention during the such time period, that if
further investigated might (i) materially impact the fairness or reliability of
either: a previously issued audit report or the underlying financial statements;
or the financial statements issued or to be issued covering the fiscal periods
subsequent to the date of the most recent financial statements covered by an
audit report (including information that may prevent it from rendering an
unqualified audit report on those financial statements), or (ii) cause it to be
unwilling to rely on management's representations or be associated with the
registrant's financial statements; and (2) due to the failure to reappoint
Deloitte as accountants for the Bank or for any other reason, Deloitte did not
so expand the scope or its audit or conduct such further investigation; or (d)
(1) Deloitte having advised the Bank that information has come to its attention
and that it had concluded that the information materially impacts the fairness
or reliability of either (i) a previously issued audit report or the underlying
financial statements, or (ii) the financial statements issued or to be issued
covering the fiscal period(s) subsequent to the date of the most recent
financial statements covered by an audit report (including information that
unless resolved to Deloitte's satisfaction, would prevent it from rendering an
unqualified audit report on those financial statements; and (2) due to the
failure to reappoint Deloitte as accountants for the Bank or for any other
reason, the issue has not been resolved to its satisfaction.
During the Company's two most recent fiscal years and any interim period
prior to March 30, 1996, the Company (or someone acting on its behalf) did not
consult McGladrey & Pullen regarding either any matter that was either (i) the
subject of a disagreement as described in paragraph number "1" above, or (ii)
the subject of any event described in paragraph number "2" above.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act
MANAGEMENT
Company Officers and Directors
Name Term Age Position Position Since
Philip C. Modder 3yr 57 Chairman of the Board June, 1992
President
James L. Wilson 3yr 53 Vice Chairman June, 1992
Chief Executive Officer
Timothy S. Butler** 2yr 46 Director December, 1992
Eugene J. Strasser 2yr 50 Director December, 1992
Harold C. Friend 1yr 50 Director December, 1994
Robert D. Butler, Jr** 1yr 48 Director December, 1994
** Timothy S. Butler and Robert D. Butler, Jr. are cousins.
Each director is elected for a period of three years. The term of
directorships are staggered as to expiration date, such that for the present
board of directors, each year one-third of the directorship is subject to
re-election, providing for additional stability and continuity. Vacancies and
newly created directorships resulting from any increase in the number of
authorized directors may be filed by a majority vote of the directors then
remaining in office; However, any additional Directors or vacancies filled may
not take office nor serve, until proper applications and disclosures are filed
with the FRB, for prior approval therefrom. Once approval is obtained from the
FRB, director[s] may thereafter take office and serve in that capacity. Certain
information with respect to the background of each director and the three
executive officers of the Company is set forth below.
Philip C. Modder: Mr. Modder, President of the Company, has been
involved in the banking industry in Palm Beach County for over 25 years. Modder
was educated at the University of Wisconsin, Racine Wisconsin, Evangel College,
Springfield, Mo., Palm Beach Junior College, Lake Worth, Fl., and Florida
Atlantic University, which granted him a B.S. Degree in 1969, in the academic
areas of Finance and Accounting. Prior to organizing the subject Company, Mr.
Modder was President and Chief Executive Officer and organizing director of
Mizner Bank located in Boca Raton, Florida, from March 1987 to May 1992. Prior
thereto, Mr. Modder served as Senior Vice President of Caribank of Palm Beach
County. In 1988, Caribank of Palm Beach County was merged into its parent,
Caribank of Dania.
Prior to that time, Modder previously served as Senior Vice President and Area
Manager of Atlantic National Bank for five years and Vice President and Branch
Manager for eight years at Sun Bank. Mr. Modder serves as a Director and was a
past Chairman of the Boca Raton Chamber of Commerce, and also serves as Chairman
of the Boca Raton Airport Authority. Mr. Modder has also served as an instructor
for the American Institute of Banking.
James L. Wilson: Mr. Wilson, Chief Executive Officer of the Company,
has been involved in banking and the finance industry in Florida since 1970, was
educated at Union College with degree granted in 1968 in the academic areas of
Mathematics and Organic Chemistry. Prior to organizing the Company, Mr. Wilson
was Executive Vice President and Senior Lending Officer of Boca Bank in Boca
Raton, Florida from June 1990 to June 1992. Prior thereto, from June 1985 to May
1990, Wilson was a Principal of Bayshore Investments, Tampa, Florida, a real
estate finance and property management company. Wilson in the early 1980's was
Vice President, and Senior Real Estate Lending Officer for Southeast Bank,
Tampa, Florida. Wilson also held various positions with Royal Trust Bank
(Canada), N.A. with USA offices in Miami; while at Royal Trust, Wilson was a
member of the Bank Acquisition team, which purchased and/or examined over a
billion dollars in banking companies. Wilson's biography has been published in
multiple editions of Who's Who of America, the South and South West, and the
World since 1984. Mr. Wilson has also served as an instructor for the American
Institute of Banking.
Timothy S. Butler: Mr. Butler was born in Fort Lauderdale and
graduated from Pompano Beach High School in 1967. He attended Broward Community
College and Florida State University. He has served as President of Butler
Properties Ltd. since 1971. That Company manages the family assets consisting of
farm land and various other real estate holdings. From January 1989 to June
1992, he served as an Associate Director of Mizner Bank in Boca Raton.
Eugene J. Strasser, M.D.: Dr. Strasser did his undergraduate and
Pre-Med work at Loyola College and the University of Maryland where he graduated
in 1968. He attended the University of Maryland Medical School in Baltimore, MD.
where he graduated in 1972. He is licensed by the American Medical Board as a
Board Certified General Surgeon and a Board Certified Plastic and Reconstructive
Surgeon. He has established his own small, private hospital, CosmoPlast Center,
in Coral Springs, Florida, where he has practiced medicine since 1981.
Harold C. Friend, M.D.: Dr. Friend has been a resident of South
Florida for 21 years. He received his B.A. from the University of Texas, and his
M.D. degree from the University of Texas Southwestern Medical School in 1972.
Friend is a board-certified Neurologist, practicing in Boca Raton. He has been
active in numerous business activities, including past membership of the Mizner
Bank's Advisory Board, President of Puget Sound Yellow Taxi, Inc., a
transportation company located in Seattle, Washington from June of 1993 to
October, 1996, and President of the Neuroscience Center in Boca Raton, Florida
from June 1985 to the present. As to civic involvement, Dr. Friend has held past
and present positions with the Southern Region of the Boy Scouts, Executive
Board of United Way, and the Local and International Rotary. Dr. Friend's
biography is published in multiple editions of Who's Who of the South and South
West, and the World.
Robert David Butler, Jr.: Mr. Butler was born in Boca Raton,
Florida and was reared in Deerfield Beach, Florida. He attended Carson-Newman
College and the University of Tennessee and was graduated with degrees in
Business Administration, English, and Music. After retiring from Eastern
Airlines after fifteen years of service as a flight services representative, in
June of 1991 he established Pegasus Travel Management, a division of Regit
Enterprises, Inc., of which he is President and Chief Executive Officer. Mr.
Butler resides in Coconut Grove, Florida, this city also being the location of
the corporate headquarters of Regit Enterprises.
Floyd Harper: Vice President of the Company (and Senior Vice
President and Cashier of the Bank), 47, graduated in 1972 with honors from
Northwood University, West Palm Beach, Florida with a Business Administration
Degree, received a Degree from University of Virginia Graduate School of Retail
Bank Management, and has been designated a Certified Consumer Credit Executive
thereby. From January 1993 to October 1994, Harper was engaged by the Resolution
Trust Corporation in the disposition of failed banking institutions of over $12
Billion, as Regional Vice President, Branch Administration, and dealt with
deposit acquisition and operational efficiency. Prior to 1993, Harper was
Executive Vice President, Chief Operating Officer for Southern National Bank,
was Vice President & District Manager for Chase Manhattan Bank (Florida)
handling upscale lending, and served with Atlantic National Bank and Barnett
Bank in South Florida.
Peter Stec, Senior Vice President and Senior Lending Officer of the
Bank, 44, has been involved in community banking since 1980 and is experienced
in rehabilitating loan portfolios and in originating new borrowing
relationships. Stec was educated at the University of Dayton, Ohio, where he
received a degree in Business Administration granted in 1975. He has attended
the Stonier Graduate School of Banking and is a Certified Lender-Business
Banking, recognized by the American Bankers Association. From June 1987 to
October 1989, Stec managed a 75 employee lending unit consisting of Commercial
Lending, Loan Operations, Credit Administration, as Senior Vice President of
First American Bank, a $1.5 Billion Florida banking company. From November 1989
to March 1993, Stec served as Vice President and Commercial Lending Manager for
Boca Bank, Boca Raton, Florida, and from June 1985 to May 1987 served as a Loan
Officer for Southeast Bank and Florida Coast Bank in South Florida.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission reports of ownership and changes in ownership of common
stock of the Company. Officers, directors and greater than 10% shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on review of the copies of such reports furnished to the
Company, the Company believes that, during the 1997 fiscal year subsequent to
the Company's registration under the Securities Exchange Act, the following
directors, officers, and holders of more than 10% of the Company's common stock
failed to file Form 3 Reports with respect to beneficial ownership of the
Company's securities: Philip C. Modder, James L. Wilson, Timothy S. Butler,
Eugene J. Strasser, Harold C. Friend, Robert D. Butler, Jr., and Floyd Harper.
During 1997 there was no public trading market with respect to the Company's
common stock, and based upon the Company's registry of record owners of its
common stock and transfer restrictions on the common stock owned by such
persons, the Company believes that none of the foregoing persons purchased or
sold any shares of the Company's common stock during that period.
Item 10. Executive Compensation
Compensation of Management
The following Table shows information concerning annual and long-term
compensation to certain Executive Officers for services to the Company for the
years ended December 31, 1997, 1996 and 1995. The table includes information on
the Company's Chairman and President, Philip C. Modder, and its Chief Executive
Officer, James L. Wilson, (collectively, the "Named Executive Officers"). No
other current executive officer earned more than $100,000 in salary and bonus in
1997.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Name and
Principal Position All Other
Compen-
sation
Securities
Year Salary Other Annual Underlying LTIP
Compensation Options/ Payouts ($)
SARs (#)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Philip C. Modder, Chairman 1997 $175,000 $17,000(1) 58,986 -0- $ 8,408
and President 1996 $127,000 $17,000(1) 19,619 -0- $ 8,408
1995 $149,000 $17,000(1) 18,692 -0- $ 8,408
- ----------------------------------------------------------------------------------------------------------------
James L. Wilson, Chief 1997 $175,000 17,000(1) 44,240 -0- $ 5,878
Executive Officer 1996 $103,000 17,000(1) 14,714 -0- $ 5,878
1995 $125,000 17,000(1) 15,966 -0- $ 5,878
</TABLE>
(1) Includes Term Life Insurance premiums and automobile allowances of $10,800
to Messrs. Modder and Wilson.
The following table shows information concerning options granted to Named
Executive Officers during the fiscal year ended December 31, 1997.
Option / SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Number of Securities % of Total Options/SAR's Exercise or Expiration
Underlying Options / Granted to Employees in Base Price Date
Name SAR's Granted Fiscal Year ($/Share)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Philip Modder 59,986 57% $0.24 6/30/2007
James Wilson 44,240 43% $0.24 6/30/2007
</TABLE>
In addition, as Directors of the Company's Bank subsidiary, each Messrs.
Modder and Wilson received 11,600 options to purchase shares of common stock of
the Bank. Such options are exercisable at the greater of 110% of the fair market
value or par value of the Bank's shares on the date of grant and are exercisable
for a period of five years from the date of grant.
The following table shows information concerning option exercises and
year-end option values for options held by the Named Executive Officers.
Aggregated Option/SAR Exercises in Last Fiscal Year
and
Fiscal Year-End Option SAR Values
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SAR's
Shares Acquired Options/SAR's at FY-End at FY-End
Name on Exercise Value Realized Exercisable/ Exercisable/
Unexercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Philip Modder -0- -0- 292,964 / 0 $-0-(1)
James Wilson -0- -0- 210,586 / 0 $-0-(1)
</TABLE>
(1) Average option exercise price was $.26 per share, the approximate book value
of the shares. There is no market for the Company's Common Stock, and any shares
issued upon exercise of the options would have been restricted under the
Securities Act.
Employment Agreements
Philip C. Modder and James L. Wilson have Employment Agreements with the
Company dated June 11, 1992 as amended June 30, 1997 (as so amended, the
"Employment Agreements"). The Employment Agreements provide that Modder shall
serve as the Company's President and Chairman of the Board, and that Wilson
shall serve as the Company's Chief Executive Officer and Vice Chairman of the
Board. By order of the Board of Directors of the Company on September 23, 1997
and subject to approval by bank regulators, which approval was granted thereby
with an effective date of December 1, 1997, the positions of Messrs. Modder and
Wilson were changed to Chairman of the Board and President, and Vice Chairman of
the Board and Chief Executive Officer, respectively.
The Employment Agreements provide that Modder and Wilson shall each serve
for a five year term from June 11, 1997, except that if the Company does not
deliver written notice to the respective executive at least six months prior to
the end of the term it shall automatically renew for an additional five year
term. Each Employment Agreement provides for the following compensation to the
executive: (I) the executive will be paid a base salary of $175,000 per year,
subject to annual increase by the greater of the change in the Consumer Price
Index ("CPI") or 5%; (ii) the executive will be paid a bonus equal to 2.5% of
the pre-tax net income of the Company; (iii) if the Company acquires the assets
of any existing financial institution, the executive shall receive a bonus equal
to 0.20% of the gross assets for each such transaction; (iv) the executive shall
during term of the Agreement receive semi-annual grants on July 1st and January
1st of stock options equal to 0.6% of the outstanding Class A Common Stock of
the Company exercisable at 110% of per share book value of such stock on the day
preceding the grant; (v) if permitted by law and in accordance with applicable
federal and state regulations, loans equal to the exercise price of the options
granted at interest rates not greater than prime plus 1% with a term of not less
than 30 months; (vi) if any of the options is not an "incentive stock option"
under the Internal Revenue Code, reimbursement of any taxes the executive is
required to pay by reason thereof; (vii) disability insurance coverage providing
for benefits in the amount of 60% of the executives total annual compensation
subject to cost of living adjustments equal to the lesser of the change in the
CPI or 12% per annum; (viii) a whole life insurance annuity policy in the face
amount of $1,750,000 plus reimbursement of any income taxes the executive is
required to pay as a result of payment of the premiums on such insurance policy;
(viii) family membership in two country clubs; (ix) an automobile allowance of
$900 per month adjusted annual in accordance with the CPI plus sales taxes,
insurance and operating costs of the auto; and (ix) comprehensive medical and
dental insurance.
Termination payments.
The Employment Agreements contain provisions for additional compensation
to the executive or his legal representatives in the event of termination,
including: (I) if an Employment Agreement terminates for any reason, all options
provided for thereunder become fully vested and exercisable for a period of ten
years from the date of such termination; (ii) if an Employment Agreement is
terminated for any reason other than death or permanent disability, the Company
will pay for the executive's comprehensive medical and dental insurance for two
years following the date of termination; (iii) in the event of the death or
permanent disability of the executive, the executive's annual compensation shall
be paid to him or his legal representatives for a period of 12 months following
termination; (iv) in the event of a Change of Control of the Company (defined to
include the acquisition of 20% or more of the combined voting power or the
Company's outstanding stock after the date of the agreement, a change in the
majority of the Board of Directors of the Company in connection with a business
combination, sale of assets or related transaction), if the executive
terminates the agreement on 60 days written notice he shall receive a lump sum
payment of 200% of his total annual compensation for the preceding 12 months;
and (v) upon 60 days written notice before termination by the executive, the
executive shall receive a lump sum payment of 200% of his annual compensation
for the preceding 12 months together with continuation of employee benefits for
the periods described above.
Compensation of Directors: At present the Company does not compensate any of its
directors for their services to the Company as directors, although they may do
so in the future, subject to applicable regulatory approval. The Company may
reimburse its directors for their costs incurred for attending meetings of the
Board of Directors. The Company's Bank subsidiary compensates its directors,
some of whom are directors of the Company, by annual grants of options to
purchase up to 17,200 shares of the Bank's common stock. Such options are
exercisable at the greater of fair market value or par value on the date of
grant for a period of eight years, except that in the case of Messrs. Modder and
Wilson, they are exercisable at the greater of 110% of fair market value or par
value on the date of grant for a period of five years.
Item 11. Security Ownership of Certain Beneficial Owners and Management
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of March 23, 1998, by each
person known by the Company to be the beneficial owner of more than five percent
of all Classes of the Company's voting securities.
Name and Address of Number of % of Outstanding
Beneficial Owner Shares Shares
- -------------------------------------------------------------
Philip C. Modder
3475 Sheridan Street
Hollywood, FL 33021 1,485,783 (2) 24.4%
James L. Wilson
3475 Sheridan Street
Hollywood, FL 33021 1,390,071 (3) 22.8%
Jack E. & Molly W. Butler, TTE's
U/A dtd 11/13/90
2363 Loblolly Lane
Deerfield Beach, FL 33442 309,343 (4) 5.1%
Robert D. & Martha L. Butler,
TTE's
U/A dtd 3/29/90
84 Southeast 4th Avenue
Deerfield Beach, FL 33441 312,948 (5) 5.1%
Linda K. Strasser
6770 N.W. 87th Avenue
Parkland, FL 33067 398,128 (6) 6.5%
Timothy S. Butler
H.C. 10, Box 580
Lakemont, GA 30552 449,738 (7) 7.4%
------------------------------------------
(1) Based on information supplied by the persons indicated.
(2) Includes options to purchase 322,391 shares that are exercisable within 60
days, and 67,511 shares owned by Mr. Modder's wife.
(3) Includes options to purchase 240,012 shares that are exercisable within 60
days, and 40,844 shares owned by Mr. Wilson's wife.
(4) Jack E. and Molly W. Butler share voting and investment power with respect
to such shares.
(5) Robert D. and Martha L. Butler share voting and investment power with
respect to such shares.
(6) Includes 16,667 shares owned by Linda Strasser's husband and options owned
by him to purchase 100,841 shares that are exercisable within 60 days.
(7) Includes 250,000 shares owned by a trust as to which Mr. Butler has sole
voting and investment power and options to purchase 134174 shares that are
exercisable within 60 days.
(8 Includes options to purchase 19,953 shares that are exercisable within 60
days, 40,933 shares owned by Mr. Friend's wife, and 152,467 shares owned by
Mr. Friend as custodian for his children.
The following table sets forth information concerning the beneficial
ownership of the Company's Common Stock beneficially owned by each director of
the Company, by each executive officer of the Company named in the compensation
table, and by all directors and executive officers of the Company as a group, as
of March 23, 1998.
Shares of Class A Percent (%) of
Name (1) Common Stock Class
Philip C. Modder 1,485,783 (2) 24.3%
James L. Wilson 1,390,071 (2) 22.8%
Eugene J. Strasser 398,128 (3) 6.5%
Harold C. Friend 281,688 (2) 4.6%
Robert D. Butler 42,890 (4) 0.7%
Timothy S. Butler 449,738 (2) 7.4%
All directors and executive
officers as a group (7 persons)
4,047,298 (5) 66.3%
(1) The business address of each of the persons identified above is at
Southern Security Bank Corporation, 3475 Sheridan
Street, Hollywood, Florida 33021.
(2) See footnotes to preceding table.
(3) Includes 272,620 shares owned by Eugene Strasser's wife and options
to purchase 100,841 shares that are exercisable within 60 days.
(4) Includes options to purchase 11,841 shares that are exercisable
within 60 days.
(5) Except as otherwise indicated in the footnotes above, members of
the group have sole voting and investment power as
to such shares.
Item 12. Certain Relationships and Related Transactions
CERTAIN TRANSACTIONS
On September 30, 1993, the Company received from Philip Modder, the
Chairman of the Company, and James Wilson, the President of the Company,
$100,000 and $50,000, respectively, in services and assistance in payment of
organizational expenses of the Company, and they received non interest bearing
notes therefor (the "Notes"). On June 30, 1997, the Company sold 945,269 shares
of Common Stock to Philip Modder, and 472,634 shares of Common Stock to James
Wilson, in each case at a price of $0.10579 per share (110% of then book value
per share), in exchange for the elimination of the Notes. Also as of June 30,
1997, Messrs. Modder and Wilson entered into an agreement with the Board of
Directors pursuant to which they eliminated obligations for unpaid wages and
benefits under the terms of their employment agreements ($78,563 in the case of
Mr. Modder and $128,563 in the case of Mr. Wilson) for Common Stock at $.10579
per share, or 742,632 shares and 1,215,266 shares, respectively. The Board
agreed that Messrs. Modder and Wilson may in the future eliminate unpaid back
wages and benefits for shares of Common Stock at 110% of book value at the time
of the elimination. As of December 31, 1997, the Company owed Mr. Modder
$242,000 and Mr. Wilson $48,000 for unpaid back wages and benefits. The Company
currently owes $100,000 to a trust affiliated with Jack E. Butler, related to
one of the Company's Directors, pursuant to the terms of a note that bears
interest at the rate of 8% per annum payable quarterly (the "Butler Note"). The
Butler Note was issued on December 29, 1993 and matures every six months, when
it is automatically renewed for an additional six months unless the trust
notifies the Company of its intention to call the note sixth (60) days prior to
such maturity date. The next maturity date of the Butler Note is on June 30,
1998.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are filed as part of this report.
2.1 Agreement and Plan of Merger by and between Southern Security
Financial Corporation and Southern Security Bank Corporation, dated
October 31, 1997*
2.2 Certificate of Merger of Southern Security Bank Corporation into
Southern Security Financial Corporation, dated November 10, 1997*
2.3 Articles of Merger of Southern Security Bank Corporation into Southern
Security Financial Corporation, under Florida law, dated November 12,
1997*
3.(i)
(a) Certificate of Incorporation of Southern Security Bank Corporation,
dated October 3, 1996**
(b) Certificate of Amendment of Certificate of Incorporation of Southern
Security Bank Corporation, dated January 17, 1997**
(c) Certificate of Amendment of Certificate of Incorporation of Southern
Security Financial Corporation, dated November 12, 1997 (changing name
to Southern Security Bank Corporation*
(ii) By-laws of the registrant -- filed herewith.
4.1 Stock Certificate for Class A Common Stock -- filed herewith.
9.0 Voting Trust Agreement -- N/A
10.1 Executive Employment Agreement of Philip C. Modder, dated June 11,
1992, together with Amendment No.1 thereto, dated June 30, 1997 --
filed herewith.***
10.2 Executive Employment Agreement of James L. Wilson, dated June 11,
1992, together with Amendment No. 1 thereto, dated June 30, 1998 --
filed herewith.***
10.3 Minutes of Meeting of June 6, 1997, of the Board of Directors of the
registrant relating to modification of the compensation arrangements
for Philip C. Modder and James L. Wilson -- filed herewith.***
10.4 Agreements between Southern Security Bank Corporation, Inc. and the
Federal Reserve Bank of Atlanta, dated February 13, 1995 -- filed
herewith.
11.0 Statement re Computation of Per Share Earnings -- To be filed by
Amendment.
13.0 Annual Report to security holders for the last fiscal year -- N/A
16.0 Letter re change of Certifying Accountant -- N/A
17.0 Letter re change in accounting principles -- N/A
21.0 Subsidiaries of the Registrant -- filed herewith.
22.0 Published Report re matters submitted to vote -- N/A
23.0 Consent of experts and counsel -- N/A
27.0 Financial Data Schedule -- filed herewith (To be amended).
_______
* Filed as an exhibit to Form 8-K of the registrant filed on November
25, 1997.
** Filed as an exhibit to Form 10-SB of the registrant filed 7/31/97
*** Management compensation plan or arrangement.
(b) Reports on Form 8-K. The following reports on Form 8-K were filed
subsequent to November 30, 1997.
(i) Form 8-K filed November 25, 1997
(ii) Form 8-K/A filed February 6, 1998
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange
Act, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SOUTHERN SECURITY BANK CORPORATION
April 1, 1998 By: s/ James L. Wilson
--------------------------------
Name: James L. Wilson
Title: Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on bhelaf of the
Registrant and in the capaicities and on the dates indicated;
Signature Title Date
(i) Pricipal Executive Officer: Chief Executive Officer April 1, 1998
s/ James L. Wilson
----------------------------
James L. Wilson
(ii) Pricipal Accounting and Vice President April 1, 1998
Financial Officer:
s/ Floyd Harper
----------------------------
Floyd Harper
(iii) Directors:
s/ Philip C. Modder Chairman of the Board April 1, 1998
----------------------------
Philip C. Modder
s/ James L. Wilson Vice Chairman April 1, 1998
----------------------------
James L. Wilson
s/ Timothy S. Butler Director March 31, 1998
----------------------------
Timothy S. Butler
s/ Harold C. Friend Director April 1, 1998
----------------------------
Harold C. Friend
Director March __, 1998
----------------------------
Robert D. Butler
<PAGE>
EXHIBIT INDEX
Exhibit
2.1 Agreement and Plan of Merger by and between Southern Security
Financial Corporation and Southern Security Bank Corporation, dated
October 31, 1997*
2.2 Certificate of Merger of Southern Security Bank Corporation into
Southern Security Financial Corporation, dated November 10, 1997*
2.3 Articles of Merger of Southern Security Bank Corporation into Southern
Security Financial Corporation, under Florida law, dated November 12,
1997*
3.(i)
(a) Certificate of Incorporation of Southern Security Bank Corporation,
dated October 3, 1996**
(b) Certificate of Amendment of Certificate of Incorporation of Southern
Security Bank Corporation, dated January 17, 1997**
(c) Certificate of Amendment of Certificate of Incorporation of Southern
Security Financial Corporation, dated November 12, 1997 (changing name
to Southern Security Bank Corporation*
(ii) By-laws of the registrant -- filed herewith.
4.1 Stock Certificate for Class A Common Stock -- filed herewith.
9.0 Voting Trust Agreement -- N/A
10.1 Executive Employment Agreement of Philip C. Modder, dated June 11,
1992, together with Amendment No.1 thereto, dated June 30, 1997 --
filed herewith.
10.2 Executive Employment Agreement of James L. Wilson, dated June 11,
1992, together with Amendment No. 1 thereto, dated June 30, 1998 --
filed herewith.
10.3 Minutes of Meeting of June 6, 1997, of the Board of Directors of the
registrant relating to modification of the compensation arrangements
for Philip C. Modder and James L. Wilson -- filed herewith
10.4 Agreements between Southern Security Bank Corporation, Inc. and the
Federal Reserve Bank of Atlanta, dated February 13, 1995 -- filed
herewith.
11.0 Statement re Computation of Per Share Earnings -- To be filed by
amendment.
13.0 Annual Report to security holders for the last fiscal year -- N/A
16.0 Letter re change of Certifying Accountant -- N/A
17.0 Letter re change in accounting principles -- N/A
21.0 Subsidiaries of the Registrant -- filed herewith.
22.0 Published Report re matters submitted to vote -- N/A
23.0 Consent of experts and counsel -- N/A
27.0 Financial Data Schedule -- filed herewith (To be amended).
______
* Filed as an exhibit to Form 8-K of the registrant filed on November 25, 1997.
**Filed as an exhibit to Form 10-SB of the registrant filed 7/31/97
SOUTHERN SECURITY BANK CORPORATION
BY-LAWS
ARTICLE I - OFFICES
Section 1. The registered office of the corporation shall
be at
The registered agent in charge thereof shall be
Section 2. The corporation may also have offices at such other places as
the Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE 11 - SEAL
Section 1. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware".
ARTICLE Ill - STOCKHOLDERS' MEETINGS
Section 1. Meetings of stockholders shall be held at the registered office
of the corporation in this state or at such place, either within or without this
state, as may be selected from time to time by the Board of Directors.
Section 2. Annual Meetings. The annual meeting of the stockholders
shall be hold on the of in each year if not a legal holiday, and if a legal
holiday, then on the next secular day following at o'clock . M., when they shall
elect a Board of Directors and transact such other business as may properly be
brought before the meeting. If the annual meeting for election of directors is
not held on the date designated therefor, the directors shall cause the meeting
to be held as soon thereafter as convenient.
Section 3. Election of Directors: Elections of the
directors of the corporation be by written ballot.
Section 4. Special Meetings: Special meetings of the stockholders may
be called at any time by the President, or the Board of Directors, or
stockholders entitled to cast at least one-fifth of the votes which all
stockholders are entitled to cast at the particular meeting. At any time, upon
written request of any person or persons who have duly called a special meeting,
it shall be the duty of the Secretary to fix the date of the meeting, to be held
not more than sixty days after receipt of the request, and to give due notice
thereof. If the Secretary shall neglect or refuse to fix the date of the meeting
and give notice thereof, the
person or persons calling the meeting may do so.
Business transacted at all special meetings shall be confined to the
objects stated in the call and matters germane thereto, unless all stockholders
entitled to vote are present and consent.
Written notice of a special meeting of stockholders stating the time and
place and object thereof, shall be given to each stockholder entitled to vote
thereat at least days before such meeting, unless a greater period of notice is
required by statute in a particular case.
Section 5. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of stockholders. If less than a majority of the outstanding shares
entitled to vote is represented at a meeting, a majority of the share so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
Section 6. Proxy. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only an long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally. All
proxies shall be filed with the Secretary of the meeting before being voted
upon.
Section 7. Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called.
Unless otherwise provided by law, written notice of any meeting shall be
given not less than ten nor more than sixty days before the date of the meeting
to each stockholder entitled to vote at such meeting.
Section 8. Consent in Lieu of Meetings. Any action required to be
taken at any annual or Special meeting of stockholders or a corporation, or any
action which may be taken at any annual or special meeting of such stockholders,
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
Section 9. List of Stockholders: The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
No share of stock upon which any installment is due and unpaid shall be voted at
any meeting. The list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
hold. The List shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
ARTICLE IV - DIRECTORS
Section 1. The business and affairs of this corporation shall be managed by
its Board of Directors, in number. The directors need not be residents of this
state or stockholders in the corporation. They shall be elected by the
stockholders at the annual meeting of stockholders of the corporation, and each
director shall be elected for the term of one year, and until his successor
shall be elected and shall qualify or until his earlier resignation or removal.
Section 2. Regular Meetings. Regular meetings of the Board
shall be held without notice
at the registered office of the
corporation, or at such other time and place as shall be determined
by the Board.
Section 3. Special Meetings. Special meetings of the Board may be called by
the President on days notice to each director, either personally or by mail or
by telegram; special meetings shall be called by the President or Secretary in
like manner and an like notice on the written request of a majority of the
directors in office.
Section 4. Quorum: A majority of the total number of
directors shall constitute a quorum for the transaction of
business.
Section 5. Consent in Lieu of Meeting: Any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee thereof
may be taken without a meeting if all members of the Board of committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee. The Board of
Directors may hold its meetings, and have an office
Section 6. Conference Telephone: One or more directors may participate
in a meeting of the Board, or a committee of the Board or of the stockholders,
by means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other;
participation in this manner shall constitute presence in person at such
meeting.
Section 7. Compensation. Directors as such, shall not receive nay stated
salary for their services, but by resolution of the Board, a fixed sum and
expenses of attendance at each regular or special meeting of the Board PROVIDED,
that nothing herein. contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
Section 8. Removal: Any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors, except that when cumulative voting
is permitted, if less than the entire Board is to be removed, no director may be
removed without cause if the votes cast against his removal would be sufficient
to elect him if then cumulatively voted at an election of the entire Board of
Directors, or, if there be classes of directors, at an election of the class of
directors of which he is a part.
ARTICLE V - OFFICERS
Section 1. The executive officers of the corporation shall be chosen by the
directors and shall be a President, Secretary and Treasurer. The Board of
Directors may also choose a Chairman, one or more Vice Presidents and such other
officers as it shall deem necessary. Any number of offices may be held by the
same person.
Section 2. Salaries: Salaries of all officers and agents of
the corporation shall be fixed by the Board of Directors.
Section 3. Term of office: The officers of the corporation shall hold
office for one year and until their successors are chosen and have qualified.
Any officer or agent elected or appointed by the Board may be removed by the
Board of Directors
whenever in its judgment the best interest of the corporation will
be served thereby.
Section 4. President: The President shall be the chief executive officer of
the corporation; he shall preside at all meetings of the stockholders and
directors; he shall have general and active management of the business of the
corporation, shall see that all orders and resolutions of the Board are carried
into effect, subject, however, to the right of the directors to delegate any
specific powers, except such as may be by statute exclusively conferred on the
President, to any other officer or officers of the corporation. He shall execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
corporation. He shall be EX-OFFICIO a member of all committees, and shall have
the general power and duties of supervision and management usually vested in the
office of President of a corporation.
Section 5. Secretary: The Secretary shall attend all sessions of the Board
and all meetings of the stockholders and act as clerk thereof, and record all
the votes of the corporation and the minutes of all its transactions in a book
to be kept for that purpose, and shall perform like duties for all committees of
the Board of Directors when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or President, and under whose supervision he shall be. He shall keep in safe
custody the corporate seal of the corporation, and when authorized by the Board,
affix the same to any instrument requiring it.
Section 6. Treasurer: The Treasurer shall have custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation, and shall keep the moneys
of the corporation in separate account to the credit of the corporation. He
shall disburse the funds of the corporation 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 his transactions as Treasurer and of the financial
condition of the corporation.
ARTICLE VI - VACANCIES
Section 1. Any vacancy occurring in any office of the corporation by death,
resignation, removal or otherwise, shall be filled by the Board of Directors.
Vacancies and newly created directorships resulting from any increase in the
authorized number of directors may be filled by a majority of the directors then
in office, although not less than a quorum, or by a sole remaining director. if
at any time, by reason of death or resignation or other cause, the corporation
should have no directors in office, then any officer ar any stockholder or an
executor, administrator, trustee or guardian of a stockholder, or other
fiduciary entrusted
with like responsibility for the person or estate of stockholder, may call a
special meeting of stockholders in accordance with the provisions of these
By-Laws.
Section 2. Resignations Effective at Future Date: When one or more
directors shall resign from the Board, effective at a future date, a majority of
the directors then in office, including those who have so r*signed, shall have
power to fill such vacancy or vacancies, the vote thereon to take effect when
such resignation or resignations shall become effective.
ARTICLE VII - CORPORATE RECORDS
Section 1. Any stockholder of record, in person or by attorney or other
agent, shall, upon written demand under oath stating the purpose thereof, have
the right during the usual hours for business to inspect for any proper purpose
the corporation's stock ledger, a list of its stockholders, and its other books
and records, and to make copies or extracts therefrom. A proper purpose shall
mean a purpose reasonably related to such person's interest as a stockholder. In
every instance where an attorney or other agent shall be the person who seeks
the right to inspection, the demand under oath shall be accompanied by a power
of attorney or such other writing which authorizes the attorney or other agent
to so act on behalf of the stockholder. The demand under oath shall be directed
to the corporation at its registered office in this state or at its principal
place of business.
ARTICLE VIII - STOCK CERTIFICATES, DIVIDENDS, ETC.
Section 1. The stock certificates of the corporation shall be numbered and
registered in the share ledger and transfer books of the corporation as they are
issued. They shall bear the corporate seal and shall be signed by the
Section 2. Transfers: Transfers of shares shall be made on the books of the
corporation upon surrender of the certificates therefor, endorsed by the person
named in the certificate or by attorneys lawfully constituted in writing. No
transfer shall he made which is inconsistent with law.
Section 3. Lost Certificate: The corporation may issue a new certificate of
stock in the place of any certificate theretofore signed by it, alleged to have
been lost, stolen or destroyed, and the corporation may require the owner of the
lost, stolen or destroyed certificate, or his legal representative to give the
Corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 4. Record Date: In order that the corporation may
determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or the express consent to
corporate action in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than tan
days before the date of such meeting, nor more than sixty days prior to any
other action.
If no record date is fixed:
(a) The record date for determining stockholder entitled to notice
of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or
if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held.
(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when
no prior action by the Board of Directors is necessary, shall be the
day on which the first written consent is expressed.
(c) The record date for determining stockholders for any ether
purpose shall be at the close of business on the day on which the Board
of Directors adopts the resolution relating thereto.
(d) A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a now record date for the adjourned meeting.
Section 5. Dividends. The Board of Directors may declare and pay dividends
upon the outstanding shares of the corporation from time to time and to such
extent as they deem advisable, in the manner and upon the terms and conditions
provided by the statute and the Certificate of incorporation.
Section 6. Reserves:. Before payment of any dividend there may be set aside
out of the net profits of the corporation such sum or sums as the directors,
from time to time, in their absolute discretion, think proper as a reserve fund
to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other purpose as the
directors shall think conducive to the interests of the corporation, and the
directors may abolish any such reserve in the manner in which it was created.
ARTICLE IX - MISCELLANEOUS PROVISIONS
Section 1. Checks: All checks or demands for money and notes
of the corporation shall be signed by such officer or officers as
the Board of Directors may from time to time designate.
Section 2. Fiscal Year. The fiscal year shall begin on the
first day of
Section 3. Notice. Whenever written notice is required to be given to any
person, it may be given to such person, either personally or by sending a copy
thereof through the mail, or by telegram, charges prepaid, to his address
appearing on the books of the corporation, or supplied by him to the corporation
for the purpose of notice. If the notice is sent by mail or by telegraph, it
shall be deemed to have been given to the person entitled thereto when deposited
in the United States mail or with a telegraph office for transmission to such
person. Such notice shall specify the place, day and hour of the meeting and, in
the case of a special meeting of stockholders, the general nature of the
business to be transacted.
Section 4. Waiver of Notice. Whenever any written notice is required by
statute, or by the Certificate or the By-Laws of this corporation a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Except in the case of a special meeting of
stockholders, neither the business to be transacted at nor the purpose of the
meeting need be specified in the waiver of notice of such meeting. Attendance of
a person either in person or by proxy, at any meeting shall constitute a waiver
of notice of such meeting, except where a person attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting was not lawfully called or convened.
Section 5. Disallowed Compensation. Any payments made to an officer or
employee of the corporation such as a salary, commission, bonus, interest, rent,
travel or entertainment expense incurred by him, which shall be disallowed in
whole or in part as a deductible expense by the Internal Revenue Services shall
be reimbursed by such officer or employee to the corporation to the full extent
of such disallowance it shall be the duty of the directors, as a Board, to
enforce payment of each such amount disallowed. in lieu of payment by the
officer Or employee, subject to the determination of the directors,
proportionate amounts may be withheld from his future
compensation payments until the amount owed to the corporation has
been recovered.
Section 6. Resignations: Any director or other officer may
resign at anytime, such resignation to be in writing, and to take
effect from the time of its receipt by the corporation, unless some
time be fixed in the resignation and then from that date. The
acceptance of a resignation shall not be required to make it
effective.
ARTICLE X - ANNUAL STATEMENT
Section 1. The president and Board of Directors shall present at each
annual meeting a full and complete statement of the business and affairs of the
corporation for the preceding year. Such statement shall be prepared and
presented in whatever manner the Board of Directors shall deem advisable and
need not be verified by a certified public accountant.
ARTICLE XI - AMENDMENTS
Section 1. These By-Laws may be amended or repealed by the vote of
stockholders entitled to cast at least a majority of the votes which all
stockholders are entitled to cast thereon, at any regular or special meeting of
the stockholders, duly convened after notice to the stockholders of that
purpose.
Exhibit 4.1
[FRONT]
[CERTIFICATE WITH ENGRAVED BORDERS]
NUMBER SOUTHERN SECURITY BANK SHARES
SSB CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE SEE REVERSE FOR
CERTAIN DEFINITIONS
CLASS - A COMMON STOCK CUSIP 843803 10 7
This Certifies That:
is owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF CLASS - A COMMON STOCK OF $.01
PAR VALUE EACH OF
SOUTHERN SECURITY BANK CORPORATION
transferable on the books of the Corporation in person or by attorney upon
surrender of this certificate duly endorsed or assigned. This certificate and
the shares represented hereby are subject to the laws of the State of Delaware,
and to the Certificate of Incorporation and By-laws of the Corporation, as now
or hereafter amended. This certificate is not valid until countersigned by the
Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
DATED: Countersigned:
Olde Monmouth Stock Transfer Co., Inc.
77 Memorial Parkway, Suite 101
Atlanta Highlands, NJ 07716
Transfer Agent
By:
[SEAL] Authorized Signature
s/ James L. Wilson s/ Philip C. Modder
James L. Wilson Philip C. Modder, Treasurer
Chief Executive Officer Chairman of the Board
[BACK]
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws of regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ___Custodian_________
TEN ENT - as tenants by the (Cust) (Minor)
entireties under Uniform Gifts to Minors
JT TEN - as joint tenants with
right of survivorship Act _____________
and not as tenants in (State)
common
Additional abbreviations may also be used though not in the above list.
For Value Received, __________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- ------------------------------------------------------------------------------
(Please print or typewrite name and address, including zip code, of Assignee)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
_______________________________________________________________________Shares of
the stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint ______________________________________________________
Attorney to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated__________
-------------------------------------------------
NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the certificate in every particular, without
alteration or enlargement or any change
whatsoever.
THE CORPORATION WILL FURNISH TO ANY STOCKHOLDER, UPON REQUEST AND WITHOUT
CHARGE, A FULL STATEMENT OF THE DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND
LIMITATIONS OF THE SHARES OF EACH CLASS AND SERIES AUTHORIZED TO BE ISSUED, SO
FAR AS THE SAME HAVE BEEN DETERMINED, AND OF THE AUTHORITY, IF ANY, OF THE BOARD
TO DIVIDE THE SHARES INTO CLASSES OR SERIES AND TO DETERMINE AND CHANGE THE
RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF ANY CLASS OR SERIES. SUCH
REQUEST MAY BE MADE TO THE SECRETARY OF THE CORPORATION OR TO THE TRANSFER AGENT
NAMED ON THIS CERTIFICATE THE SIGNATURE TO THE ASSIGNMENT MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A
COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF A NATIONAL OR REGIONAL OR
OTHER RECOGNIZED STOCK EXCHANGE IN CONFORMANCE WITH A SIGNATURE GUARANTEE
MEDALLION PROGRAM.
STOCK MARKET INFORMATION EXCHANGE COLUMBIA FINANCIAL PRINTING CO.
P.O. BOX 215
BETHPAGE, NY 11714
Southern Security Bank Corporation
EXECUTIVE Employment Agreement
Date of Agreement: June 11, 1992
EXECUTIVE Employment Agreement
of
Philip C. Modder
Agreement effective this 11th day of June, 1992, by and between
SOUTHERN SECURITY BANK CORPORATION, a Florida corporation, having its principal
place of business at 805 East Hillsboro Boulevard Suite 102, Post Office Box
1064, Deerfield Beach, Florida 33441 (hereinafter the "COMPANY"), and PHILIP C.
MODDER, whose address is Post Office Box 520, Boca Raton, Florida 33429,
(hereinafter the "EXECUTIVE").
For the mutual covenants hereinafter set forth and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the COMPANY
agrees to employ the EXECUTIVE and the EXECUTIVE agrees to be employed by the
COMPANY on the following terms and conditions:
1. Term.
The term of this EXECUTIVE Employment Agreement (hereinafter the
"Agreement") shall be for a period of five (5) years commencing on June
11, 1992, (the "Commencement Date") and ending on the fifth (5th)
anniversary of the Commencement Date, to-wit June 11, 1997. Any renewal
of this Agreement shall be negotiated, reduced to writing, and executed
by the parties hereto no less than one (1) year prior to the expiration
of this Agreement. If at least six (6) months prior to the expiration
of this Agreement the parties have failed to agree upon the renewal
terms of this Agreement and the COMPANY has not delivered written
notice to the EXECUTIVE of the COMPANY's intent to terminate this
Agreement on the expiration thereof, this Agreement shall automatically
be extended for an additional five (5) year period.
2. Employment Duties.
The EXECUTIVE shall devote his efforts, skills, attention, and such
time as he deems necessary, exclusively to the business and affairs of
the COMPANY and shall serve the COMPANY faithfully and competently and
shall at all times act in the COMPANY'S best interest. The EXECUTIVE
shall serve as the COMPANY's Chief Executive Officer and as Chairman of
the COMPANY's Board of Directors. EXECUTIVE shall supervise all aspects
of the activities and functions of the COMPANY and its affiliate
banking companies and subsidiaries under the direction of the Board of
Directors. Such supervisory and management responsibilities shall
include:
(a) Supervision of implementation and control of present and
future organizational objectives.
(b) Supervision of the preparation of the fiscal budgeting for
the COMPANY.
(c) Supervision and review of the fiscal budgeting and planning
for the COMPANY's affiliates and subsidiaries.
(d) Managerial support and assistance to the COMPANY's
affiliates and subsidiaries.
(e) Managerial support and formulation of policies for the
COMPANY and the COMPANY's affiliates and subsidiaries
regarding the investment and loan portfolios thereof
including serving as a voting member of the COMPANY's loan
committee or committees and as Chairman of the COMPANY's
asset, liability, management, and ALCO committees.
(f) Supervision of solicitation, recruitment, and procurement of
financial institutions as potential candidates for
investment, acquisition, or merger by or with the COMPANY.
(g) Review of letters of intent, stock purchase agreements,
and/or merger agreements between the COMPANY and financial
institutions for investment, acquisition, and/or merger by
or with the COMPANY.
(h) Review of the examination of the assets, liabilities, and
capital accounts of financial institutions for investment,
acquisition, and/or merger by or with the COMPANY.
(i) Review of the pre-closing, closing, and post-closing
activities for acquisition of financial institutions by the
COMPANY.
(j) Review of regulatory affairs with the Federal Reserve Bank,
the Florida Department of Banking and Finance, the Office of
the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, the Securities Exchange Commission,
and other governmental agencies regarding the ongoing
operations of the COMPANY and the COMPANY's subsidiaries and
affiliates, including review of applications to said
governmental agencies for pre-closing, closing, and
post-closing activities for acquisition of financial
institutions by the COMPANY.
The EXECUTIVE'S sole place of employment with the COMPANY shall be located in
Palm Beach County, Florida.
3. Base Compensation.
The COMPANY shall pay to the EXECUTIVE, and the EXECUTIVE agrees to
accept, minimum base compensation of:
(a) One Hundred Fifty Thousand Dollars ($150,000) per year for
the initial year of this Agreement, which base compensation
shall increase to
(b) One Hundred Sixty-Five Thousand Dollars ($165,000) per year
on the first anniversary of the Commencement Date, to
(c) One Hundred Eighty-One Thousand Five Hundred Dollars
($181,500) per year on the second anniversary of the
Commencement Date, to
(d) One Hundred Ninety-nine Thousand Six Hundred Fifty Dollars
($199,650) per year on the third anniversary of the
Commencement Date, to
(e) Two Hundred Nineteen Thousand Six Hundred Fifteen Dollars
($219,615) per year on the fourth anniversary of the
Commencement Date.
(f) In the event the employment is extended for any period as
provided for in this Agreement, the salary shall increase
for each subsequent year at a rate equal to the greater of:
110% of the previous years' salary or the EXECUTIVE's last
years' salary increased by the Consumer Price Index, CPI,
rounded up to the nearest $100. For example, on the fifth
anniversary of the Commencement Date under this Agreement,
the EXECUTIVE's salary shall be equal to the greater of:
$219,615 times 1.10 which equals $241,600 or the CPI
increase (assuming the CPI for this period is 11%), then the
next years' salary would increase to $243,800 it being the
greater amount.
4. Additional Compensation.
In addition to the base compensation set forth in Paragraph 3, above,
the COMPANY shall pay the EXECUTIVE the following as additional
compensation:
(a) During the term of this Agreement and any renewal term
thereof, the EXECUTIVE shall receive, for each fiscal year
of the COMPANY (or part thereof as to fiscal year 1992), a
salary incentive equal to 2.5% of the pre-tax net income of
the COMPANY, which bonus incentive shall be paid in cash to
the EXECUTIVE within fifteen (15) days after receipt by the
COMPANY of the COMPANY's audited financial statements for
the fiscal year. If this Agreement is terminated prior to
the end of the fiscal year, the incentive bonus due to the
EXECUTIVE shall be prorated through the last day of
EXECUTIVE's employment during such fiscal year. For purposes
of calculating the bonus incentive, pre-tax net income shall
be based upon the COMPANY's year-end audited financial
statements as determined in the course of the COMPANY's
normal audit. The determination and calculation of the
COMPANY's pre-tax net income and the EXECUTIVE's bonus
incentive by the COMPANY's independent certified public
accountant shall be conclusive and binding upon the COMPANY
and the EXECUTIVE. If the EXECUTIVE is required to pay any
income taxes attributable to the foregoing the COMPANY shall
pay said taxes, when due.
(b) In addition, in the event the COMPANY acquires all, or a
portion of, or merges with an existing financial
institution, the EXECUTIVE shall receive an incentive bonus
equal to 0.20% of the gross assets for each such
transaction, which bonus shall be payable upon the closing
of such acquisition. For example, if such a transaction
represented $50 million in assets, the bonus would be equal
to ($100,000, ($50,000 x 0.0020). If the EXECUTIVE is
required to pay any income taxes attributable to the
foregoing, the COMPANY shall pay said taxes, when due.
5. Stock Options.
(a) As of June 11, 1992, the COMPANY hereby grants to EXECUTIVE
stock options to purchase the greater of Two Hundred and
Eight Thousand (208,000) shares of the COMPANY's common
stock, or 4.0% of the outstanding shares issued pursuant to
the Private Offering Memorandum dated June 11, 1992, or any
future offerings Public or Private, at a price equal to
110%of the Book Value per share, on the date said Stock
Options are granted. For example, let us assume that the net
worth of the COMPANY was equal to $1 Million, and the then
total number shares outstanding was 10 Million shares, on
the date of granting of said options, then the Option Price
would be equal to 11(cent)per share; ($1,000,000/10,000,000)
x 110% = $0.11/share. Options for the greater of Forty-one
Thousand Six Hundred (41,600) shares or 0.80% of the then
total outstanding shares shall vest and become exercisable
on each of the four annual anniversaries following the
Commencement Date. In the event any additional or future
Private or Public offerings are consummated, EXECUTIVE shall
be immediately entitled to additional stock options in
amounts and equivalent percentages as recited in this
paragraph at the price computed in the above example,
pursuant to any future Public or Private offerings; the
EXECUTIVE shall have been granted stock options totaling
least 4.0% of the total outstanding shares. The EXECUTIVE
may exercise any such stock options at or prior to ten years
(10 years) following the granting of any such stock options
at EXECUTIVE's sole discretion, whether or not the EXECUTIVE
is employed by the COMPANY. This Stock Option provision does
not require execution of any other agreement, the granting
of the options recited above shall be automatic, and does
not require annual "granting" letters to the EXECUTIVE by
the COMPANY.
(b) If permitted by applicable law, the COMPANY shall loan to
EXECUTIVE such amounts as may be required in order for
EXECUTIVE to exercise the stock options provided in this
Paragraph 5 the amount of which loans shall not be in excess
of the exercise price thereof. The terms of any such loan
shall include a period of repayment of not less than thirty
(30) months and an annual interest rate not in excess of the
Prime Rate plus 1%, subject, however, to applicable state
and federal law and regulations.
(c) If this Agreement or any renewal thereof terminates for any
reason, all stock option provided in this Paragraph 5 shall
fully vest and become exercisable as of the date of
termination of this Agreement and the EXECUTIVE shall have
ten (10) years from the date of such termination to exercise
such stock options.
(d) If any option provided in this Paragraph 5 does not qualify
as an "incentive stock option" as defined in Section 422 of
the Internal Revenue Code of 1986, as amended, the COMPANY
shall reimburse the EXECUTIVE for the amount of any taxes
which the EXECUTIVE is required to pay by reason thereof,
which payment shall be made within five (5) days notice by
EXECUTIVE to COMPANY, when such EXECUTIVE's tax payment is
due.
6. Executive Benefits.
The COMPANY shall provide EXECUTIVE with the following benefits;
(a) At the COMPANY's sole expense, comprehensive medical and
dental insurance for the EXECUTIVE, his spouse, and his
children.
(b) Disability insurance as follows;
(1) For the first year of the EXECUTIVE's disability,
disability benefits payable to the EXECUTIVE in an
amount equal to the greater of One Hundred Thousand
Dollars ($100,000) or sixty (60%) percent of the
EXECUTIVE's total annual compensation (including base
compensation, additional compensation, and any other
benefit provided to the EXECUTIVE under this
Agreement which is deemed income to the EXECUTIVE)
based upon the twelve (12) month period ending on the
date the EXECUTIVE became disabled;
(2) For each year disability payments are payable to the
EXECUTIVE after the initial year, an amount equal to
the amount payable in the initial year, plus cost of
living increases equal to the lesser of the CPI or
twelve (12%) percent;
(3) The disability benefits shall be payable to the
EXECUTIVE until he reaches the age of sixty-five
(65);
(4) The disability benefits shall be paid to the
EXECUTIVE on a monthly basis;
(5) The policy of disability insurance shall be owned by
the EXECUTIVE and the EXECUTIVE shall pay the
premiums therefor for which the COMPANY shall
reimburse the EXECUTIVE. If such reimbursement is
deemed taxable income, the COMPANY shall reimburse
the EXECUTIVE for said taxes.
(c) A whole life annuity insurance policy in the face amount of
One Million Seven Hundred Fifty Thousand Dollars
($1,750,000) wherein the EXECUTIVE is the owner of said
policy. The COMPANY shall purchase said policy within ten
(10) days of the date of execution of this Agreement and
shall maintain and pay the premiums for said policy for a
period of eight (8) years thereafter regardless of whether
this Agreement is terminated prior thereto. Any income taxes
which the EXECUTIVE is required to pay as a result of the
COMPANY's payment of the premiums on said policy shall be
reimbursed to the EXECUTIVE by the COMPANY. The EXECUTIVE
shall have the right to designate the beneficiaries of said
policy.
(d) The EXECUTIVE shall permit the COMPANY to purchase and
maintain at the COMPANY's sole expense term life insurance
coverage on the EXECUTIVE's life in an amount not in excess
of One Million Dollars ($1,000,000) and the COMPANY shall be
the beneficiary of said policy.
(e) Membership for the EXECUTIVE and his family in two (2)
country clubs of EXECUTIVE's choice including, but limited
to, the Boca Raton Hotel and Country Club. The COMPANY shall
pay the EXECUTIVE's initiation fees, annual dues, and usage
charges for said memberships, which memberships shall be in
the name of the EXECUTIVE and his family. Upon termination
of this Agreement, said memberships shall be retained by and
transferred to the EXECUTIVE. If the EXECUTIVE is required
to pay income tax attributable to these memberships, the
COMPANY shall reimburse the EXECUTIVE for said income taxes.
(f) An automobile allowance for the term of this Agreement of
Nine Hundred Dollars ($900) per month, plus annual increases
thereof equal to the increases in the CPI, plus sales taxes,
insurance, tag and registration fees, maintenance and
servicing expenses, costs of tires and accessories, fuel and
lubrication costs, and mobile cellular telephone expense,
usage tolls and costs. If the EXECUTIVE is required to pay
any income taxes attributable to the foregoing, the COMPANY
shall reimburse the EXECUTIVE for said taxes, when due.
(g) If this Agreement is terminated for any reason other than
the EXECUTIVE's death or permanent disability, the COMPANY
shall continue to pay all premiums on the EXECUTIVE's
comprehensive medical and dental insurance, and disability
insurance for a period of two (2) years following the date
of termination.
(h) The COMPANY shall reimburse the EXECUTIVE for expenditures
made by the EXECUTIVE on behalf of the COMPANY (i.e.,
business expenses).
7. Vacation.
EXECUTIVE shall be entitled to a paid vacation for four (4) calendar
weeks per year during the employment period. Such vacation time
allowance shall not cumulatively accrue, and any unused vacation time
for each year of the employment period shall be not be forfeited by
EXECUTIVE if any such unused vacation days are not used during such
year, may be used in any subsequent year[s] at the EXECUTIVE's
discretion. EXECUTIVE shall also be entitled to all paid holidays made
generally available by the COMPANY.
8. Death or Disability.
If, while the EXECUTIVE is employed by the COMPANY, he dies or suffers
a physical or mental disability which prevents him, for a period of six
(6) consecutive months, from performing his employment duties under
this Agreement, his employment shall terminate effective the date of
death or the end of such six month period, as applicable. In the event
of such termination, the EXECUTIVE's base compensation and additional
compensation shall be continued for a period of twelve (12) months,
after such termination, and shall be paid to the EXECUTIVE if he is
alive, or to his personal representatives, if deceased, and shall be in
addition to any other compensation or benefits provided for in this
Agreement.
9. Change of Control.
(a) For the purposes of this Agreement, a "Change of Control"
shall be deemed to have taken if:
(1) any person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934 as
amended, becomes the owner or beneficial owner of the
COMPANY securities, after the date of this Agreement,
having twenty (20%) percent or more of the combined
voting power of the then outstanding securities of
the COMPANY that may be cast for the election of
directors of the COMPANY (other than as a result of
an issuance of securities initiated by the COMPANY,
or open market purchases approved by the Board, as
long as the majority of the Board approving the
purchases is the majority at the time the purchases
are made), or
(2) the persons who were the directors of the COMPANY
before such transactions shall cease to constitute a
majority of the Board of the COMPANY, or any
successor to the COMPANY, as the direct or indirect
result of, or in connection with, any cash tender or
change offer, merger or other business combination,
sale of assets or contested election or any
combination of the foregoing transactions.
(b) The EXECUTIVE may at any time after the date on which the
change of control occurs terminate this Agreement upon the
giving of at least sixty (60) days written notice and the
COMPANY shall pay the EXECUTIVE a lump sum amount equal to
200% of the EXECUTIVE's total annual compensation (including
base compensation, additional compensation, and any other
benefits provided under this Agreement which are deemed
taxable income to the EXECUTIVE) based upon the twelve (12)
month period ending on the effective date of the
termination, which payment shall be made within five (5)
days after the effective date of said termination.
10. Termination.
(a) The COMPANY may terminate this Agreement at any time for
cause. "Cause" shall mean an order of the FDIC, the Board of
Governors of the Federal Reserve System, the Florida
Department of Banking and Finance, or any other governmental
agency with lawful jurisdiction thereof, which prohibits the
EXECUTIVE from participation in the conduct of the affairs
of the COMPANY, which order has become final after all
judicial and/or administrative appeals have been exhausted.
If the COMPANY elects to terminate the EXECUTIVE for cause
as herein provided, the effective date of such termination
shall be the date on which said order becomes final as
defined herein and the COMPANY shall be obligated to pay to
EXECUTIVE all compensation he is entitled to under the terms
of this Agreement.
(b) The EXECUTIVE may terminate this Agreement or any renewal
thereof at any time upon the giving of sixty (60) days
written notice to the COMPANY and, upon the effective date
of such termination, the COMPANY shall pay the EXECUTIVE the
lump sum payment described in Paragraph 9(b) of this
Agreement within five (5) days after the date of such
termination. In addition, the employee benefits provided to
the EXECUTIVE shall continue for the periods of time as set
forth in this Agreement.
11. Restrictive Covenant.
(a) During the time the EXECUTIVE is employed by the COMPANY
under this Agreement and for a six (6) month period after
EXECUTIVE's employment with the COMPANY terminates, the
EXECUTIVE shall not, directly or indirectly, be an owner,
partner, joint venturer, employee, officer, director, or
shareholder (unless as owner of no more than ten [10%]
percent of the issued and outstanding capital stock of such
entity or unless such stock is traded on a major securities
exchange or otherwise as a purely passive shareholder), of
any financial institution, which is in competition with the
COMPANY and which operates anywhere in Palm Beach County,
Florida.
(b) Notwithstanding any provision in Paragraph 11(a), above, or
any other provision of this Agreement to the contrary, the
EXECUTIVE shall be permitted to:
(1) Invest and/or participate in the management of
companies or other entities which are not in
competition with the COMPANY,
(2) Engage in real estate transactions and earn
commissions thereby as a real estate broker, provided
that all such transactions are fully disclosed to the
COMPANY's Chief Executive Officer or the Board of
Directors;
(3) To serve on the boards of directors, serve as a
trustee, or be a member of audit committees, of other
entities where the EXECUTIVE may receive director
fees, consulting fees, or advisory fees therefrom,
provided that such service does not materially
interfere with the EXECUTIVE's employment duties as
set forth in this Agreement.
12. Severability.
Invalidity or unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other provisions.
13. Terminology.
All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders;
the singular shall include the plural and vice versa. Titles of
Paragraphs are for convenience only, and neither limit nor amplify the
provisions of the Agreement itself.
14. Governing Law.
This Agreement shall be governed and construed in accordance with the
laws of the State of Florida.
15. Entire Agreement.
This Agreement contains the entire understanding between parties and
may not be changed or modified except by an Agreement in writing signed
by all the parties.
16. Notice.
Any Notice required or permitted to be delivered hereunder shall be
deemed to be delivered when deposited in the United States mail, return
receipt requested, addressed to the parties at the addresses first
stated herein, or to such other address as either party hereto shall
from time to time designate to the other party by notice in writing as
provided herein.
17. Other Instruments.
The parties hereby covenant and agree that they will execute such other
and further instruments and documents as are or may become necessary or
convenient to effectuate and carry out the terms of this Agreement.
18. Counterparts.
This Agreement may be executed in any number of counterparts and each
such counterpart shall for all purposes be deemed an original.
19. Assignability.
This Agreement shall not be assigned by either party, except with the
written consent of the other.
20. Attorneys' Fees.
In any litigation arising out of this Agreement, the prevailing party
shall be entitled to all costs and expenses, including reasonable
attorneys' fees, and all costs and expenses including reasonable
attorneys' fees for appellate proceedings. Venue for such litigation
shall be Palm Beach County, Florida.
IN WITNESS WHEREOF, this Agreement has been duly signed by the EXECUTIVE and on
behalf of the COMPANY on the day and year first above written.
As to the "COMPANY"
By: s/ James L. Wilson
-----------------------------------
James L. Wilson, President and
Chief Operating Officer
As to the "EXECUTIVE"
Philip C. Modder
By: s/ Philip C. Modder
-----------------------------------
Philip C. Modder
<PAGE>
AMENDMENT #1 to
EXECUTIVE EMPLOYMENT AGREEMENT
OF
PHILIP C MODDER
AMENDMENT #1 to the EXECUTIVE EMPLOYMENT AGREEMENT effective this 30th
day of June, 1997, by and between SOUTHERN SECURITY BANK CORPORATION, a Florida
corporation, having its principal place of business at 3475 Sheridan Street,
Post Office Box 6699, Hollywood, Florida 33021 (hereinafter the "COMPANY"), and
PHILIP C. MODDER, whose address is: Post Office Box 520, Boca Raton, Florida
33429-0520 (hereinafter the "EXECUTIVE"). This amendment and
effectiveness thereof is subject the approval of the Federal Reserve Bank and
other requisite Regulatory Approval.
For the mutual covenants hereinafter set forth and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the COMPANY
agrees to employ the EXECUTIVE and the EXECUTIVE agrees to be employed by the
COMPANY on all terms and conditions as set forth in that contract agreement
dated June 11, 1992, as if fully restated in this amendment, except for the
following modifications as set forth below; The item number below corresponds to
that item number if recited in the original contract agreement of 6/11/92; As a
matter of confirmation by the parties to the Executive Employment Agreement and
as now being Amended, said Agreement has been extended for an additional five
[5] year period due to the automatic renewal provisions contained therein, and
is subject again to automatic renewal on June 10, 2002.
3. Base Compensation. The COMPANY shall pay to the EXECUTIVE, and the
EXECUTIVE agrees to accept a minimum base salary compensation of
$175,000 per year beginning on 7/1/97, paid in 24 installments per year
[twice per month] adjusted annually by the greater of 5%, or the CPI,
consumer price index.
5. Class-A Common Stock Options. The company will provide EXECUTIVE with
10- year term [10 years from the date of granting] Class-A Common
Stock Options with an Option Price established at 110% of the then
per-share book value when granted [a 10% premium], a quantity of
Class-A Common Stock Options in the amount of 6% the EXECUTIVE of the
then total of all classes of capital stock issued and outstanding,
accruing and being credited to the EXECUTIVE, semi-annually on July
1st and January 1st of each year, the first such granting to begin on
7/1/97, and occurring every 6 months thereafter until at the end of
the five year period a total of 6% of the then issued and outstanding
of all classes of stock have been granted thereto. These Options are
in addition to any previously granted options to EXECUTIVE under the
original Employment contract agreement. For example, on July 1, 1997,
if the company had a total of 14,713,435 shares of all classes of
stock issued and outstanding [including those shares owned by
EXECUTIVE], then EXECUTIVE would each be granted 88,280 options [math:
14,713,435 x {0.06/10 = 88,280 options, rounded-off, no fractional
options granted] for Class-A common stock, expiring 10 years from
7/1/97, and with an option price equating to 110% of the book value
per share [$0.09617 x 1.10 = $0.10579] of the company as of 6/30/97.
In the event additional shares of the company's capital stock are
issued as a result of any public or private offering[s] or due to
Merger[s] and/or acquisition[s] of the company with another
company[s], EXECUTIVE will immediately be granted in bulk, at the
consummation of each such Merger, Acquisition, Public/Private sale of
the company's capital stock, additional 10-year options, priced at
110% of the then book value of the company's stock, as determined by
most recent previously issued 6 month financial statement, either the
unaudited June 30th or the audited December 31st, such that EXECUTIVE
will have Class-A common stock options granted representing exactly 6%
of the total of all classes of the issued and outstanding shares of
the company's capital stock, for Class-A common stock options that
have been granted from 7/1/97 through to the date of each such
occurrence. Any Options granted to EXECUTIVE prior to 7/1/97 are
excluded from the computation of this new 1997 Stock Option Plan
granting arrangement.
21) Tax Incentive Bonus. The COMPANY agrees to pay EXECUTIVE, when due to
the IRS, however, no later than April 15th of each calendar year, a tax
incentive bonus equal to the personal income tax liability for the
EXECUTIVE, that may result from of all forms of Compensation paid to
the EXECUTIVE, [except the EXECUTIVE's Base Salary], including but not
limited to, Stock Options granted, Class-A Common Stock being granted
by the COMPANY, or of the exchange of Class-A COMPANY Capital Stock for
relief of debt owed by the COMPANY to the EXECUTIVE, when each such
event[s] are consummated. The only item of compensation that is not
covered by this tax incentive bonus is the EXECUTIVE's Base Salary
recited above in paragraph 3; All other forms of compensation,
benefits, and incentive bonuses shall be subject to an additional Tax
Incentive Bonus, immediately payable to the EXECUTIVE by the COMPANY.
When all such personal tax liability is accrued against the EXECUTIVE,
and due by the IRS.
22) Exchange of Compensation for Class-A Common Stock. At the sole option
of the EXECUTIVE any unpaid salary and/or benefits recited in the
employment contract, at the election of the executive, EXECUTIVE may
exchange any portion or all of any unpaid salary and/or any benefits
accrued to the benefit of the EXECUTIVE, for Class-A Common Stock at
the exchange rate equal to 110% of the then book value of the
COMPANY's Stock, as determined by most recent previously issued 6
month financial statement, either the unaudited June 30th or the
audited December 31st; After each such exchange [common stock for
unpaid and accrued salary and/or benefits] the COMPANY shall pay to
the executive no later than when due by the then IRS code, a tax
incentive bonus equal to any personal income tax liability for the
EXECUTIVE that may result, because of any said exchanges for relief of
debt owed by COMPANY to the EXECUTIVE, above mentioned.
All other terms and conditions of the original EXECUTIVE Employment agreement of
June 11, 1992, are in full force and effect as if fully restate herein at
length, and as attached hereto for reference.
IN WITNESS WHEREOF, this Agreement has been duly signed by the EXECUTIVE and on
behalf of the COMPANY on the day and year first above written.
As to the "COMPANY"
Floyd D. Harper, Vice President
Southern Security Bank Corporation
As to the "EXECUTIVE"
Philip C. Modder
AMENDMENT #1 TO
EXECUTIVE EMPLOYMENT AGREEMENT
OF
JAMES LAURENCE WILSON
AMENDMENT #1 to the EXECUTIVE EMPLOYMENT AGREEMENT effective this 30th day
of June, 1997, by and between SOUTHERN SECURITY BANK CORPORATION, a Florida
corporation, having its principal place of business at 3475 Sheridan Street,
Post Office Box 6699, Hollywood, Florida 33021 (hereinafter the "COMPANY"), and
JAMES LAURENCE WILSON, whose address is: Post Office Box 520, Boca Raton,
Florida 33429-0520 (hereinafter the "EXECUTIVE"). This amendment and
effectiveness thereof is subject the approval of the Federal Reserve Bank and
other requisite Regulatory Approval.
For the mutual covenants hereinafter set forth and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the COMPANY
agrees to employ the EXECUTIVE and the EXECUTIVE agrees to be employed by the
COMPANY on all the terms and conditions as set forth in that contract agreement
dated June 11, 1992, as if fully restated in this amendment, except for the
following modifications as set forth below; The item number below corresponds to
that item number if recited in the original contract agreement of 6/11/92; As a
matter of confirmation by the parties to the Executive Employment Agreement and
as now being Amended, said Agreement has been extended for an additional five
[5] year period due to the automatic renewal provisions contained therein, and
is subject again to automatic renewal on June 10, 2002.
3. Base Compensation. The COMPANY shall pay to the EXECUTIVE, and the
EXECUTIVE agrees to accept a minimum base salary compensation of $175,000
per year beginning on 7/1/97, paid in 24 installments per year [twice per
month] adjusted annually by the greater of 5%, or the CPI, consumer price
index.
5. Class-A Common Stock Options. The company will provide EXECUTIVE with
10-year term [10 years from the date of granting] Class-A Common Stock
Options with an Option Price established at 110% of the then per-share book
value when granted [a 10% premium], a quantity of Class-A Common Stock
Options in the amount of 6% the EXECUTIVE of the then total of all classes
of capital stock issued and outstanding, accruing and being credited to the
EXECUTIVE semi-annually on July 1st and January 1st of each year, the first
such granting to begin on 7/1/97, and occurring every 6 months thereafter
until at the end of the five year period a total of 6% of the then issued
and outstanding of all classes of stock have been granted thereto. These
Options are in addition to any previously granted options to EXECUTIVE
under the original Employment contract agreement. For example, on July 1,
1997, if the company had a total of 14,713,435 shares of all classes of
stock issued and outstanding [including those shares owned by EXECUTIVE],
then EXECUTIVE would each be granted 88,280 options [math:
14,714,435x{0.06/10}=88,280 options, rounded-off, no fractional options
granted] for Class-A common stock, expiring 10 years from 7/1/97, and with
an option price equaling to 110% of the book value per share
[$0.09617x1.10=$0.10579] of the company as of 6/30/97. In the event
additional shares of the company's capital stock are issued as a result
of any public or private offering[s] or due to Merger[s] and/or
acquisition[s] of the company with another company[s], EXECUTIVE will
immediately be granted in bulk, at the consummation of each such Merger,
Acquisition, Public/Private sale of the company's capital stock, additional
10-year options, priced at 110% of the then book value of the company's
stock, as determined by most recent previously issued 6 month financial
statement, either the unaudited June 30th or the audited December 31st,
such that EXECUTIVE will have Class-A common stock options granted
representing exactly 6% of the total of all classes of the issued and
outstanding shares of the company's capital stock, for Class-A common stock
options that have been granted from 7/1/97 through to the date of each such
occurrence. Any Options granted to EXECUTIVE prior to 7/1/97 are excluded
from the computation of this new 1997 Stock Option Plan granting
arrangement.ed from the computation of this new 1997
Stock Option Plan granting arrangement.
21) Tax Incentive Bonus. The COMPANY agrees to pay EXECUTIVE, when due to
the IRS, however, no later than April 15th of each calendar year, a
tax incentive bonus equal; to the personal income tax liability for
the EXECUTIVE, that may result from of all forms of Compensation paid
to the EXECUTIVE, [except the EXECUTIVE's Base Salary], including but
not limited to, Stock Options granted, Class-A Common Stock being
granted by the COMPANY, or of the exchange of Class-A COMPANY Capital
Stock for relief of debt owed by the COMPANY to the EXECUTIVE, when
each such event[s] are consummated. The only item of compensation that
is not covered by this tax incentive bonus is the EXECUTIVE's Base
Salary recited above in paragraph 3; All other forms of compensation,
benefits, and incentive bonuses shall be subject to an additional Tax
Incentive Bonus, immediately payable to the EXECUTIVE by the COMPANY,
when all such personal tax liability is accrued against the EXECUTIVE,
and due by the IRS.
22) Exchange of Compensation for Class-A Common Stock. At the sole option
of the EXECUTIVE any unpaid salary and/or benefits recited in the
employment contract, at the election of the executive, EXECUTIVE may
exchange any portion or all of any unpaid salary and/or benefits
accrued to the benefit of the EXECUTIVE, for Class-A Common Stock at
the exchange rate equal to 100% of the then book value of the
COMPANY's Stock, as determined by most recent previously issued 6
month financial statement, either the unaudited June 30th or the
audited December 31st; After each such exchange [common stock for
unpaid and accrued salary and/or benefits] the COMPANY shall pay to
the executive no later than when due by the then IRS code, a tax
incentive bonus equal to any personal income tax liability for the
EXECUTIVE that may result, because of any said exchanges for relief of
debt owed by COMPANY to the EXECUTIVE, above mentioned.
All other terms and conditions of the original EXECUTIVE Employment agreement of
June 11, 1992 are in full force and effect as if full restated herein at length,
and as attached hereto for reference.
IN WITNESS WHEREOF, this Agreement has been duly signed by the EXECUTIVE and on
behalf of the COMPANY on the day and year first above written.
As to the "COMPANY"
By s/ Floyd D. Harper
Floyd D. Harper, Vice President
Southern Security Bank Corporation
As to the "EXECUTIVE"
James L. Wilson
By
James L. Wilson
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT
OF
JAMES LAURENCE WILSON
AGREEMENT effective this 11th day of June, 1992, by and between
SOUTHERN SECURITY BANK CORPORATION, a Florida corporation, having its principal
place of business at 805 East Hillsboro Boulevard, Suite 102, Post Office Box
1064, Deerfield Beach, Florida 33441 (hereinafter the "COMPANY"), and JAMES
LAURENCE WILSON, whose address is: Post Office Box 520, Boca Raton, Florida
33429-0520 (hereinafter the "EXECUTIVE").
For the mutual covenants hereinafter set forth and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the COMPANY
agrees to employ the EXECUTIVE and the EXECUTIVE agrees to be employed by the
COMPANY on the following terms and conditions:
1. Term.
The term of this Executive Employment Agreement (hereinafter the
"Agreement") shall be for a period of five (5) years commencing on June
11, 1992, (the "Commencement Date") and ending on the fifth (5th)
anniversary of the Commencement Date, to-wit, June 11, 1997. Any
renewal of this Agreement shall be negotiated, reduced to writing, and
executed by the parties hereto no less than one (1) year prior to the
expiration of this Agreement. If at least six (6) months prior to the
expiration of this Agreement the parties have failed to agree upon the
renewal terms of this Agreement and the COMPANY has not delivered
written notice to the EXECUTIVE of the COMPANY's intent to terminate
this Agreement on the expiration thereof, this Agreement shall
automatically be extended for an additional five (5) year period.
2. Employment Duties.
The EXECUTIVE shall devote his efforts, skills, attention, and such
time as he deems necessary, exclusively to the business and affairs of
the COMPANY and shall serve the COMPANY faithfully and competently and
shall at all times act in the COMPANY's best interest. The EXECUTIVE
shall serve as the COMPANY's President, Senior Loan Officer, and Chief
Operating Officer, all under the direction of the COMPANY's Chairman
and Chief Executive Officer. In addition, the EXECUTIVE shall serve on
the COMPANY's Board of Directors. EXECUTIVE shall manage all aspects of
the activities and functions of the COMPANY and its affiliate banking
companies and subsidiaries under the supervision of the Chief Executive
Officer. Such management responsibilities shall include:
(a) Planning, implementation, and control of present and future
organizational objectives.
(b) Preparation and/or supervision of the preparation of the
fiscal budgeting for the COMPANY.
(c) Review of the fiscal budgeting and planning for the COMPANY's
affiliates and subsidiaries.
(d) Managerial support and assistance to the COMPANY's affiliates
and subsidiaries.
(e) Managerial support and formulation of policies for the COMPANY
and the COMPANY's affiliates and subsidiaries regarding the
investment and loan portfolios thereof including serving as
Chairman of the COMPANY's loan committee or committees and,
where necessary - as voting member of the COMPANY's asset,
liability, management, and ALCO committees.
(f) Solicitation, recruitment, and procurement of financial
institutions as potential candidates for investment,
acquisition, or merger by or with the COMPANY.
(g) Negotiation of letters of intent, stock purchase agreements,
and/or merger agreements between the COMPANY and financial
institutions for investment, acquisition, and/or merger by or
with the COMPANY.
(h) Supervision and coordination of the examination of the assets,
liabilities, and capital accounts of financial institutions
for investment, acquisition, and/or merger by or with the
COMPANY.
(i) Supervision and coordination of the pre-closing, closing, and
post-closing activities for acquisition of financial
institutions by the COMPANY.
(j) Supervision, performance, and/or coordination of regulatory
affairs with the Federal Reserve Bank, the Florida
Department of Banking and Finance, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the Securities Exchange Commission, and other
governmental agencies regarding the ongoing operations of
the COMPANY and the COMPANY's subsidiaries and affiliates,
including supervision and coordination of applications to
said governmental agencies for pre-closing, closing, and
post- closing activities for acquisition of financial
institutions by the COMPANY.
The EXECUTIVE's sole place of employment with the COMPANY shall be
located in Palm Beach County, Florida.
3. Base Compensation.
The COMPANY shall pay to the EXECUTIVE, and the EXECUTIVE agrees to
accept, minimum base compensation of:
(a) One Hundred Twenty Thousand Dollars ($120,000) per year for
the initial year of this Agreement, which base compensation
shall increase to
(b) One Hundred Twenty-nine Thousand Six Hundred Dollars
($129,600) per year on the first anniversary of the
Commencement Date, to
(c) One Hundred Thirty-nine Thousand Nine Hundred Dollars
($139,900) per year on the second anniversary of the
Commencement Date, to
(d) One Hundred Fifty-one Thousand One Hundred Dollars
($151,100) per year on the third anniversary of the
Commencement Date, to
(e) One Hundred Sixty-three Thousand Three Hundred Dollars
($163,300) per year on the fourth anniversary of the
Commencement Date.
(f) In the event the employment is extended for any period as
provided for in this Agreement, the salary shall increase
for each subsequent year at a rate equal to the greater of:
108% of the previous years' salary or the EXECUTIVE's last
years' salary increased by the Consumer Price Index, CPI,
rounded up to the nearest $100. For example, on the fifth
anniversary of the Commencement Date under this Agreement,
the EXECUTIVE's salary shall be equal to the greater of:
$163,300 times 1.08 which equals $176,400 or the CPI
increase (assuming the CPI for this period is 10%), then the
next years' salary would increase to $179,700 it being the
greater amount.
4. Additional Compensation.
In addition to the base compensation set forth in Paragraph 3, above,
the COMPANY shall pay the EXECUTIVE the following as additional
compensation.
(a) During the term of this Agreement and any renewal term thereof, the
EXECUTIVE shall receive, for each fiscal year of the COMPANY (or part
thereof as to fiscal year 1992), a salary incentive equal to 2.5% of
the pre-tax net income of the COMPANY, which bonus incentive shall be
paid in cash to the EXECUTIVE within fifteen (15) days after receipt by
the COMPANY of the COMPANY's audited financial statements for the
fiscal year. If this Agreement is terminated prior to the end of the
fiscal year, the incentive bonus due to the EXECUTIVE shall be prorated
through the last day of EXECUTIVE's employment during such fiscal year.
For purposes of calculating the bonus incentive, pre-tax net income
shall be based upon the COMPANY's pre-tax net income and the
EXECUTIVE's bonus incentive by the COMPANY's independent certified
public accountant shall be conclusive and binding upon the COMPANY and
the EXECUTIVE. If the EXECUTIVE is required to pay any income taxes
attributable to the foregoing, the COMPANY shall pay said taxes, when
due.
(b) In addition, in the event the COMPANY acquires all, or a portion
of, or merges with an existing financial institution, the EXECUTIVE
shall receive an incentive bonus equal to 0.20% of the gross assets for
each such transaction, which bonus shall be payable upon the closing of
such acquisition. For example, is such a transaction represented $50
million in assets, the bonus would be equal to $100,000. ($50,000,000 x
0.0020= $100,000). If the EXECUTIVE is required to pay any income taxes
attributable to the foregoing, the COMPANY shall pay said taxes, when
due.
5. Stock Options.
(a) As of June 11, 1992, the COMPANY hereby grants to EXECUTIVE
stock options to purchase the greater of One Hundred
Fifty-six Thousand ($156,000) shares of the COMPANY's common
stock, or 3.0% of the outstanding shares issued pursuant to
the Private Offering Memorandum dated June 11, 1992, or any
future offerings. Public or Private, at a price equal to
110% of the Book Value per share, on the date said Stock
Options are granted. For example, let us assume that the net
worth of the Company was equal to $1 Million, and the then
total number shares outstanding was 10 Million shares, on
the date of granting of said options, then the Option Price
would be equal to 11(cent)per share;
($1,000,000/10,000,000)x110% = $0.11/share. Options for the
greater of Thirty-one Thousand Two Hundred (31,200) shares
or 0.60% of the then total outstanding shares shall vest and
become exercisable on each of the four annual anniversaries
following the Commencement Date. In the event any additional
or future Private or Public offerings are consummated,
EXECUTIVE shall be immediately entitled to additional stock
options in amounts and equivalent percentages as recited in
this paragraph at the price computed in the above example,
pursuant to any future Public or Private offerings; the
EXECUTIVE shall have been granted stock options totaling
least 3.0% of the total outstanding shares. The EXECUTIVE
may exercise any such stock options at or prior to ten years
(10 years) following the granting of any such stock options
at EXECUTIVE's sole discretion, whether or not the EXECUTIVE
is employed by the COMPANY. This Stock Option provision does
not require execution of any other agreement; the granting
of the options recited above shall be automatic, and does
not require annual "granting" letters to the EXECUTIVE by
the COMPANY.
(b) If permitted by applicable law, the COMPANY shall loan to
EXECUTIVE such amounts as may be required in order for
EXECUTIVE to exercise the stock options provided in this
Paragraph 5 the amount of which loan shall not be in excess of
the exercise price thereof. The terms of any such loan shall
include a period of repayment of not less than thirty (30)
months and an annual interest rate not in excess of the Prime
Rate plus 1$, subject, however, to applicable state and
federal law and regulations.
(c) If the Agreement or any renewal thereof terminates for any
reason, all stock options provided in this Paragraph 5 shall
fully vest and become exercisable as of the date of
termination of this Agreement and the EXECUTIVE shall have ten
(10) years from the date of such termination to exercise such
stock options.
(d) If any stock option provided in this Paragraph 5 does not
qualify as an "incentive stock option" as defined in Section
422 of the Internal Revenue Code of 1986, as amended, the
COMPANY shall reimburse the EXECUTIVE for the amount of any
taxes which the EXECUTIVE is required to pay by reason
thereof, which payment shall be made within five (5) days
notice by EXECUTIVE to COMPANY, when such EXECUTIVE's tax
payment is due.
6. Executive Benefits.
The COMPANY shall provide EXECUTIVE with the following benefits:
(a) At the COMPANY's sole expense, comprehensive medical and
dental insurance for the EXECUTIVE, his spouse, and his
children.
(b) Disability insurance as follows:
(1) For the first year of the EXECUTIVE's disability,
disability benefits payable to the EXECUTIVE in an
amount equal to the greater of One Hundred Thousand
Dollars ($100,000) or sixty (60%) percent of the
EXECUTIVE's total annual compensation (including base
compensation, additional compensation, and any other
benefit provided to the EXECUTIVE under this
Agreement which is deemed income to the EXECUTIVE)
based upon the twelve (12) month period ending on the
date the EXECUTIVE became disabled;
(2) For each year disability payments are payable to the
EXECUTIVE after the initial year, an amount equal to
the amount payable in the initial year, plus cost of
living increases equal to the lesser of the CPI or
twelve (12%) percent;
(3) The disability benefits shall be payable to the
EXECUTIVE until he reaches the age of sixty-five
(65);
(4) The disability benefits shall be paid to the
EXECUTIVE on a monthly basis;
(5) The policy of disability insurance shall be owned by
the EXECUTIVE and the EXECUTIVE shall pay the
premiums therefor for which the COMPANY shall
reimburse the EXECUTIVE for said taxes.
(c) A whole life annuity insurance policy in the face amount of
One Million Seven Hundred Fifty Thousand Dollars
($1,750,000) wherein the EXECUTIVE is the owner of said
policy. The COMPANY shall purchase said policy within ten
(10) days of the date of execution of this Agreement and
shall maintain and pay the premiums for said policy for a
period of eight (8) years thereafter regardless of whether
this Agreement is terminated prior thereto. Any income taxes
which the EXECUTIVE is required to pay as a result of the
COMPANY's payment of the premiums on said policy shall be
reimbursed to the EXECUTIVE by the COMPANY. The EXECUTIVE
shall have the right to designate the beneficiaries of said
policy.
(d) The EXECUTIVE shall permit the COMPANY to purchase and
maintain at the COMPANY's sole expense term life insurance
coverage on the EXECUTIVE's life in an amount not in excess
of One Million Dollars ($1,000,000) and the COMPANY shall be
the beneficiary of said policy.
(e) Membership for the EXECUTIVE and his family in two (2)
country clubs of EXECUTIVE's choice including, but limited
to, the Boca Raton Hotel and Country Club. The COMPANY shall
pay the EXECUTIVE's initiation fees, annual dues, and usage
charges for said memberships, which memberships shall be in
the name of the EXECUTIVE and his family. Upon termination
of this Agreement, said memberships shall be retained by and
transferred to the EXECUTIVE. If the EXECUTIVE is required
to pay income tax attributable to these memberships, the
COMPANY shall reimburse the EXECUTIVE for said income taxes.
(f) An automobile allowance for the term of this Agreement of
Nine Hundred Dollars ($900) per month, plus annual increases
thereof equal to the increases in the CPI, plus sales taxes,
insurance, tag and registration fees, maintenance and
servicing expenses, costs of tires and accessories, fuel and
lubrication costs, and mobile cellular telephone expense,
usage tolls and costs. If the EXECUTIVE is required to pay
any income taxes attributable to the foregoing, the COMPANY
shall reimburse the EXECUTIVE for said taxes, when due.
(g) If this Agreement is terminated for any reason other than
the EXECUTIVE's death or permanent disability, the COMPANY
shall continue to pay all premiums on the EXECUTIVE's
comprehensive medical and dental insurance, and disability
insurance for a period of two (2) years following the date
of termination.
(h) The COMPANY shall reimburse the EXECUTIVE for expenditures
made by the EXECUTIVE on behalf of the COMPANY (i.e.,
business expenses).
7. Vacation.
EXECUTIVE shall be entitled to a paid vacation for four (4) calendar
weeks per year during the employment period. Such vacation time
allowance shall not cumulatively accrue, and any unused vacation time
for each year of the employment period shall be not be forfeited by
EXECUTIVE if any such unused vacation days are not used during such
year, may be used in any subsequent year[s] at the EXECUTIVE's
discretion. EXECUTIVE shall also be entitled to all paid holidays made
generally available by the COMPANY.
8. Death or Disability.
If, while the EXECUTIVE is employed by the COMPANY, he dies or suffers
a physical or mental disability which prevents him, for a period of six
(6) consecutive months, from performing his employment duties under
this Agreement, his employment shall terminate effective the date of
death or the end of such six month period, as applicable. In the event
of such termination, the EXECUTIVE's base compensation and additional
compensation shall be continued for a period of twelve (12) months,
after such termination, and shall be paid to the EXECUTIVE if he is
alive, or to his personal representatives, if deceased, and shall be in
addition to any other compensation or benefits provided for in this
Agreement.
9. Change of Control.
(a) For the purposes of this Agreement, a "Change of Control"
shall be deemed to have taken if:
(1) any person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934 as
amended, becomes the owner or beneficial owner of the
COMPANY securities, after the date of this Agreement,
having twenty (20%) percent or more of the combined
voting power of the then outstanding securities of
the COMPANY that may be cast for the election of
directors of the COMPANY (other than as a result of
an issuance of securities initiated by the COMPANY,
or open market purchases approved by the Board, as
long as the majority of the Board approving the
purchases is the majority at the time the purchases
are made), or
(2) the persons who were the directors of the COMPANY
before such transactions shall cease to constitute a
majority of the Board of the COMPANY, or any
successor to the COMPANY, as the direct or indirect
result of, or in connection with, any cash tender or
change offer, merger or other business combination,
sale of assets or contested election or any
combination of the foregoing transactions.
(b) The EXECUTIVE may at any time after the date on which the
change of control occurs terminate this Agreement upon the
giving of at least sixty (60) days written notice and the
COMPANY shall pay the EXECUTIVE a lump sum amount equal to
200% of the EXECUTIVE's total annual compensation (including
base compensation, additional compensation, and any other
benefits provided under this Agreement which are deemed
taxable income to the EXECUTIVE) based upon the twelve (12)
month period ending on the effective date of the
termination, which payment shall be made within five (5)
days after the effective date of said termination.
10. Termination.
(a) The COMPANY may terminate this Agreement at any time for
cause. "Cause" shall mean an order of the FDIC, the Board of
Governors of the Federal Reserve System, the Florida
Department of Banking and Finance, or any other governmental
agency with lawful jurisdiction thereof, which prohibits the
EXECUTIVE from participation in the conduct of the affairs
of the COMPANY, which order has become final after all
judicial and/or administrative appeals have been exhausted.
If the COMPANY elects to terminate the EXECUTIVE for cause
as herein provided, the effective date of such termination
shall be the date on which said order becomes final as
defined herein and the COMPANY shall be obligated to pay to
EXECUTIVE all compensation he is entitled to under the terms
of this Agreement.
(b) The EXECUTIVE may terminate this Agreement or any renewal
thereof at any time upon the giving of sixty (60) days
written notice to the COMPANY and, upon the effective date
of such termination, the COMPANY shall pay the EXECUTIVE the
lump sum payment described in Paragraph 9(b) of this
Agreement within five (5) days after the date of such
termination. In addition, the employee benefits provided to
the EXECUTIVE shall continue for the periods of time as set
forth in this Agreement.
11. Restrictive Covenant.
(a) During the time the EXECUTIVE is employed by the COMPANY
under this Agreement and for a six (6) month period after
EXECUTIVE's employment with the COMPANY terminates, the
EXECUTIVE shall not, directly or indirectly, be an owner,
partner, joint venturer, employee, officer, director, or
shareholder (unless as owner of no more than ten [10%]
percent of the issued and outstanding capital stock of such
entity or unless such stock is traded on a major securities
exchange or otherwise as a purely passive shareholder), of
any financial institution, which is in competition with the
COMPANY and which operates anywhere in Palm Beach County,
Florida.
(b) Notwithstanding any provision in Paragraph 11(a), above, or
any other provision of this Agreement to the contrary, the
EXECUTIVE shall be permitted to:
(1) Invest and/or participate in the management of
companies or other entities which are not in
competition with the COMPANY,
(2) Engage in real estate transactions and earn
commissions thereby as a real estate broker, provided
that all such transactions are fully disclosed to the
COMPANY's Chief Executive Officer or the Board of
Directors;
(3) To serve on the boards of directors, serve as a
trustee, or be a member of audit committees, of other
entities where the EXECUTIVE may receive director
fees, consulting fees, or advisory fees therefrom,
provided that such service does not materially
interfere with the EXECUTIVE's employment duties as
set forth in this Agreement.
12. Severability.
Invalidity or unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other provisions.
13. Terminology.
All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders;
the singular shall include the plural and vice versa. Titles of
Paragraphs are for convenience only, and neither limit nor amplify the
provisions of the Agreement itself.
14. Governing Law.
This Agreement shall be governed and construed in accordance with the
laws of the State of Florida.
15. Entire Agreement.
This Agreement contains the entire understanding between parties and
may not be changed or modified except by an Agreement in writing signed
by all the parties.
16. Notice.
Any Notice required or permitted to be delivered hereunder shall be
deemed to be delivered when deposited in the United States mail,
postage prepaid, registered or certified mail, return receipt
requested, addressed to the parties at the addresses first stated
herein, or to such other address as either party hereto shall from time
to time designate to the other party by notice in writing as provided
herein.
17. Other Instruments.
The parties hereby covenant and agree that they will execute such other
and further instruments and documents as are or may become necessary or
convenient to effectuate and carry out the terms of this Agreement.
18. Counterparts.
This Agreement may be executed in any number of counterparts and each
such counterpart shall for all purposes be deemed an original.
19. Assignability.
This Agreement shall not be assigned by either party, except with the
written consent of the other.
20. Attorneys' Fees.
In any litigation arising out of this Agreement, the prevailing party
shall be entitled to all costs and expenses, including reasonable
attorneys' fees, and all costs and expenses including reasonable
attorneys' fees for appellate proceedings. Venue for such litigation
shall be Palm Beach County, Florida.
IN WITNESS WHEREOF, this Agreement has been duly signed by the EXECUTIVE and on
behalf of the COMPANY on the day and year first above written.
As to the "COMPANY"
By
Philip C. Modder, Chief Executive Officer
and Chairman of the Board
As to the "EXECUTIVE"
James L. Wilson
By
James L. Wilson
SOUTHERN SECURITY BANK CORPORATION
BOARD OF DIRECTORS MEETING : June 6, 1997
The meeting was called to order by Chairman Modder for Southern Security Bank
Corp. Present were Philip C. Modder, Chairman; James L. Wilson, President;
Timothy S. Butler, Director; Eugene Strasser, Director. R.D. Butler, Jr.,
Director and Harold C. Friend, Director, contacted via telephone. After lengthy
discussions regarding the renewal of the employment agreements for Philip C.
Modder and James L. Wilson, it was by unanimous vote of the Directors voting
[Modder and Wilson not voting due to conflict of interest], it is resolved that,
subject to Federal Reserve Bank regulatory approval:
1) A $357,072 portion of the $570,037 funds owed Philip C. Modder and James L.
Wilson, "Executives" (the portion equiting to $178,536 owed each Modder and
Wilson in back wages, unpaid benefits, and $150,000 by two notes held thereby)
will be exchanged for shares of Class-A common stock computed at a premium of
110% of book value per share of the company as of 6/30/97. This represents
approximately 1,687,645 shares each for Modder and Wilson, 3,375,290 shares in
total. Upon consummation of this exchange Modder remains due the $212,965
portion of the $391,501 in accrued and unpaid wages and benefits owed Modder,
through 6/30/97. This will not be documented as a note; however, this fact may
be contained in a footnote in the financial statements of the company.
2) Modder and Wilson each agree to modify their employment contracts held with
the Company, with regard to the salary obligation to $175,000 each, per year
beginning on 7/1/97, adjusted annually by the greater of 5% or the CPI, consumer
price index; however, any unpaid salary and/or benefits recited in these
employment contracts, at the election of each executive, may exchange any
portion or all of any unpaid salary and/or benefits acccrued to the benefit of
the executive, for Class-A Common Stock at the exchange rate of 100% of the then
book value of the Company's Stock, as determined by most recent previously
issued 6 month financial statement, either the unaudited June 30th or the
audited December 31st; After each such exchange [common stock for unpaid and
accrued salary and/or benefits] the Company shall pay to each executive no later
than when due by the then IRS code, a tax incentive bonus equal to any personal
income tax liability for each Modder and Wilson, that may result, because of any
said exchanges for relief of debt owed by the Company to Modder and/or Wilson,
that may result, because of any said exchanges for relief of debt owed by
Company to Modder and/or Wilson, above mentioned.
3) In exchange for the reduced salary and reduced percentage of increases, and
as an incentive for Modder and Wilson as key company Executivies, the Company
will provide Modder and Wilson with 10-year term [10 years from the date of
granting] Class-A Common Stock Options with an Option Price established at 110%
of the then per-share book value when granted [a 10% premium], a quantity of
Class-A Common Stock Options in the amount of 6% for Modder and 6% for Wilson of
the then total of all classes of capital stock issued and outstanding, accruing
and being credited to each Modder and Wilson, semi-annually on July 1st and
January 1st of each year, the first such granting to begin on 7/1/97, and
occurring every 6 months thereafter until at the end of the five year period a
total of 12% of the then issued and outstanding of all classes of stock have
been granted thereto, 6% each. These Options are in addition to any previously
granted options to Modder and Wilson. For example, on July 1, 1997, if the
Company had a total of 14,713,435 shares of all classes of stock issued and
outstanding [including those shares owned by Modder and Wilson], then Modder and
Wilson would each be granted 88,280 options [math; 14,713,435 x {0.06/10}=88,280
options, rounded off, no fractional options granted] for Class-A common stock,
expiring 10 years from 7/1/97, and with an option price equating to 110% of the
book value per share [$0.09617x1.10=$0.10579] of the company as of 6/30/97. In
the event additional shares of the company's capital stock are issued as a
result of any public or private offering[s] or due to Merger[s] and/or
acquisition[s] of the company with another company[s], Modder and Wilson will
immediately each be granted in bulk, at the consummation of each such Merger,
Acquisition, Public/Private sale of the company's capital stock, additional
10-year options, priced at 110% of the then book value of the company's stock,
as determined by most recent previously issued 6 month financial statement,
either the unaudited June 30th or the audited December 31st, such that Modder
and Wilson will each have Class-A common stock options granted representing
exactly 6% for Modder and 6% for Wilson, of the total of all classes of the
issued and outstanding shares of the company's capital stock, for Class-A common
stock options that have been granted from 7/1/97 through to the date of each
such occurrence. Any Options granted to Modder and Wilson prior to 7/1/97 are
excluded from the computation of this new 1997 Stock Option Plan granting
arrangement.
4) The Company agrees to pay to Modder and Wilson, when due to the IRS, however,
no later than April 15th of each calendar year, a tax incentive bonus equal to
the personal income tax liability for each Modder and Wilson, that may result,
because of any Stock Options granted or Class-A common stock being granted, or
of the exchange of Class-A company capital stock for relief of debt owed by the
Company to the executives, above mentioned, when each such event[s] are
consummated.
SOUTHERN SECURITY BANK CORPORATION
PHILIP C. MODDER, CHAIRMAN & CEO
s/ Philip C. Modder
FEDERAL RESERVE BANK OF ATLANTA
Marion P. Rivers, III
Assistant Vice President
April 13, 1995
The Board of Directors
Southern Security Bank Corporation, Inc.
Post Office Box 520
Boca Raton, Florida 33429-0520
Re: Written Agreement dated April 13, 1995
Dear Board Members:
This will acknowledge receipt of two signed copies of the Written Agreement
and the cross-referenced side letter. The Federal Reserve Bank executed this
document on April 13, 1995. The corporation's record copy of the Agreement is
enclosed. Also attached is our executed draft of the accompanying side letter
clarifying our mutual understanding of certain monthly operating expenses.
The Agreement's April 13, 1995 "as of date" established the start date upon
which various reporting deadlines will be based. To clarify when the Reserve
Bank expects receipt of individual provision responses, the following grid
recaps the established deadlines dates:
- - Paragraph 2 - Capital Adequacy: the 90-day deadline is July 12, 1995;
- - Paragraph 8 - Tax Policies/Procedures: the 90-day deadline is July 12, 1995;
Management may of course submit responses before these dates if you wish.
The quarterly reports required by paragraph 11, detailing compliance with all
Agreement requirements, will commence with the second quarter of 1995; this
first report is due no later than July 30, 1995. Compliance is expected to
commence immediately for those provisions without a response due date.
We appreciate your cooperation and look forward to reviewing your initial
submissions. If you have any questions regarding this action, please contact me
or Examiner Robert Schaffel at 404/589-7220.
Very truly yours,
Marion P. Rivers, III
Enclosures
cc: Cheryl Mueller, BOG
State of Florida
104 Marietta Street, N.W. Atlanta, Georgia 30303-2713 404/585-7206
<PAGE>
UNITED STATES OF AMERICA
BEFORE THE BOARD GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.
- -------------------------------------
Written Agreement By and Among
SOUTHERN SECURITY BANK CORPORATION, INC.
Deerfield Beach, Florida
PHILIP C. MODDER
JAMES WILSON
Institution-Affiliated Parties of DOCKET NOS. 95-004-WA/RB-HC
Southern Security Bank Corporation, Inc. 95-004-WA/RB-I1
Deerfield Beach, Florida 95-004-WA/RB-12
and
FEDERAL RESERVE BANK OF ATLANTA
Atlanta, Georgia
- ----------------------------------------
WHEREAS, in order to maintain the financial soundness of Southern Security
Bank Corporation, Deerfield Beach, Florida ("Southern Security"), a registered
bank holding company, the Federal Reserve Bank of Atlanta (the "Reserve Bank"),
Southern Security, and Philip C. Modder ("Modder"), chairman of the board and a
director, and James Wilson ("Wilson"), president and a director,
institution-affiliated parties of Southern Security, have mutually agreed to
enter into this Written Agreement (the "Agreement");
WHEREAS, as of the date of this Agreement, Southern Security owns and
controls the Southern Security Bank, Hollywood, Florida (the "Bank");
WHEREAS, this Agreement is being executed in accordance with the Rules
Regarding Delegation of Authority of the Board of Directors of the Federal
Reserve System (the "Board of Governors"), specifically 12 C.F.R. 265-11(a)(15),
and the Reserve Bank has received the prior approval of the Director of the
Division of Banking Supervision and Regulation (the "Director") and the General
Counsel of the Board of Governors to enter into this Agreement with Southern
Security, Modder, and Wilson; and
WHEREAS, on March 23, 1995, the board of directors of Southern Security, at
a duly constituted meeting, adopted a resolution authorizing and directing
Philip C. Modder to enter into this Agreement on behalf of Southern Security and
consented to compliance with each and every provision of this Agreement by
Southern Security and its institution-affiliated parties, as defined in sections
3(u) and 8(b)(3) of the Federal Deposit Insurance Act, as amended (the "FDI
Act") 12 U.S.C. 1813(u) and 1818(b)(3)); and
WHEREAS, on April 5, 1995, Modder and Wilson, in their individual
capacities, consented to compliance with paragraphs 4(c), 5, and 14 through 18
of this Agreement;
NOW, THEREFORE, before the taking of any testimony or adjudication of or
finding on any issue of fact or law herein, and without this Agreement
constituting an admission of any allegation made or implied by the Board of
Governors, and for the purpose of settling this matter without further
proceedings, the Reserve Bank and Southern Security hereby agree as follows:
1. Dividends. Southern Security shall not declare or pay dividends without the
prior written approval of the Reserve Bank and the Director. Requests for
permission to pay a dividend shall be in writing and received 30 days prior to
the proposed declaration date. Such reqeusts shall, at a minimum, contain
sufficient documentation to demonstrate that the proposed dividend is in
compliance with the Board of Governors' dividend policy and is otherwise
consistent with the Board of Governors' Capital Adequacy Guidelines (12 C.F.R.
Part 225, App. A and D).
2. Capital Adequacy. Within 90 days of this Agreement, Southern Security shall
submit to the Reserve Bank an acceptable written plan to improve and,
thereafter, maintain an adequate capital position at the Bank. The plan shall,
at a minimum, address and consider:
a. The current and future capital requirements of the Bank, including
the maintenance of adequate risk-based capital ratios and tier 1 leverage ratio
in accordance with the Capital Adequacy Guidelines of the Board of Governors (12
C.F.R. Part 208, App. A and B);
b. the Bank's continued compliance with the capital requirements contained
within paragraphs 2(a) and 2(b) of the Written Agreement dated March 17, 1992,
among the Reserve Bank, the State Comptroller and Banking Commissioner of the
State of Florida, and the Bank;
c. the volume of the Bank's adversely classified assets and the potential
for additional asset quality problems at the Bank;
d. requests by the Bank's federal or state regulators for an increase in
the Bank's capita;
e. the anticipated level of earnings of the Bank, with particular attention
to the Bank maintaining an adequate loan loss reserve;
f. the source and timing of additional funds that may be necessary to
achieve compliance with the capital plan developed and submitted pursuant to the
provisions of this paragraph; and
g. Southern Security's responsibility to act as a source of strength to the
Bank, and, in connection therewith, to use its asssets to provide whatever
capital support to the Bank as may be required by the Reserve Bank in a manner
consistent with the Board of Governors'; Policy Statement on the responsibility
of bank holding companies to act as a source of strength to their bank
subsidiaries, dated April 24, 1987.
3. Debt Restrictions.
a. Southern Security shall not, directly or indirectly, increase its
borrowings or incur any additional debt, including debt to stockholders, without
the prior written approval of the Reserve Bank.
b. Southern Security shall not, directly or indirectly, make any debt
service payments to any institution-affiliated party, or related interest
thereof, without the prior written approval of the Reserve Bank.
4. Insider Transactions.
a. Except as otherwise provided in the executive employment agreements with
Modder and Wilson, dated June 11, 1992, Southern Security shall not, directly or
indirectly, incrase the salaries of, or pay any bonuses or fees to, or make any
other type of form of payments, including, but not limited to, the reimbursement
of expenses or the payment of indebtedness, to or on behalf of any
institution\-affiliated party, or related interest thereof, of Southern Security
or the Bank without the prior written approval of the Reserve Bank.
b. Southern Security shall not, directly or indirectly, enter into,
participate or, in any other manner, engage in any financial transaction with
any institution-affiliated party or principal shareholder, or related interest
thereof, of Southern Security or the Bank without the prior written approval of
the Reserve Bank.
c. Except as otherwise provided by paragraph 4.a hereof, Modder and Wilson
shall not, directly or indirectly, in any manner engage in, enter into or
participate in any financial transaction with Southern Security without the
prior written approval of the Reserve Bank.
d. Any request for prior approval pursuant to this paragraph shall be
accompanied by documentation adequate to provide the Reserve Bank with the
details of each proposed payment or transaction, including a full description of
the proposal, the purpose(s) for the payment or transaction, the amounts
involved, the benefits to be derived by Southern Security or the Bank and such
other matters that may be pertinent to the proposed payment or transaction to
assist the Reserve Bank in its review of each proposal.
e. For the purposes of this Agreement, the terms:
(1) "Related interest" shall be defined as set forth in section
215.2(m) of Regulation O of the Board of Governors (12 C.F.R. 215.2(m));
(2) "financial transaction" shall include, but is not limited to: (A)
an extension of credit (as defined in section 215.3 of Regulation O of the Board
of Governors (12 C.F.R. 215(3)), (B) the transfer, sale or purchase of any
asset, (C) a contract or payment for services, (D) the payment of any Southern
Security debt to any shareholder or institution affiliated party of Southern
Security, the Bank, or any related interest thereof, or (B) the direct or
indirect payment by Southern Security of any obligation of any
institution-affiliated party or principal shareholder, or related interest
thereof, of southern Security or the Bank; and
(3) "principal shareholder" shall include any individual or company
(other than Souther Security) that directly or indirectly, or acting through or
in consent with one or more persons, owns, controls or has the power to vote
more than 10 percent of any class of voting securities or Southern Security of
the Bank.
5. Employment Contracts.
a. Southern Security and Modder and Wilson shall each not amend or modify
any current employment contract or agreement and shall not enter into any new
employment or consulting contract or agreement without providing at least 30
dfays advance written notice to the Reserve Bank.
b. The advance written notice required by this paragraph shall include
documentation adequate to provide the Reserve Bank with the details of each
proposed amended or new contract or agreement, including a full description of
the proposed contract or agreement, the name and qualifications of the person
providing the proposed services, the amounts involved, the benefits to be
derived by Southern Security, and such other matters that may be pertinent to
the proposal and assist the Reserve Bank in its review of each proposed amended
or new contract or agreement.
c. The Reserve Bank shall have the right to disapprove any proposed amended
or new employment or consulting contract or agreement. If the Reserve Bank
disapproves any proposed amendment or new employment or consulting contract or
agreement, Southern Security, Modder and Wilson, as the case may be, shall not
proceed with such proposal.
6. Required Approval of New Directors and Executive Officers.
During the term of this Agreement, or as otherwise required by law, southern
Security shall comply with the provisions of Section 32 of the FDI Act (U.S.C.
1831i) with respect to the appointment of any new directors or the hiring or
promotion of any senior executive officer.
7. Restriction on Intercorporate Transactions.
a. Southern Security shall not, directly or indirectly, enter into,
participate, or in any other manner engage in any transaction with the Bank
without the prior written approval of the Reserve Bank.
b. Any request for prior approval pursuant to this paragraph shall be
accompanied by documentation adequate to provide the Reserve Bank with the
details of each proposed transaction, including a full description of the
proposed transaction, the purpose(s) for the transaction, the amounts involved,
the benefits to be derived by Southern Security and the Bank, the proposed
transaction's compliance with all applicable laws and regulations, including
sections 23A and 23B of the Federal Reserve Act (12 U.S.C. 371c and 371c-1) and
such other matters that may be pertinent to the proposal and assist the Reserve
Bank in its review of each proposal.
c. For the purposes of this paragraph, the term "transaction" shall
include, but not be limited to the transfer, sale or purchase of any asset, the
direct or indirect payment of any expense or obligation of Souther Security, the
payment of a management or service fee or any nature, or any extension of
credit, including overdrafts.
8. Tax Policies and Procedures.
a. Within 90 days of this Agreement, Southern Security shall submit to the
Reserve Bank an acceptable proposed written tax allocation agreement between
Southern Security and the Bank and shall take such other actions as are
necessary to execute the tax allocation agreement with the Bank within 120 days
of this Agreement. The tax agreement shall address, at a minimum:
(1) The timing and method of estimating quarterly tax payments;
(2) the dispostion of any deferred tax liability;
(3) the computation and payment of any tax benefits;
(4) the allocation of the surtax exemption;
(5) any refund due the Bank on a separate entity basis, regardless of
the availability of a consolidated refund; and
(6) the Policy Statement on Intercorporate Tax Transactions issued by
the Board of Governors, dated September 25, 1978.
b. In no event shall the tax agreement required under this paragraph call
for the Bank to incur a greater liability because of its affiliation with
Southern Security than it would as a separate taxable entity.
c. Southern Security shall remit to the Bank, immediately upon receipt by
Southern Security; (1) any state or federal income tax refund, or similar refund
received by Southern Security that becomes due, owing or otherwise reimbursable
to the Bank; and (2) the reimbursement of any tax overpayment that is allocable
to the Bank, subject to the concurrence of the Reserve Bank.
d. Southern Security shall not use monies received from the Bank pursuant
to the written tax allocation agreement between Southern Security and the Bank,
for purposes other than the remittance of same to the Internal Revenue Service
and the State of Florida in accordance with such tax agreement, and shall, in
all other respects, fully comply with such tax agreement.
9. Sale of Equity Securities.
a. Southern Security shall provide the Reserve Bank with at least 30 days
advance written notice of the proposed sale or offering of any equity
securities.
b. The advance written notice required by this paragraph shall include all
prospectus, offering or private placement materials, as well as a fuall
description of the proposed uses of the funds raised by the securities' sale, an
opinion letter from an independent securities counsel stating that the materials
contain adequate disclosures and comply with the registration, reporting, and
anti-fraud provisions of the federal and state securities laws, and such other
matters that may be pertinent to assist the Reserve Bank in its review of the
proposed sale or offering.
10. Policy and Plan Approval. The plans and tax agreement required by paragraphs
2 and 8 hereof shall be submitted to the Reserve Bank for review and approval.
An acceptable plan and tax agreement shall be submitted to the Reserve Bank
within the required time periods. Southern Security shall submit the plan and
tax agreement to the Reserve Bank no later than 30 days prior to the expiration
of the applicable time periods. The Reserve Bank may comment on the plan and tax
agreement within 10 days of receipt. Southern Security shall provide the Reserve
Bank with revised plan and tax agreement as may be required, within 5 days of
receipt of written comments, if any. Within 10 days of receipt of the revised
plan and tax agreement, the Reserve Bank shall communicate in writing its
approval or disapproval. Southern Security shall adopt the approved plan within
10 days of approval by the Reserve Bank and the tax agreement as provided in
paragraph 8 hereof, and then shall fully comply with them. During the term of
this Agreement, the approved plan and tax agreement shall not be amended or
rescinded without the prior written approval of the Reserve Bank.
11. Quarterly Compliance Reports. Within 45 days after the end of each calendar
quarter (March 31, June 30, September 30, and December 31) following the date of
this Agreement, Southern Security shall furnish to the Reserve Bank written
progress reports detailing the form and manner of all actions taken to secure
compliance with this Agreement and the results thereof.
12. All communications regarding this Agreement shall be sent to:
(a) Mr. Marion P. Rivers, III
Assistant Vice President
Federal Reserve Bank of Atlanta
104 Marietta Street, N.W.
Atlanta, George 30303
(b) Mr. Philip C. Modder
Chairman
Southern Security Bank Corporation
Post Office Box 520
Boca Raton, Florida 33429-0520
(c) Mr. James Wilson
President
Southern Security Bank Corporation
Post Office Box 520
Boca Raton, Florida 33429-0520
13. The provisions of this Agreement shall be binding upon Southern Security all
of its institution-affiliated parties, in their capacities as such, as their
successors and assigns, and Modder and Wilson in their individual capacities.
14. The provisions of this Agreement shall remain effective and enforceable
until stayed, modified, terminated or suspended, in writing, by the Reserve
Bank.
15. Notwithstanding any provision of this Agreement to the contrary, the Reserve
Bank may, in its sole discretion, grant written extensions of time to the
Southern Security, Modder, and Wilson to comply with any provision of this
Agreement.
16. The provisions of this Agreement shall not bar, estop or otherwise prevent
the Board of Governors, the Reserve Bank or any federal or state agency or
department from taken any other action affecting Southern Security, the Bank or
any of its current or former instituion-affiliated parties thereof including,
but not limited to Modder and Wilson, and their successors or assigns.
17. This Agreement is a "written agreement" for the purposes of section 8 of the
FDI Act (12 U.S.C. 1818).
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the _____ day of April, 1995.
SOUTHERN SECURITY BANK CORPORATION FEDERAL RESERVE BANK OF ATLANTA
By: s/Philip C. Modder By: s/ Marion P. Rivers, III
- ---------------------- --------------------------
Marion P. Rivers, III
Title: Chairman & CEO Assistant Vice President
With respect to paragraphs 4(c), 5, and 14 through 18 hereof, in their
individual capacities.
s/ Philip C. Modder s/ James Wilson
- ----------------------------- --------------------------------
Philip C. Modder James Wilson
The undersigned directors of Southern Security each acknowledges having
read the foregoing Agreement and approves of the consent thereto by Southern
Security.
s/Timothy Butler s/Philip C. Modder
- ----------------------------- ---------------------------------
Timothy Butler Philip C. Modder
s/Eugene Strasser, M.D. s/James Wilson
- ----------------------------- ---------------------------------
Eugene Strasser, M.D. James Wilson
s/David Butler s/Harold Friend
- ----------------------------- ---------------------------------
David Butler Harold Friend
<PAGE>
UNITED STATES OF AMERICA
BEFORE THE BOARD GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.
- -------------------------------------
Written Agreement By and Among
FLORIDA FIRST INTERNATIONAL BANK
Hollywood, Florida
FEDERAL RESERVE BANK OF ATLANTA
Atlanta, Georgia DOCKET NO. 92-022-WA/RB-SM
and
STATE COMPTROLLER AND BANKING
COMMISSIONER OF THE STATE OF FLORIDA
Tallahassee, Florida
- ----------------------------------------
WHEREAS, in recognition of their common goal to restore and maintain the
financial soundness of the Florida First International Bank, Hollywood, Florida
(the "Bank"), a State chartered bank which is a member of the Federal Reserve
System, the Bank, the Federal Reserve Bank of Atlanta (the "Reserve Bank") and
the State Comptroller and Banking Commissioner of the State of Florida (the
"Comptroller") have mutually agreed to enter into this Written Agreement (the
"Agreement"), which replaces the prior Written Agreement, effective January 9,
1989;
WHEREAS, this Agreement is being executed in accordance with the Rules
Regarding Delegation of Authority of the Board of Governors of the Federal
Reserve System (the "Board of Governors"), specifically 12 CFR 265.11(a)(15),
and the Reserve Bank has received the prior approval of the Director of the
Division of Banking Supervision and Regulation (the "Director") and the General
Counsel of the Board of Governors to enter into this Agreement with the Bank;
and
WHEREAS, on February 27, 1992, the board of directors of the Bank, at a
duly constituted meeting adopted a resolution authorizing and directing
President, George Jordan to enter into this Agreement on behalf of the Bank and
consented to compliance by the Bank and its institution-affiliated parties, as
defined by Section 3(u) of the Federal Deposit Insurance Act, as amended (12
U.S.C. 1813(u)) (the "FDI Act"), with each and every provision of this
Agreement.
NOW, THEREFORE, before the taking of any testimony or adjudication of or
finding on any issue of fact or law herein, and without this Agreement
constituting an admission of any allegation made or implied by the Board of
Governors or the Comptroller, the Bank, the Reserve Bank, and the Comptroller
agree as follows:
1. The Bank shall not declare or pay any dividends without the prior
written approval of the Reserve Bank, the Comptroller, and the Director.
2. (a) Within 60 days of this Agreement, the Bank shall submit to the
Reserve Bank and the Comptroller a written plan to maintain an adequate capital
position. The plan shall, at a minimum, address and consider (1) the Bank's
current and future capital requirements, including the maintenance of an
adequate risk-based capital ratio and tier 1 leverage ratio in conformity with
the Capital Adequacy Guidelines of the Board of Governors (12 C.F.R. Part 208,
App. A and B), (2) the volume of the Bank's adversely classified assets, (3) the
Bank's anticipated level of retained earnings, and (4) the source and timing of
additional funds to fulfill the future capital and the loan loss reserve
requirements set forth in this Agreement.
(b) Notwithstanding the provisions of paragraph 2(a) hereof, in the
event that the Bank's tier 1 leverage ratio falls below 6.25 percent, the Bank,
shall within 5 days of such event, notify the Reserve Bank and the Comptroller
about the capital deficiency and shall submit a written statement detailing the
steps that will be taken by the Bank to increase the Bank's tier 1 leverage
ratio above 6.25 percent within 90 days of such event.
3. (a) The board of directors shall take all actions as are necessary to
ensure the Bank's substantial compliance with its established written
asset/liability management policies and procedures.
(b) The Asset/Liability Committee (the "ALCO") of the bank shall, at
all times, be comprised of at least two outside directors. The ALCO shall have
the responsibility for monitoring compliance with the Bank's asset/liability
policies and procedures, and shall review, on a monthly basis, all decision made
by the Bank's management with regard to such policies and procedures, paying
particular attention to whether each decision was made in accordance with the
policies and procedures. Any exceptions to the policies and procedures shall be
documented by the ALCO as to the reason for the excepting and the continuity of
the exception with the Bank's overall goals and strategies and shall be approved
by the majority of the ALCO members.
4. (a) A majority of the Bank's Loan Committee shall, at all times, be
comprised of outside directors, who are not executive officers of the Bank. The
prior approval of the Loan Committee shall be required for any extension of
credit made by the Bank(1) that in the aggregate will exceed $100,000 to any
borower, including any related interest(s) of the borrower or (2) to any
institution-affiliated party of the Bank, including any related interest(s) of
such borrower. The Bank's Loan Committee shall have the responsibility for
monitoring compliance with the Bank's written loan policies and procedures and
shall review, on a monthly basis, all loans made by the Bank and the activities
of all personnel of the Bank involved in its lending operations. At each meeting
of the Loan Committee, the Committee shall review the current status of all
loans in excess of $50,000 that are in default as to principal or interest for
30 days or more as of the date of the board meeting, that are adversely
classified or listed for special mention by State or Federal examiners in the
Bank's latest report of examination or that are to an institution-affiliated
party of the Bank. The Committee shall specifically address whether the
extension of credit was made in accordance with the Bank's written loan policies
and procedures and whether the collection actions undertaken by Bank management
to reduce the volume of past due loans were in full compliance with the Bank's
collection procedures as set forth in its written loan policies and procedures.
The Loan Committee shall maintain accurate written minutes of its meetings,
which shall be available for subsequent supervisory review.
(b) At least once every 30 days from the date of this Agreement, but
not less than 5 days before a board of directors' meeting, the Loan Committee
shall to the board of directors a written report regarding all actions it has
taken.
(c) For the purpose of this Agreement, the terms (1) "related
interest" shall be defined as set forth in Section 215.2(k) of Regulation O of
the Board of Governors (12 CFR 215.2(k)); (2) "extension of credit" shall be
defined as set forth in Section 215.3 of Regulation O of the Board of Governors
(12 CFR 215.3); and (3) "executive officer" shall be defined as set forth in
Section 215.2(d) of Regulation O of the Board of Governors (12 CFR 215.2(d)).
5. The Bank shall not, directly or indirectly, (a) extend any additional
credit to or for the benefit of any borrower, including any related interest of
the Borrower, who is obligated in any manner to the Bank on any extension of
credit or portion thereof that has been charged off by the Bank or classified
"Loss" or "Doubtful" in the Report of Examination of the Bank, dated October 31,
1991 (the "Report of Examination":) as long as such credit remains uncollected;
and (b) extend any additional credit to any borrower whose line of credit has
been classified "Substandard" in the Report of Examination without the prior
approval of the Bank's board of directors, who shall document the reasons for
the additional advances, specifically (1) that the additional extension of
credit is necessary to protect the Bank's interest in the ultimate collection of
the credit already granted, or (2) that the additional credit is in full
compliance with the Bank's written loan policy and is adequately secured, that a
through credit analysis has been performed indicating that the additional
extension of credit is reasonable and justified, that all necessary loan
documentation has been properly and accurately prepared and filed, that the
additional extension will not impair the Bank'sinterest in obtaining repayment
of the already oustanding credit, and that the board of directors reasonably
believes that the additional extension of credit will be repaid according to its
terms. The certification, together with the credit analysis and related
information that was used in the determination, shall be maintained by the Bank
for subsequent supervisory review.
6. Within 60 days of this Agreement, the Bank shall submit to the Reserve
Bank and the Comptroller a written plan designed to improve the Bank's position
on each loan in excess of $100,000 that was in default as to principal or
interest in excess of 90 days as of the date of this Agreement and each asset,
including other real estate, adversely classified by examiners in the Report of
Examination, through amortization, repayment, liquidation, additional collateral
or other means, whichever may be appropriate. The plan shall not be amended or
rescinded withou the prior written approval of the Reserve Bank, except that the
plan shall be amended periodically to cover loans or others assets in excess of
$100,000 that are adversely classified or listed for special mention in
subsequent examinations of the Bank or, with respect to loans, in default as to
principal or interest in excess of _____ as of the date of each subsequent
examination or visitation. Amended plans based on loans or other assets that are
classified or listed for ______ mention or overdue in subsequent examinations or
visitations shall be submitted to the Reserve Bank and the Comptroller with the
next ______ report, described by paragraph 13 hereof, following each subsequent
examination or visitation.
7. (a) Within 45 days of this Agreement, the Bank shall take all necessary
steps to correct all exceptions to the Bank's loan files reflected in the loans
adversely classified and the loans listed for technical exceptions in the Report
of Examination, including obtaining accurate and current financial statements,
updating insurance coverage, and obtaining income/cashflow information.
(b) Within 60 days of this Agreement, the Bank shall submit to the
Reserve Bank and the Comptroller (1) a written report detailing the actions
taken pursuant to paragraph 7(a) hereof, and (2) written procedures designed to
ensure that all extensions of credit comply with the Bank's revised loan policy
concerning required loan documentation and collateral.
8. (a) Within 30 days of this Agreement, the Bank shall establish and
shall, thereafter, continue to maintain, through charges to current operating
income, an adequate valuation reserve for loan losses. The adequacy of ths
reserve shall be determined in light of past loss experience, evaluation of the
potential for losses in the loan portfolio of the Bank (especially the potential
for unidentified losses in loans adversely classified) and examiners' other
criticisms. A written record shall be maintained indicating the methodology used
in determining the amount of the reserve needed (e.g., at a minimum, the
methodology should address the maintenance of a reserve equal to a sum of : 40
tp 50 percent of loans classified "Doubtful", 10 to 20 percent of loans
classified "Substandard" and __________ percent of all other loans). This record
shall be submitted to the Reserve Bank and the comptroller for review within 60
days of this Agreement.
(b) Notwithstanding the provisions of paragraph 8(a) hereof, the
Bank's valuation reserve for loan losses shall, within 10 days of this Agreement
and, thereafter, at all times subsequent to date of this Agreement, equal, at a
minimum, 1.78 percent of the Bank's total loans, excluding Federal funds sold.
(c) For the purpose of this paragraph, the Bank's total loans shall
not include any loans or portions of loans that have been adversely classified
as "Loss" by examiners in any report of examination or visitation (which loans
shall be charged off upon the Bank's receipt of any report of examination or
visitation) or otherwise charged off the books of the Bank, and the amount of
total loans shall be the amount listed on line 11 of Schedule RC-C of the
Consolidated Report of Condition of the Bank as reported for each quarter after
the date of this Agreement.
(d) The requirement of this paragraph shall not be construed as a
standard for future operations of the Bank after the termination of this
Agreement. It is the intention of these requirements to provide for an
appropriate reduction in adversely classified assets and to maintain adequate
loan loss reserves during the term of this Agreement.
9. Within 45 days of this Agreement, the Bank shall develop and submit to
the Reserve Bank and the Comptroller written loan review procedures. The loan
review procedures shall be designed to identify and categorize problem credits
and to assess the overall quality of the Bank's loan portfolio. These procedures
shall, at a minimum, include the following:
(a) A description of the risk grades to be assigned to each loan;
(b) the designation of the individual(s) who will be responsible for
determining loan grades;
(c) a description of when loans will be graded; and,
(d) a mechanism for reporting periodically to the Bank's board of directors
the status of the loan reviews and the action(s) taken by management to improve
the Bank's position on each loan adversely graded.
10. Within 45 days of this Agreement, the Bank shall amend its present
written loan policies and procedures and shall submit such amended policies and
procedures to the Reserve Bank and the Comptroller. The amended loan policies
and procedures shall include, but not be limited to, the following:
(a) The establishment of procedures for performing credit evaluations,
including, at a minimum, (1) reviewing current (loess than 12 months old)
balance sheet and income information, (2) determining business trends by
obtaining statements for the previous two years for existing businesses, (3)
reviewing the applicant's liquidity, cash flow and leverage position, (4)
determining the applicant's current status and payment record on outstanding
debts, (5) obtaining credit bureau reports, (6) verifying contingent
liabilities, and (7) obtaining all other necessary documentation regarding the
applicant, guarantor, and/or collateral;
(b) guidelines for determining when audited financial statements of loan
customers will be required in lieu of applicant prepared statements or
compilations;
(c) guidelines for loans secured by real estate and/or income producing
properties, including appraisal requirements and requirements for minimum debt
service coverage ratios and minimum dollar amounts on which an outside appraisal
will be required;
(d) procedures designed to ensure that extensions of credit are generally
made to borrowers within the Bank's defined trade area;
(e) procedures for establishing repayment plans at the inception on all
extensions of credit;
(f) guidelines for placing loans on nonaccrual status in conformity with
call report instructions; and,
(g) procedures for exceptions to the loan policy, including required
documentation by the account officer and approval by the board of directors.
11. (a) Within 60 days of this Agreement, the Bank shall submit to the
Reserve Bank and the Comptroller a written strategic plan concerning the Bank's
proposed business activities for 1992. This plan shall _________ provide for or
describe:
(1) The responsibilities of the Bank's board of directors towards the
definition, approval, implementation and monitoring of the strategic plan, and
the procedures designed to ensure that the board of directors fulfill such
responsibilities;
(2) management, lending, and operational objectives, given the
condition of the Bank as reflected in the Report of Examination;
(3) an identification of the major areas in and the means by which the
Bank will seek to improve its operational and earnings performance;
(4) the operating assumptions that form the basis for major projected
income and expense components and the sources and uses of cash flow;
(5) financial performance objectives, including plans for asset growth,
earnings, liquidity and capital supported by detailed quarterly and annual pro
forma financial statements, including projected budgets, cash flow statements,
balance sheets and income statements;
(6) the establishment of a quarterly review process to monitor the
actual income, expenses and net cash flow of the Bank in comparison to budgetary
projections; and,
quarterly and annual budgets and cash flow statements and quarter-end and
year-end balance sheet and income statements for the Bank.
(b) A strategic plan for each calendar year subsequent to 1992 shall be
submitted to the Reserve Bank and the Comptroller at least one month prior to
the beginning of that calendar year. The revised projected quarterly and annual
financial statements required by paragraph 11(1)(7) hereof shall be submitted to
the Reserve Bank and the Comptroller within 30 days of the end of each calendar
quarter.
12. The plans, policies, and procedures required by paragraphs 2(a), 6,
7(b)(2), 9, and 10 hereof shall be submitted to the Reserve Bank and the
Comptroller for review and approval. The Reserve Bank and the Comptroller may
comment on the plans, policies and procedures within 10 business days of
receipt. Acceptable plans, policies, and procedures shall be submitted to the
Reserve Bank and the Comptroller within the time periods set forth in this
Agreement. The Bank shall adopt all approved plans, policies and procedures
within 10 business days of approval by the Reserve Bank and the Comptroller and
then shall fully comply with them. During the term of this Agreement, the Bank
shall not amend or rescind the approved plans, policies, and procedures without
the prior written approval of the Reserve Bank and the Comptroller.
13. Within 30 days of the end of each calendar quarter (March 31, June
30, September 30, and December 31) following the date of this Agreement, the
Bank shall furnish to the Reserve Bank and the Comptroller written progress
reports detailing the form and manner of all actions taken to ensure compliance
with this Agreement and the results thereof, including updated reports on all
asset improvement plans required by paragraph 6 hereof. The board of directors
of the Bank shall certify in writing to the Reserve Bank and the Comptroller
that each director has reviewed each quarterly progress report required by this
paragraph. Such reports may be discontinued when corrections required by this
Agreement have been accomplished, and the Reserve Bank and the Comptroller have,
in writing, released the Bank from making further reports.
14. All communications regarding this Agreement shall be sent to:
(a) Mr. Ronald N. Zimmerman
Vice President
Federal Reserve Bank of Atlanta
104 Marietta St., N.W.
Atlanta, Georgia 30303-2713
(b) Mr. Gerald A. Lewis
State Comptroller and Banking Commissioner
Office of the Comptroller
State of Florida
Tallahassee, Florida 32399-0350
(c) Mr. George W. Jordan
President
Florida First International Bank
Post Office Box 6699
Hollywood, Florida 33081
15. Notwithstanding andy provision of this Agreement to the contrary,
the Reserve Bank and the Comptroller may, in their sole discretion, grant
written extensions of time to the Bank to comply with any provision of this
Agreement.
16. The provisions of this Agreement shall be binding upon the Bank,
all of its institution-affiliated parties, in their capacities as such, and
their successors and assigns.
17. Each provision of this Agreement shall remain effective and
enforceable until stayed, modified, terminated or suspended by the Reserve Bank
and the Comptroller.
18. The provision of this Agreement shall not bar, estop or otherwise
prevent the Board of Governors or the Comptroller from taking any other action
affecting the Bank or any of its current or former institution-affiliated
parties and their successors and assigns.
19. This Agreement is a "written agreement" for the purposes of section
8 of the FDI Act (12 U.S.C. 1818).
20. As of the date of this Agreement, the Written Agreement by and
among the Bank, the Reserve Bank, and the Comptroller, dated January 9, 1969, is
terminated.
IN WITNESS WHEREOF, the parties have caused this Agreement to the
executed as of the 17th day of March, 1992.
Florida First International Bank Federal Reserve Bank
By By
President
State Comptroller and Banking
Commissioner of the State of
Florida
By
The undersigned directors of the Bank each acknowledges reading the
foregoing Agreement and approves of the consent thereto by the Bank.
s/"Frank D. Camperlengo" s/"Howard S. Wolkowitz"
s/"George W. Jordan"
<PAGE>
SOUTHERN SECURITY BANK
ASSET/LIABILITY MANAGEMENT POLICY
REVIEWED: MAY 27, 1997
APPROVED: MAY 27, 1997
MODIFIED: JULY 22, 1997
SOUTHERN SECURITY BANK
ASSET/LIABILITY MANAGEMENT POLICY
I. STATEMENT OF POLICY....................................1
II. AUTHORITY FOR ASSET/LIABILITY MANAGEMENT COMMITTEE.....1
III. ASSET/LIABILITY MANAGEMENT COMMITTEE...................2
IV. ANNUAL PROFIT PLAN.....................................4
V. LIQUIDITY POLICY.......................................4
VI. PRIMARY FUNDING NEEDS AND SOURCES......................7
VII. OFF BALANCE SHEET POLICY...............................8
VIII. INTERBANK LIABILITIES (REGULATION F)...................9
<PAGE>
ASSET/LIABILITY MANAGEMENT POLICY
Southern Security Bank is a full service banking institution organized and
operated to meet the financial needs of individuals and business throughout the
Broward County Area.
I. STATEMENT OF POLICY
A. Asset/Liability Management is the coordination of all balance sheet
categories so as to maximize shareholder wealth. The actual practice
of Asset/Liability Management focuses on the narrower asset/liability
relationship between variable rate assets and variable rate
liabilities. The advent of deregulation caused financial institution
management to assess its ability to reinvest variable cost funds into
profitable investments to maintain stable profitability. Because
banking is an industry that is changing together with the fluctuating
nature of the local and national economies, this policy is subject to
change as needed. The asset/liability management objectives of
Southern Security Bank include the following.
1. Managing net interest margins.
2. managing profitability.
3. Controlling interest rate risk exposure (GAP analysis).
4. Insuring liquidity
5. Performing balance sheet planning (maintaining the ability to
meet loan demand and deposit withdrawals).
6. Perform tax planning. 7. Plan bank funding.
B. It shall be the policy of the Bank's management to achieve the above
objective in the functioning of its Asset/Liability Management Policy.
Quantitative goals shall be established to fit these objectives in
light of the operating environment and long-term planning goals.
C. Foremost among the policies to govern Asset/Liability Management is
that of requiring full compliance with all state and federal laws.
II. AUTHORITY FOR ASSET/LIABILITY MANAGEMENT COMMITTEE
Asset/Liability management policies of the bank are under the purview
of the Board of Directors who shall delegate authority for their
formulation and administration to the Asset/Liability Management
Committee.
III. ASSET/LIABILITY MANAGEMENT COMMITTEE
A. An Asset/Liability Management Committee shall be appointed to:
1. monitoring stress conditions, financial markets and regulatory change
on a continuing basis.
2. manage mix of rate sensitive sources and uses of funds over interest
rate cycle.
3. evolve key loan deposit investment and funds management strategies
consistent with profit planning and long-range goals and objectives.
B. The composition of this committee shall include the Chairman of the
Board, the President, the Chief Operating Officer and the Senior
Lending Officer. As the staff of Southern Security Bank increases in
size and additional officers are employed, the committee may decide to
include additional members, which may include directors. The Chairman
of the committee shall be the Chairman of the Board of the bank who
shall be responsible for carrying out the Asset/Liability management
subject to quarterly review by the Board of Directors or more often if
conditions dictate.
C. The Asset/Liability Management Committee shall meet at least monthly or
more frequently as conditions require, such as in times of increased
rate volatility and unexpected economic changes.
D. At its monthly meetings, committee members will review:
1. minutes of the previous meetings.
2. monthly Asset/Liability funds budget in relation to the actual
flow of funds as well as peer group comparisons. The committee
will also conduct a spread analysis and determine how well the
allocation of sources and uses of funds as well as related
strategies and programs are working to meet the bank's longer
range targets.
3. alternative scenarios developed through sensitivity or what if
analysis. These scenarios will incorporate such variables as
expected loan demand, investment opportunities, core deposit
growth within specific categories, regulatory changes,
monetary policy adjustments and the overall state of the
economy and, in addition, interest rates on particular sources
and uses of funds.
4. ratio of the amount of rate-sensitive assets to the amount of
rate-sensitive liabilities which are sensitive within defined
time frames, (i.e., 90, 180, 365 days). the sensitive assets
and rate-sensitive liabilities and the maturity distribution.
Furthermore, it will review rate-sensitivity reports as well
as mix/spread analysis to assess the effects of anticipated
interest rates and of the volume and mix of asset/liability
items on net interest margin.
5. current and prospective liquidity position both on the asset
and liability sides of the balance sheet and in relation to
rate sensitivity.
6. results of the implementation of funding strategies which are
designed to insure that the bank has adequate funds for loans,
investments, deposit coverage, debt repayment and the
expansion of service capability when they are necessary.
Prospective assessment of the availability of funds both for
shorter term and capital purposes at a price that will give a
reasonable and consistent return on investment in relation to
the risk involved. Weighted average maturity distribution on
money market certificates and $100,000 and larger certificates
of deposits.
7. balances maintained with correspondent banks and other
non-earning assets.
8. ratio of loan loss reserve to outstanding loans.
9. capital levels to determine whether they are sufficient
to support asset growth; to underwrite interest rate risk;
to match the expectations of rating agencies and the
marketplace, and to meet long- and short-term funding needs.
Periodic review of bank's dividend policy.
10. tax position.
11. recommendations on asset/liability allocations, current months
funds budget and action plan.
E. Discussion of information recommendations and actions taken by the
committee will be recorded and reported in the minutes of the meeting.
Copies of these minutes will be distributed to the committee members
and other key personnel. A copy of the minutes for each meeting will be
maintained on file in the office of the Chief Executive Officer.
F. This committee will be involved in all operations and functions of the
bank. It requires a management information system providing thorough
and useful information quickly available. Manual preparation of such
information is burdensome and time consuming.
G. The committee shall attempt to be proactive rather than reactive in
implementing and accomplishing balance sheet goals. the bank has the
opportunity to enter the financial markets without burden of old,
economically outdated operating programs. Such strategy shall include:
1. establishing loan pricing closely paralleling the bank's cost
of funds.
2. providing variable/renegotiable rate loan products which will
change based upon and appropriate index. It will be the
intention of the committee to have these variable rate
products reflect, as much as possible, changes in the bank's
own cost of funds.
3. utilizing secondary mortgage market capabilities through loan
origination and pass through arrangements to maintain
liquidity.
4. assessing the role of the investment portfolio in light of
deregulation of interest rates and tax reform.
5. maximizing investment yield subject to risk and maturity
considerations. In addition, certain hedging devices, i.e.,
interest rate swaps, options and loss programs may be used
from time to time to more effectively manage the portfolio.
6. developing an investment portfolio that is responsive to
fluctuating levels of interest rates by emphasizing shorter
maturities and money market instruments to better match
funding liabilities.
H. Asset/Liability Management affects all bank activities. The remaining
policy areas discovered herein interrelate with Asset/Liability
management.
IV. ANNUAL PROFIT PLAN
A. Long-range plans serve as the basis for profit plans and the
Asset/Liability Management Committee will review variances
from the budget segments of these plans so that timely
corrective action can be taken or adverse variance with regard
to interest rates, volume levels, and mix of assets and
liabilities.
B. The committee will also review performance measures quarterly.
Based on discernible changes and trends or patterns, it will
make alterations and strategies for loan policies, bond
portfolio structure and funds acquisitions in order to achieve
year-end goals.
C. On an operating level, management will have sufficient
authority to react to contingencies daily.
D. Sufficient flexibility will be built into the budgeting
process so that variance analysis input and rolling monthly
12-month forecasts can be factored on an ongoing basis.
E. The Board of Directors will review each calendar quarter
comparisons of actual versus planned results in the annual
profit plan. These reviews will focus on dollar as well as
percentage variances for the quarter being reviewed in the
year-to-date results.
V. LIQUIDITY POLICY
A. Liquidity represents the ability to accommodate the most efficient
decreases in deposits and/or the run-off of other liabilities as well
as fund increases in the loan portfolio, lines and letters of credit
and fulfill short-term credit needs. A bank has adequate liquidity
potential when it can obtain sufficient cash promptly at a reasonable
cost. Liquidity is essential to compensate for expected and unexpected
balance sheet fluctuations and to provide funds for growth. The price
of liquidity is a function of market conditions and the degree of
interest rate and credit risk. If liquidity needs are met through
holdings of high quality, short-term assets, the price is income
sacrificed by not holding longer term and/or lower quality assets. If
liquidity needs are not met through liquid asset holdings, the bank
may be forced to acquire additional liabilities under adverse market
conditions at excessively high rates. Determination of the adequacy of
the bank's liquidity position depends on the analysis of:
1. historical funding requirements.
2. current liquidity position.
3. anticipated future funding needs.
4. options for reducing funding needs or attracting
additional funds.
5. sources of funds.
B. To insure adequate liquidity or a safe pattern of cash flows in a
fluctuating rate environment, the Asset/Liability Management Committee
will consider the implementation of three strategies:
1. Extending the maturities of the bank's liabilities unless
interest rates are heading downward.
2. Diversifying the bank's sources of funds, including the
development of new funding sources.
3. matching the maturity of assets and liabilities, recognizing
that this strategy usually causes a higher cost of funding
assets than maturity mismatching.
C. In assessing liquidity, the committee will consider current position
and future outlook. It will especially monitor large liability
dependence, temporary investments to large liabilities, fixed rate
assets to core deposits and loans to deposits.
D. To provide funds to satisfy liquidity needs, the bank must do one or
more of the following:
1. Dispose of liquid assets.
2. Increase short-term borrowing or issue additional short-term
deposit liabilities.
3. Decrease holdings of non-liquid assets.
4. Increase liabilities of a term nature.
5. Increase capital funds.
E. The committee will guide the bank's funding operations according to the
following principles:
1. Compete for stable deposit money by building multi-service
customer relationships.
2. Lengthen the maturity of purchased liabilities unless longer
term rates so far exceed current or prospective short-term
rates as to make this option unfeasible.
3. Diversify sources of funds by maintaining an active presence
in as many money markets as possible for a small bank.
4. Promote buyer/seller relations and market reputations so that
investor confidence will enable the bank to raise funds it
needs when it needs them at reasonable rates.
5. Plan and arrange for contingency funding through a variety of
sources before adverse market conditions cause difficulty.
6. Conduct frequent profitability analysis of deposit accounts
relationship and compare funds cost with those of alternative
sources.
F. Liquidity targets and guidelines. It should be understood that targets
are just that and if not met, an acceptable explanation will follow.
Guidelines should not be violated unless prior approval is obtained. As
follows.
1. A net loan to deposit ratio of 80% maximum. (Guideline, refer to
loan policy)
2. Net Loans & Leases (& Capital) of not greater than
8.0%. (Target, refer to loan policy)
3. Net loans to total assets of not more than 75%. (Target, refer to
loan policy).
4. Commercial loans to total loans not to exceed 60%.
(Target, refer to loan policy).
5. Consumer Loans to total loans not to exceed 50%. (Target, refer to
loan policy).
6. Real Estate Loans to total loans not to exceed 60%. (Target, refer
to loan policy).
7. Temporary Investments to average total assets of 10% - 20%.
(Guideline)
Temporary investments are interest bearing balances due from
depository institutions, federal funds sold and securities
purchased under agreements to resell, trading-account assets,
and debt securities with remaining maturities or earliest
repricing opportunity of one year or less.
8. Certificates of deposits, borrowing and public funds should account
for less than 50% of total assets. (Target)
9. Borrowing to total capital should be less than 200%. (Guideline)
10. The rate sensitive asset to rate sensitive liability ration from 0
to 90 days should be maintained between .80 to 1.20. (Target).
11. The rate sensitive asset to rate sensitive liability ration from
91 - 365 days should be maintained between .80 to 1.20. (Target).
12. Zero to 90 day GAP to total assets shall not exceed -10% to +10%.
(Target) 13. 91 - 365 day GAP to total assets shall not exceed
-10% to +10%. (Target) 14. Zero to 190 day rate sensitive loans to
total loans, 50% to 70%. (Guideline) 15. Net Liquidity to Net
Liability, more than 20%. (Target) Net Liquidity is cash,
due from banks, fed funds sold, interest-bearing deposits
maturing in 30 days or less, and market value of all
unencumbered, rated, investment-grade securities. Net
Liability is total deposits less due from banks.
16. Short term liquidity divided by total assets should be greater than
20%. (Target)
17. Riskless Assets to Total Assets 10% to 25%. (Guideline) Riskless
Assets are cash & due from, U.S. treasuries and government agency
securities less pledge amount, FDIC insured certificates of
deposits, cash and federal funds sold.
18. In determining the spread rate (rate differential) between marginal
liability cost and marginal yield, reserve requirements, taxes and
deposit insurance must be considered incremental costs for cost of
funds calculations. The resulting net spread should not be less
than 3%. (Target)
19. Gross Off Balance sheet items to total assets should not be greater
than 10%. (Target)
20. Volatile Liability Dependence Ratio should be less than a Plus 10%
and preferable a negative ratio. (Target)
G. A small bank runs an extreme risk of illiquidity quickly due to the
risk of loans transferred from other institutions inherently exceeding
the transfer of deposits. Therefore, it is imperative that the
established policy be adhered to as it relates to prudent maximum loan
limits rather than the legal maximum limits which relate to the amount
of capital not liquidity. A loan policy has been adopted and is
referenced hereto.
H. Similarly, long-range investment strategies based on the investment
Policy incorporated herein must have regard for liquidity needs.
Liquidity is sought while at the same time minimizing the cost of those
funds. It must be expected to experience cyclical deposit fluctuations
particularly in the Florida economy and to a lesser degree, loan demand
fluctuations. The Asset/Liability Management Committee will endeavor to
make
educated predictions for funding requirements and investments which can
be purchased with these requirements in mind.
I. There should be established unsecured (preferably) or secured lines of
credit with correspondent banks. Preferably at least two lines should
be established. Diversification reduces dependency on any single
supplier. The bank should not exceed its capacity to borrow in any one
area or market. The committee shall determine an appropriate level of
borrowing that the bank may have. Initially it shall be the
responsibility of the committee to arrange for lines of credit at other
financial institutions. These lines of credit shall include fed funds,
repo's and the Federal Reserve discount window.
VI. PRIMARY FUNDING NEEDS AND SOURCES
Primary funding needs and sources are measured by our need and ability to raise
cash at a reasonable cost or minimum loss. Our bank must be capable of meeting
all customer obligations at all times. Specifically, we must meet cash
withdrawal requirements, fund lines and letters of credit, and fulfill
short-term credit needs. Practically, we will achieve sufficient liquidity by
the following procedures:
1. Pursuit of core deposits.
2. We should have part of our investment portfolio maturing
within one year. As these investments mature, they will be
used to meet the bank's cash needs or they will be reinvested
to maintain a desired liquidity position.
3. We will attempt to define volatile deposits existing in our
money market savings account (i.e., accounts over $100,000).
This balance in the account will be classified as volatile
money and we will keep at least an amount equal to this in our
Fed funds sold account to offset volatile deposits. This money
in Fed funds would then become a temporary source of liquidity
if needed.
4. We may apply for a second line of credit from the
Federal Reserve or a correspondent _____________________.
5. Should we experience temporary high loan demand, we will
attempt to meet it by selling loans to correspondent
banks.
6. In terms of illiquidity, we could explore the possibility of
raising money by buying money from such sources as the CD
market.
7. For liquidity purposes we are classifying our investment
portfolio into liquidity and income designations. Government
agency, and other short-term investments maturing within two
years, and municipal securities maturing within one year, will
be designated as "liquid" investments, while investments with
maturities greater than the above criterion will be considered
"income" investments.
8. We will attempt to forecast loan and deposit expectations
through the use of historical trends and future economic
expectations. These projections will enable us to plan for
seasonal liquidity needs rather than react hastily to
liquidity pressure.
9. Should the bank become illiquid in spite of these steps, we
will curtail lending. The first step is to cease making real
estate mortgage loans; the second is to cease making
commercial loans; the third step will be to slow consumer
loans; and the
fourth step is to refuse loans to new customers. Only as a
last resort will we refuse short-term working capital loans to
existing commercial customers or short-term loans to
individual customers.
VII. OFF BALANCE SHEET POLICY
The Off Balance Sheet items (contingent liabilities) of the bank will consist
primarily of unused portions of committed lines of credit where the bank has a
legal obligation to fund these unused portions when called upon. Said legal
obligation arises from the acceptance of a commitment fee from the borrower
whether or not the loan has actually closed.
Additionally, while the bank is not at this time seeking to engage in the
issuance of standby or trade letters of credit, we recognize the possibility of
being called upon to do so by existing customers. Any letter of credit activity
will be subject to the same policy, procedures, credit and collateral
requirements that any loan request is subject to and once paid for, will become
an Off Balance Sheet Item until it is called upon or expires.
Because of liquidity considerations and their generally lower profit potential,
total exposure in letters of credit will be reviewed monthly by the Director's
Loan Committee.
Because of liquidity considerations, all unused portions of lines of credit will
be reviewed by the Director's Loan Committee monthly, said total to be compared
to the bank's average excess liquidity for the prior thirty-day period.
Loans of credit in excess of officer's authority will be subject to lending
authorities set forth in the bank's Loan Policy.
VIII. INTERBANK LIABILITIES REGULATION(S)
Credit Exposure that may exist between the Bank and its correspondent banking
relationship with outside correspondents, as that term is defined in Federal
Reserve Regulation F, shall at all times be monitored and controlled as required
by that regulation.
A. No less frequently than quarterly, the Bank's Chief Operating Officer,
or in its absence the Senior Loan Officer, or such designated
"Responsible Officer" as specified and directed by the Board of
Directors, shall review the call reports, annual reports, and such
other publicly available information as the Responsible Officer shall
deem appropriate concerning each correspondent to which this Bank has
a "significant exposure". For purposes herein, "significant exposure"
shall be deemed to exist whenever the exposure of this Bank to a
correspondent is more than $100,000 on a monthly average basis.
Exposure shall be measured by using the actual amount owed to the Bank
on all exposure types. This is to include the sale of federal funds
(exclusive of agent status).
B. The Responsible Officer shall conduct such reviews more frequently than
quarterly if prudent to do so, based upon the size and type of the
Bank's exposure and the financial condition of such correspondent. In
assessing the financial condition of each
correspondent, the Responsible Officer shall consider at a minimum the
following financial characteristics of the correspondent's:
1. Capital level;
2. Level of non-accruals and past due loans and leases;
3. Level of
earnings;
4. Factors affecting the correspondent financial condition.
In such assessments, the Responsible Officer may also take into account the
rating of the correspondent by a bank rating agency whose general assessment and
selection criteria have been reviewed and approved by the Board of Directors. At
present, this board has reviewed and approved the criteria of the following bank
rating agency:
Bauer Financial Reports, Inc.
P.O. Drawer 145510
Coral Gables, Florida 35114
This board recognizes the need to establish a current list of acceptable
correspondents. The list of institutions initially identified is neither all
inclusive or deemed an approval of a nonqualifying institution as required by
this policy:
Independent Bankers Bank - Orlando Florida
Compass Bank - Birmingham, Alabama
First Union National Bank, Charlotte, North Carolina
Chase Manhattan Bank - New York, New York
Fleet Bank - Providence, Rhode Island
C. The Responsible Officer shall determine whether the correspondent
qualified as at least "adequately capitalized" as defined in
Regulation F. At present that standard requires the correspondent to
have at a minimum:
1. - Total Risk Based Capital Ratio of 8.0%
- Tier 1 Risk Based Capital Ratio of 4.0%; and - Leverage
Ratio of 4.0%.
2. If the numerical values as defined above in Section
4.20[C](1,2,3) are not equal to or exceed those minimum
requirements as defined by Regulation "F" for an "Adequately
Capitalized" correspondent, those minimum requirements
stipulated in Regulation "F" shall be the applicable
qualifications. The Responsible Officer shall:
a. begin applying the amended standards immediately; and
b. bring such changes to the attention of the
Asset/Liability Committee immediately, and to the
Board of Directors at its next regular meeting after
the Responsible Officer becomes aware of the changes,
so that it may revise this policy.
3. Additionally, the bank should limit exposure to correspondent
banks in the form of noninterest and interest bearing FDIC
insured accounts and federal funds
exclusive of agent status). The limit for these balances on
inter-day and intra-day transactions are 10% of total assets.
The maturity of such exposure should be daily but may
occasionally extend to seven days (except for FDIC insured
time deposits which should not exceed one year). The
correspondent should also meet the following quantitative
measures: a. Nonperforming Assets/Assets equal to or less than
1.25% b. Repossessed Assets/Total Assets equal to less than
1.25% c. Return on Assets equal to or more than .75%.
D. The Bank shall neither establish nor (to the extent possible) continue
a significant exposure to a correspondent in which the form or maturity
of the exposure and the financial condition of the correspondent create
a significant risk that the payments expected by the Bank will not be
made in full or on time.
1. If a correspondent relationship which initially complied with
Bank policy later becomes non-complying because of
deterioration of the financial condition of the correspondent,
market changes or any other reason, the Responsible Officer
shall terminate and close out the relationship, or reduce it
to an insignificant level as rapidly as possible, consistent
with prudent banking standards.
2. The Responsible Officer shall report all such situations, the
remedial action taken and
_______________________________________________________.
E. The Bank's _____________ financial limit for ____ exposure to any
institutional correspondent shall be established and recorded on the
"Bank's Interbank Liability (Regulation F) Control Records". (See
Appendix for Control Record format.)
1. The Board of Directors shall review these limits from time to
time upon recommendations of management or upon its own
motion, and revise those limits up or down either as a global
change applicable to all correspondent relationships, or for
any or each specific correspondent(s) as it deems appropriate.
2. Bank management shall use only the most current revision of
each form in determining what are the internal limits of the
Bank for exposures to correspondents. Each officer
responsible for a corespondent relationship of the Bank
shall structure that relationship so as to preclude the
possibility of the relationship growing to a size in excess
of the applicable internal limit unless such growth is merely
an occasional anomaly, resulting from unusual market
disturbances, market movements favorable to the Bank,
increases in activity, operational problems, or other unusual
circumstances.
F. Procedure to determine the Bank's internal financial limit for its
exposure to any institutional correspondent.
1. At least quarterly, determine the size of the exposure in each
present or proposed correspondent relationship of the Bank.
2. If the exposure is not "significant" as defined herein, go to
Step 3. If the exposure is "significant" as defined, go to
Step 4.
3. Monitor the size of the exposure retroactively on a monthly
basis, or more frequently if appropriate. If the exposure
becomes significant, to Step 4.
4. Review each correspondent's latest call report, annual report,
rating by any bank rating service approved in the Policy, or
any other available financial and other information about the
correspondent to determine whether it has at lest the capital
as defined in item C of this section.
5. If the correspondent does not meet all of those three
requirements, determine how best to reduce the Bank's exposure
to that correspondent below the level defined as "significant"
in the Policy. Alternatively, determine how to eliminate that
exposure completely. Weigh the risks and costs of each
alternative against the risks and costs of continuing the
relationship at its present level or some level higher than
the lowest figure which constitutes a "significant" exposure
under the Policy until its normal liquidation if it is one
which will liquidate normally at a fixed time in the future.
Document these processes and report them to the Executive
Committee of the Board of Directors.
6. If the correspondent does not meet all three of those
requirements, compare the _______ of the Bank's exposure to
that correspondent with the limits stated in the Bank's
________________ liability control record established by the
Policy.
7. If the exposure is less than the applicable limit on the
control record, note that the fact in the working papers and
repeat the above steps at the next regular monitoring.
8. If the exposure is greater than the applicable limit in the
Bank's control record, the Responsible Officer shall reduce
the exposure at or below the level limit amount, unless the
excess is merely an occasional one, resulting from unusual
market disturbances, market movements favorable to the Bank,
increases in activity, operation problems, or other unusual
circumstances. Document these activities.
G. Compliance officer's Procedure to determine the Bank's compliance with
its internal financial limit for exposure to institutional
correspondent(s).
1. At least annually, obtain all records regarding the monitoring
of interbank exposure pursuant ot the Bank's policy since the
immediately previous review by the Compliance Officer.
2. If the number of correspondent relationships the Bank has is
not large, review all of them. If it is large, select a
representative sample for review, and review them.
3. Note whether correct determinations of the size and compliance
or lack thereof with the Bank's policy were made by the
Responsible Officer.
4. Note whether all corrective actions required by the Bank's
policy and procedure were taken and reported to the Bank's
Executive Committee and/or the Board of Directors.
5. Advise the Bank's auditor of the results of this examination.
H. To override internal limits as to Interbank Liabilities will require
documenting the processes and the situation. Authority is vested with
the Chief executive Officer to override the limitations herein
established.
<PAGE>
SOUTHERN SECURITY BANK
Interbank Liability (Regulation F) Control Record
Correspondent Name: Independent Bankers Bank
-----------------------------------
Address: P.O. Box 4998
-----------------------------------
Orlando, FL 32802-2998
-----------------------------------
-----------------------------------
Telephone Number: 1-800-275-4222
-----------------------------------
Contact Person: James H. McKillop III
-----------------------------------
Exposure Limits:
Type Maximum Amount
---- --------------
All $100,000
Most Recent Revision Date: March 23, 1995
<PAGE>
SOUTHERN SECURITY BANK
Interbank Liability (Regulation F) Control Record
Correspondent Name: Compass Bank
-----------------------------------
Address: 15 South 20 Street
-----------------------------------
Birmingham, Alabama 35233
-----------------------------------
-----------------------------------
Telephone Number: 1-800-239-2265
-----------------------------------
Contact Person: Kathleen Rethelford
-----------------------------------
Exposure Limits:
Type Maximum Amount
---- --------------
All $100,000
Most Recent Revision Date: March 23, 1995
Subsidiaries of the Registrant:
Southern Security Bank - Organized under the law of Florida.
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