As filed with the Securities and Exchange Commission on October __, 1997
Registration Statement No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
COASTAL BANK CORPORATION
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
<TABLE>
<CAPTION>
<S> <C> <C>
FLORIDA 6712 65-0729764
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
999 NINTH STREET SOUTH
NAPLES, FLORIDA 34102
(941) 434-0441
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
1010 FIFTH AVENUE SOUTH
NAPLES, FLORIDA 34102
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL PLACE OF BUSINESS
OR INTENDED PRINCIPAL PLACE OF BUSINESS)
SIDNEY T. JACKSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
999 NINTH STREET SOUTH
NAPLES, FLORIDA 34102
(941) 434-0441
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-----------------
COPIES TO:
BURTON L. RAIMI MICHAEL L. JAMIESON
JUDITH E. MCCAFFREY CHESTER E. BACHELLER
MCCAFFREY & RAIMI, P.A. HOLLAND & KNIGHT LLP
1800 SECOND STREET, SUITE 753 400 NORTH ASHLEY DRIVE, SUITE 2300
SARASOTA, FLORIDA 34236 TAMPA, FLORIDA 33602
-----------------
Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statements for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
======================================================================================================
PROPOSED PROPOSED
NUMBER OF MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF SHARES TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE (1) PRICE (1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value................ 1,725,000(2) $10.00 $17,250,000 $5,228
======================================================================================================
<FN>
(1) Estimated solely for the purpose of computing the amount of registration
fee pursuant to Rule 457(a).
(2) Includes an aggregate of 225,000 shares to cover over-allotments, if any,
pursuant to an over-allotment option granted to the Underwriters.
</FN>
</TABLE>
-----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
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CROSS-REFERENCE SHEET
ITEM NUMBER IN FORM SB-2 LOCATION IN PROSPECTUS
------------------------ ----------------------
<S> <C> <C>
1. Front of Registration Statement and Outside Outside Front Cover
Front Cover of Prospectus
2. Inside Front and Outside Back Cover Pages of Inside Front and Outside Back Cover Pages; Additional
Prospectus Information; Table of Contents
3. Summary of Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Risk Factors - Determination of Offering Price;
Underwriting
6. Dilution Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution Underwriting
9. Legal Proceedings Legal Proceedings
10. Directors, Executive Officers, Promoters and Management - Directors and Officers; - Experience of
Control Persons Directors and Officers
11. Security Ownership of Certain Beneficial Management - Directors and Officers; Principal
Owners and Management Shareholders
12. Description of Securities Description of Capital Stock
13. Interest of Named Experts and Counsel Not Applicable
14. Disclosure of Commission Position on Description of Capital Stock - Indemnification
Indemnification for Securities Act Liabilities Provisions; Underwriting
15. Description of Business Business; Supervision and Regulation
16. Management's Discussion and Analysis or Risk Factors - Need for Capital; Business
Plan of Operation
17. Description of Property Business - Bank Location and Facilities; - Products and
Services; - Investments
18. Certain Relationships and Related Transactions Certain Transactions
19. Market for Common Equity and Related Risk Factors - No Prior Public Market; Dividend Policy;
Stockholder Matters Description of Capital Stock - Common Stock; Shares
Eligible for Future Sale; Underwriting
20. Executive Compensation Management - Directors and Officers; - Officer
Compensation; - Stock Option Information; -
Employment Agreements; - Stock Option Agreements;
- Incentive Agreements
21. Compliance with Section 16(a) of the Not Applicable
Exchange Act
<PAGE>
22. Financial Statements Financial Statements
23. Changes in and Disagreements with Not Applicable
Accountants on Accounting and Financial
Disclosure
</TABLE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities law of any such state.
SUBJECT TO COMPLETION, DATED OCTOBER __, 1997
PROSPECTUS
1,500,000 SHARES
COASTAL BANK CORPORATION
(A PROPOSED BANK HOLDING COMPANY FOR COASTAL BANK, N.A.)
COMMON STOCK
----------------
All of the shares of Common Stock offered hereby are being sold by
Coastal Bank Corporation (the "Company"), a proposed bank holding company
organized to own all of the common stock of Coastal Bank, N.A., a national
bank (in organization) to be located in Naples, Florida (the "Bank").
Neither the Company nor the Bank has ever conducted any business operations
other than matters related to their initial organization and the raising of
capital. SEE "Business." There has been no public trading market for the
Common Stock. Robert W. Baird & Co. Incorporated has advised the Company
that it anticipates making a market in the Common Stock following completion
of this offering. SEE "Underwriting" for a discussion of the factors
considered in determining the initial public offering price. The Company
expects that the quotations for the Common Stock will be reported on the OTC
Bulletin Board under the symbol "__*_____." Unless otherwise waived by the
Company, shares of Common Stock will be sold only in minimum lots of 1,000
shares ($10,000) and any one investor (together with the investor's
affiliates) will be permitted to purchase a maximum of 50,000 shares of
Common Stock ($500,000).
----------------
THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE OF
RISK. INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD
CAREFULLY CONSIDER THE INFORMATION DISCUSSED UNDER THE CAPTION "RISK
FACTORS" AT PAGE 6.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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============================================================================================
UNDERWRITING DISCOUNTS AND
PRICE TO PUBLIC COMMISSIONS (1)(2) PROCEEDS TO COMPANY (3)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.......... $10.00 $0.70 $9.30
- --------------------------------------------------------------------------------------------
Total (4).......... $15,000,000 $1,050,000 $13,950,000
============================================================================================
<FN>
(1) The Underwriters have agreed with the Company that the Underwriting
Discounts and Commissions will be reduced to $0.30 per share for sales
to certain investors identified to the Underwriters by the Company. SEE
"Underwriting."
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. SEE "Underwriting."
(3) Before deducting estimated offering expenses payable by the Company of
$160,000, which amount does not include certain organization and other
operating expenses which were $340,889 as of August 31, 1997, and which
will continue to be incurred until the Bank commences operations.
(4) The Company has granted the Underwriters a 30-day option to purchase up
to 225,000 additional shares of its Common Stock on the same terms and
conditions set forth above to cover over-allotments, if any. If the
Underwriters exercise this option in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will be
$17,250,000, $1,207,500 and $16,042,500, respectively. SEE
"Underwriting."
</FN>
</TABLE>
----------------
The shares of Common Stock are offered by the Underwriters subject to
prior sale, when, as and if delivered to and accepted by the Underwriters,
and subject to their right to reject orders in whole or in part. It is
expected that delivery of the certificates representing shares of Common
Stock will be made on or about ______________, 1997 through the Depository
Trust Company or at the offices of Robert W. Baird & Co. Incorporated,
Milwaukee, Wisconsin.
ROBERT W. BAIRD & CO. ASHTIN KELLY & CO.,
INCORPORATED INCORPORATED
The date of this Prospectus is ____________, 1997
<PAGE>
MAP: Graphic depiction of the State
of Florida with a blow-up insert of
the western portion of Collier
County, Florida, including the City
of Naples, located on the southwest
coast of the State of Florida on the
Gulf of Mexico.
--------------------------------------------
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, ANY OTHER GOVERNMENT AGENCY OR OTHERWISE.
--------------------------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
COMMON STOCK OF THE COMPANY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS,
SYNDICATE SHORT-COVERING TRANSACTIONS, AND PENALTY BIDS. ANY OF THE FOREGOING
TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME WITHOUT NOTICE. FOR
A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
--------------------------------------------
AVAILABLE INFORMATION
The Company is not currently a reporting company pursuant to the
Securities Exchange Act of 1934 (the "Exchange Act"), but will become a
reporting company upon completion of this offering and will file the reports
required to be filed thereunder for the Company's 1997 fiscal year and for any
other periods for which the Exchange Act's requirements apply to the Company.
The Company, which will use a December 31 fiscal year end, intends to furnish
its shareholders with annual reports containing audited financial information
and, for the first three quarters of each fiscal year, quarterly reports
containing unaudited financial information.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE
DETAILED INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS
PROSPECTUS. UNLESS THE CONTEXT CLEARLY SUGGESTS OTHERWISE, REFERENCES IN THIS
PROSPECTUS TO THE COMPANY INCLUDE THE BANK. EXCEPT AS OTHERWISE INDICATED, ALL
INFORMATION IN THIS PROSPECTUS ASSUMES NO EXERCISE OF THE UNDERWRITERS'
OVER-ALLOTMENT OPTION.
THE COMPANY AND THE BANK
The Company was incorporated under the laws of the State of
Florida on January 23, 1997, primarily to serve as a bank holding company for
the Bank. The Company intends to use $10 million of the proceeds from this
offering to purchase all of the stock of the Bank. The Bank is in the process of
being organized as a national bank under federal law. The Bank has pending an
application with the Comptroller of the Currency (the "Comptroller") for a
national bank charter and with the Federal Deposit Insurance Corporation (the
"FDIC") for federal deposit insurance. After the Bank receives preliminary
approval from the Comptroller and the FDIC, the Company will file an application
with the Board of Governors of the Federal Reserve System (the "Federal
Reserve") for prior approval to become a bank holding company. The Bank intends
to service the western portion of Collier County, Florida. This area includes
the cities of Naples and Marco Island.
The Bank will not be authorized to conduct its banking business
until it receives a permit from the Comptroller and approval from the FDIC for
federal deposit insurance. The issuance by the Comptroller of the permit to
begin business and federal deposit insurance approval by the FDIC will depend,
among other things, upon the Bank's receiving adequate funds from the Company to
capitalize the Bank and upon compliance with certain standard conditions
expected to be imposed by the FDIC and the Comptroller. The organizers expect to
satisfy all conditions for organizing the Bank and to open for business during
the first quarter of 1998, or as soon thereafter as practicable.
STRATEGY
The Bank's strategy is to attain a market share by attracting
customers through a superior level of prompt and personalized banking service.
The goal of the organizers and management is to create a customer-driven
financial institution that gives high value to its customers by delivering
customized, quality products and services and by providing private-banking
services. Management believes that such a bank will appeal to customers who
prefer to conduct their banking business with a locally-managed financial
institution that demonstrates both a genuine interest in their financial affairs
and an ability to cater to their financial needs.
As a new financial institution, the Bank will employ current
technology in the conduct of its banking activities. The Bank intends to remain
at the forefront of technology, while minimizing the costs of its delivery, by
using third-party providers. The Bank expects to enter into third-party
arrangements to provide its customers with convenient electronic access to their
accounts and to deliver other bank products such as credit cards, debit cards
and home banking services. This "high touch-high tech" delivery of bank services
is expected to draw customers now receiving depersonalized bank services from
the Bank's larger competitors. This approach is also expected to appeal to the
business community and to younger customers seeking the convenience of high tech
and electronic banking. SEE "Business -- Strategy."
In recent years, the banking industry in Collier County has
experienced substantial consolidation and large bank holding companies,
headquartered outside of southwest Florida, have acquired a significant number
of financial institutions that were previously locally-owned and managed. This
consolidation has been followed by numerous pricing changes, the dissolution of
local boards of directors, changes in management and branch personnel and, in
the perception of the Bank's organizers, a decline in the level of personal
customer service. As a result of this industry consolidation, the organizers and
management believe that the competitive and economic environment in Collier
County will be receptive to a new, independent, and locally-managed bank that is
able to provide its individual and business customers with professional and
personalized attention. The Bank will be one of only three locally managed
community banks with its main office located in the market area.
PREMISES AND BANK MARKET AREA
The Company and the Bank are now located in temporarily leased
offices at 999 Ninth Street South, Naples, Florida 34102 and its telephone
number at that address is (941) 434-0441. The permanent executive offices of the
3
<PAGE>
Company and the offices of the Bank will be in leased premises at 1010 Fifth
Avenue South, Naples, Florida 34102. This location is in downtown Naples and is
conveniently located for the majority of the residents of western Collier
County. The Bank currently plans to open one or more branches in north Naples by
the end of its second year of operations.
Naples serves as the county seat of Collier County, Florida.
Between 1980 and 1990, the population of Collier County almost doubled. The
estimated year-round population of Collier County in 1997 is 202,903 and, by
year 2015, it is projected that the population will be 315,900. The population
of Collier County rises by approximately one-third during the winter season
(November - April) each year because of tourism and the return of seasonal
residents. Collier County's economic base is built primarily on services, retail
trade, agriculture, government and construction. According to 1995 statistics,
the median family income in Collier County was $48,800 and the average household
effective buying income was $55,928, the highest in the State of Florida. In
1995, the median age in Collier County was 42.5 years.
MANAGEMENT
The organizers and directors of the Company are all recognized
and established individuals in the local community. As a group, they have
significant banking and business experience with many close, long-term ties to
the Naples area. Sidney T. Jackson, the President and Chief Executive Officer of
the Company and the proposed President and Chief Executive Officer of the Bank,
has a total of 33 years of banking experience, the past 22 years with banks in
Naples. Most recently, Mr. Jackson served as senior vice president and senior
operations officer with Southwest Banks, Inc. He attended the University of
Florida and the School of Banking of the South. Mr. Jackson is active in local
community affairs. In 1996 he was Chairman of the United Way of Collier County
and he is presently involved in the Collier County 100 Club and the Chamber of
Commerce.
In addition to himself, Mr. Jackson has identified a management
team, which the Company and the Bank propose to hire, consisting of a senior
lending officer knowledgeable in the Collier County market, a highly experienced
chief financial officer and Ronald L. Kennedy, a seasoned bank business
development officer, who is currently employed by the Company. Mr. Jackson has
previously worked with each member of this proposed team at other financial
institutions and, based on these prior working relationships, it is anticipated
that the management team will operate in a cohesive, integrated manner from the
outset of the Bank operations.
The directors of the Company represent a wide range of business,
banking, and investment knowledge in the Naples area. John Humphrey is founder,
president, and chief executive officer of an international packaging company
located in Naples. He is a past chairman of the Economic Development Council of
Collier County and he previously served on the board of SunTrust Bank -
Southwest Florida. Leonard Llewellyn is founder and chairman of a real estate
consulting firm in Naples. He is a former Captain/Pilot for the United States
Marine Corps and a Navy/Marine Corps "Top Gun". Mr. Llewellyn previously served
as a director of the Founders National Trust Bank and the First National Bank &
Trust Company of Naples. Edward McNamara is president and chief executive
officer of a beverage distributor. He is a director of the Leadership Collier
Steering Committee, World Class Collier Education Committee and the Economic
Development Council of Collier County. Mike Riley is the founder and owner of
Michael J. Riley, Consulting, which provides financial, business planning and
computer consulting services to corporations. Mr. Riley also serves as president
of Holland Salley, Inc., an upscale interior design firm in Naples. He is active
in the Naples Area Chamber of Commerce and the Economic Development Council of
Collier County.
The Company's directors believe that their long-standing ties to
the community, coupled with their combined business and banking experience,
provide them with a unique perspective of the area's needs and desire for a new
independent bank under local control. Further, the directors believe that their
personal involvement in the business and community affairs of the Naples area
will be attractive to individual and business bank customers seeking to do
business with a locally-owned and managed bank.
COMPETITION
The banking business in Collier County is highly competitive.
There are many larger financial institutions that operate in this area,
including the subsidiary banks of statewide, regional, and national bank holding
companies and thrifts. Also, newly effective federal laws now permit nationwide
banking and branching, which may result in increased competition. Management
proposes to meet this competition by providing its customers with highly
professional, personalized attention, responding in a timely manner to product
and service requests and exhibiting an active interest in customers' business
and personal financial needs. SEE "Risk Factors -- Competition" and
"Business--Competition."
4
<PAGE>
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<CAPTION>
THE OFFERING
<S> <C>
Securities offered............... Common Stock, $.01 par value, of the Company
Public Offering Price ........... $10.00 per share
Minimum purchase................. 1,000 shares ($10,000)
Maximum purchase................. 50,000 shares ($500,000)
Common Stock to be outstanding
after this offering............. 1,500,000 shares
Use of proceeds ................. The net proceeds to the Company from this offering (assuming no exercise of the
over-allotment option) are estimated to be $13,790,000. The Company will invest
$10 million of the net proceeds of this offering in the Bank to provide the Bank's
initial capitalization by purchasing all of the Bank's captial stock. The Bank will
use approximately $320,000 of these funds to pay a portion of the cost to build-out
the leased premises, which will serve as its main office, approximately $357,000 to
purchase furniture, fixtures, equipment, and other necessary assets for the Bank's
operations and approximately $93,400 to repay to the Company money borrowed
for the Bank's organizing expenses. It is currently anticipated that the balance of
the net proceeds received by the Bank will be used to fund loans and other
investments and for the payment of operating expenses. Additionally, a total of
$852,000 of the net proceeds of this offering will be used by the Company to repay
the principal, fees, and accrued interest of a series of organizational loans made to
the Company by certain individual lenders. The Company will use $1,000 of the
net proceeds to redeem the 100 shares of Common Stock issued to facilitate the
Company's organization. The remaining funds (including any net proceeds from
an exercise of the Underwriters' over-allotment option) will initially be invested by
the Company in investment grade securities and held by the Company as working
capital for general corporate purposes and to pay operating expenses. The funds
will also be available for possible future capital contributions to the Bank, to
finance possible acquisitions of other financial institutions or to fund expansion
into other lines of business closely related to banking. SEE "Use of Proceeds."
Risk factors..................... The purchase of the securities offered hereby involves a high degree of risk and
should be considered only by persons who can afford to sustain the total loss of
their investment. SEE "Risk Factors."
</TABLE>
SUMMARY FINANCIAL DATA
AUGUST 31, 1997
--------------------------------
BALANCE SHEET DATA: ACTUAL AS ADJUSTED (1)
----------- ---------------
Cash and securities ................. $ 412,193 $13,371,675
Total assets ........................ 531,140 13,490,622
Total liabilities ................... 871,029 41,511
Shareholders' equity ................ $ (339,889) $13,449,111
(1) Adjusted to reflect the application of the estimated net proceeds from this
offering. See "Use of Proceeds."
5
<PAGE>
RISK FACTORS
THE COMMON STOCK OFFERED HEREBY IS SPECULATIVE, INVOLVES A HIGH
DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS
OF THEIR ENTIRE INVESTMENT. THE FOLLOWING CONSTITUTE SOME OF THE POTENTIAL RISKS
OF AN INVESTMENT IN THE COMMON STOCK AND SHOULD BE CAREFULLY CONSIDERED BY
PROSPECTIVE INVESTORS PRIOR TO PURCHASING SHARES OF COMMON STOCK. THE ORDER OF
THE FOLLOWING IS NOT INTENDED TO BE INDICATIVE OF THE RELATIVE IMPORTANCE OF ANY
DESCRIBED RISK NOR IS THE FOLLOWING INTENDED TO BE INCLUSIVE OF ALL RISKS OF
INVESTMENT IN THE COMMON STOCK. BECAUSE THE COMPANY IS ONLY RECENTLY FORMED AND
THE BANK WILL ONLY OBTAIN THE NECESSARY REGULATORY APPROVALS IN THE FUTURE BUT
WILL NOT HAVE COMMENCED BANKING OPERATIONS AS OF THE DATE HEREOF, PROSPECTIVE
INVESTORS DO NOT HAVE ACCESS TO ALL OF THE INFORMATION THAT, IN ASSESSING THEIR
PROPOSED INVESTMENT, IS AVAILABLE TO THE PURCHASERS OF SECURITIES OF A FINANCIAL
INSTITUTION WITH A HISTORY OF OPERATIONS. THE COMPANY'S PROFITABILITY WILL
DEPEND PRIMARILY UPON THE BANK'S OPERATIONS AND THERE IS NO ASSURANCE THAT THE
BANK WILL EVER OPERATE PROFITABLY.
REGULATORY APPROVALS
The Company's organizers filed pending applications on behalf of
the Bank with the Comptroller and with the FDIC on June 30, 1997, for authority
to organize as a national bank, the deposits of which will be federally insured,
up to the extent permitted by law, and to conduct a commercial banking business
in Naples, Florida. Additionally, the Company must apply for and receive
approval from the Federal Reserve before it can become the holding company of
the Bank. The Company will file this application following receipt of
preliminary bank approval from the Comptroller and the FDIC. These regulatory
approvals will be subject to certain conditions, including the requirement that
the Bank is adequately capitalized. The Company proposes to satisfy this
requirement by using $10 million of the proceeds from this offering to purchase
all of the capital stock of the Bank. SEE "Use of Proceeds". While the
organizers currently anticipate receiving bank and bank holding company
regulatory approvals during the fourth quarter of 1997, no assurances can be
given that the required approvals will be granted in a timely manner, if at all.
If such regulatory approvals are substantially delayed, the Company's
accumulated deficit will continue to increase. If such regulatory approvals are
not obtained, the Company would not be able to commence its banking activities
and would probably be liquidated and dissolved. Upon liquidation, investors
would likely realize a substantial loss on their investment. SEE "Failure to
Commence Operations", below.
FAILURE TO COMMENCE OPERATIONS
Subsequent to the sale of the shares of the Common Stock of the
Company, events could occur that might have the effect of delaying or preventing
the Bank from commencing business. Any delay in commencing operations will
increase the pre-opening expenses and postpone realization by the Bank of
potential revenues and income. Absent the commencement of profitable operations,
the Company's accumulated deficit will continue to increase (and book value per
share decrease) as operating expenses such as salaries and other administrative
expenses continue to be incurred. After the offering and prior to the time the
Bank receives final approvals from the OCC and the FDIC to commence banking
operations, the proceeds from this offering will be segregated, but will be
available for general operating expenses of the Company and the Bank, including
costs associated with opening the Bank's main facility. Although the proceeds
from this offering will be segregated, they may still be subject to claims of
creditors of the Bank and the Company, including note holders of the Company's
organizational loans, the proceeds of which were used to pay the organizational
and pre-opening expenses of the Company the Bank. The Company may use these
segregated funds to prepay the principal, fees, and accrued interest of the
organizational loans to the extent that a lender purchases Common Stock in the
offering. As a result, if a liquidation of the Company were to occur, investors
in this offering would likely realize substantially less than the $10 per share
public offering price and would suffer a significant loss. SEE "Use of
Proceeds," and "Capitalization."
NO OPERATING HISTORY; SIGNIFICANT INITIAL LOSSES EXPECTED
The Bank, which initially will be the sole subsidiary of the
Company, is in organization and neither the Bank nor the Company have any
operating history on which to base any estimate of its future prospects. The
Company's initial profitability will depend largely upon the Bank's operations
and, to a lesser extent, upon the investment results of the Company's investment
portfolio. The Bank's proposed operations are subject to risks inherent in the
establishment of a new business and, specifically, a new bank. At the outset,
all of the Bank's loans will be unseasoned as they will be new loans to new
borrowers. It will take several years to determine the borrowers' payment
histories and the quality of the Bank's loan portfolio cannot be determined
until that time. The Bank expects to incur a substantial loss in at least its
first two years of operations.
6
<PAGE>
DEPENDENCE ON MANAGEMENT
The Company and the Bank are, and for the foreseeable future will
be, dependent upon the services of Sidney T. Jackson, as President and Chief
Executive Officer of the Company and as Chairman and Chief Executive Officer of
the Bank. The loss of Mr. Jackson could adversely affect the operations of the
Company and the Bank. In light of the Company's dependence upon the banking
expertise of its Chief Executive Officer, the Company has obtained a key person
life insurance policy on Mr. Jackson in the amount of $1.5 million, payable to
the Company. SEE "Management."
COMPETITION
The banking business is highly competitive. The Bank, as a
financial institution, will serve as a financial intermediary for its customers
and, as such, will compete with other commercial banks, savings and loan
associations, credit unions, finance companies, mutual funds, insurance
companies, and brokerage and investment banking firms soliciting business from
residents of western Collier County, Florida. Most of such entities have greater
resources than those that will be available to the Bank or the Company. Some of
the financial institutions and financial services organizations with which the
Bank will compete are not subject to the same degree of regulation as the Bank.
As of June 30, 1996, approximately 21 financial institutions with a total of 90
branches were located in Collier County, Florida, the Bank's proposed primary
service area. These financial institutions aggressively compete for business in
the Bank's proposed market area. Most of these competitors have been in business
for many years, have established customer bases, are larger, have substantially
higher lending limits than the Bank and will be able to offer certain services,
including trust services, multiple branches, and international banking services,
which the Bank can offer only through correspondent banks or third party
providers, if at all. In addition, most of these entities have greater capital
resources than the Bank which, among other things, may allow them to price their
services at levels more favorable to the customer and to provide larger credit
facilities than the Bank. Additionally, recently passed federal and state
legislation regarding interstate branching and banking may act to increase
competition in the future from larger out-of-state banks. SEE "Business."
LENDING RISKS
In originating loans, there is a substantial likelihood that
credit losses will be experienced. The risk of loss will vary with, among other
things, general economic conditions, the type of loan being made, the
creditworthiness of the borrower over the term of the loan and, in the case of a
collateralized loan, the quality of the collateral for the loan. Additionally,
certain lending activities involve greater risks. Historically, commercial loans
have been more risky than residential real estate mortgage loans. While the Bank
intends to make residential real estate and consumer credit loans, it will focus
its lending activities on small to medium-sized businesses. This lending focus
may result in the Bank having a large concentration of loans to such businesses
and, as a result, the Bank may assume greater lending risks than banks which do
not have a concentration of such loans. Management will attempt to minimize the
Bank's credit exposure by carefully monitoring the concentration of its loans
within specific industries and through prudent loan application and approval
procedures, but there can be no assurance that such monitoring and procedures
will reduce these lending risks. A significant number of loan defaults and
nonpayments would have a material adverse effect on the Bank's, and in turn the
Company's, earnings and overall financial condition as well as the value of the
Common Stock.
IMPACT OF INTEREST RATES AND ECONOMIC CONDITIONS
The results of operations for financial institutions, including
the Bank, may be materially and adversely affected by changes in prevailing
economic conditions, including declines in real estate market values, rapid
changes in interest rates, and the monetary and fiscal policies of the federal
government. The Bank's profitability will, in part, be a function of the spread
between the interest rates earned on investments and loans and the interest
rates paid on deposits and other interest-bearing liabilities. In the early
1990s, many banking organizations experienced historically high interest rate
spreads. More recently, interest rate spreads have generally narrowed due to
changing market conditions and competitive pricing pressures, and there can be
no assurance that such factors will not continue to exert such pressure or that
high interest rate spreads will return. Substantially all of the Bank's loans
will be to businesses and individuals in western Collier County, and any decline
in the economy of this area could have a material adverse impact on the Bank.
Like most banking institutions, the Bank's net interest margin will be affected
by general economic conditions and other factors that influence market interest
rates and the Bank's ability to respond to changes in such rates. At any given
time, the Bank's assets and liabilities will be such that they are affected
differently by a given change in interest rates. An increase or decrease in
interest rates, the length of loan terms or the mix of adjustable and fixed rate
loans in the Bank's
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portfolio could have a positive or negative effect on the Bank's net income,
capital, and liquidity. There can be no assurance that the positive trends or
developments discussed in this Prospectus will continue or that negative trends
or developments will not have a material adverse effect on the Bank and, in
turn, the Company.
GOVERNMENT REGULATION AND MONETARY POLICY
Bank holding companies and banks operate in a highly regulated
environment and are subject to supervision and examination by bank regulatory
agencies. As a bank holding company, the Company will be subject to regulation
and supervision by the Federal Reserve. As a national bank, the deposits of
which will be federally-insured up to the extent permitted by law, the Bank will
be subject to regulation and supervision primarily by the Comptroller and, to a
lesser extent, by the FDIC. Additionally, certain Florida state laws, primarily
pertaining to maximum rates of interest that may be charged on loans, will apply
to the Bank's operations. Laws and regulations govern, among other things,
certain debt obligations of a bank holding company, changes in the control of a
bank holding company, maintenance of adequate capital for the general business
operations and financial condition of a financial institution, permissible
types, amounts, and terms of loans and investments, restrictions on dividend
payments, establishment and closing of branch offices, entry into certain lines
of business and acquisition of other financial institutions. These and other
restrictions limit the manner in which the Company and the Bank may conduct
business and obtain financing. SEE "Supervision and Regulation."
NEED FOR CAPITAL; LIMITATION ON GROWTH; POTENTIAL DILUTION
After the application of the net proceeds from this offering, the
Company does not currently anticipate the need for additional capital in the
next twelve months to commence and conduct its planned business activities.
Additional capital, in excess of that which will be provided by this offering
and any amounts generated by the Bank's operations, would probably be necessary
before the Company could undertake any significant acquisitions or expand its
operations beyond those presently planned. There can be no assurance that the
funds necessary to finance any future acquisitions or expansion will be
available.
In its applications to the federal bank regulators for authority
to operate a national bank and form a bank holding company, the organizers have
represented that during the Bank's first three years of operations the Bank will
maintain a minimum ratio of Tier 1 capital (primarily shareholders' equity) to
total assets of not less than 8%. Compliance with this undertaking may limit the
Bank's ability to grow without additional capital. SEE "Supervision and
Regulation."
Under applicable federal bank regulations, based on a
capitalization of $10,000,000, less organizational expenses of $93,400, the
Bank's initial general lending limit to one borrower will be approximately
$1,372,000 plus an additional $915,000 for loans secured by readily marketable
collateral. This lending limit will be lower than the lending limit of most of
the Bank's competitors. This lower lending limit may affect the ability of the
Bank to develop relationships with the area's larger businesses, thereby
limiting the Bank's ability to grow. The Bank expects to accommodate loans in
excess of its lending limit through the sale of participations in these loans to
other banks. There can be no assurance, however, that the Bank will be
successful in attracting or maintaining customers seeking larger loans or that
the Bank will be able to arrange participations of such loans on terms favorable
to the Bank.
To the extent the Company sells additional equity securities to
finance future growth and expansion of the Company or the Bank, such sales could
result in a significant dilution to the interests of persons purchasing shares
of Common Stock in this offering.
TECHNOLOGY BASED PRODUCTS AND SERVICES
The banking industry is undergoing rapid technological changes
with frequent introductions of new technology- driven products and services. In
addition to better serving customers, the effective use of technology increases
efficiency and enables financial institutions to reduce costs. The Bank's future
success will depend in part on its ability to address the needs of its customers
by using technology to provide products and services that will satisfy customer
demands for convenience as well as to create additional efficiencies in the
Bank's operations. Many of the Bank's competitors have substantially greater
resources to invest in technological improvements and highly skilled technical
staffs. To be and remain competitive, evolving technology may require the Bank
to expend significant amounts on computer hardware and software and on
compensation for employees skilled and knowledgeable in technology. There can be
no assurance that the Bank will be able to effectively implement new
technology-driven products and services
8
<PAGE>
or be successful in marketing these products and services to its customers.
NO CASH DIVIDENDS
It is anticipated that no cash dividends will be paid on the
Common Stock for the foreseeable future. It is likely that the Company will be
largely dependent upon cash dividends paid by the Bank for funds to pay cash
dividends on the Common Stock, if and when such cash dividends are declared. The
Bank does not anticipate paying dividends during the early years of its
operations. No assurance can be given that future earnings of the Bank, and
resulting cash dividends paid to the Company, together with any earnings from
the Company's other investments and activities, will be sufficient to permit the
legal payment of cash dividends to Company shareholders at any time in the
future. Even if the Company may legally declare dividends, the amount and timing
of such dividends will be at the discretion of the Company's board of directors.
The board may, in its sole discretion, decide not to declare dividends. For a
more detailed discussion of other regulatory limitations on the payment of cash
dividends by the Company, SEE " Dividend Policy."
ANTI-TAKEOVER PROVISIONS
Under the Federal Change in Bank Control Act (the "Control Act"),
a notice must be submitted to the Federal Reserve if any natural person or,
generally, a group of natural persons acting in concert seeks to acquire 10% or
more of any class of outstanding voting securities of the Company, unless the
Federal Reserve determines that the acquisition will not result in a change of
control of the Company. Under the Control Act, the Federal Reserve has sixty
days within which to act on such notice, taking into consideration certain
factors, including the financial and managerial resources of the acquiror, the
convenience and needs of the community to be served by the bank holding company
and its subsidiary banks, and the antitrust effects of the acquisition. Under
the Bank Holding Company Act of 1956, as amended, (the "BHC Act") a company is
generally required to obtain prior approval of the Federal Reserve before it may
obtain control of a bank holding company. Control is generally described to mean
the beneficial ownership of 25% or more of all outstanding voting securities of
a bank holding company, but may be as low as 5% under certain circumstances. SEE
"Supervision and Regulation."
Florida law contains provisions that might have the effect of
inhibiting a non-negotiated merger or other business combination. These
provisions are intended to encourage a person interested in acquiring the
Company to negotiate with, and obtain the approval of, the board of directors in
connection with the transaction. However, certain of these provisions might
discourage a future acquisition of the Company, including an acquisition in
which shareholders otherwise might receive a premium for their shares. SEE
"Description of Capital Stock." Further, the Company has agreed, subject to the
federal banking agencies having no objection thereto, to enter into an
employment agreement and stock option agreement with Sidney T. Jackson, the
President and Chief Executive Officer of the Company and the Chief Executive
Officer of the Bank, and, most likely, the Company and the Bank will enter into
similar agreements with certain future senior executives of the Company or the
Bank. These agreements might render an acquisition of the Company more costly
and therefore less probable, by triggering provisions for accelerated vesting of
stock options and the payment of severance compensation following any
involuntary or constructive employment termination of the executives. SEE
"Management." In addition, the board of directors has the authority to issue
shares of preferred stock and fix its rights and preferences, which could have
the effect of delaying or preventing a change of control. SEE "Description of
Capital Stock."
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation and By-Laws provide for
the indemnification of its officers, directors, employees, and agents and
insulate its officers, directors, employees, and agents from liability for
certain breaches of the duty of care. In addition, as permitted by federal law,
the Bank's Articles of Association will provide for the indemnification of the
Bank's officers, directors, employees and agents to the fullest extent permitted
by the laws of Florida, subject only to the limits of the corporate powers of a
national bank. It is possible that the indemnification obligations imposed under
these provisions could result in a charge against the Company's or the Bank's
earnings and thereby, directly in the case of the Company and indirectly in the
case of the Bank, affect the availability of funds for payment of dividends to
the Company's shareholders.
DETERMINATION OF OFFERING PRICE
The initial offering price of $10.00 per share was determined by
negotiations between the Company and the
9
<PAGE>
Underwriters. This price is not based upon earnings or any history of operations
and should not be construed as indicative of the present or anticipated future
value of the Common Stock. If a market should develop for the Common Stock of
the Company, there is no assurance that any of the Common Stock offered hereby
could be resold for the initial offering price or any other amount. SEE
"Underwriting."
NO PRIOR PUBLIC MARKET; LIMITED TRADING MARKET EXPECTED
Prior to this offering, there has been no public trading market
for the Common Stock. The public offering price has been determined by
negotiations between the Company and the Underwriters and may be greater than
the market price for the Common Stock following this offering. The Company
expects that the quotations for the Common Stock will be reported on the OTC
Bulletin Board under the symbol " * ." Robert W. Baird & Co. Incorporated, one
of the Underwriters, has advised the Company that it presently intends to make a
market in the Common Stock after the commencement of trading, subject to
applicable laws and regulatory requirements, but no assurances can be made as to
the liquidity of the Common Stock or that an active and liquid trading market
will develop or, if developed, that it will be sustained. Robert W. Baird & Co.
Incorporated will have no obligation to make a market in the Common Stock,
however, and may cease market-making activities, if commenced, at any time.
Making a market in securities involves maintaining bid and ask quotations and
being able, as principal, to effect transactions in reasonable quantities at
those quoted prices, subject to various securities laws and other regulatory
requirements. The development of a public trading market depends, however, upon
the existence of willing buyers and sellers, the presence of which is not within
the control of the Company, the Bank or any market maker. Even with a market
maker, factors such as the limited size of this offering, the lack of earnings
history for the Company, and the absence of a reasonable expectation of
dividends within the near future mean that there can be no assurance of an
active and liquid market for the Common Stock developing in the foreseeable
future. If a market develops, there can be no assurance that a market will
continue, or that shareholders will be able to sell their shares at or above the
Public Offering Price. Purchasers of Common Stock should carefully consider the
potentially illiquid and long-term nature of their investment in the shares
being offered hereby.
RECENT DEVELOPMENTS
Since August 31, 1997, the date of the Company's most recent
audited financial statements, the Company has continued to incur pre-opening
expenses. As of October 31, 1997, the Company's accumulated deficit was $ * .
The additional expenses incurred related principally to legal and professional
fees incurred in the regulatory application process and in connection with this
offering, employee salaries and benefits, office supplies, equipment rental, and
prepayment of three organizational loans aggregating $150,000 together with the
interest and funding fees thereon.
USE OF PROCEEDS
Net proceeds to the Company from the sale of the 1,500,000 shares
of Common Stock offered hereby are estimated to be $13,790,000 ($15,882,500 if
the Underwriters' over-allotment option is exercised in full), after deduction
of the underwriting discounts and commissions and estimated offering expenses.
The net proceeds of this offering will be segregated in an escrow
account until the Bank's receipt of final approvals from the OCC and the FDIC to
commence banking operations, but the net proceeds will be available for general
operating expenses of the Company and the Bank, including costs associated with
opening the Bank's main facility and repayment of certain loans, as described
below. The Company will use $10 million of the net proceeds of this offering to
purchase all of the capital stock of the Bank to provide the Bank's initial
capitalization. Of this amount, the Bank expects to use approximately $320,000
of these funds to pay a portion of the cost of renovating the premises in which
it is anticipated that the Bank's offices will be located, approximately
$357,000 to purchase necessary furniture, fixtures, and equipment for the Bank's
offices, and approximately $93,400 to repay the Company for the Bank's
organizational expenses. It is currently anticipated that the amounts remaining
will be used by the Bank to fund investments in loans, U.S. government and
agency securities and federal funds sold and for the payment of the Bank's
operating expenses.
The Company will also use a portion of the net proceeds of this
offering to repay a series of organizational loans, with an aggregate principal
amount of $750,000, made to the Company by 26 individual lenders. The loans are
evidenced
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<PAGE>
by 26 separate promissory notes and range in amount from $25,000 to $100,000.
The interest rate on the loans is 8% per annum and a funding fee equal to 8% of
the principal is due each lender. Each note, which may be prepaid, has a
maturity date of March 31, 1998. Assuming a prepayment date of November 1, 1997,
a total of $852,000 of the net proceeds of this offering will be used to pay the
principal, accrued interest, and the fees for these loans. For each month that
the loans remain outstanding thereafter, interest will accrue at the rate of
$5,000 per month. Prior to receipt by the Bank of final governmental approvals,
the Company may repay the loans, from the net proceeds of this offering being
held in a segregated escrow account described above, to the extent that a lender
purchases Common Stock in this offering. The proceeds of the organizational
loans have been used by the Company to pay organizational and pre-opening
expenses of the Company and the Bank. These expenses include a loan referral fee
equal to 10% of the aggregate principal of the loans, attorney, accounting and
consulting fees, prepayment of the principal, interest and funding fees of
certain organizational loans, office and equipment rental and purchase, employee
salaries and benefits, and government filing and application fees. As of August
31, 1997, these costs totaled $340,889.
Remaining net proceeds of this offering, estimated to be
$2,950,000 (plus any net proceeds as a result of the exercise of the
Underwriters' over-allotment option), will initially be invested by the Company
in investment grade securities and held by the Company as working capital for
general corporate purposes and to pay operating expenses. The funds will also be
available for possible future capital contributions to the Bank, to finance
possible acquisitions of other financial institutions, or to fund the Company's
expansion into other lines of business closely related to banking.
DIVIDEND POLICY
The Company expects that initially all Company and Bank earnings,
if any, will be retained to finance the growth of the Company and the Bank and
that no cash dividends will be paid for the foreseeable future. The Company's
By-Laws provide that the Company's board of directors may declare dividends in
cash, property or shares unless the Company is insolvent or the payment of the
dividends would make the Company insolvent, subject to the requirement that cash
or property dividends may only be paid out of unreserved and unrestricted earned
surplus or capital surplus. The Company will be largely dependent upon cash
dividends paid by the Bank for funds to pay cash dividends on the Common Stock,
if and when such cash dividends are declared. As a national bank, the Bank's
ability to pay cash dividends will be subject to the laws, regulations, and
policies of the Comptroller. In general, a national bank may only pay cash
dividends out of undivided profits, subject to other applicable provisions of
law. Further, as a bank holding company, the Company will be subject to
regulation by the Federal Reserve, which has expressed its view that a
financially weak bank holding company should not pay cash dividends exceeding
its net income or which could only be funded in ways that would further weaken
it, such as by borrowing. The Company will also be restricted in the payment of
dividends by Florida law which prohibits a corporation from making a
distribution to its shareholders if, after giving effect to the distribution,
the corporation would be unable to pay its debts as they become due in the usual
course of business, or if the corporation's total assets would be less than the
sum of its total liabilities. SEE "Supervision and Regulation." Even if the
Company may legally declare cash dividends, the amount and timing of such
dividends will depend on the Bank's earnings, capital requirements, financial
condition, and other factors considered relevant by the Company's board. The
board may in its sole discretion decide not to declare dividends even if they
may be legally paid.
CAPITALIZATION
The following table sets forth the capitalization of the Company
as of August 31, 1997, and the pro forma consolidated capitalization of the
Company and the Bank, as adjusted to give effect to the sale of the shares of
Common Stock offered hereby:
<TABLE>
<CAPTION>
AUGUST 31, 1997
---------------------------
ACTUAL AS ADJUSTED(1)
-------- ---------------
<S> <C> <C>
Long term and short term debt .................................. $750,000 $ - 0 -
Shareholders' equity:
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<PAGE>
Preferred Stock, $.01 Par value, 2,000,000 shares authorized; no
shares issued or outstanding ................................... - 0 - - 0 -
Common Stock, par value $.01 Per share, 10,000,000 shares
authorized; 100 shares issued and outstanding; 1,500,000 shares
Issued ($10 each) and outstanding as adjusted (2) .............. 1 15,000
Additional paid-in capital ..................................... 999 13,775,000
Accumulated deficit (3) ........................................ (340,889) (340,889)
Total shareholders' equity ..................................... $ (339,889) $13,449,111
<FN>
- ------------------------
(1) As adjusted to give effect to this offering and the net proceeds of this
offering.
(2) Does not include 100 shares of common stock issued to facilitate
organization of the Company to be redeemed at their original aggregate cost
of $1,000 or 25,000 shares of Common Stock issuable upon exercise of
options to be granted to Sidney T. Jackson under a stock option agreement
to be entered into by Mr. Jackson and the Company. See "Management -- Stock
Option Agreement."
(3) This deficit reflects pre-opening expenses, incurred through August 31,
1997, consisting primarily of salaries, employee benefits, legal and
consulting fees, a loan referral fee, and office and equipment rental.
</FN>
</TABLE>
BUSINESS
GENERAL
The Company was incorporated under the laws of the State of
Florida on January 23, 1997, primarily to serve as a bank holding company for
the Bank. The Company intends to use $10 million of the net proceeds from this
offering to purchase all of the capital stock of the Bank. The Bank is in the
process of being organized as a national bank under federal law. The Bank has
pending an application with the Comptroller for a national bank charter and with
the FDIC for federal deposit insurance. After the Bank receives preliminary
approval from the Comptroller and the FDIC, the Company will file an application
with the Federal Reserve for prior approval to become a bank holding company
within the meaning of the BHC Act. SEE "Supervision and Regulation.". The Bank
intends to service the western portion of Collier County, Florida. This area
includes the cities of Naples and Marco Island.
The Bank will not be authorized to conduct its banking business
until it receives a permit from the Comptroller and approval from the FDIC for
federal deposit insurance. The issuance by the Comptroller of the permit to
begin business and federal deposit insurance approval by FDIC will depend, among
other things, upon the Bank's receiving adequate funds from the Company to
capitalize the Bank and upon compliance with certain standard conditions
expected to be imposed by the FDIC and the Comptroller. The organizers expect to
satisfy all conditions for organizing the Bank and to open for business during
the fourth quarter of 1997, or as soon thereafter as practicable.
The Company was organized to facilitate the Bank's ability to
serve its future customers' requirements for financial services. The holding
company structure is expected to provide flexibility for expansion of the
Company's banking business through the possible acquisition of other financial
institutions and the provision of additional banking and non-banking related
services, which the traditional commercial bank cannot provide under present
laws. Further, the Company may borrow funds, subject to capital adequacy
guidelines of the Federal Reserve, and invest in capital instruments of the Bank
and otherwise raise capital in a manner which is unavailable to the Bank under
existing banking regulations. The net proceeds of this offering remaining after
the Company capitalizes the Bank (including the net proceeds from an exercise of
the Underwriters' over-allotment option, if any, and less the Company's
organizational expenses) will initially be invested by the Company in investment
grade securities, as permitted under federal banking law, and held by the
Company as working capital for general corporate purposes and to pay operating
expenses.
The Company has no present plans to acquire or establish any
operating subsidiaries other than the Bank. It
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<PAGE>
is expected, however, that the Company may make additional acquisitions in the
future if the Company becomes profitable and such acquisitions are deemed to be
in the best interest of the Company and its shareholders. Such acquisitions, if
any, will be subject to certain regulatory approvals and requirements. SEE
"Supervision and Regulation".
The Bank intends to be a full service commercial bank. The Bank
plans to offer personal and business checking accounts, senior checking
accounts, interest-bearing checking accounts, savings accounts, money market
accounts, and various types of certificates of deposit. The Bank also plans to
offer consumer installment loans, real estate loans, construction loans, second
mortgage loans, including home equity lines, lines of credit and commercial
loans. In addition, the Bank intends to provide such services as official bank
checks and money orders, MasterCard and Visa credit cards, safe deposit boxes,
traveler's checks, bank by mail, direct deposits, United States Savings Bonds,
and ATM and debit cards.
BUSINESS STRATEGY
The Bank's strategy is to attain a market share by attracting
customers with a superior level of prompt and personalized banking service. The
goal of the organizers and management is to create a customer-driven financial
institution that gives high value to its customers by delivering customized,
quality products and services and by providing private-banking. Management
believes that such a bank will appeal to customers who prefer to conduct their
banking business with a locally-managed financial institution that demonstrates
both a genuine interest in their financial affairs and an ability to cater to
their financial needs.
As a new financial institution, the Bank will use current
technology. The Bank intends to remain at the forefront of technology, while
minimizing the costs of its delivery, by using third-party providers. The Bank
expects to enter into third-party arrangements to provide its customers with
convenient electronic access to their accounts and to deliver other bank
products such as credit cards, debit cards and home banking services. This "high
touch-high tech" delivery of bank services is expected to draw customers now
receiving depersonalized bank services from the Bank's larger competitors. This
approach is also expected to appeal to the business community and to younger
customers seeking the convenience of high tech and electronic banking.
In recent years, the banking industry in Collier County has
experienced substantial consolidation as large bank holding companies,
headquartered outside southwest Florida, have acquired a significant number of
financial institutions that were previously locally-owned and managed. This
consolidation has been followed by numerous pricing changes, the dissolution of
local boards of directors, changes in management and branch personnel and, in
the perception of the Bank's organizers, a decline in the level of personal
customer service. As a result of this industry consolidation, the organizers and
management believe that the competitive and economic environment in Collier
County will be receptive to a new, independent and locally-managed bank that is
able to provide its individual and business customers with professional and
personalized attention. The Bank will be one of only three locally- managed
community banks with its main office located in the market area.
Management of the Bank intends to implement an active officer
call program to promote these efforts. The purpose of this call program will be
to describe the products, services, and strategies of the Bank to both existing
and new business prospects. Directors are expected to actively market the Bank
through their business and social contacts. All of the organizers are active
members of the Naples community and their continued active community involvement
will provide an opportunity to promote the Bank, its products, and services. The
organizers intend to utilize advertising and selling efforts in order to build a
distinct institutional image for the Bank and to attract a customer base.
COMPETITION
Competition in the Bank's market area is intense, competitive,
and market share is fragmented among a number of competitors. According to
statistics compiled by the FDIC, as of June 30, 1996, approximately 21 financial
institutions with a total of 90 branches were located in Collier County. The
Bank will also face competition from finance companies, insurance companies,
mortgage companies, securities brokerage firms, money market and mutual funds,
loan production offices, and other providers of financial services. Most of the
Bank's competitors have been in business for many years, have established
customer bases, are substantially larger, have substantially larger lending
limits than the Bank and can offer certain services, including multiple branches
and international banking services, that the Bank will be able to offer only
through correspondent banks, if at all. In addition, most of these entities have
greater capital resources than the Bank that, among other things, may allow them
to price their services at levels more favorable to clients and to provide
larger credit facilities than the Bank. The Company anticipates that the Bank's
legal lending limit
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<PAGE>
of approximately $1,372,000 will be adequate to satisfy the credit needs of most
of its customers and that the needs of its clients in excess of this amount will
be met through loan participation arrangements with correspondent banks and
others; however, there can be no assurance that the Bank will be successful in
arranging loan participations that will be both competitive with arrangements
offered by competitors of the Bank and in the Bank's best economic interests.
The Company believes that its personal service strategy will
enhance the Bank's ability to compete favorably by attracting individuals and
local businesses. The Bank will delegate appropriate authority to its personnel
to deal effectively and in a timely fashion with customer service needs. The
Bank expects to compete for loans principally through the type of loans offered,
interest rates, loan fees, and the quality of the service it will provide. The
Bank will actively solicit deposit-related customers and will compete for
deposits by offering customers personal attention, professional services and
competitive interest rates.
PRIMARY SERVICE AREA.
The Bank's Primary Service Area will be the western portion of
Collier County, Florida, which is located on the southwest coast of Florida.
Included in this area are the cities of Naples and Marco Island. Naples serves
as the county seat of Collier County and is located 35 miles south of Ft. Myers,
Florida and about 120 miles west of Miami, Florida. For a graphic depiction of
the Bank's proposed Primary Service Area see the map on the inside cover of this
Prospectus.
BANK LOCATION AND FACILITIES
The Bank will be located in downtown Naples at 1010 Fifth Avenue
South, Naples, Florida, on the first and second floors of a three-story office
building.
The downtown business district of Naples has several streets
with commercial and government buildings, residential structures, and churches.
Referred to as Olde Naples, the area primarily consists of established older
neighborhoods, law offices, retail establishments, restaurants, and brokerage
firms. The city government's administration buildings are within one mile of the
Bank's proposed office. The Chamber of Commerce and Naples Community Hospital
are also located near the Bank's proposed office. The downtown Fifth Avenue area
has been experiencing significant renovations for the past two years, with the
active support of the local government and business community. Many of the
older, one-story commercial buildings have been or are being renovated to become
two and three-story buildings, with retail establishments on the ground floors
and residential condominiums on the upper floors. In the immediate vicinity of
the Bank's proposed location, there are two new upscale hotels under
construction. A new U.S. Post Office facility recently opened two blocks from
the proposed Bank site. The City of Naples has current plans to modernize Sixth
Avenue South and Tenth Street South, both of which border the proposed Bank
location.
The Company entered into a lease agreement on July 30, 1997. The
commencement date of the lease will be the first day the Bank opens for business
and it will have a term of five years from the commencement date, with three
5-year renewal options. The lease covers approximately 14,748 square feet, of
which 6,990 square feet are located on the first floor and 7,758 square feet are
located on the second floor. The annual base rent is $276,913.69, payable in 12
equal monthly installments of $23,076.14, or $21.00 per leasable square foot per
year for the first floor space and $16.00 per leasable square foot per year for
the second floor space and $500.00 per month for the drive-in facility. The
annual rent for the second and each succeeding lease year will be recalculated
by adjusting the annual base rent by the Consumer Price Index. In addition to
the foregoing base rent, the Company will pay an additional rent equal to
66.77%, its pro rata share, of the real and personal property taxes levied on
the office building, the premiums for certain insurance coverage, and the cost
of maintaining the building's common areas. Under the lease, the initial
additional rent will be $4,387.48 per month. The Company plans to build-out the
first and second floors of the building. Under the lease, the landlord will
provide the Company with a tenant improvement allowance of $22.50 per leasable
square foot, for a total allowance of $331,826.40, to be applied by the Company
toward the cost of its leasehold improvements. The landlord will fund this
allowance based upon conditional releases of lien with the balance disbursed
upon the final releases of lien. In addition to amounts to be paid by the
landlord under tenant improvement allowance, the Company anticipates that, prior
to the commencement date, it will spend approximately $320,000 to renovate this
space. The banking lobby, commercial and consumer lending, safe deposit boxes,
private banking, and the office of the Chief Executive Officer will be located
on the first floor. The operations and the Company's executive offices will be
located on the second floor. The build-out and square footage are being designed
to accommodate the future growth and expansion of the Bank. Three outside
pneumatic drive-ups will be built, at the cost of the landlord, which will
contain an ATM and a night depository. The Company will carry appropriate levels
of property insurance which, in the opinion
14
<PAGE>
of management, will adequately protect both the contents of the leased premise
and the Company's investment in the leasehold improvements.
Pursuant to a sublease to be entered into, the Company will
sublease approximately 600 square feet of office space to Ashtin Kelly & Co.,
Incorporated ("Ashtin Kelly"), one of the Underwriters. In this office space,
which will be located on the first floor of the building in an area adjoining
the Bank's offices, Ashtin Kelly will conduct a retail brokerage operation.
Additionally, the Company has granted Ashtin Kelly a right of first refusal,
subject to the prior approval of the Company's board of directors, to sublease
any excess space at future Bank branch locations. Any sublease between the
Company and Ashtin Kelly will be negotiated at arms length and will have the
customary terms and conditions of such a sublease, including a market rate of
rent.
ECONOMIC AND DEMOGRAPHIC FACTORS
Collier County, Florida's estimated year round population for
1997 is 202,903 residents, the vast majority of whom live in the western portion
of the county. According to Enterprise Florida, Inc., Department of Research,
each year the county's population rises by approximately one-third during the
winter season (November through April). According to data developed by U.S.
Housing Markets, 28.4 residential building permits per 1,000 residents were
issued in the Naples area during 1996, ranking the Naples area first in the
country in number of building permits issued. Based upon research of the
University of Florida Bureau of Economic and Business Research, the Southwest
Florida region has been, and will continue to be, one of the fastest growing
regions in the United States.
Collier County has a diverse commercial and residential
environment with upscale resort areas, commercial office parks, residential
developments, shopping centers, and entertainment areas. Collier County is
located south of Lee County and 30 minutes from the Southwest Florida
International Airport, which has a large number of daily domestic and
international flights. The City of Naples is easily accessible from the major
cities in Florida through a modern, well-maintained federal and state super
highway system. Tourism is a contributing factor to the growth of Collier
County. Located at the gateway to the Everglades, Naples is a popular eco-travel
destination. Young professionals and wealthy retirees are among the many
residents attracted to this area by its quality of life and mild climate.
Between 1980 and 1990, the population of Collier County almost
doubled, from 85,971 to 152,099, and, in the last seven years, the population
has grown by another 50,804 to the current estimated population of 202,903,
according to information compiled by Enterprise Florida, Inc., Department of
Research. It is projected by Enterprise Florida, Inc. and the University of
Florida Bureau of Economic and Business Research that the population of Collier
County will be 315,900 by the year 2015. Also, according to the University of
Florida, in 1995, the median age in Collier County was 42.5 years.
According to statistics of the Department of Housing and Urban
Development, in 1995 the median family income in Collier County was $48,800 and,
according to data complied by Sales and Marketing Management, the 1995 average
household effective buying income was $55,928, both figures being the highest in
the State of Florida. Based on data of Claritas, the median value of a single
family home in Collier County was $156,483 in 1995.
Collier County's economic base is built on services, retail
trade, agriculture, government and construction. Historically, employment within
the county has been seasonal and associated with the seasonal based tourist
economy and return of seasonal residents during the winter months. In 1996, the
unemployment rate for Collier County was 6%, higher than the national average of
5.4% and the Florida average of 5.1%. Growth in the county's labor force from
1985 to 1995 was 68.6%, which was significantly higher than the State of
Florida's rate of 27.95%. The service industry is the largest segment of
employment by type with 31%, retail trade second with 24%, agriculture is third
with 14%, government fourth with 10%, and construction fifth with 9%.
PRODUCTS AND SERVICES
LENDING POLICY. The Bank is being established to meet the local
consumer and commercial financing needs of the residents and businesses of
Naples and the surrounding areas of western Collier County. Consequently, the
Bank intends to aggressively seek creditworthy loans in this limited geographic
area. The Bank will make consumer loans to individuals, primary and secondary
mortgage loans for the acquisition or improvement of personal residences, real
estate related loans, including construction loans for residential and
commercial properties, and commercial loans to small and medium-sized businesses
and professional concerns.
15
<PAGE>
Although the Bank proposes to take a progressive and competitive
approach to lending, it intends to stress high quality in its loans. To promote
such quality lending, the board of directors of the Bank will adopt appropriate
lending policies and procedures. Under these policies, a maximum lending
authority will be established for each loan officer. Each loan request exceeding
a loan officer's authority will be approved by one or more senior officers. On a
monthly basis, the entire board of directors will review all loans made in the
preceding month. In addition, a loan committee of the board of directors of the
Bank will review larger loans for prior approval when the loan request exceeds
the established limits for the senior officers. Because of the Bank's local
focus, management believes that quality control may be achieved while still
providing prompt and personal service.
The Bank intends to maintain a continuous loan review process
designed to promote early identification of credit quality problems. The Bank's
credit review administrator will be responsible for conducting a continuous
internal review which tests compliance with loan policy and documentation of all
loans. Any past due loans and identified problem loans will be reviewed with the
board of directors on a monthly basis.
Under the regulations of the Comptroller, a national bank's total
outstanding loans and extensions of credit, both secured and unsecured, to one
borrower may not exceed 15 % of the bank's capital and surplus, plus an
additional 10% of the bank's capital and surplus, if the amount that exceeds the
15% general limit is fully secured by readily marketable collateral, as defined
in the regulations. Under these regulations, the Bank's initial general lending
limit to one borrower will be approximately $1,372,000 plus an additional
$915,000 for loans secured by readily marketable collateral. While the Bank
expects generally to employ more conservative lending limits, the board of
directors will have discretion to lend up to these legal lending limits.
REAL ESTATE LOANS. The Bank will make real estate loans,
consisting primarily of one-to-four unit family structures. The loans, which are
generally long-term, will have either fixed or variable interest rates. It will
be the Bank's general policy to retain all variable interest rate mortgage loans
in the Bank's loan portfolio and to sell in the secondary market all fixed rate
loans but retain the servicing rights to the loans sold. This policy will be
subject to review by management and the Bank's board of directors as a result of
changing market and economic conditions and other relevant factors.
Retention of variable interest rate loans in the Bank's loan
portfolio is expected to reduce the Bank's exposure to fluctuations in interest
rates. However, such loans generally pose credit risks different from the risks
inherent in fixed rate loans, primarily because as interest rates rise, the
underlying payments from the borrowers rise, thereby increasing the potential
for default.
Additionally, the Bank will make residential construction loans
for one-to-four unit family structures. The Bank will require a first lien
position on the land associated with the construction project and will offer
these loans to homeowners. Loan disbursements will require on-site inspections
to assure the project is on budget and that the loan proceeds are being used for
the construction project and not being diverted to another project. The
loan-to-value ratio for such loans will be predominantly 80% of the lower of the
as-built appraised value or project cost, and will be a maximum of 90% if the
loan is amortized. To be eligible for a residential construction loan, a
borrower must be pre-qualified for permanent financing.
COMMERCIAL LOANS. Commercial lending will be directed principally
toward small to mid-sized businesses, including commercial real estate
developers, whose demands for funds either fall within the legal lending limits
of the Bank or can be satisfied through loan participations arranged by the
Bank. This category of loans includes loans made to individual, partnership or
corporate borrowers, and obtained for a variety of business purposes. Risks
associated with these loans can be significant and include, but are not limited
to, fraud, bankruptcy, economic downturns, deteriorated or non-existing
collateral, customer financial problems, and changes in interest rates.
CONSUMER LOANS. The Bank plans to make consumer loans, consisting
primarily of installment loans to individuals for personal, family and household
purposes, including loans for automobiles, home improvements and investments.
Risks associated with consumer loans include, but are not limited to, fraud,
deteriorated or non-existent collateral, general economic downturn, customer
financial problems, and changes in interest rates.
DEPOSITS. The Bank plans to attract deposits by offering a broad
array of competitively priced deposit services, including regular savings
accounts, money market deposits (transaction and investment), certificates of
deposit, retirement accounts, and other deposit or fund transfer services as
permitted by law or regulation and required to remain
16
<PAGE>
competitive in the Bank's market. The Bank intends to seek deposits through an
aggressive marketing plan in its overall service area, a broad product line, and
competitive services. The primary sources of deposits will be residents and
businesses located in the Bank's Primary Service Area, attracted through
personal solicitation by the Bank's officers and directors, direct mail
solicitations, and advertisements published in the local media.
OTHER BANK SERVICES. Management of the Bank intends to establish
and provide other bank services, such as trust services and loans in excess of
the Bank's lending limits, through relationships with correspondent banks and
other third party service providers. There can be no assurance, however, that
the Bank will be successful in establishing such relationships.
INVESTMENTS
In addition to loans, the Bank will make other investments
primarily in obligations of the United States or obligations guaranteed as to
principal and interest by the United States and other investment grade
securities in compliance with the regulations and laws applicable to national
banks.
ASSET AND LIABILITY MANAGEMENT
The Bank intends to manage its assets and liabilities to provide
an optimum and stable net interest margin, a profitable after-tax return on
assets and return on equity, and adequate liquidity. These management functions
will be conducted within the framework of written loan and investment policies,
which the Bank intends to adopt. The Bank will attempt to maintain a balanced
position between rate sensitive assets and rate sensitive liabilities.
DATA PROCESSING
The data processing services will be purchased on a contract
basis, reducing the number of persons otherwise required to handle the
operational functions of the Bank. The Bank is in the process of discussing
arrangements with potential data processing providers.
EMPLOYEES
Upon commencement of operations, the Bank is expected to have
approximately 19 full-time equivalent employees. The Company is not expected to
have any employees who are not also employees of the Bank. At the present, the
Company's only full-time employees are Messrs. Jackson and Kennedy and an
administrative assistant.
The Bank will hire additional officers and employees as
commencement of the Bank's operations becomes more imminent. The Bank plans to
employ as officers and employees of the Bank primarily persons from the Naples
area who have substantial experience and proven records in banking. The Bank
intends to pay competitive salaries to attract and retain such officers and
employees.
MANAGEMENT
DIRECTORS AND OFFICERS
The table below sets forth, as of August 31, 1997: (a) the
initial directors and executive and other significant officers of the Company
and the Bank, (b) their ages, (c) the positions they hold in the Company and
their commencement dates, (d) the positions they will hold in the Bank after its
formation, (e) the number of shares of Common Stock that they intend to purchase
in the offering, and (f) the percentage of Common Stock outstanding such number
will represent.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
COMPANY POSITIONS/ BANK OWNED AFTER SHARES AFTER
NAME & ADDRESS AGE COMMENCEMENT DATE POSITIONS OFFERING (1) OFFERING (2)
- -------------- --- ----------------- --------- ---------------- -------------
17
<PAGE>
<S> <C> <C> <C> <C> <C>
John R. Humphrey 73 Director/April, 1997 Director 10,000 0.7
3963 Enterprise Ave.
Naples, FL
Sidney T. Jackson(3) 55 President, CEO & CEO & 12,500 0.8
999 9th Street S. Director/March 1997 Director
Suite 101
Naples, FL
Ronald Kennedy 60 Vice President Senior V.P. 1,000 0.1
999 9th Street S.
Suite 101
Naples, FL
Leonard F. Llewellyn 63 Director/May 1997 Director 5,000 0.3
750 Palm Drive
Goodland, FL
Edward P. McNamara 55 Director/July 1997 Director 5,000 0.3
4747 Progress Ave.
Naples, FL
Michael J. Riley 41 Director/October 1997 Director 1,000 0.1
8024 San Simeon Way
Naples, FL 34109
Directors, executive
and significant officers
of the Company as a
group (6)
34,500 2.3
<FN>
- ----------
(1) Some or all of the Common Stock listed may be held for the benefit of
spouses and children of, or various trust established by, the person
indicated. The information contained in this column is based upon
information furnished to the Company by the persons named above and the
members of the designated group. The nature of beneficial ownership for
shares shown in this column is sole voting and investment power.
(2) Assumes no exercise of the Underwriters' over-allotment option.
(3) Excludes options to purchase 25,000 shares of Common Stock which the
Company intends to grant pursuant to the terms of Mr. Jackson's employment
agreement. SEE "Management-Employment Agreements" and "Management-Stock
Option Agreements".
</FN>
</TABLE>
Each director will hold office in the Company and the Bank until
the first annual meeting of shareholders and until his successor has been duly
elected and qualified or until his earlier resignation, removal from office or
death. After the first annual meeting, a director will hold office until the
next succeeding annual meeting of shareholders and until his successor has been
duly elected and qualified or until his earlier resignation, removal from office
or death. There are no family relationships among any Company or Bank directors,
officers or key personnel.
Following the opening of the Bank, the non-employee directors of
the Company will be compensated at the rate of $300 per meeting for their
attendance and services at the Company's regularly scheduled quarterly board
meetings and for any special meetings and they will be compensated for
attendance at committee meetings at the rate of $100 per meeting. The directors
will not be compensated for their services as directors of the Bank. Employees
of the Company or Bank who also serve as directors of the Company or Bank will
not be separately compensated for their services as directors.
Additionally, Mr. Jackson has identified a management team, which
the Bank proposes to hire, consisting of a senior lending officer knowledgeable
in the Collier County market, a highly experienced chief financial officer and
18
<PAGE>
Ronald L. Kennedy, a seasoned bank business development officer, who is
currently employed by the Company. Mr. Jackson has previously worked with each
member of this proposed team at other financial institutions and, based on these
prior working relationships, it is anticipated that the management team will
operate in a cohesive, integrated manner from the outset of the Bank operations.
In light of the Company's dependence upon the banking expertise
of its Chief Executive Officer, the Company has a obtained a key person life
insurance policy on Mr. Jackson in the amount of $1.5 million, payable to the
Company.
COMMITTEES OF THE COMPANY AND THE BANK
Presently, the Company's board of directors has an Audit
Committee, a Compensation Committee and a Site Committee. The Company's board
will establish an Investment Committee and the Bank's board will establish a
Loan Committee. The Company's Audit Committee will review internal audit
procedures for the Company and the Bank, and it will coordinate and review the
Company's annual audit by its independent auditors. The Compensation Committee
will generally oversee the employment practices and employee benefits of the
Company and the Bank. The Site Committee will approve leased premises for the
Company's and Bank's offices. The Company's Investment Committee will adopt
Investment Policies for the Company and the Bank and ensure adherence to those
policies. The Investment Committee will also supervise the Company's and Bank's
purchase and sale of securities. The Bank's Loan Committee will approve the
Bank's Loan Policies and it will review larger lending accommodations
recommended by the Bank's loan officers and will monitor credit quality.
EXPERIENCE OF DIRECTORS AND OFFICERS
The experience and backgrounds of the directors and executive and
other significant officers of the Company and the Bank are summarized below.
JOHN R. HUMPHREY. John R. Humphrey is a director of the Company
and he will be a director of the Bank. Mr. Humphrey serves on the Company's
Compensation and Site Committees. He has been a resident of Naples, Florida
since 1975. Mr. Humphrey is the founder, president, and chief executive officer
of International Packaging Machines, Inc., which was established in Mentor, Ohio
in 1963 and relocated to Naples in 1975. The firm manufactures packaging
machinery and holds many patents in this field. He served on the board of
SunTrust Bank - Southwest Florida (formerly Sun Bank of Naples) from 1989 to
1994. He has also served as the past chairman of the Economic Development
Council of Collier County, past chairman of the Private Industry Council, and
served on numerous committees and task forces appointed by the Governor of
Florida, Collier County Board of Commissioners and Naples City Council. He
presently serves as Chairman of the Industrial Development Authority and he is a
member of Jobs & Education Partnership Region 24, and Trustee of International
College of Naples. Mr. Humphrey attended Purdue University and is the author of
articles and papers relating to various phases of automation technology.
SIDNEY T. JACKSON. Mr. Jackson is the President and Chief
Executive Officer of the Company and will serve as Chief Executive Officer of
the Bank. He serves on the Company's Site Committee and is an ex officio member
of the Company's Compensation committee. Mr. Jackson has been a resident of
Naples since 1975. He has over thirty- three years of banking experience and for
the past 22 years has been in executive positions with banks in Naples. Mr.
Jackson was employed with Southwest Banks, Inc. from 1994 to 1997, where he
served as Senior Vice President and Senior Operations Officer. From 1986 to
1994, he was employed with SunBank/Naples, N.A., where he served as Executive
Vice President and Chief Administrative Officer. He has held various other
officer positions with First National Bank & Trust Company of Naples and
Community Bank of St. Petersburg. Prior to those positions, he served as a bank
examiner for the State of Florida. Mr. Jackson served as the 1996 Chairman of
the United Way of Collier County and he is presently involved with the Collier
County 100 Club, St. John Neuman Parents Council and the Chamber of Commerce. He
has also served as a former President of the Bank Administration Institute. Mr.
Jackson attended the University of Florida and the School of Banking of the
South.
RONALD L. KENNEDY. Ronald L. Kennedy has been a resident of
Naples since 1969. Mr. Kennedy is currently a Vice President of the Company.
After the Bank is opened, he will relinquish this position and become a Senior
Vice President of the Bank with responsibility for marketing and business
development. With over 20 years banking experience, his responsibilities have
covered various banking positions from installment and commercial lending,
business development to branch manager. He has been involved in the applications
and feasibility studies for the filing of three branch bank applications and the
opening of those offices. Mr. Kennedy's responsibilities for these new
facilities included design and equipment assistance along with the hiring of the
office staff. First National Bank and
19
<PAGE>
Trust Company of Naples employed Mr. Kennedy as Vice President and Commercial
Lender from 1971-1980. From 1980 to 1989, he was employed in the oil and gas
production business, first as a Vice President and Director of an Ohio based oil
company and then, from 1983 to 1989, as President and owner of Kenco Oil
Company. From 1989 to April 1992, Mr. Kennedy served as an Assistant Vice
President for business development and lending for Sun Bank in Naples, Florida.
Mr. Kennedy was an Assistant Vice President and Branch Manager of Citizens
National Bank on Marco Island, Florida from April 1992 until September 1993.
From October 1993 until November 1996, Mr. Kennedy was Vice President of
Founders National Trust Company, which was subsequently acquired by Chase
Federal Bank which, in turn, was acquired by NationsBank. Mr. Kennedy was Vice
President and Director of Marketing and Sales for Mirage on the Gulf, a 59-unit
luxury condominium project from November 1996 through March 1997. In April 1997,
Mr. Kennedy joined the Company, as Vice President, to assist Mr. Jackson in the
organization and formation of the Bank. Mr. Kennedy has served as an Organizing
Director of the Lely Golf Estates Home Owners Association, Treasurer and
Director of Friends of the Library, Vice President and Director of the Naples
Jaycees, and as a member of the Marco Island and Naples Area Chambers of
Commerce. Mr. Kennedy is a graduate of the University of Iowa and the School of
Banking of the South.
LEONARD F. LLEWELLYN. Leonard F. Llewellyn is a director of the
Company and will be a director of the Bank. Mr. Llewellyn serves on the
Company's Site Committee. He has been a resident of Naples since 1974. From 1982
to the present, Mr. Llewellyn has served as chairman of Consultants, Inc. of
Southwest Florida, a real estate consulting firm in the Naples area. Mr.
Llewellyn has served as a director for Vogel Water Co., a publicly held company.
He served as a bank director of First National Bank & Trust Company of Naples
from 1980 to 1991. During that time period, First National was acquired by
Landmark Banks of Florida which in turn was acquired by Citizens & Southern
Corporation. Mr. Llewellyn also served as a director of Founders National Trust
Bank from 1992 to 1995. Mr. Llewellyn is a former Captain and "Top Gun" Pilot
for the United States Marine Corps and he served as a pilot for Presidents
Kennedy and Johnson. He was a franchise representative for Deltona Corporation
from 1967 to 1974. Mr. Llewellyn is a past President of the Marco Island Chamber
of Commerce, member of the Board of Directors of Collier County Conservancy,
President of the Marco Island Board of Realtors, Trustee of Naples Community
Hospital, and Board of Trustees of Community Foundation of Collier County. He
currently serves as Sheriff's Commissioner and as a Senior Certified Member for
the International Real Estate Federation. He attended the Eastern Montana
College of Education, where he graduated with a B.S. in Pre-Electrical
Engineering.
EDWARD P. MCNAMARA. Edward P. McNamara is a director of the
Company and will be a director of the Bank. Mr. McNamara serves on the Company's
Audit Committee. From 1987 to the present, he has served as the President and
Chief Executive Officer of Coastal Beverage Ltd., a beverage distributor located
in Naples, Florida. Mr. McNamara is also the owner of E. P. McNamara, Inc. and
Inisfale, Inc., both business holding companies. Mr. McNamara served as
Vice-President Regional Sales at Anheuser-Busch, Inc. for seventeen years prior
to retirement. From 1987 to 1991, Mr. McNamara served on the advisory board of
Southeast Bank/Naples. He is currently a member of Leadership Collier Steering
Committee, World Class Collier Education Committee, a Director of the Economic
Development Council of Collier County, and a member of the Collier County
Disaster Recovery Committee. He is a past Director and Treasurer of the Naples
Chamber of Commerce, past Chairman of Leadership Southwest Florida and past
Vice-President and Director of the Florida Beer Wholesale Association. Mr.
McNamara is a graduate of Georgetown University with a degree in finance and he
did post graduate work at George Washington University Graduate School of
Business.
MICHAEL J. RILEY. Michael J. Riley is a director of the Company
and will be a director or the Bank. Mr. Riley serves on the Company's Audit and
Compensation Committees. Mr. Riley has been a resident of Naples since 1980. Mr.
Riley is the founder and owner of Michael J. Riley, Consulting, which was
established in 1990. Michael J. Riley, Consulting provides financial, business
planning and computer consulting services to corporations. Additionally, from
1994 to the present, Mr. Riley serves as President of Holland Salley, Inc., an
upscale interior design firm in Naples. From 1985 to 1994, Mr. Riley served as
Project Coordinator and, prior to that, Corporate Planner, for Naples Community
Healthcare System, a diversified health care corporation with fourteen
subsidiary corporations. From 1980 to 1985, Mr. Riley was Controller and, prior
to that, Assistant Vice President, Commercial Loans, for SunBank, Naples. Mr.
Riley also served as a computer conversion representative for Mellon Bank, N.A.
in Pittsburgh, Pennsylvania from 1978 to 1980. Mr. Riley is active in the Naples
Area Chamber of Commerce and the Economic Development Council of Collier County.
He has served as a volunteer for the Special Olympics and as a basketball and
baseball coach for the Naples YMCA Youth Program. Mr. Riley graduated from
Indiana University of Pennsylvania in 1977 with a B.S. in Business and
Accounting.
OFFICER COMPENSATION
20
<PAGE>
The following table sets forth the compensation paid by the
Company to Sidney T. Jackson and Ronald L. Kennedy, the only two Company
officers who received compensation for services rendered during the period from
the Company's formation through August 31, 1997.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------- ----------------------------------------------------
AWARDS PAYOUTS
------------------------- ---------------------
NAME AND PERIOD SALARY BONUS OTHER ANNUAL RESTRICTED SECURITIES LTIP ALL OTHER
PRINCIPAL POSITION ENDED (1) ($) COMPENSATION STOCK UNDERLYING PAYOUTS COMPENSATION
8/31/97 ($) (2) AWARDS OPTIONS/ ($) ($)
($) SAR'S
(#)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ------------------- ------- ------- ----- ----------- ---------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sidney Jackson, 1997 $35,962 None None None 25,000(3) None None
President, CEO &
Director of
Company and CEO
& Director of Bank
Ronald L. Kennedy, 1997 $18,750 None None None None None None
V.P. of Company;
Sr. V.P. of Bank
<FN>
- ----------
(1) Mr. Jackson's annual salary is $82,200 and Mr. Kennedy's annual salary is
$45,000.
(2) Messrs. Jackson and Kennedy received certain perquisites, but the
incremental cost of providing such perquisites does not exceed the lesser
of $50,000 or 10% of the their respective total annualized salaries and
bonuses as set forth in footnote 1 above.
(3) As of August 31, 1997, these stock options had not been granted; however,
the Company intends to grant these stock options to Mr. Jackson during
1997.
</FN>
</TABLE>
STOCK OPTION INFORMATION
The following table sets forth certain information concerning
stock options that the Company has determined to grant during 1997:
<TABLE>
<CAPTION>
OPTION GRANTS IN 1997
INDIVIDUAL GRANTS
NAME NUMBER OF % OF TOTAL EXERCISE OR BASE EXPIRATION DATE
SECURITIES OPTIONS GRANTED PRICE ($/SH)(2)
UNDERLYING TO EMPLOYEES IN
OPTIONS FISCAL YEAR
GRANTED (#)(1)
(a) (b) (c) (d) (e)
- ------------------ --------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Sidney T. Jackson,
President, CEO &
Director of
Company and CEO
& Director of Bank 25,000 100% $10.00 January 1, 2007
21
<PAGE>
<FN>
- ----------
(1) Option becomes exercisable in equal portions on April 1, 1999, April 1,
2000, April 1, 2001, April 1, 2002 and April 1, 2003.
(2) Exercise price is the public offering price of the Common Stock offered by
this Prospectus.
</FN>
</TABLE>
EMPLOYMENT AGREEMENTS
Prior to commencement of the Bank's operations, the Company and
the Bank intend, subject to the federal banking agencies not objecting, to enter
into an employment agreement with Sidney T. Jackson. Under the terms of the
employment agreement, Mr. Jackson will be employed by the Company as the
President and Chief Executive Officer and as the Chief Executive Officer of the
Bank. The employment agreement will have a term of three years and will
automatically renew for an additional one-year term unless Mr. Jackson is given
notice of non-renewal ninety days prior to the expiration of the agreement. The
employment agreement will commence on the date the Bank opens for business.
Under the terms of the employment agreement, Mr. Jackson will receive an annual
base salary of $125,000 and a monthly automobile allowance of $750, which
amounts will be paid in equal shares by the Company and the Bank. Mr. Jackson
will also be permitted to participate in life insurance, hospitalization, major
medical and any other employee benefit plans of the Company that may be in
effect from time to time to the extent that he is eligible under the terms of
those plans. In the event of a change of control, as defined in the employment
agreement, the Company and Bank would be required to collectively pay the
equivalent of two times Mr. Jackson's annual base salary. The employment
agreement is terminable at any time by either the Company or by Mr. Jackson. The
agreement provides severance compensation in the event that Mr. Jackson is
terminated without cause equal to his annual base salary during the first twelve
months and, thereafter, equal to his annual base salary plus an amount equal to
one-twenty-fourth(1/24) of Mr. Jackson's then current annual base salary for
each additional month of service rendered by Mr. Jackson after the first twelve
months, up to a maximum severance payment equal to two times Mr. Jackson's
annual base salary. In the event Mr. Jackson voluntarily terminates his
employment with the Company and the Bank, Mr. Jackson will be prohibited from
engaging, directly or indirectly, in any service to or employment by a financial
institution located in Collier County, Florida.
Under the terms of the employment agreement, the Company will
enter into a separate stock option agreement pursuant to which Mr. Jackson will
be granted the option to purchase 25,000 shares of Common Stock of the Company
(the "Stock Option Agreement"). SEE "Stock Option Agreement" below. Also under
the terms of the employment agreement, the Company will enter into a separate
Incentive Agreement whereby the Company will pay Mr. Jackson a cash bonus award
of $40,000 on April 1, 1999 upon the achievement of certain goals and objectives
that have been established by the Company. SEE "Incentive Agreement" below.
The Company and the Bank also anticipate entering into similar
employment, stock option and incentive agreements with two other members of the
proposed senior management team who have been identified by the Company but have
not yet been hired. The Company intends to pay each of these individuals a
signing bonus at the time they join the Company. One individual will be paid a
signing bonus of $50,000 and the second individual will be paid a signing bonus
of $25,000 minus any year end-bonus payments this individual receives in his
present position. The payment of these signing bonuses is intended to compensate
these individuals for the loss of income that they anticipate as a result of
leaving their present positions.
STOCK OPTION AGREEMENTS
As required by the terms of Sidney T. Jackson's employment
agreement with the Company and the Bank, the Company and the Bank will enter
into a Stock Option Agreement with Mr. Jackson. Under the Stock Option
Agreement, Mr. Jackson will be granted an option (the "Option") to purchase
25,000 shares of the Company's Common Stock for $10.00 per share, an amount
equal to the public offering price of the Common Stock. The number of shares
subject to the Option and the Option price are both subject to adjustment in the
event of certain changes in the capitalization of the Company.
Under the terms of the Agreement, no portion of the Option may be
exercised, except as noted below, prior to April 1, 1999. The Option becomes
exercisable in equal portions of up to a maximum of 5,000 shares of Common Stock
on April 1, 1999, April 1, 2000, April 1, 2001, April 1, 2002 and April 1, 2003.
In the event of a change of control of the Bank or Company, as defined in the
Stock Option Agreement, to the extent that any portion of the Option has not
been exercised, Mr. Jackson may immediately exercise the remaining portion of
the Option. Finally, to the extent that any portion of the Option has not been
exercised, the Stock Option Agreement terminates and the Option expires on the
earliest of (a) ninety days after termination of Mr. Jackson's employment with
the Company and the Bank for any reason except death, disability or retirement,
(b) twelve months after termination of Mr. Jackson's employment with the Company
and the Bank because of his death, disability or retirement, or (c) January 1,
2007.
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The Company also anticipates entering into similar stock option
agreements with at least two other members of senior management who have been
identified but not yet employed by the Company or the Bank. Under these proposed
stock option agreements, the Company intends to grant these individuals the
right to purchase 20,000 shares of the Company's Common Stock under the same
terms and conditions contained in the Stock Option Agreement to be entered into
with Mr. Jackson described above.
INCENTIVE AGREEMENTS
The Company and the Bank also intend to enter into an incentive
bonus agreement with Mr. Jackson (the "Incentive Agreement"). The Incentive
Agreement will be administered by a committee (the "Incentive Committee")
appointed by the board of directors of the Company composed of all non-employee
directors. Under the terms of the Incentive Agreement, Mr. Jackson will receive
a $40,000 cash bonus award on April 1, 1999, provided the goals set forth in the
Incentive Agreement are met. The grant of this cash bonus award is subject to
the following pre-conditions: 1) core deposits of the Bank must be at least $40
million on December 31, 1998; 2) the Incentive Committee must deem Mr. Jackson's
performance, as measured by certain criteria, satisfactory; 3) the Comptroller,
the Bank's primary federal banking regulator, must have found the Bank's
condition to be satisfactory; and 4) the Bank must be adequately capitalized as
required by applicable federal banking laws.
It is also anticipated that at least two other members of senior
management, who have been identified but not yet employed by the Company or the
Bank, will enter into similar Incentive Agreements during the Bank's first year
of operations. Under these proposed incentive agreements, the Company intends to
pay each of these individuals a $20,000 cash bonus under the same terms and
conditions contained in the Incentive Agreement to be entered into with Mr.
Jackson, described above.
It is the intention of the board of directors of the Company to
adopt a long term incentive plan to appropriately reward Company and Bank
officers upon the attainment of specific performance goals, to be established,
in the years following the Bank's first year of operations.
CERTAIN TRANSACTIONS
TRANSACTIONS WITH AFFILIATES
The Company and the Bank expect to have banking and other
business transactions in the ordinary course of business with directors and
officers of the Company and the Bank, including members of their families or
corporations, partnerships, or other organizations in which such directors and
officers have a controlling interest. If such transactions occur, they will be
on substantially the same terms (including price, or interest rate and
collateral) as those prevailing at the time for comparable transactions with
unrelated parties, and any banking transactions will not be expected to involve
more than the normal risk of collectibility or present other unfavorable
features to the Company and the Bank. Additionally, certain federal banking laws
restrict transactions between a national bank and an affiliate, as defined in
those laws, and the amount and types of loans that a national bank may make to
an executive officer of a national bank. Also certain laws of the State of
Florida restrict "affiliated transactions" between the Company and an
"interested shareholder" or any "affiliate" or "associate" of an interested
shareholder as those terms are defined in Florida law. SEE "Supervision and
Regulation."
ORGANIZATIONAL LOANS
The Company borrowed from certain individual lenders the
aggregate amount of $750,000 to pay organizational and pre-opening expenses for
the Company and the Bank. Sidney T. Jackson, President, Chief Executive Officer,
and a director of the Company, holds one of these notes in the amount of
$25,000. The principal, fees and accrued interest of these organizational loans
will be repaid from the offering proceeds. SEE "Use of Proceeds."
PRINCIPAL SHAREHOLDERS
Except for 100 shares issued and sold to Sidney T. Jackson for
the sole purpose of incorporating the Company, the Company has not yet issued
any Common Stock. These organizational shares will be repurchased by the Company
at their original issue price of $1,000 concurrently with the closing of this
offering. Following the offering, no shareholder is expected to own more than 5%
of the outstanding Common Stock of the Company. Shares owned by officers and
directors of the Company are shown under "Management - Directors and Officers."
Following the offering, the directors and all executive officers, as a group,
will own 34,500 shares of the Common Stock, or approximately 2.3% of the
outstanding shares of the Company.
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SUPERVISION AND REGULATION
OVERVIEW
Bank holding companies and banks are extensively regulated under
both federal and state law. Consequently, the growth and earnings performance of
the Company and the Bank can be effected by not only management decisions and
general economic conditions, but also by the statutes administered by, and the
regulations and policies of, various governmental regulatory authorities
including, but not limited to, the Comptroller, the Federal Reserve, the FDIC,
the Internal Revenue Service, federal and state taxing authorities and the
Securities and Exchange Commission (the "SEC"). The effect of such statutes,
regulations and policies can be significant and cannot be predicted with a high
degree of certainty.
The following is a brief summary of certain statutes, rules and
regulations affecting the Company and the Bank. This summary is qualified in its
entirety by reference to the particular statutory and regulatory provisions
referred to below and is not intended to be an exhaustive description of the
statutes or regulations applicable to the business of the Company and the Bank.
Supervision, regulation, and examination of the Company and the Bank by the bank
regulatory agencies are intended primarily for the protection of the Federal
Deposit Insurance Fund and the Bank's depositors rather than shareholders of the
Company.
BANK HOLDING COMPANY REGULATION
The Company will be a registered holding company under the BHC
Act will be regulated under such act by the Federal Reserve.
As a bank holding company, the Company is required to file annual
reports with the Federal Reserve and such additional information as the Federal
Reserve may require pursuant to the BHC Act. The Federal Reserve may also
conduct examinations of the Company to determine whether it is in compliance
with the BHC Act and the regulations promulgated thereunder.
The BHC Act requires every bank holding company to obtain prior
approval from the Federal Reserve before acquiring direct or indirect ownership
or control of more than 5% of the voting shares of any bank which is not already
majority owned or controlled by that bank holding company.
The Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 (the "Interstate Act") permits bank holding companies to acquire
existing banks in any state effective September 29, 1995, and any interstate
bank holding company is permitted to merge its various bank subsidiaries into a
single bank with interstate branches effective June 1, 1997. States have the
authority to authorize interstate branching prior to June 1, 1997, or
alternatively, to opt out of interstate branching prior to that date. The state
of Florida has determined to permit interstate branching by acquisition only.
In addition to having the right to acquire ownership or control
of other banks, a bank holding company is authorized to acquire ownership or
control of non-banking companies and to enter into non-banking lines of business
provided the activities of such non-banking companies or new lines of business
are so closely related to banking or managing or controlling banks that the
Federal Reserve considers such activities to be a proper incident to the
operation and control of banks. Regulation Y, promulgated by the Federal
Reserve, sets forth those activities which are regarded as closely related to
banking or managing or controlling banks and, thus, are permissible activities
for bank holding companies, subject to approval by the Federal Reserve in
individual cases. The BHC Act also prohibits the Company from acquiring direct
or indirect ownership or control of more than 5% of the voting shares of any
company which is engaged in a business which is not closely related to banking.
The Company has no current plans to engage in any business other than the
business of owning and controlling the Bank.
Federal Reserve policy requires a bank holding company to act as
a source of financial strength and to take measures to preserve and protect bank
subsidiaries, including the infusion of additional capital into a bank
subsidiary in situations where an additional investment in a troubled bank would
not ordinarily be made by the prudent investor. Under these policies, a bank
holding company may be required to contribute capital or loan money to its
subsidiary in the form of capital notes or other instruments which qualify for
capital under regulatory rules. Any loans by a holding company to such
subsidiary banks are likely to be unsecured and subordinated to the bank's
depositors and perhaps other creditors. In recent years there have been court
challenges to this policy and, as a result, a question exists as to whether
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or not this policy is fully enforceable by the Federal Reserve against bank
holding companies.
The Federal Reserve uses capital adequacy guidelines in its
examination and regulation of bank holding companies. If capital falls below
minimum guideline levels, a bank holding company may, among other things, be
denied approval to acquire or establish additional banks or non-bank businesses.
The Federal Reserve's capital guidelines establish the following
minimum regulatory capital requirements for bank holding companies: a risk-based
requirement expressed as a percentage of total risk-weighted assets, and a
leverage requirement expressed as a percentage of total assets. The risk-based
requirement consists of a minimum ratio of total capital to total risk-weighted
assets of 8%, of which at least one-half must be Tier 1 capital (consisting
principally of shareholders' equity). The leverage requirement consists of a
minimum ratio of Tier 1 capital to total assets of 3% for the most highly-rated
companies, with minimum requirements of 4% to 5% for all others.
The risk-based and leverage standards presently used by the
Federal Reserve are minimum requirements, and higher capital levels will be
required if warranted by the particular circumstances or risk profiles of
individual banking organizations. Further, any banking organization experiencing
or anticipating significant growth would be expected to maintain capital ratios,
including tangible capital positions (I.E., Tier 1 capital less all intangible
assets), well above the minimum levels.
The Federal Reserve's regulations provide that the foregoing
capital requirements will generally be applied on a bank-only (rather than a
consolidated) basis in the case of a bank holding company with less than $150
million in total consolidated assets. Nonetheless, on a pro forma basis,
assuming the issuance and sale by the Company of 1,500,000 shares of Common
Stock at $10.00 per share, the Company's risk-based capital ratio and leverage
ratio, in each case as calculated on a consolidated basis under the Federal
Reserve's capital guidelines, would exceed these requirements.
The Federal Reserve has issued a policy statement on the payment
of cash dividends by bank holding companies. In the policy statement, the
Federal Reserve expressed its view that a bank holding company experiencing
earnings weaknesses should not pay cash dividends exceeding its net income or
which could only be funded in ways that weakened the bank holding company's
financial health, such as by borrowing.
Under the Federal Change in Bank Control Act (the "Control Act"),
a notice must be submitted to the Federal Reserve if a natural person or,
generally, a group of natural persons acting in concert seeks to acquire 10% or
more of any class of outstanding voting securities of the Company, unless the
Federal Reserve determines that the acquisition will not result in a change of
control of the Company. Under the Control Act, the Federal Reserve has sixty
days within which to act on such notice, taking into consideration certain
factors, including the financial and managerial resources of the acquiror, the
convenience and needs of the community to be served by the bank holding company
and its subsidiary banks, and the antitrust effects of the acquisition. Under
the BHC Act, a company is generally required to obtain prior approval of the
Federal Reserve before it may obtain control of a bank holding company. Control
is generally described to mean the beneficial ownership of 25% or more of all
outstanding voting securities of a company but may be as low as 5% under certain
circumstances.
BANK REGULATION
GENERAL. The Company will initially have one subsidiary bank. The
Bank will be a national bank chartered under the laws of the United States and
will be subject to examination by the Comptroller. The Comptroller regulates or
monitors all areas of a bank's operations and activities, including reserves,
loans, mergers, issuance of securities, payment of dividends and establishment
of branches.
The deposits of the Bank will be insured by the FDIC to the
fullest extent provided by law and, under certain conditions, the Bank is
subject to regulation by the FDIC. The major functions of the FDIC with respect
to insured banks include paying depositors in the event an insured bank is
closed because of its inability to meet the demands of its depositors, acting as
a receiver of insured banks placed in receivership, and preventing the
continuance or development of unsafe and unsound banking practices. In addition,
the FDIC is authorized to examine national banks whenever FDIC deems that such
examination is necessary to determine the condition of the institution for
insurance purposes. The FDIC also approves conversions, mergers, consolidations
and assumption of deposit liability transactions between insured banks and
non-insured banks or institutions.
A subsidiary bank of a bank holding company is subject to certain
restrictions imposed by the BHC Act on any
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extension of credit to the bank holding company or any of its subsidiaries, on
investment in the stock or other securities of the bank holding company or its
subsidiaries, and on the taking of such stock or securities as collateral for
loans to any borrower. In addition, a bank holding company and its subsidiaries
are prohibited from engaging in certain tying arrangements in connection with
any extension of credit or provision of any property or services.
TRANSACTIONS WITH AFFILIATES AND EXECUTIVE OFFICERS. As a
national bank, the Bank will be a member of the Federal Reserve System, subject
to the laws, regulations, and policies applicable to member banks. Sections 23A
and 23B of the Federal Reserve Act place restrictions on transactions between a
member bank and an affiliate, as that term is defined in the Federal Reserve
Act. The restrictions contained in the foregoing sections generally require that
all loans made by a member bank to an affiliate be collateralized by collateral
of a certain value and quality and that the terms and conditions of any
transaction between a member bank and an affiliate be on terms that are
substantially the same as those prevailing for comparable transactions with
nonaffiliated parties. Additionally, subject to certain exceptions, a member
bank may not purchase as fiduciary any securities or other assets from an
affiliate and may not purchase, as a principal or as a fiduciary, any security
during an underwriting if the principal underwriter is an affiliate of the
member bank.
Regulations applicable to member banks also limit the amount and
types of extensions of credit a member bank may make to its executive officers,
as that term is defined in the regulations. Generally, extensions of credit to
executive officers may not exceed the higher of 2.5 percent of the bank's
unimpaired capital and unimpaired surplus or $25,000, but in any event may not
exceed $100,000. The foregoing limits do not apply to loans to finance the
education of the executive officer's children or with respect to a first
mortgage loan secured by the executive officer's home.
CAPITAL REQUIREMENTS. Regulatory agencies measure capital
adequacy with a framework that makes capital requirements sensitive to the risk
profile of the individual banking institution. The guidelines define capital as
either Tier 1 capital (primarily shareholders' equity) or Tier 2 capital
(certain debt instruments and a portion of the reserve for loan losses). There
are two measures of capital adequacy for national banks: the Tier 1 leverage
ratio and the risk-based capital requirements. The Bank must maintain a minimum
Tier 1 leverage ratio of 4%. In addition, Tier 1 capital must equal 4% of
risk-weighted assets, and total capital (Tier 1 plus Tier 2) must equal 8% of
risk-weighted assets. These are minimum requirements, however, and institutions
experiencing internal growth (which will initially be the case for the Bank) or
making acquisitions, as well as institutions with supervisory or operational
weaknesses, will be expected to maintain capital positions well above these
minimum levels.
Current regulations of the Comptroller require national banks
to maintain a ratio of total capital (which is essentially Tier 1 capital plus
the allowance for loan losses) to total assets (defined as balance sheet assets
plus the allowance for loan losses) of at least 6% (the "primary capital
ratio"). In addition, in its application to the Comptroller to obtain a national
bank charter and in its application to the FDIC to obtain federal deposit
insurance, the Bank represented that it intends to maintain a Tier 1 capital
ratio of at least 8% for the first three years of its operation.
The federal banking agencies have promulgated standards to
provide for the consideration of interest rate risk in the overall determination
of a bank's capital ratio and require banks with greater interest rate risk to
maintain adequate capital for this risk. These regulations apply to the Bank
and, depending upon the Bank's interest rate risk profile, may require the Bank
to maintain higher capital ratios than those described above.
The Federal Deposit Insurance Corporation Improvement Act of 1991
(the "1991 Act") imposes a regulatory matrix which requires the federal banking
agencies to take prompt corrective action to deal with depository institutions
that fail to meet their minimum capital requirements or are otherwise in a
troubled condition. The prompt corrective action provisions require
undercapitalized institutions to become subject to an increasingly stringent
array of restrictions, requirements and prohibitions, as their capital levels
deteriorate and supervisory problems mount. If these corrective measures prove
unsuccessful in recapitalizing the institution and correcting its problems, the
1991 Act mandates that the institution be placed in receivership.
Pursuant to regulations promulgated under the 1991 Act, the
corrective actions that the banking agencies either must, or may, take are tied
primarily to an institution's capital levels. In accordance with the framework
adopted by the 1991 Act, the banking agencies have developed a classification
system, pursuant to which all banks and thrifts are placed into one of five
categories: well-capitalized institutions, adequately capitalized institutions,
undercapitalized institutions, significantly undercapitalized institutions and
critically undercapitalized institutions. The categories are defined in the 1991
Act and are used to determine the severity of corrective action the appropriate
regulator may take in the event an institution reaches a given level of
undercapitalization. The capital guidelines can affect the Company and the Bank
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in several ways. After completion of this offering, the Company and the Bank
will both have capital ratios which are significantly greater than those
required for "well capitalized" institutions. However, rapid growth, poor loan
portfolio performance, poor earnings performance, or a combination of these
factors, could change the capital position of the Company and the Bank, making
an additional capital infusion necessary.
DIVIDENDS. The Bank will be restricted in its ability to pay cash
dividends to the Company under the national banking laws and by regulations of
the Comptroller. Pursuant to 12 U.S.C. Section 56, a national bank may not pay
dividends from its capital. All dividends must be paid out of undivided profits,
subject to other applicable provisions of law. Payments of dividends out of
undivided profits is further limited by 12 U.S.C. Section 60(a), which prohibits
a bank from declaring a dividend on its shares of common stock until its surplus
equals its stated capital, unless there has been transferred to surplus not less
than 1/10 of the Bank's net income of the preceding two consecutive half-year
periods (in the case of an annual dividend). Pursuant to 12 U.S.C. Section
60(b), the approval of the Comptroller is required if the total of all dividends
declared by the Bank in any calendar year exceeds the total of its net income
for that year combined with its retained net income for the preceding two years,
less any required transfers to surplus.
The Comptroller has enacted regulations concerning the level of
allowable dividend payments by national banks. The intended effect of these
regulations is to make the calculation of national banks' dividend-paying
capacity consistent with generally accepted accounting principles (GAAP). In
this regard, the allowance for loan and lease losses is not considered an
element of either "undivided profits then on hand" or "net profits." Further, a
national bank may be able to use a portion of its capital surplus account as
"undivided profits then on hand," depending on the composition of that account.
CRA AND FAIR LENDING. On April 19, 1995, the federal bank
regulatory agencies adopted revisions to the regulations promulgated pursuant to
the Community Reinvestment Act (the "CRA"), which are intended to set distinct
assessment standards for financial institutions. The revised regulation contains
three evaluation tests: (a) a lending test which will compare the institution's
market share of loans in low- and moderate-income areas to its market share of
loans in its entire service area and the percentage of a bank's outstanding
loans to low- and moderate-income areas or individuals, (b) a services test
which will evaluate the provision of services that promote the availability of
credit to low- and moderate-income areas, and (c) an investment test, which will
evaluate an institution's record of investments in organizations designed to
foster community development, small- and minority-owned businesses and
affordable housing lending, including state and local government housing or
revenue bonds. The regulation is designed to provide regulators, institutions
and community groups with an objective and predictable manner with which to
evaluate the CRA performance of financial institutions. The rule became
effective on January 1, 1996 when evaluation under streamlined procedures began
for institutions with assets of less than $250 million that are owned by a
holding company with total assets of less than $1 billion.
Congress and the federal agencies responsible for implementing
the nation's fair lending laws, which include the Department of Housing and
Urban Development, the Federal Trade Commission, and the Department of Justice
in addition to the federal banking agencies, have been increasingly concerned
that prospective home buyers and other borrowers are experiencing discrimination
in their efforts to obtain loans. In recent years, the Department of Justice has
filed suit against financial institutions which it determined had engaged in
discriminatory lending, seeking fines and restitution for borrowers who
allegedly suffered from these practices. Most, if not all, of these suits have
been settled (some for substantial sums) without a full adjudication on the
merits.
On March 8, 1994, the Federal Agencies, in an effort to clarify
what constitutes lending discrimination and to specify the factors the agencies
will consider in determining if lending discrimination exists, announced a joint
policy statement detailing specific discriminatory practices prohibited under
the Equal Credit Opportunity Act and the Fair Housing Act. In the policy
statement, three methods of proving lending discrimination were identified: (a)
overt evidence of discrimination, when a lender blatantly discriminates on a
prohibited basis, (b) evidence of disparate treatment, when a lender treats
applicants differently based on a prohibited factor even where there is no
showing that the treatment was motivated by prejudice or a conscious intention
to discriminate against a person, and (c) evidence of disparate impact, when a
lender applies a practice uniformly to all applicants, but the practice has a
discriminatory effect, even where such practices are neutral on their face and
are applied equally, unless the practice can be justified on the basis of
business necessity.
FDIC INSURANCE ASSESSMENTS. The Bank will be subject to FDIC
deposit insurance assessments for the Bank Insurance Fund ("BIF"). The FDIC has
implemented a risk-based assessment system under which banks are assessed on a
sliding scale depending on their placement in nine separate supervisory
categories. Recent legislation provides that
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BIF insured institutions, such as the Bank, will share the Financial Corporation
("FICO") bond service obligation. Previously, only financial institutions
(typically thrifts) insured under the Savings Association Insurance Fund
("SAIF") were obligated to contribute to the FICO bond service. As of the most
recent BIF semiannual assessment period, June 30, 1997, BIF insured financial
institutions paid federal deposit insurance assessments ranging from zero cents
($0.0) per $100 of BIF insured deposits, the rate for the healthiest and highest
rated institutions, to twenty-seven cents ($0.27) per $100 of BIF insured
deposits, the rate for the lowest rated institutions. It is anticipated that
initially the Bank will be in the highest rated category and thus, based on the
most recent assessment period, pay no federal deposit insurance assessment. As
of the most recent FICO assessment adjustment date, June 30, 1997, BIF insured
institutions were required to pay an annual FICO assessment, payable in
quarterly installments, of one and twenty-sixth hundredths cents ($0.0126) per
$100 of insured deposits.
FUTURE REQUIREMENTS. Statutes and regulations may be proposed
containing wide-ranging measures for altering the structures, regulations and
competitive relationships of the nation's financial institutions. It cannot be
predicted whether or what form any proposed statutes or regulations will be
adopted or the extent to which the business of the Company and the Bank may be
affected by such statutes or regulations.
FLORIDA BUSINESS CORPORATION ACT
TRANSACTIONS WITH AFFILIATES. The Florida Business Corporation
Act (the "Florida Act") contains an "affiliated transaction" provision that
prohibits a publicly-held Florida corporation from engaging in a broad range of
business combinations or other extraordinary corporate transactions with an
"interested shareholder" unless (i) the transaction is approved by a majority of
disinterested directors before the person becomes an interested shareholder,
(ii) the interested shareholder has owned at least 80% of the corporation's
outstanding voting shares for at least five years, or (iii) the transaction is
approved by the holders of two-thirds of the corporation's voting shares other
than those owned by the interested shareholder. An interested shareholder is
defined as a person who together with affiliates and associates, beneficially
owns (as defined in Section 607.0901(1)(e) of the Florida Act) more than 10% of
the corporation's outstanding voting shares.
ANTI-TAKEOVER PROVISIONS. The Florida Act also contains
provisions which may inhibit or discourage takeover transactions. SEE
"Description of Capital Stock."
DIVIDENDS. The Company will be restricted in the payment of
dividends by the Florida Act which prohibits a corporation from making a
distribution to its shareholders if, after giving effect to the distribution,
the corporation would be unable to pay its debts as they become due in the usual
course of business, or if the corporation's total assets would be less than the
sum of its total liabilities plus the amount that would be needed, if the
corporation were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of shareholders whose preferential rights
are superior to those receiving the distribution.
BANK HOLDING COMPANY PROVISIONS. Florida does not impose
additional statutory provisions on the Company because of the Company's status
as a bank holding company.
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The Company's Articles of Incorporation authorize the Company to
issue up to 10,000,000 shares of Common Stock, par value $.01 per share, of
which 1,500,000 shares will be issued pursuant to this offering. No other
classes of Common Stock are authorized. Other than the 25,000 stock options
granted to Sidney T. Jackson under a written agreement, there are no outstanding
options or warrants to purchase, or securities convertible into, the Common
Stock. See "Management - Stock Options".
All shares of Common Stock of the Company will be entitled to
share equally in dividends from funds legally available therefor, when, as and
if declared by the board of directors, and upon liquidation or dissolution of
the Company, whether voluntary or involuntary, to share equally in all assets of
the Company available for distribution to the shareholders. It is not
anticipated that the Company will pay any cash dividends on the Common Stock in
the near future. SEE "Dividend Policy." Each holder of Common Stock will be
entitled to one vote for each share on all matters submitted to the
shareholders. There is no cumulative voting. Holders of Common Stock will not
have any preemptive
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rights to acquire authorized but unissued capital stock of the Company. All
shares of the Common Stock issued in accordance with the terms of this offering
as described in this Prospectus will be fully-paid and non-assessable.
PREFERRED STOCK
Under its Articles of Incorporation, the Company is authorized to
issue 2,000,000 shares of Preferred Stock. The board of directors of the Company
is authorized to issue Preferred Stock in series and to fix the particular
designation of and the rights, preferences, privileges and restrictions granted
to and imposed upon each series, all without further approval of the Company's
shareholders. The Company has no plans at this time to issue any of the
Preferred Stock.
SPECIAL SHAREHOLDERS' MEETINGS
Article II, Section 2 of the Company's By-Laws allows a special
meeting of shareholders to be called by the president, a majority of the board
of directors or when requested in writing by shareholders holding not less than
10% of the shares entitled to vote.
VOTING ON CERTAIN TRANSACTIONS
Under Article II, Section 8 of the Company's By-Laws, any merger
or consolidation involving the Company or any sale or other disposition of all
or substantially all of its assets will require the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock present at a
duly called meeting of shareholders at which a quorum is present. A quorum is
present when the holders of a majority of the outstanding shares are present at
the meeting, either in person or by proxy.
AMENDMENT OF PROVISIONS
Any provision of the Company's Articles of Incorporation may be
amended or repealed in the manner prescribed by Florida law. In general, any
amendment to the Company's Articles of Incorporation must be approved by a
majority of the outstanding shares of Common Stock with the exception that
certain amendments of an administrative nature may be adopted by the board of
directors of the Company without shareholder approval.
ANTI-TAKEOVER PROVISIONS
The Company is subject to several anti-takeover provisions under
the Florida Act that apply to a public corporation governed by Florida law, as
provided in the Act, unless the corporation has elected to opt out of those
provisions in its articles of incorporation or (depending on the provision in
question) bylaws. The Company has not elected to opt out of these provisions.
The Florida Act prohibits the voting of shares in a publicly-held Florida
corporation that are acquired in a "control share acquisition" unless the board
of directors approves the control share acquisition or the holders of a majority
of the corporation's voting shares (exclusive of shares held by officers of the
corporation, inside directors, or the acquiring party) approve the granting of
voting rights as to the shares acquired in the control share acquisition. A
"control share acquisition" is defined as an acquisition that immediately
thereafter entitles the acquiring party to vote in the election of directors
within each of the following ranges of voting power: (i) one-fifth or more but
less than one-third of such voting power, (ii) one-third or more but less than a
majority of such voting power, and (iii) a majority or more of such voting
power. This statutory voting restriction is not applicable in certain
circumstances set forth in the Florida Act. These provisions are intended to
encourage a person interested in acquiring the Company to negotiate with and
obtain approval of the board of directors in connection with the transaction.
However, certain of these provisions might discourage a future acquisition of
the Company, including an acquisition in which the shareholders might receive a
premium.
Certain federal banking laws also might inhibit or discourage
takeover transactions. See the description of Control Act and the BHC Act with
respect to the acquisition of shares of a bank holding company under
"Supervision and Regulation."
The Articles of Incorporation authorize the board of directors to
issue up to 2,000,000 shares of preferred stock and fix the rights and
preferences of any shares of preferred stock issued. Any such issuance of
preferred stock could have the effect of delaying or preventing a change of
control.
29
<PAGE>
INDEMNIFICATION PROVISIONS
The Articles of Incorporation of the Company provide for the
indemnification of directors, officers, employees and agents of the Company to
the full extent permitted by Florida law. In addition, as permitted by federal
law, the Bank's Articles of Association provide for the indemnification of the
Bank's officers, directors, employees and agents to the fullest extent permitted
by the laws of Florida, subject only to the limits of the corporate powers of a
national bank. Under such provisions, any director, officer, employee, or agent
who in his or her capacity as such, is made or threatened to be made, a party to
any suit or proceeding, shall be indemnified if such director or officer acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Company or the Bank. The Company expects to
purchase directors' and officers' liability insurance. Such insurance may
provide protection whether or not the Company or the Bank would have had the
power to indemnify against such liability. The Company is not aware of any
pending or threatened action, suit or proceeding involving any of its directors,
officers, employees or agents for which indemnification from the Company or the
Bank may be sought. It is possible that the indemnification obligations imposed
under the Company's Articles of Incorporation and Bank's Articles of Association
could result in a charge against the Company's or the Bank's earnings and
thereby, directly in the case of the Company and indirectly in the case of the
Bank, affect the availability of funds for payment of dividends to the Company's
shareholders.
Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the SEC, such indemnification is against public
policy as expressed in the 1933 Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
Federal banking laws and regulations prohibit, in general, an
institution the deposits of which are federally insured and its parent holding
company from indemnifying its officers, directors, employees, agents and other
persons affiliated with the institution for costs sustained in an administrative
or civil enforcement action commenced by a federal banking agency which results
in a final order or settlement pursuant to which the person is, under applicable
federal banking laws, assessed a civil money penalty, removed from office,
prohibited from participating in the affairs of an insured depository
institution or required to cease and desist from or take affirmative action
REGISTRAR AND TRANSFER AGENT
The transfer agent and registrar for the Common Stock is
*
------------------
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company expects to have
1,500,000 shares of its Common Stock outstanding. The 1,500,000 shares of the
Company's Common Stock purchased in this offering (plus any additional shares
sold upon the Underwriters' exercise of their over-allotment option) have been
registered with the SEC under the 1933 Act and may generally be resold without
registration under the 1933 Act unless they are acquired by an affiliate
("Affiliate") of the Company, as defined under Rule 144 of the SEC. Generally,
any executive officer, director or control shareholder of the Company or the
Bank will be an Affiliate of the Company under Rule 144. Affiliates of the
Company may only sell shares of the Common Stock pursuant to Rule 144 or another
exemption under the 1933 Act.
Under Rule 144 as currently in effect, an Affiliate of the
Company may sell shares of Common Stock within any three-month period in an
amount limited to the greater of 1% of the outstanding shares of the Company's
Common Stock (15,000 shares immediately after the completion of this offering)
or the average weekly trading volume in the Company's Common Stock during the
four calendar weeks preceding such sale. Sales under Rule 144 are also subject
to certain manner-of-sale provisions, notice requirements and the availability
of current public information about the Company.
The Company, the directors and the executive and other
significant officers, (who are expected to hold an
30
<PAGE>
aggregate of approximately 34,500 shares after this offering), have agreed, or
will agree, not to sell, contract to sell or otherwise dispose of any shares of
Common Stock for a period of 180 days from the date of this Prospectus without
the prior written consent of the Underwriters. Prior to this offering, there has
been no public trading market for the Common Stock, and no predictions can be
made as to the effect, if any, that sales of shares or the availability of
shares for sale will have on the prevailing market price of the Common Stock
after completion of this offering. Nevertheless, sales of substantial amounts of
Common Stock in the public market could have an adverse effect on prevailing
market prices.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, Robert W. Baird & Co. Incorporated and Ashtin Kelly & Co.,
Incorporated, as Underwriters, have severally agreed to purchase from the
Company the respective number of shares of Common Stock set forth opposite their
names below:
NUMBER OF
UNDERWRITERS SHARES
- ------------ ----------
Robert W. Baird & Co. Incorporated....................... *
Ashtin Kelly & Co., Incorporated......................... *
Total............................................. 1,500,000
=========
The Underwriting Agreement provides that the obligations of the
Underwriters thereunder are subject to approval of certain legal matters by
their counsel and to various other conditions. The Underwriters are obligated to
purchase all the shares of Common Stock offered hereby, excluding shares covered
by the over-allotment option granted to the Underwriters, if any are purchased.
The Company has been advised by the Underwriters that they
propose to offer the Common Stock to the public at the initial public offering
price set forth on the cover page of this Prospectus and to certain dealers at
such price, less a concession not in excess of $0.70 per share (this amount will
be reduced to $0.30 per share with respect to sales to certain investors
identified by the Company to the Underwriters prior to the effectiveness of the
Registration Statement for this offering), and that the Underwriters and such
dealers may reallow a concession not in excess of $__*____ per share to other
dealers. The public offering price and concessions and reallowances to dealers
may be changed by the Underwriters after the initial public offering.
Unless waived by the Company, shares of Common Stock will be sold
to the public only in minimum lots of 1,000 shares ($10,000) and any one
investor (together with the investor's affiliates) will be permitted to purchase
a maximum of 50,000 shares of Common Stock ($500,000). The Underwriters have
informed the Company that they do not intend to confirm sales of the shares of
Common Stock offered hereby to any accounts over which they may exercise
discretionary authority.
The Company has granted to the Underwriters an option,
exercisable within 30 days after the date of the initial public offering, to
purchase up to an additional 225,000 shares of Common Stock to cover
over-allotments, at the same price per share to be paid by the Underwriters for
the other shares offered hereby. If the Underwriters purchase any such
additional shares pursuant to this option, each of the Underwriters will be
committed to purchase such additional shares in approximately the same
proportion as set forth in the above table. The Underwriters may purchase such
shares only to cover over-allotments, if any, in connection with the offering.
The Company and the Underwriters have agreed to indemnify, or to
contribute to payments made by, each other against certain civil liabilities,
including certain civil liabilities under the 1933 Act.
The Company arranged a series of loans from certain individuals
in the aggregate principal amount of $750,000 to pay organizational and
pre-opening expenses of the Company and the Bank. The Company paid Ashtin Kelly
& Co., Incorporated a fee equal to 10% of the aggregate principal amount of the
loans, for a total fee of $75,000, for referring the individual lenders to the
Company. The Company has also granted Ashtin Kelly & Co., Incorporated the right
to
31
<PAGE>
submit a bid for consideration to serve as the Company's underwriter if the
Company determines to make another public offering in the future.
There has been no public trading market for the Common Stock. The
price to the public was determined in negotiations between the Company and the
Underwriters. This price is not based upon earnings or any history of operations
and should not be construed as indicative of the present or anticipated future
value of the Common Stock. Several factors were considered in determining the
initial public offering price of the Common Stock, among them the size of the
offering, the desire that the security being offered be attractive to
individuals, and the Underwriters' experience in dealing with initial public
offerings for financial institutions.
Robert W. Baird & Co. Incorporated, one of the Underwriters, has
advised the Company that it presently intends to make a market in the Common
Stock after the commencement of trading, but no assurances can be made as to the
liquidity of the Common Stock or that an active and liquid trading market will
develop or, if developed, that it will be sustained. Robert W. Baird & Co.
Incorporated will have no obligation to make a market in the Common Stock,
however, and may cease market-making activities, if commenced, at any time.
In connection with the offering of the Common Stock, the
Underwriters and any selling group members and their respective affiliates may
engage in over-allotment, stabilizing transactions, syndicate covering
transactions, and penalty bids effected in accordance with Rule 104 of the SEC's
Regulation M. Over-allotment is a transaction in which the Underwriters create a
short position for their own account by selling more Common Stock than they are
committed to purchase from the Company. To cover all or part of a short
position, the Underwriters may exercise the over-allotment option described
above or may purchase Common Stock in the open market following completion of
the initial offering of the Common Stock. In stabilizing transactions, the
Underwriters may bid for, and purchases, shares of the Common Stock at a level
above that which might otherwise prevail in the open market for the purpose of
preventing or retarding a decline in the market price of the Common Stock.
Syndicate covering transactions involve purchases of Common Stock in the open
market after the distribution has been completed in order to cover syndicate
short positions. Penalty bids permit the Underwriters to reclaim a selling
concession from a syndicate member when the Common Stock originally sold by such
syndicate member is purchased in a syndicate covering transaction to cover
syndicate short positions. Such over-allotment, stabilizing transactions,
syndicate covering transactions, and penalty bids may cause the price of the
Common Stock to be higher than it would other wise be in the absence of such a
transaction. The Underwriters are not required to engage in any of the foregoing
transactions, and, if commenced, may be discontinued at any time.
The Company, the directors and the executive and other
significant officers, have agreed not to sell, contract to sell, or otherwise
dispose of any shares of Common Stock for a period of 180 days after the date of
this Prospectus without the prior written consent of the Underwriters. See
"Shares Eligible for Future Sale."
LEGAL PROCEEDINGS
Neither the Company nor the Bank is a party to any pending legal
proceeding. Management believes there is no litigation threatened in which the
Company or the Bank faces potential loss or exposure or which will materially
affect shareholders' equity or the Company's business or financial condition
upon completion of this offering.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby
will be passed upon for the Company by McCaffrey & Raimi, P.A., Sarasota and
Naples, Florida. Certain legal matters in connection with the sale of the Common
Stock offered hereby will be passed upon for the Underwriters by Holland &
Knight LLP, Tampa, Florida.
EXPERTS
The financial statements of the Company at August 31, 1997, and
for the period from January 23, 1997 (inception) until August 31, 1997, set
forth herein have been so included in reliance on the report of Hill, Barth &
King, Inc. independent certified public accountants, given on the authority of
that firm as experts in accounting and auditing.
32
<PAGE>
ADDITIONAL INFORMATION
The Company has filed a Registration Statement with the SEC under
the 1933 Act with respect to the Common Stock offered hereby. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the SEC. For further information with respect to the Company and
the Common Stock, reference is made to the Registration Statement and the
exhibits thereto. The Registration Statement may be examined at, and copies of
it may be obtained at prescribed rates from, the Public Reference Section of the
Securities and Exchange Commission, 450 Fifth Street N.W., Washington, D.C.
20549 and at the SEC's regional offices at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite
1300, New York, New York 10048. In addition, the Company is required to file
electronic versions of these documents with the SEC through the SEC's Electronic
Data Gathering, Analysis and Retrieval (EDGAR) system. The SEC also maintains a
Web site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants, such as the Company,
that file electronically with the Commission.
The Company and the organizers have filed or will file various
applications with the FDIC, the Federal Reserve and the Comptroller. Prospective
investors should rely only on information contained in this Prospectus and in
the Company's related Registration Statement in making an investment decision.
To the extent that other available information not presented in this Prospectus,
including information available in public files and records maintained by the
FDIC, the Federal Reserve and the Comptroller, is inconsistent with information
presented in this Prospectus or provides additional information, such other
information is superseded by the information presented in this Prospectus and
should not be relied on. Projections appearing in the applications are required
by the various federal banking agencies as part of the application process. Such
projections are not representations by the Company or the Underwriters and no
assurance is given that the results reflected in such projections will be
realized. Projected and actual results will vary and those variations may be
material. Neither the Company nor any of the Underwriters nor any of their
respective agents or representatives assume responsibility for the accuracy or
adequacy of such projections.
33
<PAGE>
FINANCIAL STATEMENTS
COASTAL BANK CORPORATION
(A Development Stage Company)
August 31, 1997
************
CONTENTS
PAGE
----
Independent Auditors' Report - - - - - - - - - - - - - - F-2
Balance Sheet - - - - - - - - - - - - - - - - - - - - - F-3
Statement of Operations - - - - - - - - - - - - - - - - F-4
Statement of Changes in Shareholders Deficit - - - - - F-5
Statement of Cash Flows - - - - - - - - - - - - - - - - F-6
Notes to Financial Statements - - - - - - - - - - - - - F-7-9
************
F-1
<PAGE>
Board of Directors
Coastal Bank Corporation
Naples, Florida
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of Coastal Bank
Corporation (the Company) as of August 31, 1997, and the related statements of
operations, shareholders deficit and cash flows for the period from January 23,
1997 (date of inception) to August 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Coastal Bank
Corporation as of August 31, 1997, and the results of its operations and its
cash flows for the period from January 23, 1997 (date of inception) to August
31, 1997 in conformity with generally accepted accounting principles.
HILL, BARTH & KING, INC.
Certified Public Accountants
Naples, Florida
September 5, 1997, except for Note C
as to which the date is October 29, 1997
F-2
<PAGE>
<TABLE>
<CAPTION>
COASTAL BANK CORPORATION
(A Development Stage Company)
BALANCE SHEET
August 31, 1997
<S> <C>
ASSETS
Cash and due from banks $ 35,596
Interest bearing deposits in banks 376,597
------------
TOTAL CASH AND CASH EQUIVALENTS 412,193
------------
Equipment - NOTE B 18,689
Deferred offering costs 52,707
Prepaid expenses 36,100
Other assets 11,451
------------
$ 531,140
============
LIABILITIES AND SHAREHOLDERS DEFICIT
Liabilities:
Loans payable - NOTE C $ 750,000
Accrued interest payable 19,518
Accrued expenses and other liabilities 101,511
------------
TOTAL LIABILITIES 871,029
------------
Shareholders Deficit:
Preferred stock, par value $.01 per share,
2,000,000 shares authorized; no shares issued
and outstanding -
Common stock, par value $.01 per share,
10,000,000 shares authorized; 100 shares issued
and outstanding 1
Additional paid-in capital 999
Deficit accumulated during the development stage (340,889)
------------
TOTAL SHAREHOLDERS DEFICIT (339,889)
------------
$ 531,140
============
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
COASTAL BANK CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
Period from January 23, 1997 (date of inception) to August 31, 1997
INCOME
Interest income $ 6,597
EXPENSES
Salaries and employee benefits 67,604
Interest expense and loan fees 154,520
Professional fees 68,322
Other expenses 57,040
-----------
TOTAL EXPENSES 347,486
-----------
NET LOSS $ (340,889)
===========
See accompanying notes to financial statements
F-4
<PAGE>
COASTAL BANK CORPORATION
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS DEFICIT
Period from January 23, 1997 (date of inception) to August 31, 1997
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON PAID-IN DEVELOPMENT
STOCK CAPITAL STAGE TOTAL
--------- ----------- ------------- ---------
Balance
January 23, 1997 $ 0 $ 0 $ 0 $ 0
Proceeds from
issuance of
common stock 1 999 0 1,000
Net loss 0 0 (340,889) (340,889)
--------- --------- --------- ---------
Balance (deficit)
August 31, 1997 $ 1 $ 999 $(340,889) $(339,889)
========= ========= ========= =========
See accompanying notes to financial statements
F-5
<PAGE>
COASTAL BANK CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Period from January 23, 1997 (date of inception) to August 31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(340,889)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 1,010
Increase in prepaid expenses (36,100)
Increase in other assets (64,158)
Increase in accounts payable 101,511
Increase in accrued interest payable 19,518
---------
NET CASH USED IN OPERATING ACTIVITIES (319,108)
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (19,699)
---------
NET CASH USED IN INVESTING ACTIVITIES (19,699)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 1,000
Proceeds from loans 750,000
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 751,000
---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 412,193
CASH AND CASH EQUIVALENTS
Beginning of period 0
---------
End of period $ 412,193
=========
See accompanying notes to financial statements
F-6
<PAGE>
COASTAL BANK CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 1997
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization:
Coastal Bank Corporation (the Company) was incorporated under the laws
of the State of Florida on January 23, 1997 with an initial capitalization of
$1,000. The Company's activities to date have been limited to the organization
of Coastal Bank, National Association (the Bank), as well as preparation for a
$15,000,000 common stock offering (the Offering). A substantial portion of the
proceeds of the Offering will be used by the Company to provide the initial
capitalization of the Bank. The start-up of the Bank is contingent upon
receiving the approval of various banking regulatory authorities and also a
successful completion of the Offering.
Nature of Business:
The Bank intends to offer a full range of commercial and consumer
banking services primarily within the Naples, Florida area.
Use of Estimates:
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents:
Cash, demand balances due from banks and interest bearing deposits in
banks are considered cash and cash equivalents for cash flow reporting purposes.
Deferred Offering Costs:
Deferred offering costs consist of legal and accounting fees related to
the initial public stock offering and will be offset against the offering
proceeds when received.
F-7
<PAGE>
COASTAL BANK CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1997
NOTE B - EQUIPMENT
Equipment at August 31, 1997 consists of the following:
Furniture, fixtures and equipment $ 7,155
EDP equipment and software 11,919
Construction in progress 625
-------
19,699
Less accumulated depreciation 1,010
-------
TOTAL $18,689
=======
Depreciation is computed on the straight-line method over the estimated
useful lives of the depreciable assets. Depreciation expense was $1,010 for the
period ended August 31, 1997.
NOTE C - LOANS PAYABLE
The Company arranged a series of loans from certain individual lenders
in the aggregate amount of $750,000 to pay organizational and pre-opening
expenses for the Bank and the Company. One of the directors, who is also the
President and Chief Executive Officer of the Company holds one of these notes in
the amount of $25,000. The foregoing loans and interest costs will be repaid
from the offering proceeds.
As of October 29, 1997 three of these loans aggregating $150,000 along
with accrued interest and loan fees had been repaid. The Company executed new
notes for $150,000 with three new individual lenders. In addition, the Company
has obtained restated note agreements from all of the individual lenders. The
restated loans bear interest at an annual rate of 8%, a loan fee of 8% based on
the face amount of the loan and mature on March 31, 1998.
F-8
<PAGE>
COASTAL BANK CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
August 31, 1997
NOTE D - COMMITMENTS AND CONTINGENCIES
The Company has committed to lease two floors of a three-story building
for its main office location and additional space for a drive-in facility. The
proposed lease has a term of 5 years with the option for three 5-year renewals;
to begin on the date the bank is open for business to the public. The aggregate
annual lease payment is $335,563 for the first year of the lease and increases
by the Consumer Price Index (Revised) - All Urban Consumers (U.S. City Average)
in each succeeding year during the initial term or any renewal period. The
Company has also entered into a short-term lease for office space to conduct its
activities during the development stage. The lease has a term of nine months
ending December 31, 1997 with the option for one 3-month renewal period.
NOTE E - STOCK OPTIONS
The Board of Directors of the Company have agreed to enter into a stock
option agreement with the President/Chief Executive Officer. Under the terms of
the agreement the President/CEO will be granted an option to purchase 25,000
shares of the Company's common stock for $10.00 per share. The option is
exercisable in equal portions of 5,000 shares on April 1, 1999, 2000, 2001, 2002
and 2003.
F-9
<PAGE>
================================================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE BANK OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES OF
COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
----------------
TABLE OF CONTENTS
PAGE
----
Available Information ..................................................... 2
Prospectus Summary ........................................................ 3
Risk Factors .............................................................. 6
Use of Proceeds ........................................................... 10
Dividend Policy ........................................................... 11
Capitalization ............................................................ 11
Business .................................................................. 12
Management ................................................................ 17
Certain Transactions ...................................................... 23
Principal Shareholders .................................................... 23
Supervision and Regulation ................................................ 24
Description of Capital Stock .............................................. 28
Shares Eligible for Future Sale ........................................... 30
Underwriting .............................................................. 31
Legal Proceedings ......................................................... 32
Legal Matters ............................................................. 32
Experts ................................................................... 32
Additional Information .................................................... 33
Index to Financial Statements ............................................. F-1
----------------
UNTIL ___________, 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
================================================================================
================================================================================
1,500,000 SHARES
COASTAL BANK
CORPORATION
COMMON STOCK
-------------
PROSPECTUS
-------------
ROBERT W. BAIRD & CO.
INCORPORATED
ASHTIN KELLY & CO.,
INCORPORATED
_____________, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. - INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Florida corporation. The FBCA provides that, in general, a
business corporation may indemnify any person who is or was a party to any
proceeding (other than an action by, or in the right of, the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, against liability incurred in connection with such proceeding,
including any appeal thereof, provided certain standards are met, including that
such officer or director acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation, and
provided further that, with respect to any criminal action or proceeding, the
officer or director had no reasonable cause to believe his conduct was unlawful.
In the case of proceedings by or in the right of the corporation, the FBCA
provides that, in general, a corporation may indemnify any person who was or is
a party to any such proceeding by reason of the fact that he is or was a
director, officer, employee or agent of the corporation against expenses and
amounts paid in settlement actually and reasonably incurred in connection with
the defense or settlement of such proceeding, including any appeal thereof,
provided that such person acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation,
except that no indemnification shall be made in respect of any claim as to which
such person is adjudged liable unless a court of competent jurisdiction
determines upon application that such person is fairly and reasonably entitled
to indemnity. To the extent that any officers or directors are successful on the
merits or otherwise in the defense of any of the proceedings described above,
the FBCA provides that the corporation is required to indemnify such officers or
directors against expenses actually and reasonably incurred in connection
therewith. However, the FBCA further provides that, in general, indemnification
or advancement of expenses shall not be made to or on behalf of any officer or
director if a judgment or other final adjudication establishes that his actions,
or omissions to act, were material to the cause of action so adjudicated and
constitute: (i) a violation of the criminal law, unless the director or officer
had reasonable cause to believe his conduct was lawful or had no reasonable
cause to believe it was unlawful; (ii) a transaction from which the director or
officer derived an improper personal benefit; (iii) in the case of a director, a
circumstance under which the director has voted for or assented to a
distribution made in violation of the FBCA or the corporation's articles of
incorporation; or (iv) willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder. Article VI of the Company's Articles of Incorporation
provide that the company shall indemnify any director, officer, employee or
agent or any former director, officer, employee or agent to the full extent
permitted by Florida law.
The Company has purchased insurance with respect to, among other things,
any liabilities that may arise under the statutory provisions referred to above.
ITEM 25. - OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses in connection with the
issuance and distribution of the securities being registered hereunder.
Securities and Exchange Commission registration fee............ $5,228
NASD Filing Fee................................................ 2,225
Printing and engraving expenses................................ 40,000*
Accounting fees and expenses................................... 18,000*
Legal fees and expenses........................................ 50,000*
Blue Sky fees and expenses..................................... 35,000*
Miscellaneous.................................................. 9,547*
--------
Total..................................................... 160,000*
========
- -----------
* Estimated.
II-1
<PAGE>
ITEM 26. - RECENT SALES OF UNREGISTERED SECURITIES.
Pursuant to an exemption under the Securities Act of 1933, the Company
issued a series of loans evidenced by 26 separate promissory notes. The loans
are in denominations ranging from $25,000 to $100,000 and the aggregate
principal of the loans is $750,000. As of October 29, 1997, three of these notes
aggregating $150,000, together with the accrued interest and funding fees
thereon, had been repaid. In replacement of these repaid notes, the Company
executed three new notes for $150,000 with three new individual lenders. All of
the notes have uniform terms and a maturity date of March 31, 1998. Each note
bears an interest rate of 8% and each lender is due a funding fee equal to 8% of
the original principal of the note. The principal, accrued interest, and fees
due on the loans will be paid from the proceeds of this public offering. Ashtin
Kelly Co., Incorporated, one of the Underwriters, has been paid a fee of 10% of
the aggregate principal of the loans, for a total fee of $75,000, for referring
the lenders to the Company.
The company has not previously issued any other securities except that Mr.
Sidney T. Jackson, President and Chief Executive Officer of the Company,
purchased 100 shares of the Company's Common Stock at $10.00 per share upon the
Company's organization solely for the purpose of organizing the Company and
electing its directors. These shares will be repurchased at their $10.00 cost
and canceled by the Company concurrently with the closing of this offering.
ITEM 27. - EXHIBITS
The following exhibits either are filed herewith or will be filed by
amendment, as indicated below:
EXHIBITS DESCRIPTION
1.1 Substantial Form of Underwriting Agreement
3.1 Restated Articles of Incorporation of Company
3.2 Articles of Amendment to Articles of Incorporation of Company
3.3 Bylaws of Company
4.1 Form of Certificate of Common Stock of Company*
5.1 Opinion, with consent, of Mccaffrey & Raimi, P.A.*
10.1 Lease dated July 30, 1997 between Company and Dooner Family Equities,
Ltd.
10.2 Substantial Form of Employment Agreement to be executed by Company and
Sidney T. Jackson
10.3 Substantial Form of Stock Option Agreement to be executed by Company
and Sidney T. Jackson
10.4 Substantial Form of Incentive Agreement to be executed by Company and
Sidney T. Jackson
10.5 Restated Futures Agreement between Company and Ashtin Kelly & Co.,
Incorporated
21 The only subsidiary of the Company will be Coastal Bank, N.A.
23.1 Consent of Mccaffrey & Raimi, P.A. is included in its Opinion (Exhibit
5.1)
23.2 Consent of Hill, Barth & King, Inc.
24 Power of Attorney is contained in the signature section of the
Registration Statement
27 Financial Data Schedule
- -----------------------
* To be filed by amendment.
II-2
<PAGE>
ITEM 28. - UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the indemnification provisions described herein, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of Naples,
State of Florida, on October 30, 1997.
COASTAL BANK CORPORATION
(Registrant)
By: /s/ SIDNEY T. JACKSON
------------------------------------------
Sidney T. Jackson
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Sidney T. Jackson and John R. Humphrey and each
of them acting alone, his true and lawful attorneys-in-fact and against, each
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments,
including post-effective amendments, to this Registration Statement, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that each said attorneys-in-fact and agents or any
of them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President and Chief Executive October 30, 1997
Officer and Director (Principal
/s/ SIDNEY T. JACKSON Executive Officer)
- -------------------------
Sidney T. Jackson
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JOHN R. HUMPHREY
- ----------------------------
John R. Humphrey Director October 30, 1997
/s/ LEONARD F. LLEWELLYN
- ----------------------------
Leonard F. Llewellyn Director October 30, 1997
/s/ EDWARD P. MCNAMARA
- ----------------------------
Edward P. Mcnamara Director October 30, 1997
/s/ MICHAEL J. RILEY
- ----------------------------
Michael J. Riley Director October 30, 1997
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
EXHIBITS DESCRIPTION
- -------- -----------
1.1 Substantial Form of Underwriting Agreement
3.1 Restated Articles of Incorporation of Company
3.2 Articles of Amendment to Articles of Incorporation of Company
3.3 Bylaws of Company
10.1 Lease Dated July 30, 1997 between Company and Dooner Family Equities,
LTD.
10.2 Substantial Form of Employment Agreement to be executed by Company and
Sidney T. Jackson
10.3 Substantial Form of Stock Option Agreement to be executed by Company
and Sidney T. Jackson
10.4 Substantial Form of Incentive Agreement to be executed by Company and
Sidney T. Jackson
10.5 Restated Futures Agreement between Company and Ashtin Kelly & Co.,
Incorporated
21 The only subsidiary of the Company will be Coastal Bank, N.A.
23.2 Consent of Hill, Barth & King, Inc.
24 Power of Attorney is contained in the signature section of the
Registration Statement
27 Financial Data Schedule
EXHIBIT 1.1
COASTAL BANK CORPORATION
1,500,000 Shares of Common Stock(1)
UNDERWRITING AGREEMENT
November __, 1997
ROBERT W. BAIRD & CO. INCORPORATED
ASHTIN KELLY & CO., INCORPORATED
As Representatives of the Several Underwriters
Identified in Schedule I Annexed Hereto
c/o Robert W. Baird & Co. Incorporated
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Ladies and Gentlemen:
1. INTRODUCTORY. Coastal Bank Corporation, a Florida corporation (the
"Company") proposes to sell 1,500,000 shares (the "Firm Shares") of common
stock, $.01 par value per share (the "Common Stock"), to the several
underwriters identified in Schedule I annexed hereto (the "Underwriters"), who
are acting severally and not jointly. In addition, the Company has agreed to
grant to the Underwriters an option to purchase up to 225,000 additional shares
of Common Stock (the "Optional Shares") as provided in section 5 hereof. The
Firm Shares and, to the extent such option is exercised, the Optional Shares are
hereinafter collectively referred to as the "Shares."
You, as representatives of the Underwriters (the "Representatives"), have
advised the Company that the Underwriters propose to make a public offering of
their respective portions of the Shares as soon hereafter as in your judgment is
advisable and that the public offering price of the Shares initially will be
$10.00 per share.
The Company hereby confirms its agreement with the Underwriters as
follows:
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, the several Underwriters, and shall be deemed
to represent and warrant to the several Underwriters on each Closing Date (as
hereinafter defined), that:
(a) The Company has been duly incorporated and is validly existing as
a corporation and its status is active under the laws of its jurisdiction of
incorporation, and, subject to section 1(e) hereof and the commencement of
business of Coastal Bank, N.A., a national bank (in organization) to be located
in Naples, Florida (the "Bank"), is duly registered under Section 3(a)(1) of the
Bank Holding Company Act of 1956, as amended (the "Bank Holding Company Act")
with full corporate power and authority to own, lease and operate its properties
and to conduct its business as presently conducted and described in the
Prospectus (as hereinafter defined) and the Registration Statement (as defined
in subsection 2(n), below; the Company is duly registered and qualified to do
business as a foreign corporation under the laws of, and is in good standing as
such in, each jurisdiction in which such registration or qualification is
required, except where the failure to so register or qualify would not have a
material adverse effect on the condition (financial or other), business,
property, net worth or results of operations of the Company, taken as a whole
("Material Adverse Effect"); and no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification.
- --------
(1) Plus an option to acquire up to 225,000 additional shares of Common Stock
from the Company, to cover over-allotments.
<PAGE>
Complete and correct copies of the articles of incorporation and by-laws, as
amended or restated ("Articles of Incorporation" and "By-laws," respectively),
of the Company as in effect on the date hereof have been delivered to the
Representatives, and no changes thereto will be made on or subsequent to the
date hereof and prior to each Closing Date.
(b) The shares of Common Stock issued and outstanding immediately
prior to the issuance and sale of the Shares to be sold by the Company hereunder
as set forth in the Prospectus have been duly authorized and validly issued, are
fully paid and nonassessable and conform to the description thereof contained in
the Prospectus and the Registration Statement. There are no preemptive,
preferential or, except as described in the Prospectus, other rights to
subscribe for or purchase any shares of Common Stock (including the Shares), and
no shares of Common Stock have been issued in violation of such rights. The
Shares to be issued and sold by the Company to the Underwriters have been duly
authorized and, when issued, delivered and paid for pursuant to this Agreement,
will be validly issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus and the Registration Statement.
The delivery of certificates for the Shares to be issued and sold by the Company
hereunder and payment therefor pursuant to the terms of this Agreement will pass
valid title to such Shares to the Underwriters, free and clear of any lien,
claim, encumbrance or defect in title. Except as described in the Prospectus,
there are no outstanding options, warrants or other rights of any description,
contractual or otherwise, entitling any person to be issued any class of
security by the Company, and there are no holders of Common Stock or other
securities of the Company, or of securities that are convertible or exchangeable
into Common Stock or other securities of the Company, that have rights to the
registration of such Common Stock or securities under the Securities Act of
1933, as amended, and the regulations thereunder (together, the "Act") or the
securities laws or regulations of any of the states (the "Blue Sky Laws").
(c) The Company does not currently have and never has had any
subsidiaries and does not own any equity interest in or control, directly or
indirectly, any other corporation, limited liability company, partnership,
limited liability partnership, joint venture, association, trust or other
business organization, other than the Bank. With respect to the representations
and warranties contained in this section 2, the Company shall be deemed to have
knowledge of anything known to the officers and directors of the Bank.
(d) The Company has full corporate power and authority to enter into
and perform this Agreement, and the execution and delivery by the Company of
this Agreement and the performance by the Company of its obligations hereunder
and the consummation of the transactions described herein, have been duly
authorized with respect to the Company by all necessary corporate action and
will not: (i) violate any provisions of the Articles of Incorporation or By-laws
of the Company; (ii) violate any provisions of, or result in the breach,
modification or termination of, or constitute a default under, any provision of
any agreement, lease, franchise, license, indenture, permit, mortgage, deed of
trust, evidence of indebtedness or other instrument to which the Company is a
party or by which the Company, or any property owned or leased by the Company,
may be bound or affected which violation, breach or default could have a
Material Adverse Effect; (iii) violate any statute, ordinance, rule or
regulation applicable to the Company, or order or decree of any court,
regulatory or governmental body, arbitrator, administrative agency or
instrumentality of the United States or other country or jurisdiction having
jurisdiction over the Company; or (iv) result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company. No
consent, approval, authorization or other order of any court, regulatory or
governmental body, arbitrator, administrative agency or instrumentality of the
United States or other country or jurisdiction is required for the execution and
delivery of this Agreement by the Company, the performance of its obligations
hereunder or the consummation of the transactions contemplated hereby, except
for compliance with the Act, the Securities Exchange Act of 1934, as amended,
and the regulations thereunder (together, the "Exchange Act"), the Blue Sky Laws
applicable to the public offering of the Shares by the several Underwriters and
the clearance of such offering and the underwriting arrangements evidenced
hereby with the National Association of Securities Dealers, Inc. (the "NASD").
This Agreement has been duly executed and delivered by and on behalf of the
Company and is a valid and binding agreement of the Company enforceable against
the Company in accordance with its terms, except that rights to indemnity or
contribution may be limited by applicable law and except as enforceability may
- 2 -
<PAGE>
be limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws generally affecting the rights of creditors and by equitable principles
limiting the right to specific performance or other equitable relief.
(e) The Company has prepared and filed with the Board of Governors of
the Federal Reserve System (the "FRB") in accordance with Section 3(a)(1) of the
Bank Holding Company Act, and Section 225.14 of Regulation Y promulgated by the
FRB, an application to become a bank holding company which, together with all
exhibits, schedules, amendments, and supplements thereto, hereinafter, is
referred to as the "Holding Company Application". On ____________, 1997, the FRB
approved the Company's application to become a bank holding company through the
acquisition of 100% of the voting stock of the Bank (the "Holding Company
Approval"), effective upon the Company's compliance with commitments and
representations made in connection with the Holding Company Application. The
Holding Company Approval provides that the acquisition by the Company of the
Bank must be made within a "window" commencing 30 days after ___________, 1997,
and ending three months after such date, unless the period is extended by the
FRB. The Holding Company Approval further requires that the FRB be provided,
within 30 days of the Company's acquisition of the Bank's voting stock, certain
further information as set forth therein. In the event that the Company files
with the FRB an amendment or supplement to the Holding Company Application, the
term "Holding Company Application" shall refer to such amended or supplemented
Holding Company Application from and after the time it is filed with the FRB.
(f) The Company does not own any equity interest in, or control,
directly or indirectly, any corporation, limited liability company, association,
partnership, joint venture, trust or other business entity, except that as of
the First Closing Date and the Second Closing Date (as each such term is defined
in section 5 hereof), the Company will either own or have the sole right to
acquire all of the outstanding capital stock of the Bank. Upon the contribution
by the Company to the Bank of $10,000,000 of the net proceeds from the sale of
the Common Stock to the Underwriters pursuant to this Agreement, all of the
authorized capital stock of the Bank will be issued to the Company and upon such
issuance will have been duly authorized and validly issued, will be fully paid
and non-assessable and will be owned by the Company free and clear of any lien,
claim, encumbrance, defect in title, security interest, or restriction on
transfer (except for any restrictions under federal or state banking laws); and
no options, warrants, or other rights to purchase, agreements or other
obligations to issue or rights to convert any obligations into shares of capital
stock or ownership interest in the Bank are, or will as of the First Closing
Date and the Second Closing Date be, outstanding.
(g) The incorporators of the Bank have prepared and filed with the
United States Comptroller of the Currency (the "OCC") in accordance with the
National Bank Act (the "Bank Act") an Application to Organize a National Bank
which, together with all exhibits, schedules, amendments and supplements
thereto, is hereinafter referred to as the "Charter Application." On
_____________, 1997, the OCC approved the Charter Application for authority to
organize the Bank, subject to certain terms and conditions specified in such
approval (the "Charter Approval"). The Charter Approval remains in full force
and effect as of the date hereof. In the event that the Company or the Bank
files with the OCC an amendment or supplement to the Charter Application, the
term "Charter Application" shall refer to such amended or supplemented Charter
Application from and after the time it is filed with the OCC.
(h) The incorporators of the Bank have, on behalf of the Bank,
prepared and filed with the Federal Deposit Insurance Corporation (the "FDIC")
in accordance with Section 5(a)(1) of the Federal Deposit Insurance Act, as
amended (the "Federal Deposit Insurance Act"), an Application for Federal
Deposit Insurance which, together with all exhibits, schedules, amendments, and
supplements thereto, hereinafter is referred to as the "Deposit Insurance
Application". On ____________, 1997, the FDIC approved the Deposit Insurance
Application, subject to certain terms and conditions specified in such approval
(the "Approval of Deposit Insurance"). In the event that the Bank files with the
FDIC an amendment or supplement to the Deposit Insurance Application, the term
"Deposit Insurance Application" shall refer to such amended or supplemented
Deposit Insurance Application from and after the time it is filed with the FDIC.
- 3 -
<PAGE>
(i) The Company has previously provided the Underwriter with true and
complete copies of the Charter Application, the Holding Company Application, and
the Deposit Insurance Application, as each has been amended or supplemented from
time to time (the "Applications"), and the Charter Approval, Holding Company
Approval, and Approval of Deposit Insurance, as each has been amended or
supplemented in writing from time to time (the "Approvals"). As of the
respective times the Applications were filed with the respective authorities,
upon the filing or first delivery to the Underwriter of the Prospectus, as of
the date hereof and at the First Closing Date and the Second Closing Date: (i)
such Applications each conformed and will conform in all material respects to
the respective applicable requirements of the Bank Act, the Bank Holding Company
Act, the Federal Deposit Insurance Act and the rules and regulations promulgated
by the respective authorities thereunder; and (ii) none of the Applications
contained or will contain any untrue statement of a material fact or omitted or
will omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(j) As of the First Closing Date and the Second Closing Date, as the
case may be, subject to the capital contribution to the Bank by the Company of
$10,000,000 of the net proceeds from the sale of the Shares to the Underwriters
pursuant to this Agreement, and the satisfaction of the conditions set forth in
the Charter Approval and the Approval of Deposit Insurance, the Bank will be
duly organized and validly existing and in good standing under the laws of the
United States as a commercial bank, and will have full power and authority
(corporate and other) to own, lease, and operate its properties and to conduct
its business as described in the Registration Statement, the Prospectus, the
Applications, and the Approvals, and is not required to be qualified as a
foreign corporation in any jurisdiction, except where the failure so to qualify
would not reasonably be expected to have a Material Adverse Effect on the
Company and the Bank considered as one enterprise or of the Bank considered
separately, and no proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
qualification.
(k) As of the First Closing Date and the Second Closing Date, as the
case may be, the Bank will have received the Charter Approval and the Approval
of Deposit Insurance (collectively, the "Bank Approvals") from, respectively,
the OCC and the FDIC and, as of such respective dates: (i) the Bank Approvals
will be in full force and effect and no action to suspend or revoke any of the
Bank Approvals will have been taken, or proceedings therefor initiated or
threatened, by the OCC or the FDIC; (ii) the Bank will not be in breach or
default under any condition precedent of or commitment contained in any of the
Bank Approvals that can be satisfied as of such date; and (iii) the Bank will
have satisfied all conditions precedent to the Bank Approvals that can be
satisfied as of such date.
(l) As of the First Closing Date and the Second Closing Date, as the
case may be, the Company will have received the Holding Company Approval from
the FRB and, as of such representative dates: (i) the Holding Company Approval
will be in full force and effect and no action to suspend or revoke the Holding
Company approval will have been taken by the FRB or proceedings therefor
initiated or threatened by the FRB; (ii) the Company will not be in breach or
default under any condition of or commitment contained in the Holding Company
Approval that can be satisfied as of such date; and (iii) the Company will have
satisfied all conditions precedent to the Holding Company Approval that can be
satisfied as of such date.
(m) In addition to the representations regarding federal deposit
insurance herein, the Company and the Bank maintain all other insurance of the
types and in the amounts generally deemed adequate in their respective
businesses and consistent with insurance coverage maintained by similar
companies and businesses, and as required by the rules and regulations of all
governmental agencies having jurisdiction over the Company or the Bank, all of
which insurance is in full force and effect. The Company has a key person life
insurance policy on the life of Sidney T. Jackson in the amount of $1,500,000,
payable to the Company, which insurance is in full force and effect.
(n) A registration statement on Form SB-2 (Reg. No. 333-_____) with
respect to the Shares (the "Registration Statement"), including a preliminary
form of prospectus, has been carefully prepared by the Company
- 4 -
<PAGE>
in conformity with the requirements of the Act and has been filed with the
Securities and Exchange Commission (the "Commission"). If the Company files a
registration statement to register a portion of the Shares and relies on Rule
462(b) for such registration statement to become effective upon filing with the
Commission (the "Rule 462(b) Registration Statement"), then any reference to the
"Registration Statement" (as defined below) shall be deemed to include the Rule
462(b) Registration Statement, as amended from time to time. Such registration
statement, as finally amended and revised at the time such registration
statement was or is declared effective by the Commission (including the
information contained in the form of final prospectus, if any, filed with the
Commission pursuant to Rule 424(b) and Rule 430A under the Act and deemed to be
part of the registration statement if the registration statement has been
declared effective pursuant to Rule 430A(b)) and as thereafter amended by
post-effective amendment, if any, is herein referred to as the "Registration
Statement." The related final prospectus in the form first filed with the
Commission pursuant to Rule 424(b) or, if no such filing is required, as
included in the Registration Statement, or any supplement thereto, is herein
referred to as the "Prospectus." The prospectus subject to completion in the
form included in the Registration Statement at the time of the initial filing of
the Registration Statement with the Commission, and each such prospectus as
amended from time to time until the date of the Prospectus, is referred to
herein as the "Preliminary Prospectus." The Company has prepared and filed such
amendments to the Registration Statement since its initial filing with the
Commission, if any, as may have been required to the date hereof, and will file
such additional amendments thereto as may hereafter be required. There have been
delivered to the Representatives two signed copies of the Registration Statement
and each amendment thereto, if any, together with two copies of each exhibit
filed therewith, and such number of conformed copies for each of the
Underwriters of the Registration Statement and each amendment thereto, if any
(but without exhibits), and of each Preliminary Prospectus and of the Prospectus
as the Representatives have requested. The Company is a "small business issuer"
as such term is defined in Rule 504 and Regulation SB under the Act.
(o) Neither the Commission nor any state securities commission has
issued any order preventing or suspending the use of any Preliminary Prospectus,
nor, to the knowledge of the Company, have any proceedings for that purpose been
initiated or threatened, and each Preliminary Prospectus filed with the
Commission as part of the Registration Statement (excluding from this
representation the information referred to in section 3), as originally filed or
as part of any amendment or supplement thereto complied when so filed with the
requirements of the Act and, as of its date, did not include any untrue
statement of a material fact or omit to state , a material fact required to be
stated therein or necessary to make the statements therein not misleading. As of
the effective date of the Registration Statement, and at all times subsequent
thereto up to each Closing Date, the Registration Statement and the Prospectus
contained or will contain all statements that are required to be stated therein
in accordance with the Act and conformed or will conform in all respects to the
requirements of the Act, and neither the Registration Statement nor the
Prospectus (excluding from this representation the information referred to in
section 3), included or will include any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Neither the Company,
nor any person that controls, is controlled by or is under common control with
the Company, has distributed or will distribute prior to each Closing Date any
offering material in connection with the offering and sale of the Shares other
than a Preliminary Prospectus, the Prospectus, the Registration Statement, or
other materials permitted by the Act and provided to the Representatives.
(p) Hill, Barth & King, Inc., which has expressed its opinion with
respect to the financial statements and schedules filed with the Commission and
included as a part of each Preliminary Prospectus, the Prospectus, or the
Registration Statement, are independent accountants as required by the Act.
(q) The financial statements and the related notes and schedules
thereto included in each Preliminary Prospectus, the Prospectus, and the
Registration Statement present fairly the financial position, results of
operations, and cash flows of the Company as of their respective dates or for
the respective periods covered thereby, all in conformity with generally
accepted accounting principles consistently applied throughout the periods
involved. The financial statement schedules, if any, included in the
Registration Statement present fairly the information required to be stated
therein on a basis consistent with the combined financial statements of the
Company contained therein. The Company had an outstanding capitalization as set
forth in the Registration Statement and under "Capitalization"
- 5 -
<PAGE>
in the Prospectus as of the date indicated therein, and there has been no
material change thereto since such date except as disclosed in the Prospectus.
The financial and statistical information and data relating to the Company in
each Preliminary Prospectus, the Prospectus, and the Registration Statement are
accurately presented and prepared on a basis consistent with the audited
combined financial statements and books and records of the Company. The combined
financial statements and schedules and the related notes thereto included in
each Preliminary Prospectus, the Prospectus, or the Registration Statement are
the only such financial statements and schedules required under the Act to be
set forth therein.
(r) Neither the Company nor the Bank is currently, nor with the
giving of notice or passage of time or both, would be, in violation or in breach
of: (i) its Articles of Incorporation or By-laws; (ii) any statute, ordinance,
injunction, judgment, rule or regulation, license, permit, approval, or
authorization applicable to the Company or the Bank; (iii) any statute,
ordinance, order, rule or regulation applicable to the Company; (iv) any order
or decree of any court, regulatory body, arbitrator, administrative agency, or
other instrumentality of the United States or other country or jurisdiction
having jurisdiction over the Company; (v) any condition of or commitment
contained in any of the Applications, if such condition or commitment can be
performed as of such date; or (vi) any provision of any agreement, lease,
franchise, license, indenture, permit, mortgage, deed of trust, evidence of
indebtedness, or other instrument to which the Company or the Bank is a party or
by which any property owned or leased by either is bound or affected. Neither
the Company nor the Bank has received notice of any violation of any applicable
statute, ordinance, order, rule or regulation applicable to the Company or the
Bank. Neither the Company nor the Bank is nor have they been (by virtue of any
action, omission to act, contract to which it is a party or other occurrence) in
violation of any applicable foreign, federal, state, municipal or local
statutes, laws, ordinances, rules, regulations, or orders (including those
relating to environmental protection, occupational safety and health and equal
employment practices) heretofore or currently in effect, except any such
violation that has been fully cured or satisfied without recourse.
(s) Other than the routine processing of the Application, there are
no legal or governmental proceedings or investigations pending or, to the
knowledge of the Company or the Bank, threatened to which the Company, the Bank,
Sidney T. Jackson, or other key members of management, is or may be a party or
to which any property owned or leased by the Company or the Bank is or may be
subject, including, without limitation, any such proceedings that are related to
environmental or employment discrimination matters, that are required to be
described in the Registration Statement or the Prospectus that are not so
described, or that question the validity of this Agreement or any action taken
or to be taken pursuant hereto. Except as described in the Registration
Statement or the Prospectus, neither the Company nor the Bank: (i) is in
violation of any statute, ordinance, rule or regulation, or any decision, order
or decree of any court, regulatory body, arbitrator, administrative agency, or
other instrumentality of the United States or other country or jurisdiction
having jurisdiction over the Company or the Bank relating to the use, disposal,
or release of hazardous or toxic substances, or relating to the protection or
restoration of the environmental or human exposure to hazardous or toxic
substances (collectively, "environmental laws"); (ii) owns or operates any real
property contaminated with any substance that is subject to any environmental
laws; (iii) is liable for any off-site disposal or contamination pursuant to any
environmental laws; or (iv) is subject to any claim relating to any
environmental laws.
(t) There is no transaction, relationship, obligation, agreement, or
other document required to be described in the Registration Statement or the
Prospectus or to be filed or deemed to be filed as an exhibit to the
Registration Statement by the Act, which has not been described or filed as
required. All such contracts or agreements to which the Company or the Bank is a
party have been duly authorized, executed, and delivered by the Company or the
Bank, constitute valid and binding agreements of the Company or the Bank, comply
with applicable regulations of the OCC and the FRB and are enforceable by and
against the Company or the Bank, in accordance with the respective terms
thereof.
(u) The Company and the Bank have good and valid title to all
property and assets reflected as owned by the Company or the Bank, respectively,
in the Company's financial statements included in the Registration Statement (or
elsewhere in the Registration Statement or the Prospectus), free and clear of
all liens, claims,
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mortgages, security interests, or other encumbrance of any kind or nature
whatsoever except those, if any, reflected in such financial statements (or
elsewhere in the Registration Statement or the Prospectus). All property (real
and personal) held or used by the Company or the Bank under leases, licenses,
franchises, or other agreements is held by the Company or the Bank,
respectively, under valid, subsisting, binding and enforceable leases,
franchises, licenses, or other agreements.
(v) Neither the Company nor any person that controls, is controlled
by (including the Bank) or is under common control with the Company has taken or
will take, directly or indirectly, any action designed to cause or result in, or
which constituted, or which could cause or result in, stabilization or
manipulation, under the Exchange Act or otherwise, of the price of any security
of the Company to facilitate the sale or resale of the Common Stock.
(w) Except as described in the Registration Statement or the
Prospectus, since the respective dates as of which information is given in the
Registration Statement or the Prospectus and prior to each Closing Date: (i) the
Company and the Bank have not or will not have incurred any liability or
obligation, direct or contingent, or entered into any transaction, that is
material to the Company, except as in the ordinary course of business; (ii) the
Company and the Bank have not and will not have paid or declared any dividend or
other distribution with respect to their respective capital stock and the
Company and the Bank have not or will not be delinquent in the payment of
principal or interest on any outstanding debt obligation; and (iii) there has
not been and will not have been any change in the capital stock, any material
change in the indebtedness of the Company or the Bank, or any change or
development involving or that could be expected to involve, a Material Adverse
Effect, whether or not arising from transactions in the ordinary course of
business.
(x) Neither the Company nor any person that controls, is controlled
by (including the Bank) or is under common control with the Company has,
directly or indirectly: (i) made any unlawful contribution to any candidate for
political office, or failed to disclose fully any contribution in violation of
law; or (ii) made any payment to any federal, state, or foreign governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof or applicable foreign jurisdictions.
(y) The Company and the Bank own or possess adequate rights to use
all patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service mark registrations, copyrights, and licenses
presently used in or necessary for the conduct of their respective business or
ownership of their properties and the Company has not violated or infringed upon
the rights of others or received any notice of conflict with the asserted rights
of others, in respect thereof.
(z) The Company and the Bank have in place and effective such
policies of insurance, with limits of liability in such amounts, as are normal
and prudent in the ordinary course of the business of the Company and the Bank.
(aa) No labor dispute with the employees of the Company or the Bank
exists or, to the knowledge of the Company or the Bank, is imminent, and the
Company or the Bank are not parties to any collective bargaining agreement and,
to the knowledge of the Company and the Bank, no union organizational attempts
have occurred or are pending. There has been no change in the relationship of
the Company or the Bank with any of its principal suppliers, manufacturers,
contractors, or customers resulting in or that could be expected to result in a
Material Adverse Effect.
(ab) The Company is not an "investment company", an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company", as such terms are defined in the Investment Company Act of 1940, as
amended.
(ac) All federal, state, and local tax returns required to be filed
by or on behalf of the Company and the Bank have been filed (or are the subject
of valid extension) with the appropriate federal, state, and local authorities,
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and all such tax returns, as filed, are accurate in all material respects; all
federal, state, and local taxes (including estimated tax payments) required to
be shown on all such tax returns or claimed to be due from or with respect to
the business of the Company have been paid or reflected as a liability on the
financial statements of the Company for appropriate periods; all deficiencies
asserted as a result of any federal, state, or local tax audits have been paid
or finally settled, and no issue has been raised in any such audit which, by
application of the same or similar principles, reasonably could be expected to
result in a proposed deficiency for any other period not so audited; no state of
facts exist or has existed that would constitute grounds for the assessment of
any tax liability with respect to the periods that have not been audited by
appropriate federal, state, or local authorities; there are no outstanding
agreements or waivers extending the statutory period of limitation applicable to
any federal, state, or local tax return of any period; and the Company has never
been a member of an affiliated group of corporations filing consolidated federal
income tax returns, other than a group of which the Company is and has been the
common parent. The Company has not made an S Corporation election and has not at
any time been and is not qualified as an S Corporation.
(ad) Upon the satisfaction of the conditions set forth in the
Approvals, the Company and the Bank will hold and will be in compliance with all
permits, certificates, licenses, approvals, registrations, consents, and
authorizations required under all laws, rules, and regulations in connection
with their businesses, and all of such permits, certificates, licenses,
approvals, registrations, consents, and authorizations will be in full force and
effect; and neither the Company nor the Bank has received any notice of
threatened proceedings relating to the revocation or modification of any such
permit, certificate, license, approval, registration, consent, or authorization.
Neither the Company nor the Bank is, and neither has been (by virtue of any
action, omission to act, contract to which it is a party or any occurrence or
state of facts whatsoever) in violation of any applicable federal, state,
municipal or local statutes, laws, ordinances, rules, regulations, or orders
issued pursuant to foreign, federal, state, municipal, or local statutes, laws,
ordinances, rules, or regulations (including those relating to environmental
protection, occupational safety and health and employment practices) heretofore
or currently in effect, except any such violations that have been fully cured or
satisfied without recourse or that would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect.
(ae) Neither the Company nor the Bank is a participating employer or
plan sponsor with respect to any employee pension benefit plan as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or any employee welfare benefit plan as defined in Section 3(1) of
ERISA, including, without limitation, any multi-employer welfare or pension
plan. With respect to each defined benefit retirement plan, such plan does not
have benefit liabilities (as defined in Section 4001(a)(16) of ERISA) exceeding
the assets of the plan. The Company or the Bank or the administrator of each of
any employee benefit plans (the "Plans"), as the case may be, has timely filed
the reports required to be filed by ERISA and the Code in connection with the
maintenance of the Plans, and no facts, including, without limitation, any
"reportable event" as defined by ERISA and the regulations thereunder, exist in
connection with the Plans which, under applicable law, would constitute grounds
for the termination of any of the Plans by the Pension Benefit Guaranty
Corporation or for the appointment by the appropriate United States District
Court of a trustee to administer any of the Plans.
(af) The Company and the Bank maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and with the regulations of the OCC, FRB and the FDIC and
to maintain accountability for assets; (iii) access to assets is permitted only
in accordance with management's general or specific authorizations; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(ag) Neither the Company nor the Bank, nor any officer or director of
the Company or the Bank, or any person who owns of record or beneficially any
class of securities issued by the Company is: (i) an officer, director, or
partner of any brokerage firm, broker or dealer that is a member of the NASD
("NASD Member"); or (ii) directly or indirectly, a "person associated with" an
NASD member or an "affiliate" of an NASD member, as such
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<PAGE>
terms are used in the NASD Rules of Fair Practice. In addition, neither the
Company nor the Bank has issued or transferred any Common Stock, warrants,
options, or other securities, or any other items of value, to the Underwriter or
any "related person" of any Underwriter, as such term is used in the NASD Rules
of Fair Practice, except as provided in this Agreement.
(ah) The Company has prepared and filed with the Commission a
registration statement for the Common Stock pursuant to Section 12(g) of the
Exchange Act. Such registration statement either has been declared effective by
the Commission under the Exchange Act or will be declared effective by the
Commission prior to or concurrently with the commencement of the public offering
of the Shares.
(ai) Neither the Company, nor any affiliate of the Company does
business with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075 of the Florida Statutes, and the
Company agrees to comply with such section if, prior to the completion of the
distribution of the Shares, the Company, or any affiliate of the Company
commences doing such business.
(aj) All offers and sales of the securities of the Company prior to
the date hereof were made in compliance with the Act and all other applicable
state and federal laws or regulations. Except pursuant to this Agreement, the
Company knows of no outstanding claims for finder's, origination, or
underwriting fees with respect to the sale of the Common Stock.
(ak) The Company has obtained for the benefit of the Underwriters the
agreement, enforceable by Robert W. Baird & Co. Incorporated ("Baird"), of each
of the officers and directors of the Company, and each of the current
shareholders of the Company that for a period of 180 days after the date of the
Prospectus, such persons will not, without the prior written consent of Baird,
except for the repurchase of 100 shares of Common Stock (the "Organizational
Shares") from Sidney T. Jackson, directly or indirectly, offer, sell, transfer,
or pledge, contract to sell, transfer or pledge, or cause or in any way permit
to be sold, transferred, pledged, or otherwise disposed of, any: (i) shares of
Common Stock; (ii) rights to purchase shares of Common Stock (including, without
limitation, shares of Common Stock that may be deemed to be beneficially owned
by any such shareholder in accordance with the applicable regulations of the
Commission and shares of Common Stock that may be issued upon the exercise of a
stock option, warrant, or other convertible security); or (iii) securities that
are convertible or exchangeable into shares of Common Stock.
A certificate signed by any officer of the Company and delivered
to the Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby. A certificate delivered by the Company to its counsel for
purposes of enabling such counsel to render the opinion referred to in section
10(d) will also be furnished to the Representatives and counsel for the
Underwriters and shall be deemed to be additional representations and warranties
to the Underwriters by the Company as to the matters covered thereby.
3. REPRESENTATIVES OF UNDERWRITERS. The Representatives will act as the
representatives for the several Underwriters in connection with the public
offering of the Shares, and any action under or in respect of this Agreement
taken by the Representatives will be binding upon all of the Underwriters.
4. INFORMATION FURNISHED BY THE UNDERWRITERS. The information set forth in
the last paragraph on the outside front cover page of the Prospectus concerning
the terms of the offering by the Underwriters, the paragraph on the inside front
cover page of the Prospectus relating to stabilization practices, and the
concession and reallowance amounts appearing under the caption "Underwriting" in
the Prospectus constitute all of the information furnished to the Company by and
on behalf of the Underwriters for use in connection with the preparation of the
Registration Statement and the Prospectus, as such information is referred to in
this Agreement.
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<PAGE>
5. PURCHASE, SALE AND DELIVERY OF SHARES.
(a) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set forth, the
Company agrees to sell to the Underwriters identified in Schedule I annexed
hereto 1,500,000 Firm Shares, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company the number of Firm Shares as
hereinafter set forth at the price per share of $9.30, except as provided in the
following sentence. The obligation of each Underwriter to the Company shall be
to purchase from the Company that number of full Firm Shares which (as nearly as
practicable in full shares as determined by the Representatives) bears the same
proportion to the number of Firm Shares to be sold by the Company as the number
of shares set forth opposite the name of such Underwriter in Schedule I annexed
hereto bears to the total number of Firm Shares to be purchased by all of the
Underwriters under this Agreement. The purchase price will be increased to $9.70
with respect to sales of Common Stock to any director or officer of the Company
or the Bank whose name, address, and telephone number are on a list furnished to
the Underwriters by the Company as of _________, 1997.
(b) On the First Closing Date (as hereinafter defined), the Company
will deliver to the Representatives, at the offices of Baird, 777 East Wisconsin
Avenue, Milwaukee, Wisconsin 53202, or through the facilities of The Depository
Trust Company, for the accounts of the several Underwriters, certificates
representing the Firm Shares to be sold by it against payment in Milwaukee,
Wisconsin of the purchase price therefor by certified or official bank check or
checks in New York Clearing House (next day) funds payable to the order of the
Company with respect to the Firm Shares being sold by the Company. As referred
to in this Agreement, the "First Closing Date" shall be on the third full
business day after the date of the Prospectus, at 9:00 a.m., Milwaukee,
Wisconsin time, or at such other date or time not later than ten full business
days after the date of the Prospectus as the Representatives and the Company may
agree. The certificates for the Firm Shares to be so delivered will be in
denominations and registered in such names as the Representatives request by
notice to the Company prior to the First Closing Date, and such certificates
will be made available for checking and packaging at 9:00 a.m., Milwaukee,
Wisconsin time on the first full business day preceding the First Closing Date
at a location to be designated by the Representatives.
(c) In addition, on the basis of the representations, warranties and
agreements herein contained, and subject to the terms and conditions herein set
forth, the Company hereby agrees to sell to the Underwriters, and the
Underwriters, severally and not jointly, shall have the right at any time within
thirty days after the date of the Prospectus to purchase up to 225,000 Optional
Shares from the Company, at the purchase price per share of $9.30 for use solely
in covering any over-allotments made by the Underwriters in the sale and
distribution of the Firm Shares. The option granted hereunder may be exercised
upon notice by the Representatives to the Company within thirty days after the
date of the Prospectus setting forth the aggregate number of Optional Shares to
be purchased by the Underwriters and sold by the Company, the names and
denominations in which the certificates for such shares are to be registered and
the date and place at which such certificates will be delivered. Such date of
delivery (the "Second Closing Date") shall be determined by the Representatives,
provided that the Second Closing Date, which may be the same as the First
Closing Date, shall not be earlier than the First Closing Date and, if after the
First Closing Date, shall not be earlier than three nor later than ten full
business days after delivery of such notice to exercise. Certificates for the
Optional Shares will be made available for checking and packaging at 9:00 a.m.,
Milwaukee, Wisconsin time, on the first full business day preceding the Second
Closing Date at a location to be designated by the Representatives. The manner
of payment for and delivery of (including the denominations of and the names in
which certificates are to be registered) the Optional Shares shall be the same
as for the Firm Shares.
(d) The Representatives have advised the Company that each
Underwriter has authorized the Representatives to accept delivery of the Shares
and to make payment therefor. It is understood that the Representatives,
individually and not as representatives of the Underwriters, may (but shall not
be obligated to) make payment for any Shares to be purchased by any Underwriter
whose funds shall not have been received by the Representatives by the First
Closing Date or the Second Closing Date, as the case may be, for the account of
such Underwriter, but any such payment shall not relieve such Underwriter from
any obligation under this Agreement.
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<PAGE>
As referred to in this Agreement, "Closing Date" shall mean either the First
Closing Date or the Second Closing Date.
(e) Notwithstanding anything contained herein to the contrary, if
prior to the First Closing Date or the Second Closing Date the Company shall not
have received Holding Company Approval and the Bank shall not have received
Charter Approval or Approval of Deposit Insurance, then the net offering
proceeds shall be held in escrow by a nationally-chartered, FDIC-insured bank of
the Company's choice pursuant to the terms of an escrow agreement in
substantially the form of Exhibit A (the "Escrow Agreement).
6. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
several Underwriters that:
(a) If the effective time of the Registration Statement is not prior
to the execution and delivery of this Agreement, the Company will use its best
efforts to cause the Registration Statement to become effective at the earliest
possible time and, upon notification from the Commission that the Registration
Statement has become effective, will so advise the Representatives and counsel
to the Underwriters immediately. If the effective time of the Registration
Statement is prior to the execution and delivery of this Agreement and any
information shall have been omitted therefrom in reliance upon Rule 430A, the
Company, at the earliest possible time, will furnish the Representatives with a
copy of the Prospectus to be filed by the Company with the Commission to comply
with Rule 424(b) and Rule 430A under the Act and, if the Representatives do not
object to the contents thereof, will comply with such Rules. Upon compliance
with such Rules, the Company will so advise the Representatives promptly. The
Company will advise the Representatives and counsel to the Underwriters
immediately of the issuance by the Commission or any state securities commission
of any stop order suspending the effectiveness of the Registration Statement or
of the institution of any proceedings for that purpose, or of any notification
of the suspension of qualification of the Shares for sale in any jurisdiction or
the initiation or threatening of any proceedings for that purpose, and will also
advise the Representatives and counsel to the Underwriters immediately of any
request of the Commission for amendment or supplement of the Registration
Statement, of any Preliminary Prospectus or of the Prospectus, or for additional
information, and the Company will not file any amendment or supplement to the
Registration Statement (either before or after it becomes effective), to any
Preliminary Prospectus or to the Prospectus (including a prospectus filed
pursuant to Rule 424(b)) if the Representatives have not been furnished with a
copy prior to such filing (with a reasonable opportunity to review such
amendment or supplement) or if the Representatives object to such filing.
(b) If, at any time when a prospectus relating to the Shares is
required by law to be delivered in connection with sales by an Underwriter or
dealer, any event occurs as a result of which the Prospectus would include an
untrue statement of a material fact, or would omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it is necessary at any time to supplement the Prospectus to comply with the Act,
the Company promptly will advise the Representatives and counsel to the
Underwriters and the Attorneys-in-Fact thereof and will promptly prepare and
file with the Commission, at its expense, an amendment to the Registration
Statement that will correct such statement or omission or an amendment that will
effect such compliance; and, if any Underwriter is required to deliver a
prospectus nine months or more after the effective date of the Registration
Statement, the Company, upon request of the Representatives but at the expense
of such Underwriter, will prepare promptly such prospectus or prospectuses as
may be necessary to permit compliance with the requirements of Section 10(a)(3)
of the Act. The Company consents to the use, in accordance with the provisions
of the Act and with the Blue Sky Laws of the jurisdictions in which the Shares
are offered by the several Underwriters and by dealers, of each Preliminary
Prospectus.
(c) The Company will not, prior to the Second Closing Date, if any,
incur any liability or obligation, direct or contingent, or enter into any
material transaction, other than in the ordinary course of business, or enter
into any transaction with an "affiliate," as defined in Rule 405 under the Act,
which is required to be described in the Prospectus pursuant to Item 404 of
Regulation S-B under the Act, except as described in the Prospectus.
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<PAGE>
(d) Other than the repurchase of the Organizational Shares, the
Company will not, prior to the Second Closing Date, if any, acquire any of the
Common Stock nor will the Company declare or pay any dividend or make any other
distribution upon its Common Stock payable to shareholders of record on a date
prior to such earlier date, except as described in the Prospectus.
(e) The Company will make generally available to its security holders
and the Representatives an earnings statement as soon as practicable, but in no
event later than sixty days after the end of its fiscal quarter in which the
first anniversary of the effective date of the Registration Statement occurs,
covering a period of twelve consecutive calendar months beginning after the
effective date of the Registration Statement, which will satisfy the provisions
of the last paragraph of Section 11(a) of the Act and Rule 158 promulgated
thereunder.
(f) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the Company will
furnish to the Representatives at the expense of the Company, copies of the
Registration Statement, the Prospectus, any Preliminary Prospectus, and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as the Representatives may reasonably request.
(g) The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder for the purposes set forth in the Prospectus.
(h) The Company will cooperate with the Representatives and counsel
to the Underwriters in qualifying or registering the Shares for sale under the
Blue Sky Laws of such jurisdictions as the Representatives designate, and will
continue such qualifications or registrations in effect so long as reasonably
requested by the Representatives to effect the distribution of the Shares. The
Company shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction where it is not
presently qualified. In each jurisdiction where any of the Shares shall have
been qualified as provided above, the Company will file such reports and
statements as may be required to continue such qualification for a period of not
less than one year from the date of the Prospectus. The Company shall promptly
prepare and file with the Commission, from time to time, such reports as may be
required to be filed by the Act and the Exchange Act, and the Company shall
comply in all respects with the undertakings given by the Company in connection
with the qualification or registration of the Shares for offering and sale under
the Blue Sky Laws.
(i) During the period of five years from the date of the Prospectus,
the Company will furnish to each of the Representatives and to each of the other
Underwriters who may so request, as soon as available, each report, statement or
other document of the Company or its Board of Directors mailed to its
shareholders or filed with the Commission, and such other information concerning
the Company as the Representatives may reasonably request.
(j) Except for the sale of the Common Stock pursuant to this
Agreement, without the prior written consent of Baird, the Company will not,
during the period of 180 days from the date of the Prospectus, directly or
indirectly, issue, offer, sell, grant any option for the sale of, or otherwise
dispose of, contract to sell or otherwise dispose of, or cause or in any way
permit to be sold or otherwise disposed of, any: (i) shares of Common Stock;
(ii) rights to purchase shares of Common Stock; or (iii) securities that are
convertible or exchangeable into shares of Common Stock.
(k) The Company will maintain a transfer agent and, if required by
law or the rules of The Nasdaq Stock Market or any national securities exchange
on which the Common Stock is listed, a registrar (which, if permitted by
applicable laws and rules, may be the same entity as the transfer agent) for its
Common Stock.
(l) If at any time when a prospectus relating to the Shares is
required to be delivered under the Act, any rumor, publication or event relating
to of affecting the Company shall occur as a result of which, in the opinion of
Baird, the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to the Prospectus), the Company will, after
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written notice from Baird advising the Company of any of the matters set forth
above, promptly consult with Baird concerning the advisability and substance of,
and, if the Company and Baird determine that it is appropriate, disseminate, a
press release or other public statement responding to or commenting on, such
rumor, publication or event.
(m) If the sale to the Underwriters of the Shares is not consummated
on or before ___________ __, 1997 because (i) the Company decides not to proceed
with the Offering and the Underwriters are prepared to proceed with an offering,
or (ii) the Underwriters decide not to proceed with the Offering due to a
material, adverse change in the financial condition, results of operations,
business, or prospects of the Company, which, in the reasonable opinion of the
Underwriters, would adversely affect the Offering, the Company agrees to
reimburse the Underwriters for all of their out-of-pocket expenses incurred in
connection with the Offering, including without limitation, fees and expenses of
counsel for the Underwriters, and the provisions of sections 7 and 10 hereof
shall at all times be effective and apply. Notwithstanding the foregoing, if the
sale to the Underwriters of the Shares is not consummated for any reason other
than termination of this Agreement by the Underwriters pursuant to section 11
hereof, and the Company or any of the shareholders of the Company enter into an
agreement on or before one year from the date of this Agreement with respect to
the sale, lease, disposition, or other transfer of all or substantially all of
the Company's assets or a majority interest in its capital stock, directly or
indirectly, by merger, share exchange, business combination or otherwise (such
sale, lease, disposition, or other transfer of assets or stock is hereinafter
referred to as a "Business Combination"), then the Company shall engage the
Representatives as its financial advisors for any such Business Combination and
the Company shall pay the Representatives a financial advisory fee in the amount
of $______ in immediately available funds upon consummation of such Business
Combination for financial advisory services to be rendered by the
Representatives in connection therewith.
(n) The Company will comply or cause to be complied with the
conditions to the obligations of the Underwriters in sections 8(a), (b)(i), (d),
(e), (g), (h), (i), and (j) hereof.
(o) The Company shall deliver the requisite notice of issuance to the
NASD and shall take all necessary and appropriate action within its power to
cause or permit trading and listing of the Common Stock on the OTC Bulletin
Board for a period of at least 36 months after the date of this Agreement,
except during such period(s) in which the Company's Common Stock shall be listed
for trading on any of the: (i) Nasdaq Small Cap Market; (ii) the Nasdaq National
Market System; (iii) the American Stock Exchange; or (iv) the New York Stock
Exchange; or with the prior written consent of Baird.
(p) The Company shall promptly prepare and file with the Commission,
from time to time, such reports as may be required to be filed by the Company
under the Act, the Exchange Act or the Rules and Regulations thereunder.
(q) The Company will apply the net proceeds from the sale of the
Common Stock to be sold by it hereunder for the purposes set forth in the
Prospectus.
(r) Neither the Company nor the Bank shall file any amendment or
supplement to any of the Applications of which the Underwriters shall not
previously have been advised and furnished with a copy or as to which the
Underwriters shall have objected in writing promptly after reasonable notice
thereof. In addition, the Company will advise the Underwriters promptly of any
of the following events: (i) the issuance by the OCC, the FRB or the FDIC of any
amendment to any of the Approvals; (ii) the receipt of any comments from the
OCC, the FRB or the FDIC concerning any of the Applications or the Approvals;
(iii) any request by the OCC, the FRB or the FDIC for any amendment or
supplement to any of the Applications or for additional information; and (iv)
the issuance by the OCC, the FRB or the FDIC of any order suspending any of the
Approvals or the initiation or threatening of any proceedings for that purpose.
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7. PAYMENT OF EXPENSES. Whether or not the transactions contemplated
hereunder are consummated or this Agreement becomes effective, or if this
Agreement is terminated for any reason, the Company will pay the costs, fees,
and expenses incurred in connection with the public offering of the Shares. Such
costs, fees and expenses to be paid by the Company include, without limitation:
(a) All costs, fees, and expenses (excluding the expenses incurred by
the Underwriters and the legal fees and disbursements of counsel for the
Underwriters, but including such fees and disbursements described in subsection
(b) of this section 7) incurred in connection with the performance of the
Company's obligations hereunder, including without limiting the generality of
the foregoing: the registration fees related to the filing of the Registration
Statement with the Commission; the fees and expenses related to the quotation of
the Shares on the OTC Bulletin Board; the fees and expenses of the Company's
counsel, accountants, transfer agent and registrar; the costs and expenses
incurred in connection with the preparation, printing, shipping, and delivery of
the Registration Statement, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements) and all agreements and
supplements provided for herein, this Agreement and the Preliminary and
Supplemental Blue Sky Memoranda, including, without limitation, shipping
expenses via overnight delivery or courier service to comply with applicable
prospectus delivery requirements; and the costs and expenses associated with the
production of materials related to, and travel expenses incurred by the
management of the Company in connection with, the various meetings to be held
between the Company's management and prospective investors.
(b) All registration fees and expenses, including legal fees (which
in no event shall exceed $20,000) and disbursements of counsel for the
Underwriters incurred in connection with qualifying or registering all or any
part of the Shares for offer and sale under the Blue Sky Laws (including
applicable Canadian securities laws, if any) and the clearing of the public
offering and the underwriting arrangements evidenced hereby with the NASD.
(c) All fees and expenses related to printing of the certificates for
the Shares, and all transfer taxes, if any, with respect to the sale and
delivery of the Shares.
8. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of
the several Underwriters under this Agreement shall be subject to the accuracy
of the representations and warranties on the part of the Company herein set
forth as of the date hereof and as of each Closing Date, to the accuracy of the
statements of the Company's officers made pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder, and to the
following additional conditions, unless waived in writing by the
Representatives:
(a) The Registration Statement shall have been declared effective by
the Commission not later than 5:30 p.m., Washington, D. C. time, on the date of
this Agreement, or such later time as shall have been consented to by the
Representatives , which consent shall be deemed to have been given if the
Registration Statement shall have been declared effective on or before the date
and time requested in the acceleration request submitted on behalf of the
Representatives pursuant to Rule 461 under the Act; all filings required by
Rules 424(b) and 430A under the Act shall have been timely made; no stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the Commission or any state securities commission nor, to the
knowledge of the Company, shall any proceedings for that purpose have been
initiated or threatened; and any request of the Commission or any state
securities commission for inclusion of additional information in the
Registration Statement, or otherwise, shall have been complied with to the
satisfaction of the Representatives.
(b) Since the dates as of which information is given in the
Registration Statement:
(i) there shall not have occurred any change or development
involving, or which could be expected to involve, a Material
Adverse Effect whether or not arising from transactions in the
ordinary course of business in the ability of the Company or the
Bank to conduct its business; and
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(ii) the Company shall not have sustained any loss or
interference from any labor dispute, strike, fire, flood,
windstorm, hurricane, accident or other calamity (whether or not
insured) or from any court or governmental action, order or
decree,
the effect of which on the Company, in any such case described in clause (i) or
(ii) above, is in the opinion of the Representatives so material and adverse as
to make it impracticable or inadvisable to proceed with the public offering or
the delivery of the Shares on the terms and in the manner contemplated in the
Registration Statement and the Prospectus.
(c) The Representatives shall not have advised the Company that the
Registration Statement or the Prospectus contains an untrue statement of fact
that, in the opinion of the Representatives or counsel for the Underwriters, is
material, or omits to state a fact that, in the opinion of the Representatives
or such counsel, is material and is required to be stated therein or necessary
to make the statements therein not misleading.
(d) The Representatives shall have received an opinion of McCaffrey &
Raimi, P.A., counsel for the Company addressed to the Representatives, as the
representatives of the Underwriters, and dated the First Closing Date or the
Second Closing Date, as the case may be, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation and whose status is active under the
laws of Florida, and has received the approval of the FRB to
become a bank holding under Section 3(a)(1) of the Bank Holding
Company Act, with full corporate power and authority to own,
lease, and operate its properties and conduct its business as
presently conducted and as described in the Prospectus and the
Registration Statement; and to the knowledge of such counsel
after investigation, the Company is duly registered and
qualified to do business as a foreign corporation under the laws
of, and is in good standing as such in, each jurisdiction in
which such registration or qualification is required, except
where the failure to so register or qualify would not have a
Material Adverse Effect;
(ii) The authorized capital stock of the Company consists of
10,000,000 shares of Common Stock, par value $0.01 per share,
and 2,000,000 shares of Preferred Stock, par value $0.01 per
share, and all such stock conforms as to legal matters to the
descriptions thereof in the Prospectus and the Registration
Statement;
(iii) The issued and outstanding shares of capital stock of the
Company immediately prior to the issuance and sale of the Shares
to be sold by the Company hereunder have been duly authorized
and validly issued, are fully paid and nonassessable, and there
are no preemptive, preferential or, except as described in the
Prospectus and to such counsel's knowledge after investigation,
other rights to subscribe for or purchase any shares of capital
stock of the Company, and to such counsel's knowledge after
investigation, no shares of capital stock of the Company have
been issued in violation of such rights;
(iv) Upon the satisfaction of the conditions set forth in the
Approvals, and upon contribution by the Company to the Bank of
$10,000,000 of the net proceeds form the sale of the Common
Stock to the Underwriter pursuant to this Agreement, all of the
capital stock of the Bank will be duly authorized and validly
issued, will be fully paid and non-assessable and will be owned
by the Company free and clear of any lien, encumbrance, equity,
security interest, or claim; and to such counsel's knowledge, no
options, warrants, or other rights to purchase, agreements or
other obligations to issue or rights to convert any obligations
into shares of capital stock or ownership interest in the Bank
are, or will as of the First closing Date and the Second Closing
Date be, outstanding;
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<PAGE>
(v) As of the time the Holding Company Application was filed
with the FRB and as of the First Closing Date and the Second
Closing Date, as the case may be: (A) such application conformed
in all material respects to the applicable requirements of the
Bank Holding Company Act and the rules and regulations
thereunder; and (B) to such counsel's knowledge after
investigation, as of any such times such application contained
no untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(vi) The Bank has received the Approvals from the OCC and the
FDIC and, to the knowledge of such counsel after investigation,
as of the date hereof: (A) such Approvals are in full force and
effect and no action to suspend or revoke any of such Approvals
has been taken, or, proceedings therefor initiated or
threatened, by the OCC or the FDIC; (B) the Bank is not in
breach or default under any condition contained in any of such
Approvals that can be satisfied as of such date; and (C) the
Bank has satisfied all conditions precedent to such Approvals
which can be satisfied as of such date;
(vii) The Company has received Holding Company Approval from the
FRB and, to the knowledge of such counsel after investigation,
as of the date hereof: (A) the Holding Company Approval is in
full force and effect and no action to suspend or revoke the
Holding Company Approval has been taken by the FRB or
proceedings therefor initiated or threatened by the FRB; (B) the
Company is not in breach or default under any condition of or
commitment that may be satisfied as of the date hereof contained
in the Holding Company Approval; and (C) the Company has
satisfied all conditions precedent to the Holding Company
Approval that can be satisfied as of such date;
(viii) The Company does not own or control any subsidiary or
other affiliate other than the Bank, and does not, to such
counsel's knowledge after investigation, own any equity interest
in or control, directly or indirectly, any other corporation,
limited liability company, partnership, limited liability
partnership, joint venture, association, trust or other business
organization, except as described in the Prospectus and the
Registration Statement;
(ix) The certificates for the Shares to be delivered hereunder
are in due and proper form and conform to the requirements of
applicable law including the Bank Act; and when duly
countersigned by the Company's transfer agent, and delivered to
the Representatives or upon the order of the Representatives
against payment of the agreed consideration therefor in
accordance with the provisions of this Agreement, the Shares to
be sold by the Company represented thereby will be duly
authorized and validly issued, fully paid and nonassessable, and
free of any preemptive, preferential or other rights to
subscribe for or purchase shares of Common Stock and, upon
delivery to the Underwriters or upon the order against payment
of the agreed consideration therefor in accordance with the
provisions of this Agreement, the Underwriters will acquire good
and marketable title thereto, free and clear of any lien, claim,
security interest, encumbrance, or restriction on transfer
(except for any restriction under the Act, the Blue Sky Laws,
and applicable banking laws);
(x) The Registration Statement has become effective under the
Act, and to such counsel's knowledge after investigation, no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been initiated or are threatened under the Act or any Blue
Sky Law; the Registration Statement and the Prospectus and any
amendment or supplement thereto (except for the financial
statements and other statistical or financial data included
therein as to which such counsel need express no opinion) comply
as to form in all material respects with the requirements of the
Act; no facts have come to the attention of such counsel which
lead it to believe that the Registration Statement or the
Prospectus or any amendment or supplement (if any) thereto,
contains any untrue statement of a material fact or omitted to
state a material fact required to be
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<PAGE>
stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as of the First Closing Date
or the Second Closing Date, as the case may be, contained any
untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
under which they were made (except, in each case, for the
financial statements and other financial data included therein
as to which such counsel need express no opinion); to such
counsel's knowledge after investigation, there are no legal or
governmental proceedings pending or threatened, including,
without limitation, any such proceedings that are related to
environmental or employment discrimination matters, required to
be described in the Registration Statement or the Prospectus
which are not so described or which question the validity of
this Agreement or any action taken or to be taken pursuant
thereto, nor is there any transaction, relationship, agreement,
contract or other document of a character required to be
described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement by the Act,
which is not described or filed as required;
(xi) The Company has full corporate power and authority to enter
into and perform this Agreement; the performance of the
Company's obligations hereunder and the consummation of the
transactions described herein have been duly authorized by the
Company by all necessary corporate action and this Agreement has
been duly executed and delivered by and on behalf of the
Company, and is a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its
terms, except that rights to indemnity or contribution may be
limited by applicable law and except as enforceability of this
Agreement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors'
rights generally, and by equitable principles limiting the right
to specific performance or other equitable relief; no consent,
approval, authorization or other order or decree of any court,
regulatory or governmental body, arbitrator, administrative
agency or other instrumentality of the United States, Florida,
or to the knowledge of such counsel, any other jurisdiction
having jurisdiction over the Company or the Bank is required for
the execution and delivery of this Agreement or the consummation
of the transactions contemplated by this Agreement (except for
compliance with the Act, the Exchange Act, applicable Blue Sky
Laws and the clearance of the underwriting arrangements by the
NASD);
(xii) The execution, delivery and performance of this Agreement
by the Company will not: (A) violate any provisions of the
Articles of Incorporation or By-laws of the Company or the Bank;
(B) violate any provisions of, or result in the breach,
modification or termination of, or constitute a default under,
any agreement, lease, franchise, license, indenture, permit,
mortgage, deed of trust, other evidence of indebtedness or other
instrument known to such counsel after investigation, to which
the Company or the Bank is a party or by which the Company or
the Bank, or any of their respective owned or leased property is
bound, and which is filed as an exhibit to the Registration
Statement; or (C) violate any statute, ordinance, order, rule,
decree or regulation of any court, regulatory or governmental
body, arbitrator, administrative agency or other instrumentality
of the United States, Florida, or to the knowledge of such
counsel, any other jurisdiction having jurisdiction over the
Company or the Bank (assuming compliance with all applicable
federal and state securities laws);
(xiii) Subject to the capital contribution by the Company to the
Bank of $10,000,000 of the net proceeds from the sale of the
Common Shares to the Underwriters pursuant to this Agreement,
and the satisfaction of the conditions set forth in the Charter
Approval and the Approval of Deposit Insurance, the Bank will be
duly organized and validly existing under the laws of the United
States as a commercial bank and will have all requisite
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement, the Prospectus and the Applications, and
is not required to be duly qualified as a foreign corporation in
any state, except where the failure so to qualify would not have
a Material Adverse Effect on the
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<PAGE>
conditions or earnings of the Company and the Bank considered as
one enterprise or of the Bank considered separately, and no
proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such qualification;
(xiv) As of the respective times the Charter Application and the
Deposit Insurance Application were filed with the respective
authorities and as of the First Closing Date and the Second
Closing Date, as the case may be: (A) such applications each
conformed in all material respects to the respective applicable
requirements of the OCC, the Federal Deposit Insurance Act and
the rules and regulations promulgated by the respective
authorities thereunder; and (B) to such counsel's knowledge
after investigation as of such times such Applications contained
no untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(xv) To such counsel's knowledge after investigation, except as
described in the Prospectus, there are no holders of Common
Stock or other securities of the Company, or securities that are
convertible or exchangeable into Common Stock or other
securities of the Company, that have rights to the registration
of such securities under the Act or any Blue Sky Laws;
(xvi) The Common Stock is registered under the Exchange Act;
(xvii) The Company is not, nor with the giving of notice or
passage of time or both would be, in violation of its Articles
of Incorporation or By-laws or, to such counsel's knowledge
after investigation, in default in any material respect in the
performance of any agreement, lease, franchise, license, permit,
mortgage, deed of trust, evidence of indebtedness or other
instrument or document that is filed as an exhibit to the
Registration Statement, to which the Company is subject or
bound;
(xviii) The Company is not an "investment company", an
"affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended, and, upon its
receipt of any proceeds from the sale of the Shares, assuming
application of the proceeds in the manner set forth under the
caption "Use of Proceeds" in the Prospectus, the Company will
not become or be deemed to be an "investment company"
thereunder;
(xix) The description in the Registration Statement and the
Prospectus of statutes, law, regulations, legal and governmental
proceedings, and contracts and other legal documents described
therein fairly and correctly presents, in all material respects,
the information required to be included therein by the Act; and
(xx) All offers and sales by the Company of its capital stock
before the date hereof were at all relevant times duly
registered under or exempt from the registration requirements of
the Act, and were duly registered under or the subject of an
available exemption from the registration requirements of any
applicable Blue Sky Laws.
In rendering such opinion, counsel for the Company may rely, to the
extent counsel deems such reliance proper, as to matters of fact upon
certificates of officers of the Company and of governmental officials, and
copies of all such certificates shall be furnished to the Representatives and
for the Underwriters on or before each Closing Date.
(e) The Representatives shall have received an opinion of Holland &
Knight LLP, counsel for the Underwriters, dated the First Closing Date or the
Second Closing Date, as the case may be, with respect to the
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<PAGE>
issuance and sale of the Shares by the Company, the Registration Statement and
other related matters as the Representatives may require, and the Company shall
have furnished to such counsel such documents and shall have exhibited to them
such papers and records as they request for the purpose of enabling them to pass
upon such matters.
(f) The Representatives shall have received on each Closing Date, a
certificate of Sidney T. Jackson, in his capacity as President and Chief
Executive Officer; and ____________, in his capacity as principal financial
officer of the Company, to the effect that:
(i) The representations and warranties of the Company set forth
in section 2 hereof are true and correct in all material
respects as of the date of this Agreement and as of the date of
such certificate, and the Company has complied with all the
agreements and satisfied all the conditions to be performed or
satisfied by it at or prior to the date of such certificate;
(ii) The Commission has not issued an order preventing or
suspending the use of the Prospectus or any Preliminary
Prospectus or any amendment or supplement thereto; no stop order
suspending the effectiveness of the Registration Statement has
been issued; and to the knowledge of the respective signatories,
no proceedings for that purpose have been initiated or are
pending or contemplated under the Act or under the Blue Sky Laws
of any jurisdiction;
(iii) Each of the respective signatories has carefully examined
the Registration Statement and the Prospectus, and any amendment
or supplement thereto, and such documents contain all statements
required to be stated therein, and do not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading, and since the date on which
the Registration Statement was initially filed, no event has
occurred that was required to be set forth in an amended or
supplemented prospectus or in an amendment to the Registration
Statement that has not been so set forth; and
(iv) Since the date on which the Registration Statement was
initially filed with the Commission, there shall not have
occurred any change or development involving, a Material Adverse
Effect, whether or not arising from transactions in the ordinary
course of business relating to the organization of the Company
or the Bank, except as disclosed in the Prospectus and the
Registration Statement as heretofore amended or (but only if the
Representatives expressly consent thereto in writing) as
disclosed in an amendment or supplement thereto filed with the
Commission and delivered to the Representatives after the
execution of this Agreement; since such date and except as so
disclosed or in the ordinary course of business, the Company has
not incurred any liability or obligation, direct or indirect, or
entered into any transaction which is material to the Company;
since such date and except as so disclosed, there has not been
any change in the outstanding capital stock of the Company, or
any change that is material to the Company in the short-term
debt or long-term debt of the Company; since such date and
except as so disclosed, the Company has not acquired any of the
Common Stock or other capital stock of the Company nor has the
Company declared or paid any dividend, or made any other
distribution, upon its outstanding Common Stock payable to
shareholders of record on a date prior to such Closing Date;
since such date and except as so disclosed, the Company has not
incurred any material contingent obligations, and no material
litigation is pending or threatened against the Company; and,
since such date and except as so disclosed, the Company has not
sustained any material loss or interference from any strike,
fire, flood, windstorm, accident or other calamity (whether or
not insured) or from any court or governmental action, order or
decree.
The delivery of the certificate provided for in this subsection (f)
shall be and constitute a representation and warranty of the Company as to the
facts required in the immediately foregoing clauses (i), (ii), (iii), and (iv)
to be set forth in the certificate.
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<PAGE>
(g) At the time this Agreement is executed and also on each Closing
Date, there shall be delivered to the Representatives a letter addressed to the
Representatives, as the representatives of the Underwriters, from Hill, Barth &
King, Inc., the Company's independent accountants, the first letter to be dated
the date of this Agreement, the second letter to be dated the First Closing Date
and the third letter (if applicable) to be dated the Second Closing Date, which
shall be in form and substance satisfactory to the Representatives and shall
contain information as of a date within five days of the date of such letter.
There shall not have been any change or decrease set forth in any of the letters
referred to in this subsection (i) which makes it impracticable or inadvisable
in the judgment of the Representatives to proceed with the public offering or
purchase of the Shares as contemplated hereby.
(h) The Shares shall have been qualified or registered for sale under
the Blue Sky Laws of such jurisdictions as shall have been specified by the
Representatives, the underwriting terms and arrangements for the offering shall
have been cleared by the NASD, and the Common Stock shall have been approved for
listing on the OTC Bulletin Board and shall have been registered under the
Exchange Act.
(i) Such further certificates and documents as the Representatives
may reasonably request (including certificates of officers of the Company).
(j) A written agreement or agreements signed by officers and
directors of the Company to the effect that such persons will not offer to sell,
sell, grant any option for the sale, of, or otherwise dispose of any shares of
Common Stock, or any rights to purchase shares of Common Stock, in the open
market or otherwise, for a period of 180 days after the date of the Prospectus,
except with the prior written consent of the Underwriter and except for the sale
to the Company of the Organizational Shares by Sidney T. Jackson.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to the
Representatives and to Holland & Knight LLP, counsel for the Underwriters. The
Company shall furnish the Representatives with such manually signed or conformed
copies of such opinions, certificates, letters and documents as the
Representatives may reasonably request.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at either Closing Date is not so satisfied when and as
required by this Agreement, this Agreement at the election of the
Representatives will terminate upon notification to the Company without
liability on the part of any Underwriter, including the Representatives or the
Company except for the provisions of section 6(n) hereof, the expenses to be
paid by the Company pursuant to section 7 hereof and except to the extent
provided in section 10 hereof.
9. MAINTAIN EFFECTIVENESS OF REGISTRATION STATEMENT. The Company will use
its best efforts to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement, and, if such stop order is issued,
to obtain as soon as possible the lifting thereof.
10. INDEMNIFICATION.
(a) The Company subject to the last paragraph of this section 10,
agrees to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of the Act or the Exchange Act,
from and against any losses, claims, damages, expenses, liabilities, or actions
in respect thereof ("Claims"), joint or several, to which such Underwriter or
each such controlling person may become subject under the Act, the Exchange Act,
Blue Sky Laws, or other federal or state statutory laws or regulations, at
common law or otherwise (including payments made in settlement of any
litigation), insofar as such Claims arise out of or are based upon any breach of
any representation, warranty, or covenant made by the Company in this Agreement,
or any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or in any application filed
under any Blue Sky Law or other document executed by the Company for that
purpose or based upon written information furnished by the Company and filed in
any state or other jurisdiction to qualify any or all of the Shares under the
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<PAGE>
securities laws thereof (any such document, application, or information being
hereinafter called a "Blue Sky Application") or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Company, subject to the last paragraph of this section 10, agrees to reimburse
each Underwriter and each such controlling person for any legal fees or other
expenses incurred by such Underwriter or any such controlling person in
connection with investigating or defending any such Claim; provided, however,
that the Company will not be liable in any such case to the extent that: (i) any
such Claim arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
any Preliminary Prospectus, the Prospectus or supplement thereto or in any Blue
Sky Application in reliance upon and in conformity with the written information
furnished to the Company pursuant to section 4 of this Agreement; or (ii) such
statement or omission was contained or made in any Preliminary Prospectus and
corrected in the Prospectus and (1) any such Claim suffered or incurred by any
Underwriter (or any person who controls any Underwriter) resulted from an
action, claim or suit by any person who purchased Shares that are the subject
thereof from such Underwriter in the offering, and (2) such Underwriter failed
to deliver or provide a copy of the Prospectus to such person at or prior to the
confirmation of the sale of such Shares in any case where such delivery is
required by the Act, unless such failure was due to failure by the Company to
provide copies of the Prospectus to the Underwriters as required by this
Agreement. The indemnification obligations of the Company as provided above are
in addition to and in no way limit any liabilities the Company may otherwise
have.
(b) The Company agrees to indemnify and hold harmless each
Underwriter and each controlling person from and against any Claims to which
such Underwriter or each such controlling person may become subject under the
Act, the Exchange Act, Blue Sky Laws or other federal or state statutory laws or
regulations, at common law or otherwise (including payments made in settlement
of any litigation), insofar as such Claims arise out of or are based upon any
breach of any representations, warranty or covenant made by such parties in this
Agreement.
(c) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors and each of its officers who
sign the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Act or the Exchange Act, against any Claim to
which the Company, or any such director, officer, or controlling person may
become subject under the Act, the Exchange Act, Blue Sky Laws or other federal
or state statutory laws or regulations, at common law or otherwise (including
payments made in settlement of any litigation, if such settlement is effected
with the written consent of such Underwriter), insofar as such Claim arises out
of or is based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or in any Blue Sky
Application, or arises out of or is based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or in any Blue Sky Application, in reliance solely upon and in conformity with
the written information furnished by the Representatives to the Company pursuant
to section 5 of this Agreement. Each Underwriter will severally reimburse any
legal fees or other expenses incurred by the Company, or any such director,
officer, or controlling person in connection with investigating or defending any
such Claim, and from any and all Claims solely resulting from failure of an
Underwriter to deliver a Prospectus, if the person asserting such Claim
purchased Shares from such Underwriter and a copy of the Prospectus (as then
amended if the Company shall have furnished any amendments thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Shares to such person, and if the Prospectus (as so amended) would have
cured the defect giving rise to such Claim. The indemnification obligations of
each Underwriter as provided above are in addition to any liabilities any such
Underwriter may otherwise have. Notwithstanding the provisions of this section,
no Underwriter shall be required to indemnify or reimburse the Company, or any
officer, director or controlling person in an aggregate amount in excess of the
total price at which the Shares purchased by any such Underwriter hereunder were
offered to the public, less the amount of any damages such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
- 21 -
<PAGE>
(d) Promptly after receipt by an indemnified party under this section
of notice of the commencement of any action in respect of a Claim, such
indemnified party will, if a Claim in respect thereof is to be made against an
indemnifying party under this section, notify the indemnifying party in writing
of the commencement thereof, but the omission so to notify the indemnifying
party will not relieve an indemnifying party from any liability it may have to
any indemnified party under this section or otherwise. In case any such action
is brought against any indemnified party, and such indemnified party notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in and, to the extent that he, she or it may wish,
jointly with all other indemnifying parties, similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and any indemnifying party and the indemnified party shall
have been advised by counsel that there may be legal defenses available to the
indemnified party that are different from or additional to those available to
any indemnifying party and in the reasonable judgment of such counsel it is
advisable for the indemnified party to employ separate counsel, the indemnified
party or parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. The indemnifying party will not be
liable for any settlement of any proceeding effected without its written
consent, which shall not be unreasonably withheld.
(e) Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the defense of
such action and upon approval by the indemnified party of counsel selected by
the indemnifying party, the indemnifying party will not be liable to such
indemnified party under this section for any legal fees or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof, unless:
(i) the indemnified party shall have employed separate counsel
in connection with the assumption of legal defenses in
accordance with the proviso to the last sentence of subsection
(e) of this section (it being understood, however, that the
indemnifying party shall not be liable for the legal fees and
expenses of more than one separate counsel, approved by the
Representatives, if one or more of the Underwriters or their
controlling persons are the indemnified parties);
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after the
indemnified party's notice to the indemnifying party of
commencement of the action; or
(iii) the indemnifying party has authorized the employment of
counsel at the expense of the indemnifying party.
(f) If the indemnification provided for in this section is
unavailable to an indemnified party under subsection (a), (b), or (c) hereof in
respect of any Claim referred to therein, then each indemnifying party, in lieu
of indemnifying such indemnified party, shall, subject to the limitations
hereinafter set forth, contribute to the amount paid or payable by such
indemnified party as a result of such Claim:
(i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Underwriters from the
offering of the Shares; or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred
to in clause (i) above, but also the relative fault of the
Company and the Underwriters in connection with the statements
or omissions which resulted in such Claim, as well as any other
relevant equitable considerations.
The relative benefits received by each of the Company and the
Underwriters shall be deemed to be in such proportion so that the Underwriters
are responsible for that portion represented by the percentage that the amount
of the underwriting discounts and commissions per share appearing on the cover
page of the Prospectus
- 22 -
<PAGE>
bears to the public offering price per share appearing thereon, and the Company
(including its officers and directors and controlling persons) is responsible
for the remaining portion. The relative fault of the Company and the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the Claims referred to
above shall be deemed to include, subject to the limitations set forth in
subsections (e) and (f) of this section, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
(g) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this section were determined by pro
rata or per capita allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method or allocation which does not
take into account the equitable considerations referred to in subsection (f) of
this section. Notwithstanding the other provisions of this section, no
Underwriter shall be required to contribute any amount that is greater than the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this section are several in proportion to their
respective underwriting commitments and not joint.
11. DEFAULT OF UNDERWRITERS. It shall be a condition to the obligations of
each Underwriter to purchase the Shares in the manner as described herein, that,
except as hereinafter provided in this section, each of the Underwriters shall
purchase and pay for all the Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Representatives of all such Shares in accordance
with the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Shares hereunder on either the First Closing Date or the
Second Closing Date and the aggregate number of Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed ten
percent of the total number of Shares that the Underwriters are obligated to
purchase on such Closing Date, the Representatives may make arrangements for the
purchase of such Shares by other persons, including any of the Underwriters, but
if no such arrangements are made by such Closing Date the nondefaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Shares which such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of Shares with respect to which
such default or defaults occur is greater than ten percent of the total number
of Shares which the Underwriters are obligated to purchase on such Closing Date,
and arrangements satisfactory to the Representatives for the purchase of such
Shares by other persons are not made within thirty-six hours after such default,
this Agreement will terminate without liability on the part of any nondefaulting
Underwriter or the Company, except for the expenses to be paid by the Company
pursuant to section 7 hereof, and except to the extent provided in section 10
hereof.
In the event that Shares to which a default relates are to be
purchased by the nondefaulting Underwriters or by another party or parties, the
Representatives shall have the right to postpone the First Closing Date or the
Second Closing Date, as the case may be, for not more than seven business days
in order that the necessary changes in the Registration Statement, Prospectus
and any other documents, as well as any other arrangements, may be effected. As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
12. EFFECTIVE DATE. This Agreement shall become effective upon the
execution and delivery of this Agreement by the parties hereto. Such execution
and delivery shall include an executed copy of this Agreement sent by
telecopier, facsimile transmission or other means of transmitting written
documents.
- 23 -
<PAGE>
13. TERMINATION. Without limiting the right to terminate this Agreement
pursuant to any other provision hereof, this Agreement may be terminated by the
Representatives prior to or on the First Closing Date and the over-allotment
option from the Company referred to in section 5 hereof, if exercised, may be
cancelled by the Representatives at any time prior to or on the Second Closing
Date, if in the judgment of the Representatives, payment for and delivery of the
Shares is rendered impracticable or inadvisable because:
(a) additional governmental restrictions, not in force and effect on
the date hereof, shall have been imposed upon trading in securities generally or
minimum or maximum prices shall have been generally established on the New York
Stock Exchange or the American Stock Exchange, or trading in securities
generally shall have been suspended or materially limited on either such
exchange or on The Nasdaq Stock Market or OTC Bulletin Board or a general
banking moratorium shall have been established by either federal or state
authorities in New York, Florida or Wisconsin;
(b) any development or prospective development involving particularly
the business or properties or securities of the Company or the Bank or
transactions contemplated by this Agreement has occurred that, in the judgment
of the Representatives makes it impractical or inadvisable to offer or deliver
the Shares; including, but not limited to, events set forth in section 8(b); or
(c) an outbreak or escalation of hostilities or other national or
international calamity or any substantial change in political, financial, or
economic conditions shall have occurred or shall have accelerated to such
extent, in the judgment of the Representatives, as to have a material adverse
effect on the financial markets of the United States, or to make it
impracticable or inadvisable to proceed with completion of the sale of and
payment for the Shares as provided in this Agreement.
Any termination pursuant to this section shall be without liability
on the part of any Underwriter to the Company, or on the part of the Company to
any Underwriter, except for expenses to be paid by the Company pursuant to
section 7 hereof or reimbursed by the Company pursuant to section 6(n) hereof
and except as to indemnification to the extent provided in section 10 hereof.
14. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The respective
indemnities, agreements, representations, warranties, covenants and other
statements of the Company, of its officers or directors, and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or the Company or any of their partners, officers, directors or any
controlling person, as the case may be, and will survive delivery of and payment
for the Shares sold hereunder.
15. NOTICES. All communications hereunder will be in writing and, if sent
to the Representatives, will be mailed, delivered, telecopied (with receipt
confirmed) or telegraphed and confirmed to Robert W. Baird & Co. Incorporated at
777 E. Wisconsin Avenue, Milwaukee, Wisconsin 53202, Attention: Steven P. Kent,
Managing Director, with a copy to Chester E. Bacheller, Esq., Holland & Knight
LLP, 400 North Ashley Drive, Suite 2300, Tampa, Florida, 33602 and if sent to
the Company, will be mailed, delivered, telecopied (with receipt confirmed) or
telegraphed and confirmed to the Company at 999 9th Street South, Naples,
Florida 34102, Attention: Sidney T. Jackson, with a copy to Judith E. McCaffrey,
McCaffrey & Raimi, P.A., 5811 Pelican Bay Boulevard, Suite 206-A, Naples,
Florida 33963.
16. SUCCESSORS. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors, personal
representatives and assigns, and to the benefit of the officers and directors
and controlling persons referred to in section 10 hereof and no other person
will have any right or obligation hereunder. The term "successors" shall not
include any purchaser of the Shares as such from any of the Underwriters merely
by reason of such purchase.
- 24 -
<PAGE>
17. PARTIAL UNENFORCEABILITY. If any section, paragraph, clause or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph clause or provision hereof.
18. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Florida without
reference to conflict of law principles thereunder. This Agreement may be signed
in various counterparts which together shall constitute one and the same
instrument, and shall be effective when at least one counterpart hereof shall
have been executed by or on behalf of each party hereto.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters, including the Representatives, all in accordance with its terms.
Very truly yours,
COASTAL BANK CORPORATION
By:
-----------------------------
Sidney T. Jackson, President and
Chief Executive Officer
- 25 -
<PAGE>
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the
date first above written.
By: ROBERT W. BAIRD & CO. INCORPORATED
ASHTIN KELLY & CO., INCORPORATED
Acting as Representatives of the several
Underwriters (including themselves) identified
in Schedule I annexed hereto.
By:
------------------------
Authorized Representative
By:
------------------------
Authorized Representative
- 26 -
<PAGE>
Coastal Bank Corporation
SCHEDULE I
NUMBER OF FIRM
SHARES TO
NAME OF UNDERWRITER BE PURCHASED
------------------- --------------
Robert W. Baird & Co. Incorporated
Ashtin Kelly & Co., Incorporated
Total ------------------
- 27 -
<PAGE>
EXHIBIT A
ESCROW AGREEMENT
This Escrow Agreement (the "Escrow Agreement") is entered into by and
between _________________________, a nationally-chartered bank with its
principal office in Naples, Florida (the "Escrow Agent"), Coastal Bank
Corporation, a Florida corporation (the "Company"), and Coastal Bank, N.A., a
national banking organization, to be located in Naples, Florida (the "Bank").
BACKGROUND
The Company has prepared and filed with the Board of Governors of
the Federal Reserve System an application to become a bank holding company (the
"Holding Company Application"). Incorporators of the Bank, on behalf of the
Bank, have (i) an application to organize a National Bank with the United States
Comptroller of the Currency and (ii) an Application for Federal Deposit
Insurance with the Federal Deposit Insurance Corporation (collectively the "Bank
Approvals" and together with the Holding Company Application the "Regulatory
Approvals"). The Company proposes to sell up to 1,725,000 shares of its common
stock, par value $.01 per share (the "Offering") to Robert W. Baird & Co.
Incorporated ("Baird") and Ashtin Kelly & Co., Incorporated, as representatives
of the several underwriters (the "Representatives"), identified on Schedule I to
an underwriting agreement between the Company and the Representatives dated
_________ __, 199_. The parties desire that the Offering proceeds (the
"Proceeds") plus interest and earnings thereon (together with the Proceeds, the
"Escrow Funds") shall be held in an escrow account at a nationally-chartered,
FDIC-insured bank until such time as the Bank and the Company receive the
Regulatory Approvals.
THEREFORE, in consideration of the mutual covenants contained in
this Escrow Agreement, the parties agree as follows:
TERMS
1. If on the closing date of the Offering or the closing date
pertaining to the exercise of the underwriters' over-allotment option in the
Offering, the Company and the Bank have not received the Regulatory Approvals,
the Company and the Bank will deliver the Proceeds to the Escrow Agent to be
held by the Escrow Agent pursuant to the terms of this Escrow Agreement.
2. The Escrow Funds are to be invested by the Escrow Agent in
Permitted Investments. Interest and earnings on the Escrow Funds will be deemed
earned by the Company and the Company's federal tax identification number will
be used to establish any accounts for reporting such interest and earnings. The
term "Permitted Investments" means the following investments so long as they
have maturities of 90 days or less: (a) obligations issued or guaranteed by the
United States or by any person controlled or supervised by or acting as an
instrumentality of the United States or by any person controlled or supervised
by or acting as an instrumentality of the United States pursuant to authority
granted by Congress; (b) obligations issued or guaranteed by any state or
political subdivision thereof rated either Aa or higher, or MIG 1 or higher, by
Moody's Investors Service, Inc. or AA or higher, or an equivalent, by Standard &
Poor's Corporation, both of New York, New York, or their successors; (c)
commercial or finance paper which is rated either Prime-1 or higher or an
equivalent by Moody's Investors Service, Inc. or A-1 or higher or an equivalent
by Standard & Poor's Corporation, both of New York, New York, or their
successors; and (d) certificates of deposit or time deposits of banks or trust
companies, organized under the laws of the United States, having a minimum
equity of $500,000,000.
3. The Escrow Funds must be disbursed in accordance with paragraph 4
hereof as a condition precedent to the Company and the Bank having any right,
title, or interest (legal or equitable) in any of the Escrow Funds.
<PAGE>
The Company acknowledges and agrees that its rights under this Escrow Agreement
are valid and sufficient consideration for the issuance of the Company's Common
Stock in the Offering.
4. The Company may obtain disbursements of Escrow Funds [for general
operating expenses,] including costs associated with opening the Bank's main
facility and repayment of organizational debt [to the extent] the note holders
of such debt buy stock in the Offering. The Escrow Agent will release Escrow
Funds permitted to be disbursed by it hereunder in the amount specified in
writing by the Company, upon receipt by the Escrow Agent of written
certification from the Company that the Escrow Funds are being disbursed for the
purposes described in the preceding sentence. The Company, as applicable, must
also provide Baird with a copy of such written certification. Upon receipt of
written certification from the Company that each has received all necessary
Regulatory Approvals to conduct its respective business, the Escrow Agent shall
promptly release and pay to the Company the Escrow Funds, net of the Escrow
Agent's fees for services provided by it under this Agreement and any amounts
previously distributed by the Escrow Agent pursuant to this paragraph 4.
5. If the Company and the Bank have not received all of the
Regulatory Approvals by _______________, 199_, the Escrow Agent will disburse
the Escrow Funds to the shareholders of record on such date pro rata based on
the amount that the Company common stock held by each shareholder bears to the
total amount of Company common stock outstanding on such date. The Company will
cause the Company's registrar and transfer agent to cooperate with the Escrow
Agent to identify such shareholders.
6. The Company and the Bank shall have the right to inspect and
obtain copies of the records of the Escrow Agent and to receive monthly reports
of the status of the Escrow Funds.
7. The Escrow Agent may resign as escrow agent by notice to the
other parties hereto (the "Resignation Notice"). If, prior to the expiration of
60 business days after the delivery of the Resignation Notice, the Escrow Agent
shall not have received written instructions from the Company or the Bank
designating a banking corporation or trust company organized either under the
laws of the United States or of any state meeting the minimum capital and
surplus requirements as successor escrow agent and consented to in writing by
such successor escrow agent, the Escrow Agent may apply to a court of competent
jurisdiction to appoint a successor escrow agent. Alternatively, if the Escrow
Agent shall have received such written instructions, it shall promptly transfer
the Escrow Funds to such successor escrow agent. Upon the appointment of a
successor escrow agent and the transfer of the Escrow Funds thereto, the duties
of the Escrow Agent hereunder shall terminate.
8. In the event of a dispute between the parties as to the proper
disposition of the Escrow Funds which continues for 90 days or more, the Escrow
Agent shall be entitled to submit the dispute to a court of competent
jurisdiction and shall thereupon be relieved of any obligations or liability.
9. The Company shall pay the Escrow Agent reasonable compensation
for its services hereunder and reimburse the Escrow Agent for all disbursements
and advances incurred or made by it in the performance of its duties hereunder
(including, without limitation, the reasonable fees, expenses and disbursements
of its counsel) and to indemnify and hold the Escrow Agent harmless from and
against any and all taxes, expenses (including reasonable counsel fees),
assessments, liabilities, claims, damages, actions, suits or other charges
incurred by or assessed against it for any thing done or omitted by it in the
performance of its duties hereunder, except as a result of its own gross
negligence or willful misconduct. The agreement contained in this paragraph
shall survive any termination of the duties of the Escrow Agent hereunder.
10. The Escrow Agent shall have no duties or responsibilities,
except those expressly set forth herein. The Escrow Agent may consult with
counsel, shall be fully protected with respect to any action taken or omitted in
good faith on advice of counsel and shall have no liability hereunder except for
willful misconduct or negligence. The Escrow Agent shall have no responsibility
as to the validity, collectibility or value of the Escrow Funds or for
investment losses related thereto, provided the Escrow Funds have been invested
in accordance with paragraph 2 above, and it may rely on any notice,
instruction, certificate, statement, request, consent, confirmation, agreement
A-2
<PAGE>
or other instrument that it believes to be genuine and to have been signed or
presented by a proper person or persons. If the Escrow Agent shall be uncertain
as to its duties or rights hereunder or shall receive instructions from any of
the undersigned with respect to the Escrow Funds, which, in its opinion, are in
conflict with any of the provisions of this Agreement, it shall be entitled to
refrain from taking any action until it shall be directed otherwise in writing
by all of the other parties hereto or by order of a court of competent
jurisdiction. Notwithstanding any provision to the contrary contained in any
other agreement between any of the parties hereto, the Escrow Agent shall have
no interest in the Escrow Funds except as provided in this Agreement.
11. This Agreement shall be binding upon and inure to the benefit of
the parties named herein and their respective successors and permitted assigns.
No party may assign either this Agreement or any of its rights, interest, or
obligations hereunder without the prior written approval of the other parties.
12. Each of the parties submits to the jurisdiction of any state or
federal court sitting in Naples, Florida, in any action or proceeding arising
out of or relating to this Agreement and agrees that all claims in respect of
the action or proceeding may be heard and determined in any such court. Each of
the parties waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other party with respect thereto. Any party may
make service on the other party by sending or delivering a copy of the process
(i) to the party to be served at the address and in the manner provided for the
giving of notices in paragraph 13 below or (ii) to the party to be served in
care of the Process Agent at the address and in the manner provided for the
giving of notices in paragraph 13 below. Nothing in this paragraph 13, however,
shall affect the right of any party to serve legal process in any other manner
permitted by law or in equity. Each party agrees that a final judgment in any
action or proceeding so brought shall be conclusive and may be enforced by suit
on the judgment or in any other manner provided by law or in equity.
13. All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given if (and then two business
days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
Escrow Agent: Company:
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
Bank: Baird:
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
With copy to:
Chester E. Bacheller, Esq.
Holland & Knight LLP
400 North Ashley Drive,
Suite 2300
Tampa, FL 33602
14. This Escrow Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Florida without giving effect
to any choice or conflict of law provision or rule (whether of the State
A-3
<PAGE>
of Florida or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Florida.
15. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
16. This Escrow Agreement shall continue until such time as all
Escrow Funds, including any earnings thereon, have been distributed or refunded
pursuant to the terms of this Escrow Agreement.
Dated this ______ day of November, 1997.
COASTAL BANK CORPORATION
By:
----------------------------
Its:
---------------------------
COASTAL BANK, N.A.
By:
----------------------------
Its:
---------------------------
--------------------
(Escrow Agent)
By:
----------------------------
Its:
---------------------------
A-4
EXHIBIT 3.1
[SEAL]
I certify the attached is a true and correct copy of the Restated Articles of
Incorporation, filed on June 20, 1997, for COASTAL BANK CORPORATION, a Florida
corporation, as shown by the records of this office.
The document number of this corporation is P97000008575.
Given under my hand and the Great
Seal of the State of Florida, at
Tallahassee, the Capitol, this the
Twenty-third day of June, 1997
[SEAL] /s/ SANDRA B. MORTHAM
-----------------------
Sandra B. Mortham
Secretary of State
<PAGE>
RESTATED
ARTICLES OF INCORPORATION
OF
COASTAL BANK CORPORATION
PURSUANT TO THE PROVISIONS OF SECTION 607.1007, FLORIDA STATUTES, THIS
CORPORATION ADOPTS THE FOLLOWING RESTATED ARTICLES OF INCORPORATION:
ARTICLE I. NAME
The name of this corporation shall be Coastal Bank Corporation.
ARTICLE II. COMMENCEMENT & DURATION
The commencement of this corporation's existence shall be at the time
of the filing of these Articles of Incorporation by the Florida Department of
State. This corporation's duration shall be perpetual.
ARTICLE III. PURPOSES, POWERS & RIGHTS
The corporation may engage in any lawful acts or activities for which
corporations may be organized under the laws of the State of Florida.
In furtherance of its corporate purposes, this corporation shall have
all of the general and specific powers and rights granted to and conferred on a
corporation by the laws of the State of Florida, including the power and right:
A. To change the Articles of Incorporation at any time pursuant to
law and the By-laws;
B. To change the principal office of the corporation and establish,
from time to
Restated Articles of Incorporation of Coastal Bank Corporation
Page 1
<PAGE>
time, other locations, within or outside the State of Florida for
corporate operations, pursuant to the By-laws, and without the
necessity of amending the Articles of Incorporation;
C. To invest the funds of this corporation in real estate, mortgages,
stocks, bonds, or any other type of investment, and to own real
and personal property necessary for the conduct of its business;
D. To purchase and acquire, in accordance with law and the By-laws,
any or all of its shares.
ARTICLE IV. CAPITAL STOCK
A. This corporation shall have the authority to issue TEN MILLION
(10,000,000) shares of common stock par value ONE CENT ($.01) per
share.
B. The designations, voting powers, preferences and relative
participating options or other special rights, qualifications,
limitations or restrictions of the above stock are as follows:
1. The holders of the common stock are entitled to receive, to
the extent permitted by law, such dividends as may be
declared from time to time by the Board of Directors.
2. In the event of the voluntary or involuntary liquidation,
dissolution, distribution of assets or winding up of the
corporation, after distribution in full of the preferential
amounts, if any, to be distributed to the
Restated Articles of Incorporation of Coastal Bank Corporation
Page 2
<PAGE>
creditors and holders of shares of preferred stock, if any
such stock shall be authorized herein and issued, the holders
of common stock shall be entitled to receive all of the
remaining assets of the corporation of whatever kind
available for distribution to shareholders, ratably in
proportion to the number of shares of common stock held by
them respectively. The Board of Directors may distribute in
kind to the holders of common stock such remaining assets of
the corporation or may sell, transfer or otherwise dispose of
all or any part of such remaining assets to any other person,
corporation, trust or other entity and receive payment
therefore in cash, stock or obligations of such other person,
corporation, trust or other entity, or any combination
thereof, and may sell all or any part of the consideration so
received and distribute any balance thereof in kind to
holders of common stock. The merger or consolidation of the
corporation into or with any other corporation, or the merger
of any other corporation into it, or any purchase or
redemption of shares of stock of the corporation of any
class, shall not be deemed to be a dissolution, liquidation
nor winding up of the corporation for the purposes of this
paragraph.
3. Any person, upon becoming the owner or holder of any shares
of the common stock or other securities having voting rights
issued by this
Restated Articles of Incorporation of Coastal Bank Corporation
Page 3
<PAGE>
corporation ("shareholder"), does thereby consent and agree
that all rights, powers, privileges, obligations or
restrictions pertaining to such person or such securities in
any way may be altered, amended, restricted, enlarged, or
repealed by legislative enactments of the State of Florida, or
of the United States hereinafter adopted which have reference
to or affect corporations, such securities, or such persons,
if any; and that the corporation reserves the right to
transact any business of the corporation, to alter, amend or
repeal these Articles of Incorporation, or to do any other
acts or things as authorized, permitted or allowed by such
legislative enactments.
ARTICLE V. BOARD OF DIRECTORS
The number of directors of this corporation shall be set as provided in
this corporation's By-laws and shall be no less than one (1) and no more than
twenty-five (25).
The business and affairs of the Corporation shall be managed by the
Board of Directors. In addition to any powers conferred herein or in the
By-laws, The Board of Directors may, subject to any express limitation contained
in these Articles of Incorporation or in the By-laws, exercise the full extent
of powers conferred by the laws of the State of Florida upon corporations or
directors thereof and the enumeration and definition of particular powers herein
or in the By-laws shall in no way be deemed or restrict or otherwise limit those
lawfully conferred powers. In furtherance and without limitation of the
Restated Articles of Incorporation of Coastal Bank Corporation
Page 4
<PAGE>
foregoing, the Board of Directors shall have the power to make, alter, amend or
repeal from time to time the By-laws of the Corporation.
ARTICLE VI. INDEMNIFICATION
This corporation shall indemnify any officer, director, employee, or
agent, and any former officer, director, employee, or agent, to the full extent
permitted by law.
ARTICLE VII. PRINCIPAL OFFICE &
REGISTERED OFFICE & AGENT
The address of this corporation's principal office shall be 999 Ninth
Street, South, Suite 101, Naples, Florida 34102. The name and address of this
corporation's registered agent shall be: Coastal Bank Corporation c/o Judith E.
McCaffrey, 5811 Pelican Bay Boulevard, Suite 206-A, Naples, Florida 34908.
ARTICLE VIII. AMENDMENT
This corporation reserves the right to amend or repeal any provisions
in these Articles of Incorporation, or any amendments hereto, in the manner now
or hereafter prescribed by statute. Any rights conferred upon the shareholders
are granted subject to this reservation.
IN WITNESS WHEREOF, THE UNDERSIGNED DULY AUTHORIZED OFFICER OF THE
CORPORATION EXECUTES THESE RESTATED ARTICLES OF INCORPORATION ON THE DATE
INDICATED:
May 20, 1997
/s/ SIDNEY T. JACKSON
- ---------------------------
Sidney T. Jackson, president
Restated Articles of Incorporation of Coastal Bank Corporation
Page 5
<PAGE>
I hereby accept my designation as resident agent and agree to serve as
the resident agent of Coastal Bank Corporation, Inc. I hereby state that I am
familiar with and accept the duties and responsibilities as registered agent for
Coastal Bank Corporation.
May 20, 1997
/s/ JUDITH E. MCCAFFREY
- ------------------------
Judith E. McCaffrey - Registered Agent
Restated Articles of Incorporation of Coastal Bank Corporation
Page 6
<PAGE>
CERTIFICATE
FIRST: These Restated Articles of Incorporation do not provide for an exchange,
reclassification or cancellation of issued shares.
SECOND: These Restated Articles of Incorporation were adopted by the directors
of the corporation on May 20, 1997.
THIRD: These Restated Articles of Incorporation were approved by the
shareholders of the corporation on May 20, 1997. The number of votes
castfor the amendment was sufficient for approval.
Dated this 20 day of May, 1997
/s/ SIDNEY T. JACKSON
----------------------------
Sidney T. Jackson, president
Restated Articles of Incorporation of Coastal Bank Corporation
Page 7
EXHIBIT 3.2
[SEAL]
I certify the attached is a true and correct copy of the Articles of Amendment,
filed on September 3, 1997, to Articles of Incorporation for COASTAL BANK
CORPORATION, a Florida Corporation, as shown by the records of this office.
The document number of this corporation is P97000008575.
Given under my hand and the Great
Seal of the State of Florida, at
Tallahassee, the Capitol, this the
Eleventh day of September, 1997
[SEAL] /s/ SANDRA B. MORTHAM
-----------------------
Sandra B. Mortham
Secretary of State
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
COASTAL BANK CORPORATION
PURSUANT TO THE PROVISIONS OF SECTION 607.1006, FLORIDA STATUTES, THIS
CORPORATION ADOPTS THE FOLLOWING ARTICLES OF AMENDMENT TO ITS ARTICLES OF
INCORPORATION:
FIRST: Article IV of the Articles of Incorporation is hereby amended by
deleting the existing Article IV in its entirety and substituting
therefore the following:
ARTICLE IV, CAPITAL STOCK
A. This corporation shall have the authority to issue TEN MILLION
(10,000,000) shares of common stock par value ONE CENT ($.01) per
share. The designations, voting powers, preferences and relative
participating options or other special rights, qualifications,
limitations or restrictions of the above stock are as follows:
1. The holders of the common stock are entitled to receive, to the
extent permitted by law, such dividends as may be declared from
time to time by the Board of Directors.
2. In the event of the voluntary or involuntary liquidation,
dissolution, distribution of assets or winding up of the
corporation, after distribution in full of the preferential
amounts, if any, to be distributed to the creditors and holders of
shares of preferred stock, if any such stock shall be authorized
herein and issued, the holders of common stock shall be entitled
to receive all of the remaining assets of the corporation of
whatever kind available for distribution to shareholders, ratably
in proportion to the number of shares of common stock held by them
respectively. The Board of Directors may distribute in kind to the
holders of common stock such remaining assets of the corporation
or may sell, transfer or otherwise dispose of all or any part of
such remaining assets to any other person, corporation, trust or
other entity and receive payment therefore in cash, stock or
obligations of such other person, corporation, trust or other
entity, or any combination thereof, and may sell all or any part
of the consideration so received and distribute any balance
thereof in kind to holders of common stock. The
<PAGE>
merger or consolidation of the corporation into or with any other
corporation, or the merger of any other corporation into it, or
any purchase or redemption of shares of stock of the corporation
of any class, shall not be deemed to be a dissolution, liquidation
nor winding up of the corporation for the purposes of this
paragraph.
3. Any person, upon becoming the owner or holder of any shares of the
common stock or other securities having voting rights issued by
this corporation ("shareholder"), does thereby consent and agree
that all rights, powers, privileges, obligations or restrictions
pertaining to such person or such securities in any way may be
altered, amended, restricted, enlarged, or repealed by legislative
enactments of the State of Florida, or of the United States
hereinafter adopted which have reference to or affect
corporations, such securities, or such persons, if any; and that
the corporation reserves the right to transact any business of the
corporation, to alter, amend or repeal these Articles of
Incorporation, or to do any other acts or things as authorized,
permitted or allowed by such legislative enactments.
B. This corporation shall have the authority to issue TWO MILLION
(2,000,000) shares of preferred stock, the par value of which, as well
as the designations, voting powers, preferences and relative
participating options or other special rights, qualification,
limitations or restrictions of the preferred stock to be determined by
the Board of Directors of this corporation at the time it authorizes
the issuance of said preferred stock.
SECOND: The amendment does not provide for any exchange, reclassification or
cancellation of issued shares.
THIRD: This amendment was adopted by the directors of the corporation on
September 2, 1997.
FOURTH: The amendment was approved by the shareholders. The number of votes
cast for the amendment was sufficient for approval.
Dated this 2 day of September, 1997
/s/ SIDNEY T. JACKSON
----------------------------
Sidney T. Jackson, president
EXHIBIT 3.3
BY-LAWS
OF
COASTAL BANK CORPORATION
<PAGE>
BY-LAWS
OF
COASTAL BANK CORPORATION
ARTICLE I OFFICES.......................................................1
Section 1. Principal Office.....................................1
Section 2. Other Offices........................................1
ARTICLE II SHAREHOLDERS.................................................1
Section 1. Annual Meetings......................................1
Section 2. Special Meetings.....................................2
Section 3. Meeting Place........................................2
Section 4. Meeting Notice.......................................2
Section 5. Adjourned Meeting Notice.............................2
Section 6. Determination Of Record Date.........................3
Section 7. Voting Record........................................3
Section 8. Quorum & Voting......................................3
Section 9. Organization.........................................4
Section 10. Voting Shares........................................4
Section 11. Proxies..............................................5
Section 12. Written Action.......................................6
ARTICLE III DIRECTORS...................................................6
Section 1. Function.............................................6
Section 2. Qualifications.......................................6
Section 3. Compensation.........................................6
Section 4. Duties...............................................7
Section 5. Assent Presumption...................................7
Section 6. Number...............................................8
Section 7. Election & Term......................................8
i
<PAGE>
Section 8. Resignation..........................................8
Section 9. Vacancies............................................8
Section 10. Removal..............................................9
Section 11. Quorum And Voting....................................9
Section 12. Interest Conflicts...................................9
Section 13. Organization........................................10
Section 14. Committees..........................................10
Section 15. Meeting Place.......................................12
Section 16. Meeting Time, Notice, And Call......................12
Section 17. Conference Telephone Meetings.......................12
Section 18. Written Action......................................12
ARTICLE IV OFFICERS....................................................13
Section 1. Designation.........................................13
Section 2. Duties..............................................13
ARTICLE V SHARE CERTIFICATES...........................................14
Section 1. Issuance............................................14
Section 2. Form................................................14
Section 3. Loss, Destruction, Or Theft.........................15
ARTICLE VI BOOKS, RECORDS, & MINUTES...................................16
Section 1. Requirements........................................16
Section 2. Inspection Rights...................................16
Section 3. Financial Information...............................16
ARTICLE VII DIVIDENDS..................................................17
ARTICLE VIII CORPORATE SEAL............................................18
ARTICLE IX BY-LAWS.....................................................19
ii
<PAGE>
BY-LAWS
OF
COASTAL BANK CORPORATION
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE
The principal office of the Corporation in the State of Florida shall be in
the City of Naples.
SECTION 2. OTHER OFFICES
The Corporation may have such other offices in such places, within and
without the State of Florida, as the Board of Directors may from time to time
determine.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETINGS
A Meeting of Shareholders shall be held at least annually (the "Annual
Meeting of Shareholders") for the election of Directors and such other business
as may properly come before the meeting. The Annual Meeting of Shareholders
shall be held at a time and place designated by the Board of Directors.
SECTION 2. SPECIAL MEETINGS
Special meetings of Shareholders shall be held when called by the
president, a majority of the Board of Directors, or when requested in writing to
the president by the Shareholders holding not less than TEN per cent of all the
shares entitled to vote, PROVIDED HOWEVER that in the case of a special meeting
of Shareholders
1
<PAGE>
requested by Shareholders such request shall state the purposes of such meeting
and the matters proposed to be acted on. A special meeting requested by the
Shareholders, shall be held not less than FIFTEEN nor more than THIRTY days
after the request is made.
SECTION 3. MEETING PLACE
Meetings of Shareholders shall be held at such place within or without the
State of Florida as the Board of Directors may determine. Some or all of the
Shareholders may attend meetings by conference telephone or similar
communication equipment which permits all persons participating in the meeting
to hear each other at the same time, and any Shareholder so attending will be
considered to be attending in person.
SECTION 4. MEETING NOTICE
Written notice, stating the time and place of a meeting, and the business
to be transacted at the meeting shall be delivered in writing not less than TEN
nor more than THIRTY days before the meeting, either personally, by messenger or
by first class mail, by or at the direction of the secretary, to each
Shareholder entitled to vote. If mailed, the notice, addressed to each
Shareholder at his or her address as it appears on the stock transfer books,
shall be deemed to be delivered when deposited in the United States mail. Notice
of any meeting of Shareholders shall be deemed waived by any Shareholder who
shall attend such meeting in person, by telephone or other electronic hookup, or
by proxy, or who shall, either before or after the meeting, submit a signed
waiver of notice which is filed with the records of the meeting.
The notice shall state the matters proposed to be acted on at the meeting.
SECTION 5. ADJOURNED MEETING NOTICE
When a meeting is adjourned to another designated time or place, it shall
not be necessary to give notice of the adjourned meeting. If, however, after the
adjournment, the Board of Directors fixes a new record date for the adjourned
meeting, it shall be necessary to give notice.
2
<PAGE>
SECTION 6. DETERMINATION OF RECORD DATE
The Board of Directors shall fix a Record Date for determining the
Shareholders (1) entitled to notice of, or to vote at a meeting or an
adjournment thereof, (2) entitled to receive dividends, or (3) for any other
purpose. The Record Date shall not be less than ten nor more than 45 days prior
to the date on which a meeting is to be held, dividends paid or other action
requiring a Record Date taken.
SECTION 7. VOTING RECORD
At least ten days before each meeting of Shareholders, the officer having
charge of the stock transfer books shall make a complete list of the names and
addresses of the Shareholders entitled to vote, including the number, class, and
series, if any, of shares held by each. The list, for a period of ten days prior
to the meeting, shall be kept on file at the Corporation's registered office,
principal place of business, or transfer agent's or registrar's office. Any
Shareholder shall be entitled to inspect the list at any time during usual
business hours. The list shall also be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any Shareholder
at any time during the meeting.
If there is not substantial compliance with this requirement, the meeting,
on the demand of any Shareholder, shall be adjourned until a Shareholder list is
produced. If no demand is made, failure to comply with these requirements shall
not affect the validity of any action taken at the meeting.
SECTION 8. QUORUM & VOTING
A majority of the shares entitled to vote on a matter and represented at a
meeting in person or by proxy shall constitute a quorum.
If a quorum is present, an affirmative vote of a majority of the shares
entitled to vote on the matter and represented at the meeting in person or by
proxy shall be the act of the Shareholders, except as provided otherwise by
these By-Laws or by law. For any matter which, under applicable statutes,
regulatory requirements, or the Articles of Incorporation, requires approval by
a separate vote of one or more classes of shares, the presence in person or by
proxy of Shareholders
3
<PAGE>
of a majority of the shares of each class required to vote as a class on the
matter shall constitute a quorum.
After a quorum has been established, the subsequent withdrawal of
Shareholders, so as to reduce the number of shares entitled to vote on the
matter, below the number required for a quorum, shall not affect the validity of
any action taken at the meeting or any adjournment thereof.
The holders of a majority of shares entitled to vote at the meeting and
present in person or by proxy, whether or not sufficient to constitute a quorum,
or, if no quorum is present, any officer present and presiding at such meeting
may adjourn the meeting without determining the date of the new meeting or from
time to time without further notice to a date not more than 120 days after the
original record date. Any business that might have been transacted at the
meeting originally called may be transacted at any such adjourned meeting at
which a quorum is present.
SECTION 9. ORGANIZATION
At each meeting of the Shareholders, the Chairperson of the Board of
Directors (if one has been designated by the Board of Directors), or in his or
her absence or inability to act, the President, or in the absence or inability
to act of the Chairperson of the Board of Directors and the President, an
Executive Vice President or Senior Vice President, shall act as chairperson of
the meeting; provided, however, that if no such officer is present or able to
act, a chairperson of the meeting shall be elected at the meeting. The
Secretary, or in his or her absence or inability to act, any person appointed by
the chairperson of the meeting, shall act as secretary of the meeting and keep
the minutes thereof.
SECTION 10. VOTING SHARES
Each common share shall be entitled to one vote on each matter submitted to
a vote at the meeting.
Treasury shares, shares of this Corporation owned by another corporation,
of which a majority of that corporation's voting shares are owned or controlled
by this Corporation, and shares of this Corporation held by it in a fiduciary
capacity shall not be voted, directly or indirectly, at any meeting, and shall
not be counted in determining the total number of outstanding shares at any
given time, provided that,
4
<PAGE>
the shares of this Corporation held in a fiduciary capacity by this Corporation
or any corporation of which this Corporation owns a majority of the shares, may
be voted and may be counted in determining the total number of outstanding
shares if the directions for voting those shares are provided by the beneficial
owner or owners thereof.
At each election for Directors, each Shareholder entitled to vote shall
have the right to vote the number of shares owned by him or her for each
Director to be elected at that time. However, votes may not be cumulated.
Shares standing in the name of another corporation, domestic or foreign,
may be voted by the officer, agent, or proxy designated by the corporation's
by-laws or, in the absence of any applicable by-laws, by the person designated
by the corporation's board of directors. Proof of the designation may be made by
the presentation of a certified copy of the corporation's by-laws or a certified
resolution of the corporation's Board of Directors making such designation.
A shareholder, whose shares are pledged, shall be entitled to vote the
shares, PROVIDED HOWEVER, if the shares have been transferred into the name of
the pledgee the pledgee may vote.
SECTION 11. PROXIES
Any Shareholder entitled to vote or to express consent or dissent, may
authorize another person to act for him or her by proxy.
A proxy must be in writing and must be signed by the Shareholder. A proxy
shall be valid only for the meeting for which it is given and any adjournment
thereof, and in no event after the expiration of eleven months from the date
thereof. A proxy shall be revocable by the Shareholder executing it, except as
provided otherwise by law.
A proxy holder's authority to act shall not be revoked by the death or the
incompetence of the Shareholder who executed the proxy, unless, before the
authority is exercised, written notice and proof of the death or the
adjudication of incompetency is received by the officer responsible for
maintaining the Shareholders list.
If a proxy for the same shares confers authority upon two or more persons,
and does not provide otherwise, a majority of them present, or if only one is
present,
5
<PAGE>
then that one, may exercise the powers conferred by the proxy. However, if the
proxy holders present are equally divided as to the right and manner of voting,
the voting of the shares shall be prorated.
If a proxy expressly so provides, the proxy holder may appoint, in writing,
another person to act in his or her place.
SECTION 12. WRITTEN ACTION
Any action required to be taken or which may be taken, at any Annual or
special meeting of Shareholders, may be taken without a meeting, without prior
notice, and without a vote, if a written consent, setting forth the action
taken, is signed by all of the Shareholders required by law or these By-Laws to
notice of and to vote at a meeting and such consent is filed with the records of
Shareholders' meetings.
ARTICLE III
DIRECTORS
SECTION 1. FUNCTION
All corporate powers shall be exercised by or under the authority of, and
this Corporation's business and affairs shall be managed under the direction of,
the Board of Directors.
SECTION 2. QUALIFICATIONS
Directors need not be Shareholders of this Corporation.
SECTION 3. COMPENSATION
The Board of Directors may set reasonable compensation for the attendance
at meetings of the Board of Directors or committees of the Board of Directors
for Directors who are not also officers of the Corporation and may reimburse any
Director for his or her actual out-of-pocket expenses incurred in connection
with traveling to and returning from meetings of the Board of Directors or
committees of the Board of Directors.
6
<PAGE>
SECTION 4. DUTIES
A Director shall perform his or her duties as a Director and as a member of
any committee of the Board of Directors upon which he or she may serve, in good
faith, in a manner he or she reasonably believes to be in the best interests of
this Corporation, and with the care which an ordinarily prudent person in the
same position would use under similar circumstances.
In performing his or her duties, a Director shall be entitled to rely on
information, opinions, reports, or statements, including financial statements
and other financial data, in each case prepared or presented by:
a. corporate officers or employees whom the Director reasonably
believes to be reliable and competent in the matters
presented,
b. counsel, public accountants, or other persons, as to matters
which the Director reasonably believes to be within their
professional or expert competence, or
c. committees of the Board of Directors upon which he or she
does not serve, duly designated in accordance with provisions
of the Articles of Incorporation or By-Laws, as to matters
within their designated authority, which committees the
Director reasonably believes to merit confidence.
A Director shall not be considered to be acting in good faith if he or she
has knowledge concerning the matter in question that would cause his or her
reliance to be unwarranted.
A Director who performs his or her duties in compliance with this section
shall have no liability by reason of being or having been a Director.
SECTION 5. ASSENT PRESUMPTION
A Director who is present at a Board of Directors meeting, at which action
on any corporate matter is taken, shall be presumed to have assented to the
action taken, unless he or she votes against the action or abstains from voting
in respect thereto and such vote or abstention is recorded in the minutes of the
meeting.
7
<PAGE>
SECTION 6. NUMBER
The number of Directors on this Corporation's initial Board of Directors
shall be 5. The number of Directors may be increased or decreased by amending
these ByLaws, but no decrease shall have the effect of shortening the term of
any incumbent Director.
SECTION 7. ELECTION & TERM
Each member of the initial Board of Directors shall hold office until the
first Annual Meeting of Shareholder' and until his or her successor shall have
been elected and qualified, or until his or her earlier resignation, removal
from office, or death.
At the first Annual Meeting of Shareholders and at each Annual Meeting of
Shareholders thereafter, the Shareholders shall elect Directors to hold office
until the next succeeding Annual Meeting of Shareholders or until his or her
successor shall have been elected and qualified, or until his or her earlier
resignation, removal from office, or death.
SECTION 8. RESIGNATION
A Director of the Corporation may resign at any time by giving written
notice of his or her resignation to the Board of Directors or the Chairperson of
the Board of Directors or the President or the Secretary. Any such resignation
shall take effect at the time specified therein or, if the time when it shall
become effective shall not be specified therein, immediately upon its receipt;
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
SECTION 9. VACANCIES
Any vacancy occurring in the Board of Directors, including any vacancy
created by reason of an increase in the number of Directors, may be filled by
the affirmative vote of a majority of the remaining Directors, even though they
constitute less than a quorum of the Board of Directors. A Director elected to
fill a vacancy shall hold office only until the next election of Directors by
the Shareholders.
8
<PAGE>
If a Director is convicted of a felony or declared of unsound mind by an
order of a court of competent jurisdiction, the other members of the Board of
Directors may declare such Director's office vacant and fill the vacancy in the
manner provided in these By-Laws.
SECTION 10. REMOVAL
At a Special Meeting of Shareholders called expressly for that purpose, any
Director, or the entire Board of Directors, may be removed, with or without
cause, by a vote of a majority of the shares entitled to vote at an election of
Directors.
SECTION 11. QUORUM AND VOTING
A majority of the number of Directors designated by these By-Laws shall
constitute a quorum for the transaction of business. An act of a majority of the
Directors, at a meeting duly called and at which a quorum is present, shall be
an act of the Board of Directors.
SECTION 12. INTEREST CONFLICTS
No contract or other transaction, between this Corporation and one or more
of its Directors, or any other corporation, firm, association, or entity, in
which one or more of this Corporation's Directors are Directors or officers or
are financially interested, shall be either void or voidable because of the
relationship or interest, or because the Director or Directors are present at
the meeting of the Board of Directors or a committee thereof, at which the
contract or transaction was authorized, approved, or ratified, or because his,
her, or their votes are counted for such purpose, if:
a. the fact of the relationship or interest is disclosed or
known to the Board of Directors or the committee thereof, and
the authorization, approval, or ratification of the contract
or transaction was by a sufficient vote or written consent
for the purpose, without counting the votes or written
consents of the interested Directors; or
b. the fact of the relationship or interest is disclosed or
known to the Shareholders entitled to vote, and they
authorize,
9
<PAGE>
approve, or ratify the contract or transaction by vote or
written consent.
Common or interested Directors or Shareholders may be counted in
determining the presence of a quorum at a meeting of the Board of Directors, a
committee thereof or a meeting of Shareholders at which the contract or
transaction is authorized, approved, or ratified.
SECTION 13. ORGANIZATION
The Board of Directors may, by resolution adopted by a majority of the
entire Board of Directors, designate a Director as Chairperson. The Chairperson
of the Board of Directors shall preside at each meeting of the Board of
Directors. The Board of Directors may also designate a Vice-Chairperson of the
Board of Directors. The Secretary of the Corporation shall serve also as the
Secretary of the Board of Directors, unless a majority of the Board of Directors
determines otherwise. In the absence or inability of the Chairperson of the
Board of Directors to preside at a meeting, the Vice-Chairperson or, in his or
her absence or inability to act, another Director chosen by a majority of the
Directors present, shall act as Chairperson of the meeting and preside thereat.
The Secretary (or, in his or her absence or inability to act, any person
appointed by the Chairperson of the meeting) shall act as secretary of the
meeting and keep the minutes thereof.
SECTION 14. COMMITTEES
The Board of Directors, by resolution adopted by a majority of the full
Board of Directors, may designate from its members an executive committee and
one or more other committees, each of which, to the extent provided in the
resolution, shall have and may exercise all the authority of the Board of
Directors, except that no committee shall have the authority to:
a. approve any actions or proposals required by law to be
approved by the Shareholders,
b. designate candidates for the office of Director, for purposes
of proxy solicitation or otherwise, provided however, that an
appropriate committee of the Board of Directors may recommend
a list of candidates to the full Board of Directors,
10
<PAGE>
c. fill vacancies on the Board of Directors or any committee
thereof,
d. amend these By-Laws,
e. authorize or approve the reacquisition of shares, unless
pursuant to a general formula or method specified by the
Board of Directors, or
f. authorize or approve the issuance or sale of shares or any
contract therefor, or designate the terms of a series of a
class of shares, except that the Board of Directors, having
acted under its general authorization for the issuance or
sale of shares or any contract therefor, and in the case of a
series, the designation thereof, and having specified a
general formula or method by resolution or by the adoption of
a stock option or other plan, may authorize a committee to
designate the terms of any contract for the sale of shares
and the terms upon which the shares may be issued or sold,
including, without limitation, the price, the rate or manner
of payment of dividends, and provisions for redemption,
sinking funds, conversion, voting and preferential rights,
and other features of a class of shares or a series of a
class of shares, with full power in the committee to adopt
any final resolution setting forth all the terms thereof and
to authorize a statement of the terms of a series for filing
with the Department of State.
Proceedings of committees appointed by the Board of Directors, in the
absence of an appropriate resolution of the Board of Directors setting forth
different procedures, shall follow the same rules and regulations regarding
proceedings, quorum and manner of acting as govern meetings of the Board of
Directors.
The Board of Directors, by resolution adopted in accordance with this
section, may designate one or more Directors as alternate committee members to
serve in the place and stead of absent committee members at a committee meeting.
11
<PAGE>
SECTION 15. MEETING PLACE
Regular and special meetings may be held within or without Florida.
SECTION 16. MEETING TIME, NOTICE, AND CALL
A regular meeting of the Board of Directors shall be held immediately
following each Shareholders' annual meeting. Written notice of the time and
place of a special meeting shall be given to each Director by personal delivery,
telegram or cablegram, at least two days before the meeting, or by notice mailed
to each Director at least five days before the meeting.
Notice of a meeting need not be given if all of the Directors sign a waiver
of notice of the meeting.
The business to be transacted at, and the purpose of, a regular or special
meeting shall be specified in the notice or waiver of notice of the meeting.
A majority of the Directors present, whether or not a quorum exists, may
adjourn a meeting to another designated time and place. Notice of the adjourned
meeting shall be given to each Director who was not present at the time of the
adjournment and to all Directors if the time and place of the adjourned meeting
were not designated at the time of the adjournment.
Meetings may be called by the President or a majority of the Directors.
SECTION 17. CONFERENCE TELEPHONE MEETINGS
Members of the Board of Directors or a committee thereof may participate in
a meeting by using conference telephones or similar communication equipment
which permits all persons participating in the meeting to hear each other at the
same time. Participation in this manner shall constitute presence in person at
the meeting.
SECTION 18. WRITTEN ACTION
Any action required to be taken or which may be taken by the Board of
Directors or a committee thereof may be taken without a meeting, without prior
notice and without a vote if a written consent setting forth the action so
taken, signed by all the Directors or committee members, as the case may be, is
filed in the minutes of the proceedings of the Board of Directors or committee.
The consent
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shall have the same effect as a unanimous vote.
ARTICLE IV
OFFICERS
SECTION 1. DESIGNATION
The senior officers of this Corporation shall consist of a chief executive
officer, a president, a secretary, and a treasurer, each of whom shall be
elected by the Board of Directors at its regular meeting immediately following
the Annual Meeting of Shareholders. These officers shall serve until their
successors are duly elected and qualified. Subordinate officers and assistant
officers and agents, as the Board of Directors may be deem necessary, may be
elected or appointed by the Board of Directors from time to time. Any two or
more offices may be held by the same person. The failure to elect a president,
secretary, or treasurer shall not affect the existence of this Corporation.
SECTION 2. DUTIES
The chief executive officer, shall be responsible for the day-to-day
general and active management of this Corporation's business and affairs,
subject to the directions of the Board of Directors.
The president shall be responsible for carrying out management directives
of the chief executive officer and shall perform any other duties prescribed by
the chief executive officer or the Board of Directors.
The secretary shall be responsible for the custody and maintenance of all
corporate records, except financial records, shall record the minutes of all
Shareholders' and Board of Directors' meetings, shall send out all notices of
meetings, and shall perform any other duties prescribed by the chief executive
officer, the president or the Board of Directors.
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The treasurer shall be responsible for the custody and maintenance of all
corporate funds and financial records, shall keep full and accurate accounts of
all receipts and disbursements, shall render accounts thereof at the Annual
Meeting of Shareholders' and whenever else required by the chief executive
officer, the president or the Board of Directors, and shall perform any duties
prescribed by the chief executive officer, the president or the Board of
Directors.
SECTION 3. REMOVAL
Any officer or agent elected or appointed by the Board of Directors may be
removed by the Board of Directors whenever, in its judgment, the best interests
of this Corporation will be served thereby. The removal of a person as an
officer shall be without prejudice to the contract or shareholder rights, if
any, of the person so removed; PROVIDED, HOWEVER that election or appointment of
a person as an officer shall not in and of itself create any contract rights.
Any vacancy in any office may be filled by the Board of Directors.
ARTICLE V
SHARE CERTIFICATES
SECTION 1. ISSUANCE
Every Shareholder shall be entitled to have a certificate representing the
shares to which he or she is entitled. The certificate shall not be issued for
the shares until they are fully paid.
SECTION 2. FORM
Certificates representing shares shall be signed by the president or vice
president and the secretary or assistant secretary, and may be sealed with the
corporate seal or a facsimile thereof. The signatures of the president or vice
president and the secretary or assistant secretary may be facsimiles if the
certificate is manually signed by a transfer agent or registrar (other than this
Corporation itself) or a corporate employee. In case any officer, who signed or
whose facsimile signature has been placed upon a certificate, shall have ceased
to
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be an officer before the certificate is issued, it may be issued by this
Corporation with the same effect as if he or she were the officer at the date of
its issuance.
Every certificate shall set forth or fairly summarize, or shall state that
this Corporation will furnish to any shareholder upon request and without
charge, a full statement of the preferences, limitations, relative rights, and
series designation provisions pertaining to the shares of each class or series
authorized to be issued, the variations in the relative rights and preferences
between the shares of each series so far as these have been designated and
determined, and the authority of the Board of Directors to designate and
determine the relative rights and preferences of subsequent series.
Every certificate shall state upon its face the name of this Corporation,
that this Corporation is organized under the laws of the State of Florida, the
name of the person to whom it is issued, the number and class of shares and any
series designation, and the par value of the shares or a statement that the
shares are without par value.
SECTION 3. LOSS, DESTRUCTION, OR THEFT
This Corporation shall issue a new certificate in place of any certificate
previously issued if the shareholder:
a. makes proof in affidavit form that it has been lost,
destroyed, or stolen,
b. requests the issuance of a new certificate before this
Corporation has notice that the certificate has been acquired
by a purchaser for value in good faith and without notice of
any adverse claim,
c. gives bond in such form as this Corporation may direct to
indemnify this Corporation and its transfer agent and
registrar against any claim that may be made on account of
the alleged loss, destruction, or theft of the certificate,
and
d. satisfies any other reasonable requirements imposed by this
Corporation.
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ARTICLE VI
BOOKS, RECORDS, & MINUTES
SECTION 1. REQUIREMENTS
This Corporation shall keep correct and complete books and records of
accounts and shall keep minutes of all meetings of its Shareholders and Board of
Directors and committees thereof.
This Corporation shall keep records of its Shareholders at its registered
office or principal place of business or at its transfer agent's or registrar's
office. The records shall contain the names and addresses of all Shareholders
and the number, class, and series, if any, of the shares held by each.
All books, records, and minutes shall be in written form, or in any other
form capable of being converted into written form within a reasonable time.
SECTION 2. INSPECTION RIGHTS
Any shareholder holding any class or series of shares, upon written
request stating the purpose thereof, shall have the right to examine, in person
or by agent or attorney, at any reasonable time or times, for any proper
purpose, this Corporation's relevant books and records of accounts, minutes, and
records of Shareholders, and to make extracts therefrom; provided however, that
prior to making extracts therefrom, such shareholder signs a confidentiality
agreement satisfactory in form and substance to the Board of Directors of the
Corporation.
SECTION 3. FINANCIAL INFORMATION
Not later than four months after the close of each fiscal year, this
Corporation shall prepare a balance sheet, showing in reasonable detail its
financial condition as of the close of that fiscal year, and a profit and loss
statement, showing the financial results of its operation during that fiscal
year and shall promptly after their preparation mail of copy of such financial
statements
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to each shareholder.
Balance sheets and profit and loss statements shall be filed in this
Corporation's registered office in Florida, shall be kept for at least five
years, and shall be subject to inspection during business hours by any
shareholder who was a Shareholder of record during the time period covered by
the financial statement requested.
ARTICLE VII
DIVIDENDS
The Board of Directors may from time to time declare, and this Corporation
may pay, dividends on shares in cash, property, or its own shares, except when
this Corporation is insolvent, when the payment thereof would render this
Corporation insolvent, or when the declaration or payment thereof would be
contrary to any restrictions contained in the Articles of Incorporation, subject
to the following provisions:
a. dividends in cash or property may be declared and paid,
except as otherwise provided in this article, only out of the
unre served and unrestricted earned surplus or capital
surplus, howsoever arising, but all dividends paid out of the
capital surplus shall be identified as a distribution of the
capital surplus, and the amount per share paid from the
capital surplus shall be disclosed to the Shareholders
receiving the dividends concurrently with the distribution of
the dividends,
b. dividends may be declared and paid in this Corporation's own
treasury shares,
c. dividends may be declared and paid in this Corporation's own
authorized but unissued shares out of any unreserved and
unrestricted surplus, subject to the following conditions:
1. if the dividends are payable in shares having a par
value, the shares shall be issued at not less than the
par value thereof, and there shall be transferred to the
stated capital, at the time the dividends are paid, an
amount of
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surplus equal to the aggregate par value of the shares
to be issued as the dividends, and
2. if the dividends are payable in shares without par (no
par) value, the shares shall be issued at the stated
value as shall be designated by the Board of Directors
by resolution adopted at the time the dividends are
declared, there shall be transferred to the stated
capital, at the time the dividends are paid, an amount
of surplus equal to the aggregate stated value so
designated in respect to the shares, and the amount per
share so transferred to the stated capital shall be
disclosed to the Shareholders receiving the dividends
concurrently with the distribution of the dividends,
3. dividends payable in shares of any class shall not be
paid to the Shareholders of shares of any other class,
unless the Articles of Incorporation so provide or the
payment is authorized by the affirmative vote or written
consent of the Shareholders of a majority of the shares
of the class in which the payments are to be made, and
d. a split-up or division of the issued shares of any class into
a greater number of shares of the same class, without
increasing the stated capital, shall not be construed to be
dividends within the meaning of this article.
ARTICLE VIII
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall have
inscribed thereon such information as determined by the Board of Directors of
the Corporation.
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ARTICLE IX
BY-LAWS
By-Laws may be adopted, altered, amended, or repealed by the vote of a
majority of the Board of Directors at a meeting duly called for that purpose.
19
EXHIBIT 10.1
COASTAL BANK CORPORATION
LEASE AGREEMENT
THIS LEASE, made as of this 30th day of July, 1997, by and between
DOONER FAMILY EQUITIES, LTD., whose address is 1010 Fifth Avenue South, Naples,
Florida 34102; PHONE: (941) 643-4211; FAX: (941) 643-7752 (hereinafter referred
to as the "LESSOR"), and COASTAL BANK CORPORATION, a Florida corporation whose
principal address is 1010 Fifth Avenue South, Naples, FL 34102; PHONE: (941)
434-0441; FAX: (941) 434-8829 (hereinafter referred to as the "LESSEE").
In consideration of the exchange of mutual promises, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. PREMISES: LESSOR, owner of fee simple title to certain real property
located at 1010 Fifth Avenue South, Naples, FL 34102 (the "Property"), hereby
leases to LESSEE and LESSEE leases from LESSOR the premises described as the
entire first and second floors of the Building and the drive through lane(s) and
automatic teller machine ("ATM") lane as depicted on the attached Exhibit "A"
(the "Premises") and for purposes of this Lease consisting of a total of
FOURTEEN THOUSAND SEVEN HUNDRED FORTY-SEVEN AND 84/100ths (14,747.84) leasable
square feet of which 6,989.65 leasable square feet are located on the first
floor of the Building and 7,758.19 leasable square feet are located on the
second floor of the Building having an address listed as 1010 Fifth Avenue
South, Naples, FL 34102, and located within the office building located on the
Property (the "Building" or "Office Building") owned by LESSOR. The Premises do
not include any space above the interior surface of the ceiling, below the
interior surface of any floor, and outside the interior surface of any window
and wall (excluding the drive through and ATM lanes), nor any part of the
exterior walls of the building in which the Premises are located, nor the walks
or Common Areas as defined herein.
LESSOR and LESSEE each covenant, as a material part of the
consideration for this LEASE, to keep and perform each and all of the terms,
covenants and conditions herein set forth.
2. LEASE TERM AND COMMENCEMENT DATE: This Lease shall be for a term of
FIVE (5) years, which term shall begin upon the Commencement Date as hereafter
defined. LESSEE shall not abandon the Premises during the Lease Term (for
purposes of this agreement, the term "Lease Term" shall mean the primary Lease
term of FIVE (5) years plus any renewal term or terms from time to time
exercised by LESSEE as provided herein.) The Commencement Date shall be the date
LESSEE "opens" for business to the general public as a commercial bank facility.
LESSOR and LESSEE acknowledge that certain obligations under various articles of
this Lease may commence prior to the Commencement Date of the Lease Term and
agree that this is a binding and enforceable agreement as of the date LESSEE and
LESSOR execute this Lease, subject to the termination provisions contained
herein.
(Page 1 of 19)
<PAGE>
3. RENEWAL OPTION(S): LESSEE shall have THREE (3) separate options to
renew this LEASE for a further term of FIVE (5) years each on giving written
notice to LESSEE not less than THREE (3) months nor more than SIX (6) months
before expiration of the LEASE Term, or any extension thereof, on the same terms
and conditions herein set forth including the annual CPI increase in the Base
Annual Rent as set forth in paragraph 10.a. hereof.
4. ACCEPTANCE OF PREMISES: LESSEE has personally inspected the Premises
and approved same subject to the following:
a. LESSEE shall have the right to enclose the existing Fifth
Avenue doorway area to create additional office space on the
first floor of the Building (whereupon LESSEE's rent shall be
proportionately increased);
b. LESSEE shall have the right to modify the existing balcony area
on the northwest side of the second floor to accommodate
additional office space (whereupon LESSEE's rent shall be
proportionately increased);
c. Prior to the Lease Commencement Date LESSOR, at LESSOR's
expense, shall re-pave and re-stripe the parking lot in
accordance with a parking space plan as shown in Exhibit "B";
and
d. Prior to the Lease Commencement Date, LESSOR, at LESSOR's
expense, shall paint the Building's mansard roof to match the
aqua- colored railing trim. Further, LESSOR may also re-paint
the present medium brown trim in accordance with a color scheme
to be mutually agreed upon by LESSOR and LESSEE, the cost of
which shall be paid by LESSEE.
LESSEE shall perform, at LESSEE's cost and expense, all work which is necessary,
usual or customary in further modifying or improving the Premises (common areas
excluded except for that area located within the existing Fifth Avenue entrance
doorway area and the exterior drive- through/ATM lanes) for LESSEE's occupancy
(the "Leasehold Improvements"); provided, however, all such improvements or
modifications shall first be approved by LESSOR and LESSEE in writing and
further provided that all such work shall be performed by a licensed general
contractor or interior designer approved by LESSOR. After the completion of the
approved Leasehold Improvements, LESSEE shall not make any interior alterations
or additions in, on or to the Premises or any part thereof without the prior
written consent of LESSOR; provided, however, if such work is merely decorative
in nature or if the cost is less than $25,000.00, the approval of LESSOR shall
not be required. Additions, fixtures and non-removable improvements, except
stock in trade, movable furniture and equipment, shall at once become part of
the realty and the property of the LESSOR and upon termination of this Lease
shall remain upon the Premises. All additions, alterations and improvements
shall comply with all building codes, regulations and other applicable laws. All
contractors, subcontractors, mechanics, laborers,
(Page 2 of 19)
<PAGE>
materialmen and others who perform any work, labor or services or furnish any
materials or otherwise participate in the improvement of the Premises shall be
and are hereby given notice that LESSEE is not authorized to subject LESSOR's
interest in the Premises to any claim for mechanics', laborers' and materialmen
liens, and all persons dealing directly or indirectly with LESSEE may not look
to the Premises as security for payment. Except for LESSOR'S negligent or
willful acts, LESSEE shall save LESSOR harmless from and against all expenses,
liens, claims or damages to either property or person which may or might arise
by reason of the making by LESSEE or its agents of any such additions,
improvements, alterations and/or installations.
5. TENANT IMPROVEMENTS/TENANT IMPROVEMENT ALLOWANCE: LESSOR shall
construct the proposed drive-in facility at LESSOR's sole cost and expense (but
not to exceed $50,000.00) in accordance with the plans and specifications as
shown in Exhibit "A". All other leasehold improvements shall be constructed by
LESSEE. LESSOR shall provide LESSEE with an allowance for Leasehold Improvements
to be constructed by LESSEE in the amount of TWENTY-TWO AND 50/100 DOLLARS
($22.50) per leasable square foot ("LESSEE's Leasehold Improvement Allowance")
[total allowance equals THREE HUNDRED THIRTY-ONE THOUSAND EIGHT HUNDRED
TWENTY-SIX AND 40/100 DOLLARS ($331,826.40) based on the Premises containing
14,747.84 square feet of leasable area] to be applied by LESSEE toward the cost
of its leasehold improvements(not to include the drive-in facility to be
constructed by LESSOR). LESSOR shall fund the Leasehold Improvement Allowance
based upon conditional releases of lien, and the balance disbursed upon final
releases of lien in accordance with a progress payment schedule to be mutually
agreed upon by LESSOR and LESSEE (the "Progress Payment Schedule"). All costs of
the Leasehold Improvements to be constructed by LESSEE in excess of the LESSEE's
Leasehold Improvement Allowance shall be payable by LESSEE.
6. PARKING: LESSOR shall provide LESSEE one (1) exclusive and
designated parking space for every THREE HUNDRED (300) square feet of space
which LESSEE occupies within the Premises. In addition, LESSOR at its sole cost
and expense, shall install nine (9) covered parking spaces of which six (6)
shall be for the sole and exclusive use of LESSEE's employees in the area
depicted on the attached Exhibit "B".
7. QUIET ENJOYMENT: Subject to LESSEE observing and obeying all
applicable laws, ordinances and regulations and performing all of the covenants,
conditions and provisions required of LESSEE herein, LESSEE shall have quiet
possession of the Premises during the LEASE Term.
8. EFFECTIVE DATE: This LEASE shall become a binding and enforceable
agreement on the date upon which the Lease has been executed by both parties
(the "Effective Date").
9. USE: LESSEE shall use and occupy the Premises only for general
office purposes including but not limited to, a commercial bank facility
operating in conformity with federal and state banking regulations, and shall
not use, nor occupy the Premises, for any other purposes without LESSOR's
consent. Furthermore, LESSEE shall not interfere with, nor violate
(Page 3 of 19)
<PAGE>
the use rights of, nor conduct any activity which may injure or annoy other
lessees within the Building, nor use or occupy the Premises in violation of any
law, ordinance, government regulation or directive.
As long as LESSEE shall occupy the Premises for the uses
hereinabove set forth, LESSOR agrees that it shall not allow or permit any other
financial institution, including but not limited to a bank, savings and loan
association, credit union, or brokerage company to occupy any other portion of
the Property nor shall LESSOR allow any other tenant to provide financial
services, such checking and savings deposit accounts, loan services, stock and
mutual fund brokerage services or trust services, without the prior written
consent of LESSEE which may be withheld in LESSEE's sole and absolute
discretion.
10. RENT: All agreed rental shall be paid to LESSOR without any set
off, counterclaim or deduction whatsoever (except as otherwise provided herein)
and shall consist of the following in addition to all other charges set forth in
this lease agreement:
a. BASE RENTAL WITH ANNUAL CPI INCREASES. For the first year of the
term hereof, the annual Base Rent shall be the base sum of TWO HUNDRED SEVENTY
SIX THOUSAND NINE HUNDRED THIRTEEN AND 69/100 DOLLARS ($276,913.69) which the
LESSEE hereby agrees to pay in equal monthly installments over a twelve (12)
month period of TWENTY-THREE THOUSAND SEVENTY-SIX AND 14/100 DOLLARS
($23,076.14) per month plus applicable sales taxes, payable without demand in
advance on the first day of each and every month during such term commencing on
the Commencement Date. It is understood and agreed that the rental, is at the
rate of TWENTY-ONE AND NO/100 DOLLARS ($21.00) per leasable square foot per year
for the first floor Building space, at the rate of SIXTEEN AND NO/100 DOLLARS
($16.00) per leasable square foot per year for the second floor Building space
of the Building, and FIVE HUNDRED AND NO/100 DOLLARS ($500.00) per month as
agreed upon rent for the drive-in facility to be constructed by LESSOR. In the
event that the Commencement Date is other than the first day of the month,
rental shall be prorated for the month and paid in advance and the Lease
termination date shall be extended for the same number of days so that the Lease
terminates at the end of a calendar month. For the purpose of this Lease, the
end of the first lease year shall be one year plus the number of days to the end
of the first month of the first lease year if the Lease Commencement Date is
other than the first of the month.
At the end of the first and each succeeding lease year, during the
initial term or any renewal hereof, the annual rent for the second and each
succeeding lease year shall be recalculated by adjusting the annual base rent
shown above by using the "Consumer Price Index (Revised) - All Urban Consumers
(U.S. City Average)" issued by the U.S. Department of Labor (hereinafter
referred to as "Index"). The adjustment will be made by multiplying the annual
base rent by a fraction, whose numerator shall consist of the most recent Index
as of the last day of the lease year then ending. The denominator used for each
such adjustment shall always consist of the most recent Index as of the
Commencement Date. Stated as an algebraic formula, rent will be adjusted as
follows:
(Page 4 of 19)
<PAGE>
Adjusted Annual Rent equals (Annual Base Rent) multiplied by (The
Most Recent Index as of the last day of the lease year then ending) divided by
(The most recent Index as of the Commencement Date).
Any publication by either the U.S. Department of Labor or the U.S.
Department of Commerce in which the Index is published will be admissible in any
proceedings to determine the annual rent due, without any further proof of
authenticity. In the event the U.S. Department of Labor shall cease to prepare
and publish such a retail index, then and in such an event the adjustment of
rent shall be made according to the most closely comparable commodity index as
agreed upon by the Lessor and the Lessee; in the absence of such an agreement,
then by arbitration in accordance with the then existing rules of the American
Arbitration Association. In the event of delay in determining the adjustment in
rent, the Lessee shall continue paying the rent it has been paying until such
time as the required adjustment has been made, at which time an accounting will
be made, retroactive to the beginning of such lease year, and the Lessee will
then within fifteen (15) days after demand from Lessor pay to Lessor any
additional rent due it for such period. In addition to the rent payable, the
Lessee shall also pay the applicable sales and use taxes attributable thereto.
The first scheduled monthly payment of Base Rent and Additional Rent,
(as defined below) shall be paid upon Commencement of the Lease Term.
b. LATE CHARGE. In the event that any payment is not paid within TEN
(10) business days of the date of written notice thereof, LESSEE agrees to pay
to LESSOR a late charge equal to five percent (5%) of the unpaid amount to
defray LESSOR's administrative charges with respect to such late payment. In the
event any payment has not been received within FIFTEEN (15) days of such notice,
LESSEE shall be in default hereof and LESSOR shall be entitled to immediately
terminate this Lease by written notice to LESSEE.
c. FAIR REPRESENTATION OF EXPENSES. LESSEE acknowledges and agrees that
the above charges represent a fair and reasonable estimate and liquidation of
LESSOR's expense in the administration of the Office Building resulting from
such incidents, which expense is not contemplated nor included in any other
rental or charge provided to be paid by LESSEE.
d. DEPOSIT. Upon execution of this Lease, LESSEE shall make a
non-refundable deposit in the sum of TWENTY THOUSAND AND NO/100 DOLLARS
($20,000.00) with LESSOR to be applied toward payment of the first month's rent
due hereunder. In the event the contingency set forth in paragraph 48 is not
satisfied, LESSOR shall be entitled to retain such deposit as a liquidated
damages.
11. ADDITIONAL RENT: The Base Rent and all sales or use taxes imposed
thereon payable to LESSOR are net of all expenses associated with the operation
of the Office Building. Therefore, in addition to Base Rent, LESSEE shall pay
its Pro Rata Share (as herein defined), plus any sales or use taxes assessed
thereon, of the following, all of which shall collectively be referred to as
"Additional Rent":
(Page 5 of 19)
<PAGE>
a. TAXES. Representing the amount of all real and personal property
taxes and assessments levied, imposed or assessed upon the Office Building
taking into account the maximum available discount each year. During the Lease
term LESSEE shall have the right (at its sole cost and expense) to protest and
appeal any taxes or the values on which they are based, but LESSEE will inform
LESSOR, of the institution of any action in connection therewith and shall from
time to time, upon request, update LESSOR on the progress thereof. LESSOR agrees
to assist and cooperate with LESSEE on any such appeal. In the event LESSEE
elects to appeal any taxes or the values on which they are based, and LESSEE is
successful in contesting such appeal, then LESSEE shall receive its out of
pocket costs and expenses in connection with such contest prior to distribution
of any tax savings to other tenants in the Building.
b. INSURANCE. Representing the cost of all fire, extended coverage,
liability, workmen's compensation and other insurance coverage carried by LESSOR
on the Office Building.
c. COMMON AREA MAINTENANCE (CAM). Representing the Office Building's
Operating Costs, as more fully described herein. The term "Operating Costs"
shall mean the total cost and expenses incurred in connection with the normal
administration, operation, preventive and corrective maintenance and repair of
the Office Building, the implementation and costs for which shall be at the
reasonable discretion of LESSOR, and whether paid to employees of LESSOR or
parties engaged by LESSOR, including but not limited to: landscaping, Building
repairs (including but not limited to all system repairs to be performed by
LESSOR pursuant to paragraph 18 hereof; provided same are either obsolete or
cannot be adequately repaired and only to the extent such replacement item is
comparable in kind and quality to the item being repaired, if available,
provided, further, if the item to be replaced is customarily capitalized,
LESSEE'S proportionate share of such cost shall be payable in equal installments
over the useful life of such replaced item or capital improvement for
depreciation purposes according to generally accepted accounting practices),
line painting, landscaping, window cleaning [minimum of TWO (2) times per year],
Building painting, property maintenance allocations, roof cleaning and routine
roof maintenance (including but not limited to the repair of any leaks that may
from time to time exist), bumpering and top coating; lighting fixtures;
electricity; sanitary control; pest control; removal of trash, rubbish, garbage
and other refuse (hereinafter "trash"); rental on machinery or equipment used in
such maintenance; building security, if provided; the cost of personnel to
implement such services (including social security, unemployment and disability
insurance); legal fees (only to the extent attributable to the general operation
and administration of the Building, e.g., legal expenses incurred by LESSOR with
respect evicting another tenant would not be included in CAM charges); and a
management fee (excluding executive salaries and bonuses). LESSOR may direct
that trash intensive lessees within the Office Building arrange for the use of
their own trash receptacle and removal service at lessee's expense, or in the
alternative, LESSOR may assess a surcharge for such lessee's excess trash
collection and removal service. LESSOR may establish a common expense reserve to
accumulate funds to cover the cost of future painting of the Building,
resurfacing, seal coating and striping the parking area (at the end of the Lease
Term, to the extent that any funds contributed by LESSEE remain in such reserve
account, such funds shall be repaid to LESSEE). If any of the aforementioned
maintenance or repairs are made necessary by reason of LESSEE's use and
occupancy of the demised Premises in a manner
(Page 6 of 19)
<PAGE>
inconsistent with the reasonable use and occupancy thereof, or the negligence of
the LESSEE, its agents, servants, employees and invitees, or by reason of
alterations made by the LESSEE, then and in any of such events such repairs
shall be made by the LESSEE at LESSEE's own cost and expense. Such costs and
common expense reserve will be paid monthly as indicated, unless LESSOR elects
to bill LESSEE every other month or on a quarterly basis. In the event LESSOR's
estimated common expenses are less than the actual common expenses, LESSOR may
demand from LESSEE LESSEE's pro rata share of such difference and LESSEE shall
reimburse LESSOR for such pro rata share charges within thirty (30) days from
receipt of a bill and accounting therefore from LESSOR.
Operating Costs shall NOT include any of the following items: (1) any
expenses for which LESSOR receives reimbursement or should have received
reimbursement from any other source such as, but not limited to, insurance
proceeds and payments required to be made by other tenants, to the extent such
reimbursement is received or should have been received, (2) any ground rents or
interest or amortization on mortgages, (3) any leasing and advertising expenses,
(4) any capital expenses including Building structural work,
air-conditioner/heater replacement(s), or roof replacement, (5) any costs of
repairs arising from casualties for which it is LESSOR'S obligation to obtain
insurance, unless the proceeds of such insurance are not paid to LESSOR due to a
wrongful act or omission of LESSEE, (6) costs due to the wrongful acts or
omissions of LESSOR, (7) payments to contractors, related to or affiliated with
LESSOR in excess of third party contracts in the same circumstances, (8)
depreciation of the Office Building, and (9) costs of complying with the
Americans with Disabilities Act.
Common Areas as used herein shall refer to all areas designated by
LESSOR as the areas, spaces and improvements in the Office Building which LESSOR
makes available from time to time for the common use and benefit of the tenants
and occupants of the Office Building, including without limitation on-site
parking areas, roads, walkways, promenades, sidewalks, open and covered courts
and malls, if any, landscaped and planted areas, if any, and public restrooms,
if any.
d. OTHER ADDITIONAL RENT. Representing all other sums of money or
charges required to be paid by LESSEE under "other additional rent", which shall
include but not be limited to: administrative fees, late submission fees,
service charges, attorney's fees incurred by LESSOR to enforce the provisions of
this LEASE, or interest charges on past due payments, all of which shall be
payable as Additional Rent within the next installment of Base Rent.
e. LESSEE'S PRO RATA SHARE. LESSEE'S Pro Rata Share is SIXTY-SIX AND
77/100 PERCENT (66.77%) determined by dividing the leasable square footage of
the Premises by the total leasable area of the Office Building.
(Page 7 of 19)
<PAGE>
12. PAYMENT OF ADDITIONAL RENT: LESSEE shall pay LESSOR, on a monthly
basis, in addition to Base Rent, the monthly installment of estimated Additional
Rent as set forth by LESSOR. By March 1, of each LEASE year, LESSOR shall
deliver to LESSEE a statement of the actual Additional Rent payable by LESSEE
for the prior year. Any further Additional Rent amount due to LESSOR shall be
paid by LESSEE, without prejudice to any written exception, within thirty (30)
days following LESSOR's delivery of said statement. If the total Additional Rent
payment received by LESSOR is greater than the actual Additional Rent due for
the same period, LESSEE shall receive a credit in the amount of the overpayment
against the next required payment of Additional Rent. Should a credit be due
LESSEE at the termination of this LEASE, LESSOR shall remit payment to LESSEE
within TEN (10) days of the Lease termination date. The initial monthly
contribution to be paid by LESSEE for the payment of Additional Rent shall be
FOUR THOUSAND THREE HUNDRED EIGHTY-SEVEN AND 48/100 DOLLARS ($4,387.48) (plus
any applicable sales tax) per month based on $3.57 per square foot and 14,747.84
square feet of leasable area.
LESSEE shall have the right to examine LESSOR's books and records
relating to the operation and maintenance of the Building during normal business
hours to verify LESSOR'S annual statement of actual Additional Rent payable by
LESSEE. The annual statement shall be certified as accurate by an officer of
LESSOR and shall be prepared in accordance with good and sound accounting
practices as consistently applied in the industry. In the event LESSEE elects to
examine LESSOR's books and records and LESSEE discovers an error resulting in a
decrease of at least three percent (3.0%) of the amount of Additional Rent
charged to LESSEE during the annual period covered by LESSOR's statement, then
LESSOR shall reimburse the reasonable out of pocket costs and expenses incurred
by LESSEE in connection with LESSEE's review plus reimbursement of the
overcharges with interest at the then existing prime rate plus one percent
(1.0%). Similarly, in the event LESSEE's review of LESSOR'S books and records
reveals less than a three percent (3.0%) error, LESSEE shall reimburse LESSOR
for LESSOR'S reasonable out-of-pocket expenses incurred as a result of LESSEE'S
review.
13. PRORATION: If the first day of the LEASE commences on any day other
than the first day of a month, or if this LEASE ends on any day other than the
last day of a month, any payment due LESSOR by reason of any Base Rent or
Additional Rent shall be justly and fairly prorated.
14. USE OF COMMON AREAS: The use and occupancy by LESSEE of the
Premises shall include the use in common with others entitled to the use of the
common areas, employee parking areas, service roads, loading facilities,
sidewalks and visitor parking areas within the Office Building (collectively
referred to as the "Common Areas").
(Page 8 of 19)
<PAGE>
15. SIGNS: Subject to LESSOR'S prior approval, which shall not be
unreasonably withheld or delayed, LESSEE shall be permitted to install
appropriate signs, logos, etc., on LESSEE'S entrance doors, in the elevator
lobby of LESSEE's floor, in the ground floor lobby and entrance foyer area, and
will also have the exclusive right to install its signage upon the exterior of
the Building throughout the Lease Term; provided, however, as long as Heart-Fax
continues as a tenant within the Building, it may also retain its present
signage on the exterior of the Building, and may replace or modify said existing
signage with the approval of LESSEE, which shall not be unreasonably withheld.
No other tenant shall be permitted to erect a sign on the exterior of the
Building except as may be specifically approved by both LESSOR and LESSEE which
consent may be withheld for any reason including purely aesthetic reasons. All
such signs of LESSEE shall be maintained in a good and safe condition and
appearance at LESSEE's expense and LESSEE shall repair any damage to the
Premises resulting from the erection, maintenance or removal of said signs by
LESSEE. LESSOR has provided a "Marquee" sign on Fifth Avenue South for LESSEE's
sole and exclusive use. The cost of maintaining such Marquee sign, including the
cost of placing LESSEE's name thereon, shall be borne by LESSEE.
16. IMPROVEMENTS AND ALTERATIONS OF OFFICE BUILDING AND COMMON AREAS:
Except for the drive through teller and ATM lanes, the Common Areas are the
private property of LESSOR and are at all times subject to the control of
LESSOR. LESSOR may increase, reduce or change the number, dimensions or location
of the walks and parking areas that LESSOR reasonably deems proper, and LESSOR
shall have the right to make alterations to the Office Building as long as such
alterations are in full compliance with all applicable laws and ordinances and
do not adversely affect LESSEE'S use and occupancy of the Premises specifically
including the LESSEE's drive through and ATM facility. LESSOR shall provide
notice to LESSEE prior to implementing any such changes. Notwithstanding the
foregoing, LESSOR shall not make any change to the Building landscaping, or
architectural layout of the Building (including the Building's painting scheme)
except as may be specifically approved by LESSEE which consent may not be
unreasonably withheld.
17. IMPROVEMENTS AND ALTERATIONS OF PREMISES BY LESSEE: LESSEE, upon
obtaining the prior written consent of LESSOR, which consent shall not be
unreasonably withheld or delayed by LESSOR, may make improvements or alterations
to the Premises as LESSEE may from time to time deem necessary or desirable,
provided however, LESSEE shall not have the right to make any improvements or
alterations that affect the structure, or outward appearance of the Office
Building. At least ten (10) days prior to the commencement of such work, LESSEE
shall submit to LESSOR complete plans and specifications for such work. Any
improvements or alterations made to the Premises by LESSEE shall be in
compliance with all insurance requirements, and regulations and ordinances of
governmental authorities. All such improvements by LESSEE shall be deemed the
property of LESSEE during the Lease Term, but upon the expiration or sooner
termination of this LEASE, become the property of LESSOR unless agreed to be
LESSEE'S property at the time such plans and specifications were approved by
LESSOR as elsewhere provided for herein.
(Page 9 of 19)
<PAGE>
18. REPAIRS: LESSOR agrees to keep and maintain the Building as a first
class office building, in good order and repair. Without limiting the foregoing,
LESSOR will keep in good order and repair, and maintain and replace as needed
(the cost of which shall be included in CAM charges): all fixtures serving, but
not located within the perimeter of, the Premises, including but not limited to,
water, plumbing, sewer, HVAC, fire/life safety, electrical and sprinkler
systems. If any such maintenance and repairs are caused in part or in whole by
the act, neglect, fault or omission of duty by LESSEE, its agents, servants,
employees or invitees, LESSEE shall pay to LESSOR the actual cost of such
maintenance and repairs. LESSEE shall at once report in writing to LESSOR any
known defective or damaged condition of the Premises which LESSOR is required to
repair pursuant to this Paragraph and LESSEE's failure to report to LESSOR any
such condition or defect shall make LESSEE responsible to LESSOR for any
liabilities, costs, expenses, and attorneys' fees incurred by LESSOR as a result
of such defect or damage. LESSOR shall not be obligated to commence
non-emergency repairs or to perform routine maintenance of the Premises for a
period not to exceed five (5) days following written notice to LESSOR of the
need for such repair or maintenance. Emergency repairs shall be commenced as
quickly as is reasonably practicable for purposes of this LEASE, repairs
involving the air conditioning system shall be deemed to be emergency repairs).
There shall be an abatement of rent after five (5) days of non-use of the
Premises, but no other liability of LESSOR by reason of any injury to or
interference with LESSEE's business arising from the making of any repairs,
alterations or improvements in or to any portion of the Office Building or the
Premises, or in or to fixtures and equipment therein.
LESSEE will, at its own cost and expense, keep and maintain the
Premises and every part thereof in good order and repair except those portions
of the Premises to be repaired by LESSOR expressly hereunder. LESSEE shall
return the Premises to LESSOR at the expiration or sooner termination of this
LEASE in as good condition and repair as when first received, reasonable wear
and tear and casualty excepted. All damage or injury to the Office Building,
Premises, the Common Areas, or the equipment serving same, caused by or
resulting from LESSEE's misuse, or the act or negligence of LESSEE, its agents,
employees, licensees, invitees or visitors shall be promptly reported to LESSOR
and repaired by LESSOR at the sole cost and expense of LESSEE and LESSEE hereby
agrees to pay such amounts on demand as Additional Rent.
LESSEE shall keep in good order and repair at LESSEE'S sole cost and
expense, that portion of the water, plumbing, sewer, electrical and sprinkler
systems located within the perimeter of the Premises. LESSOR shall assign to
LESSEE any and all warranties applicable to such items.
19. UTILITIES/HVAC REPLACEMENT AND REPAIR: LESSOR agrees to install new
air-conditioning compressors, condensers, Aetherton control system, and air-
handlers acceptable to LESSEE exclusively serving LESSEE's Premises. LESSEE
agrees to maintain interior lighting and air-conditioning equipment exclusively
serving LESSEE's Premises (including but not limited to the routine replacement
of filters and cleaning of drip pans) and to pay all costs of replacement of
lamps, tubes, ballasts, starters, transformers. The LESSEE shall be responsible
for maintaining compressors, condensers and air handlers relating to the air
(Page 10 of 19)
<PAGE>
conditioning equipment, but the cost of replacement of such items shall be paid
by LESSOR as a capital expense. LESSEE will pay all utility expenses of the
Premises which are separately metered and any unmetered common area utilities
will be included in reimbursable costs of LESSOR for common expenses as
elsewhere set forth herein.
If LESSEE'S use of the Premises shall require additional utility
facilities, the same shall be installed only after obtaining LESSOR's written
approval, and such costs shall be at LESSEE'S expense and in accordance with
plans and specifications approved in writing by LESSOR. If LESSEE'S use or
occupancy of the Premises results in an increase to LESSOR of any utility
expense, or connection or user fees, or charges for increased usage or capacity,
or assessments of any kind whatsoever, LESSEE shall pay the entire amount
thereof within fifteen (15) days of LESSOR's written statement for same. Except
for LESSOR'S negligent acts, LESSOR shall not be liable for any interruption or
failure in the supply of utilities to the Premises. LESSOR and LESSEE shall
agree as to LESSEE'S specific electrical and other utility requirements in the
Plans and Specifications.
20. RUBBISH REMOVAL: LESSEE shall maintain the interior of the Premises
in a clean condition, shall routinely remove all trash and refuse therefrom, and
shall provide janitorial service for the interior of the Premises at LESSEE'S
sole cost and expense. Trash and refuse removal from the Building site shall be
arranged for by LESSOR and shall be paid for by LESSEE as part of the common
area maintenance charges as Additional Rent.
21. SIDEWALKS: Except with respect to the automated teller machine
("ATM") and drive-in teller facility set forth in the original Plans and
Specifications, LESSEE shall neither encumber nor obstruct the sidewalks
adjoining the Premises nor allow the same to be obstructed or encumbered in any
manner. LESSEE shall not place, nor cause to be placed, any merchandise, signs,
vending machines or anything else on the sidewalk or exterior of the Premises
without the prior written consent of LESSOR.
22. INSURANCE: LESSEE shall carry at its own expense Comprehensive
General Public Liability (to include Bodily Injury) and Property Damage
insurance with combined single limits of not less than $1,000,000 with insurance
companies authorized to do business in Florida and satisfactory to LESSOR (an
insurance company with BEST'S KEY RATING GUIDE: PROPERTY - CASUALTY of not less
than "A-" shall be deemed satisfactory to LESSOR), insuring LESSOR and LESSEE
against any liability arising out of the use, occupancy or maintenance of the
Premises. The insurance policy or policies shall contain provisions prohibiting
the modification or cancellation of insurance without at least FIFTEEN (15) days
prior written notice to LESSOR. LESSEE shall deliver said policies or
certificates thereof to LESSOR prior to LESSEE'S occupancy of the Premises, and
thereafter, renewal policies or certificates shall be delivered to LESSOR not
less than FIFTEEN (15) days prior to expiration. The limit of any such insurance
shall not limit the liability of LESSEE hereunder. LESSEE may provide this
insurance under a blanket policy provided said insurance shall have a LESSOR's
protective liability endorsement attached thereto. The failure of LESSEE to
effect said insurance in the names herein called for, or to pay the premiums
required, or to deliver said policies or certificates to LESSOR shall be a
material Default under this LEASE.
(Page 11 of 19)
<PAGE>
LESSOR, shall maintain Building replacement insurance; comprehensive
and hazard insurance to include windstorm coverage; flood insurance to the
extent available; and public liability insurance in an amount of not less than
$10,000,000.00. The cost of such insurance shall be an item of Additional Rent
as set forth in Paragraph 11.
23. PERSONAL PROPERTY INSURANCE: LESSEE shall solely be responsible for
securing and maintaining any insurance on LESSEE'S stock, trade fixtures,
equipment or other personal property located in the Premises, and LESSOR shall
not have any obligation to repair or replace same unless such damage is caused
by negligence of LESSOR, its employees, agents or servants.
24. DAMAGE OR DESTRUCTION: If the Premises are damaged by insured
casualty and insurance proceeds have been made available to LESSOR, said damage
shall be repaired by LESSOR, to the extent of such available insurance proceeds,
provided such repairs can be made in total from said insurance proceeds within
one hundred eighty (180) days after the occurrence of the casualty, and without
the payment of overtime or other premiums. Until such repairs are completed,
Base Rent and Additional Rent shall be abated in proportion to that part of the
Premises unusable by LESSEE. If the damage is due to the fault or neglect of
LESSEE, or its employees, contractors, agents or invitees, there shall be no
abatement of Base Rent, Additional Rent or any other financial obligations of
LESSEE hereunder. Should the Premises be damaged as a result of any cause not
covered by insurance, or if repairs cannot be completed within one hundred
eighty (180) days following the casualty date, LESSOR and LESSEE shall each have
the option to terminate this LEASE as of the casualty date, such notice of
election to be made by within sixty (60) days of the casualty date. In the event
neither LESSOR nor LESSEE elects to terminate the LEASE, Base Rent and
Additional Rent shall be abated from the date of such casualty until such
Building repairs are completed unless the casualty was due to the fault or
negligence of LESSEE.
Notwithstanding the foregoing, in the event of a disaster or other
event rendering the Premises temporarily unusable, LESSOR shall fully cooperate
with LESSEE in implementing any "business recovery plan" imposed on LESSEE under
federal banking regulations. By way of example and not of limitation, LESSOR
will cooperate with LESSEE: (i) in the placement of any temporary banking
facility to be located elsewhere in any available useable vacant space within
the Building or to be located external to the Building on a portion of the
parking lot or other Building common area; and (ii) to coordinate the supply of
electrical power to such temporary banking facility including allowing the
placement of any necessary auxiliary power unit(s) and the modification of
Building electrical connectors to allow electrical service to be supplied to
such temporary banking facility.
25. CONDEMNATION: If the entire Premises shall be taken under power of
eminent domain, this LEASE shall automatically terminate as of the date of such
taking. LESSEE hereby assigns to LESSOR any award which may be made in such
taking provided however, nothing contained herein shall be deemed to give LESSOR
any interest in nor require LESSEE to assign to LESSOR any award made for the
taking of LESSEE's personal property nor for the interruption of, or damage to,
LESSEE's business including LESSEE'S relocation expenses.
(Page 12 of 19)
<PAGE>
26. ASSIGNMENT AND SUBLETTING: Unless LESSEE receives prior approval in
writing from LESSOR, which consent shall not be unreasonably withheld, LESSEE
shall not sell or assign this LEASE, nor sublet the Premises and such an event
contrary to the provisions of this Paragraph shall constitute a Default under
this LEASE; provided, LESSOR'S prior written approval shall not be required if
such purchaser, assignee or subtenant continues to use the Premises in a manner
permitted by and consistent with uses permitted under Paragraph 9 hereinabove or
such purchaser, assignee or sub-tenant is an affiliate of LESSEE or a related
corporation or entity formed by LESSEE for the purpose of conducting banking
operations. Any assignment approval of this LEASE by LESSOR shall be conditioned
on the ASSIGNEE'S assumption of payment responsibility for Base Rent, Additional
Rent, and other charges as defined in this LEASE. Further, as long as the use of
the Premises remains unchanged, LESSOR'S consent shall not be required for
LESSEE to assign (or sublease, in whole or in part) the Lease to a corporate
affiliate or related entity of LESSEE or successor in interest by sale of the
assets of LESSEE or due to a corporate or other merger.
27. DEFAULT:
a. MONETARY DEFAULT. If LESSEE does not timely pay any or all of the
Base Rent or Additional Rent in the manner required to be paid by this Lease, or
if LESSEE shall fail to pay any of the other monetary obligations required by
this Lease within ten (10) business days after mailing of notice of such default
to LESSEE, then LESSEE shall be in default hereunder.
b. NON-MONETARY DEFAULTS. If LESSEE fails to perform any of the other
covenants, duties, agreements, undertakings or terms of this Lease, LESSOR shall
give LESSEE thirty (30) days written notice to cure the same or to commence to
cure the same and diligently prosecute to completion if the same cannot be cured
within a thirty (30) day period. If LESSEE does not cure the breach or begin to
take such steps and institute and diligently prosecute to completion such
proceedings as will cure such breach (if same cannot be cured) within thirty
(30) days after LESSOR gives notice, then LESSEE shall be in default hereunder.
28. LESSOR'S DEFAULT REMEDIES:
If LESSEE is in default hereunder beyond the expiration of any
applicable grace period and fails to cure said default as provided above, LESSOR
may do one or more of the following at its sole option and without limiting any
other right or remedy to which LESSOR may be entitled:
a. continue to hold LESSEE liable for all rent and any other monies due
LESSOR under the LEASE, without taking possession of the Premises, in which
event, LESSOR has the option to periodically sue LESSEE for past rent due
without waiving any right to sue for future rent;
b. cancel and terminate the LEASE, as well as all of the right, title,
possession and interest of LESSEE hereunder, and evict LESSEE by Court order as
provided by Florida law, without waiving LESSOR's right to payment of any
amounts due LESSOR hereunder. In the
(Page 13 of 19)
<PAGE>
event of such eviction, LESSEE shall immediately relinquish possession of the
Premises to LESSOR.
c. reenter and repossess the Premises with LESSEE remaining liable to
LESSOR for all sums and charges provided herein for the remainder of the Lease
Term. LESSOR, at its sole option, may relet the Premises and reduce the amounts
due to LESSOR from LESSEE hereunder after first receiving credit for all costs
incurred by LESSOR in connection with such reletting of the Premises; and/or
d. pursue any action at law or equity available to LESSOR.
29. BANKRUPTCY: Neither this lease, nor any interest therein, nor any
estate thereby created shall pass to any trustees or receiver or assignee for
the benefit of creditors or otherwise by operation of law. If the estate created
hereby shall be taken or attempted to be taken in execution or by other process
of law, or if Tenant shall be adjudicated insolvent or bankrupt pursuant to the
provisions of any state or federal insolvency or bankruptcy act, or if a
receiver or trustee of the property of Tenant shall be appointed by reason of
Tenant's insolvency or inability to pay its debts, or if any assignment shall be
made or attempted to be made by Tenant's property for the benefit of creditors,
then and in any such event, Tenant will be deemed in default under this lease.
The allowance of any petition under the bankruptcy law, or the appointment of a
trustee or receiver of Tenant or its assets shall be conclusive evidence that
Tenant caused, or gave cause therefore, in violation of this lease, unless such
allowance of the petition, or the appointment of a trustee or receiver, is
vacated within sixty (60) days after such allowance or appointment. Any act
described in this section shall be deemed a material breach of Tenant's
obligation hereunder, and at any time when such a breach exists, Landlord may,
at its option, and in addition to and independent of, any remedy available to
Landlord, terminate this lease and all rights of Tenant hereunder by giving to
Tenant notice in writing of the election of Landlord so to terminate, and
re-enter and repossess the Premises with or without prior notice; provided,
however, the obligations of LESSEE under the LEASE shall be fully forgiven, and
further provided, LESSOR shall have obtained possession of the Premises within
sixty (60) days following the Bankruptcy filing date. Should LESSOR elect not to
terminate the LEASE in accordance herein, LESSOR shall be entitled to recover
the maximum award permitted for any damages or losses which are suffered from
such an event. Notwithstanding anything contained to the contrary in the
foregoing paragraph, neither bankruptcy, insolvency, reorganization, an
assignment for the benefit of creditors nor the appointment of a receiver or
trustee shall affect this LEASE or permit its termination as long as the
covenants on the part of LESSEE to be performed under this LEASE, including but
not limited to LESSEE's obligation to pay rent, shall continue to be performed.
30. RIGHTS AND REMEDIES: The various rights and remedies herein granted
may be exercised concurrently, and shall be cumulative and in addition to any
others the parties hereto may be entitled to by law, and the exercise of one or
more rights or remedies shall not impair such party's right to exercise any
other right or remedy. The failure or forbearance of either party to enforce any
right or remedy in connection with any Default shall not be deemed a waiver of
such Default nor a consent to a continuation thereof, nor waiver of the same
Default
(Page 14 of 19)
<PAGE>
at any subsequent date. Any waiver of rights by either party must be in writing
and shall apply only to that written waiver and shall not have general or
prospective application.
31. ACCESS BY LESSOR: Upon written notice to LESSEE, LESSOR, and its
agents, shall have the right to enter the Premises during LESSEE'S normal
business hours for the purpose of showing the Premises to prospective purchasers
or to other lessees; provided, however, showings to prospective lessees shall be
authorized during the last six month of the Lease Term only. LESSOR may enter
the Premises whenever necessary in the event of an emergency. Notwithstanding
the foregoing, LESSOR shall not be permitted to enter into any part of the
Premises where monies, securities, confidential data or valuables are kept at
any time, unless accompanied by a representative of LESSEE and LESSEE agrees to
furnish such representative promptly upon request.
32. SURRENDER OF PREMISES: At the expiration or termination of this
LEASE, LESSEE shall surrender the Premises to LESSOR in as good a condition and
repair as reasonable and proper ordinary wear and tear and casualty excepted.
Except in the case of termination of the LEASE and eviction of LESSEE by court
order, LESSEE shall have the right at the end of this LEASE to remove any
equipment, furniture, trade fixtures or other personal property placed in the
Premises by LESSEE provided, LESSEE promptly repairs any damage to the Premises,
or the Office Building, caused by such removal. Any liability of LESSEE
hereunder shall survive the expiration or termination of this LEASE. If LESSEE
fails to remove any property belonging to it which LESSEE is required to remove
pursuant to the terms of paragraph 4 hereof within ten (10) business days of
LESSOR's written Notice to remove such property, or by any date established by a
court order directing such removal, all such property shall be deemed abandoned
by LESSEE and shall become the property of LESSOR. However, LESSEE shall remain
liable to LESSOR for any costs and expenses associated with LESSOR's
transportation and removal of said personal property from the Premises.
33. NOTICES: Any Notice required to be given hereunder, including
copies thereof which are to be concurrently transmitted to such parties as
LESSOR or LESSEE may designate from time to time, shall be in writing, and may
be given by personal delivery, facsimile transmission, or by United States
certified mail, and if given by mail and properly addressed, shall be deemed
sufficiently given three (3) days following the date transmitted by registered
or certified mail, postage prepaid, return receipt requested. Until notified to
the contrary, LESSOR shall send all Notices to LESSEE at the address set forth
on page 1 hereof, and LESSEE shall send all Notices to LESSOR at the address set
forth on page 1 hereof.
34. INABILITY TO PERFORM: This LEASE, and the obligations of LESSOR
hereunder, shall be terminated and of no further force and effect in the event
LESSOR is unable to fulfill any of its obligations hereunder, or is
substantially delayed in doing so if such inability or delay is caused by reason
of strike or other labor troubles, civil commotion, invasion, rebellion,
hostilities, military or usurped power, sabotage, governmental regulations or
controls, inability to obtain any material, service, energy shortages, acts of
God, casualty, or by any other causes beyond the reasonable control of LESSOR.
Except as provided hereinabove, upon LESSOR'S failure to perform after ten (10)
business days of the date of mailing written notice of
(Page 15 of 19)
<PAGE>
such failure by LESSEE to LESSOR, LESSEE shall have the right to perform
LESSOR'S obligations and offset rent to cover the reasonable costs to perform
such obligations.
35. ATTORNEY'S FEES: If any legal matter, dispute, action or proceeding
exists or is commenced to enforce this LEASE, the non-prevailing party shall be
liable for and shall pay the expense of the prevailing party's attorney's fees
and court costs as established by court order. If either party hereto without
fault is made a party to any litigation instituted by or against any other party
to this LEASE, such other parties shall indemnify and hold harmless the other
party, as the case may be, against all costs and expenses, including reasonable
attorney's fees incurred in connection therewith. "Attorney's fees" as referred
to in this LEASE, shall include fees incurred by LESSOR after an occurrence of a
monetary or nonmonetary Default, or after the recognition of an issue by LESSOR
deemed significant enough, in the exclusive judgment of LESSOR, to be the basis
of any legal action, whether or not such action is commenced, that seeks any
type of relief or declaratory judgment, which shall include fees and expenses of
its attorneys for all legal services, negotiation services and collection
services through trial and appeal, and such fees shall be payable by LESSEE as
Additional Rent.
36. TIME OF ESSENCE: Time is of the essence with respect to the
performance of each party's covenants of this LEASE.
37. HOLDING OVER: Should LESSEE continue in occupancy of the Premises
after expiration of this LEASE, LESSEE shall become a tenant from month to month
upon each and all of the terms herein provided, and any such holding over shall
not constitute a renewal or extension of this LEASE. During such holding over,
LESSEE shall pay, at LESSOR'S sole discretion, Base Rent at one hundred twenty
percent (120%) of the monthly amount which was payable by LESSEE immediately
prior to the hold over occurrence.
38. PARTIAL INVALIDITY: Any provision of this LEASE which shall be held
to be invalid, void or illegal shall in no way affect, impair or invalidate any
other provision hereof, and such other provisions shall remain in full force and
effect.
39. BROKERS: LESSEE warrants and represents that it has negotiated this
Lease directly with LESSOR and has not authorized or employed or acted by
implication to authorize or to employ any other real estate broker or salesman
to act for LESSEE in connection with this Lease. LESSEE shall hold LESSOR
harmless from and indemnify and defend LESSOR against any and all claims by any
real estate broker or salesman, other than brokers dealt with by LESSOR, if any,
and LESSOR shall indemnify and hold LESSEE harmless against any and all claims
by any real estate broker or salesman, other than brokers dealt with by LESSEE,
for a commission or finder's fee as a result of LESSEE entering into this Lease.
LESSOR shall be responsible for payment of all brokerage commissions incurred as
a result of brokers retained by LESSOR in connection with the negotiation of
this LEASE.
(Page 16 of 19)
<PAGE>
40. WAIVER: LESSOR's failure to insist upon a strict performance of any
of the agreements, terms, covenants or conditions hereof shall not be deemed a
waiver of any rights or remedies that LESSOR may have and shall not be deemed a
waiver of any subsequent breach or default of any agreements, terms, covenants
and conditions of this LEASE.
41. SUCCESSORS AND ASSIGNS: Except as otherwise provided in this LEASE,
all of the covenants, conditions and provisions of this LEASE shall be binding
upon and shall inure to the representatives, successors, and assigns.
42. HEADINGS OF LESSOR AND LESSEE: The article and paragraph captions
contained in this LEASE are for convenience only and do not in any way limit or
amplify any term or provision hereof. The terms "LESSOR" and "LESSEE" as used
herein shall include the plural as well as the singular, and the neuter shall
include the masculine and feminine genders.
43. NO ESTATE BY LESSEE: This LEASE shall only create a relationship of
landlord and tenant between LESSOR and LESSEE. LESSEE has only a right of use
for the Premises, not subject to levy or sale, and not assignable by LESSEE
except as expressly provided herein.
44. ENTIRE AGREEMENT: LESSEE and LESSOR each acknowledge that it has
read this entire LEASE, evidencing same by the initialing all LEASE pages, and
each party hereto understands and agrees to all of the terms and conditions
contained herein. LESSOR and LESSEE further acknowledge that the preparation of
this LEASE has been a joint effort of each party, and the resulting document
shall not, solely as a matter of judicial construction, be construed more
severely against one party over the other. This LEASE, and any attached Exhibits
and Addendum, constitute the entire agreement between LESSOR and LESSEE, and no
prior agreement or understanding shall be effective. No provision of this LEASE
may be amended except by written agreement signed by LESSOR and LESSEE or their
respective successors in interest.
45. GOVERNING LAW: This LEASE shall be construed, interpreted and
governed by and in accordance with the laws of the State of Florida. Any legal
proceedings with respect to this LEASE shall be instituted in the Circuit Court
of Collier County, and LESSEE submits itself to the jurisdiction and venue of
this court.
46. RADON GAS: Radon is a naturally occurring radioactive gas that when
it has accumulated in a building in sufficient quantities, may present health
risk to persons who are exposed to it over time. Levels of radon that exceed
Federal and State guidelines have been found in buildings in Florida. Additional
information regarding radon and radon testing may be obtained from the county
public health unit. This notice is given pursuant to 404.056(8) of the Florida
Statutes. To the best of LESSOR'S knowledge, LESSOR is not aware that any radon
gas affects the Property, nor any other hazardous waste or toxic substance.
(Page 17 of 19)
<PAGE>
47. CONSENTS AND/OR APPROVALS: Unless otherwise specified, to the
extent either party hereto is required to give its consent or approval, such
consent shall not be unreasonably withheld. In the event no time is specified
for the giving of such consent or approval, such consent shall not be
unreasonably withheld or delayed.
48. CONTINGENCY FOR REGULATORY APPROVAL(S): The obligations of LESSEE
hereunder are expressly contingent upon LESSEE obtaining all required regulatory
and administrative approvals, and required capitalization, including but not
limited to approval from the Federal Deposit Insurance Corporation for insurance
of customer deposits, necessary for the commencement of banking operations at
the Premises. In the event the foregoing approvals are not received by December
31, 1997, LESSEE shall have the right to terminate this Lease Agreement and
LESSEE shall not be liable to LESSOR for any sums otherwise due hereunder.
49. RIGHT OF FIRST REFUSAL: LESSEE shall have the right of first
refusal to lease any vacant space on the third floor of the Building. This right
shall be exercisable in writing by LESSEE within FIFTEEN (15) days of LESSOR's
notice that LESSOR has a bona fide tenant for the space. With respect to any
additional space leased by LESSEE in accordance with this paragraph, the rent
payable shall be on the same terms as the rent then payable by LESSEE for the
Premises and shall commence THIRTY (30) days after the date LESSEE gives notice
hereunder. Any such additional space leased under the provisions of this
paragraph shall be on an "AS-IS" basis and with any tenant improvement allowance
to be negotiated between LESSOR and LESSEE. The foregoing right of first refusal
shall automatically expire and be of no further force and effect upon LESSOR
entering into a lease with such bona fide tenant on terms and conditions
substantially the same as offered to LESSEE. In the event the proposed tenant
fails to enter into such a lease arrangement with LESSOR, or upon expiration of
such tenant's lease term, the foregoing right of first refusal shall again be in
effect.
50. FDIC REQUIREMENTS. Notwithstanding any other provisions contained
in this Lease, in the event (a) Lessee or its successors or assignees shall
become insolvent or bankrupt, or if it or their interests under this Lease shall
be levied on or sold under execution or by other legal process, or (b) the
depository supervisory authority ("Authority"), Lessor may, in either such
event, terminate this Lease only with the concurrence of any Receiver or
Liquidator appointed by such authority; provided, that in the event this Lease
is terminated by the Receiver or Liquidator, the maximum claim of Lessor for
rent, damages, or indemnity for injury resulting from the termination,
rejection, or abandonment of the unexpired Lease shall by law in no event be in
an amount equal to all accrued and unpaid rent to the date of termination.
(Page 18 of 19)
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
LEASE as of the day and year first above written.
Witnesses as to LESSOR LESSOR:
(2 REQUIRED)
DOONER FAMILY EQUITIES, LTD.
By: Dooner Management, Inc.,
Its: General Partner
/s/ PATRICIA L. PENN By: /s/ ANTON E. DOONER
- -------------------- -------------------------
Patricia L. Penn Anton E. Dooner
/s/ ROBERT E. DEVLIN Its: PRESIDENT
- -------------------- ------------------------
Robert E. Devlin
Witnesses as to LESSEE LESSEE:
(2 REQUIRED)
COASTAL BANK CORP.,
a Florida corporation
/s/ RONALD L. KENNEDY By: /s/ SIDNEY T. JACKSON
- --------------------- -------------------------
Ronald L. Kennedy SIDNEY T. JACKSON,
President
/s/ ANN E. CROWLEY
- ---------------------
Ann E. Crowley
(Page 19 of 19)
<PAGE>
EXHIBIT "A"
(SEE PARAGRAPH 1 - ATTACH GRAPHIC DEPICTION OF ATM/DRIVE-IN FACILITY LAYOUT)
<PAGE>
EXHIBIT "B"
(SEE PARAGRAPH 6 - ATTACH GRAPHIC DEPICTION OF PARKING SPACE LAYOUT)
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of the ________ day of _____________________,
1997, by and among Coastal Bank Corporation (the "Company"), Coastal Bank, N.A.
(in organization), a proposed national bank to be organized under the laws of
the United States (the "Bank") (the Company and the Bank are collectively
referred to herein as the "Employer"), and Sidney T. Jackson (the "Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Company, as organizers of the
Bank, are seeking approval from the Office of the Comptroller of the Currency
and the Federal Deposit Insurance Corporation to charter a national bank in
Naples, Florida; and
WHEREAS, the Company will seek approval from the Federal Reserve Bank
of Atlanta and the Federal Reserve Board to acquire the Bank and to become a
bank holding company; and
WHEREAS, Executive is willing to assist the Board of Directors of the
Company in the organization of the Bank and to become the Chief Executive
Officer of the Bank and the Company in accordance with the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of mutual promises and covenants
contained herein, the parties hereto agree as follows:
1. EMPLOYMENT. Employer employs Executive and Executive accepts employment upon
the terms and conditions set forth in this Agreement.
2. TERM. This Agreement shall commence on the date the Bank opens for business
(the "Anniversary Date") and shall continue in full force and effect for a
period of three (3) years thereafter, subject to earlier termination as provided
herein. At the end of this Agreement's initial three-year term and at the end of
each subsequent one-year term thereafter, if any, unless Employer gives
Executive written notice of the non-renewal of this Agreement not less than
ninety (90) days prior to the expiration date (and this Agreement is not, or has
not been, terminated sooner as provided herein), the term of this Agreement
shall be automatically extended for an additional one-year term, commencing on
the Anniversary Date.
3. TITLE AND DUTIES. Executive shall serve as President and Chief Executive
Officer of the Company and as Chief Executive Officer of the Bank. Executive
shall run the day-to-day activities of the Bank and Company and oversee the Bank
and Company, within the framework of the approved annual budget, with a sound
system of internal controls, and in compliance with the policies of the Board of
Directors of the Company and the Bank and all applicable laws and regulations.
Additionally, Executive will be subject to and comply with all employee policies
adopted by the Board of Directors of the Company and the Bank.
<PAGE>
4. EXTENT OF SERVICES. Executive shall devote his entire time, attention and
energies to the business of Employer and shall not during the term of this
Agreement be engaged in any other business activity which requires the attention
or participation of Executive during normal business hours of Employer,
recognition being given to the fact that Executive is expected on occasion to
participate in business development after normal business hours. Prior to (a)
undertaking any outside activity for compensation, whether or not such activity
is to be performed or rendered during normal business hours or (b) accepting
appointment or election as an officer or director of any entity, whether for
profit or not-for-profit, the Executive shall obtain the prior approval of a
committee (the "Committee") appointed by the Board of Directors of the Company,
composed of all of the Non-Employee Directors of the Company, as defined in Rule
16b-3, promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"). However, Executive may invest his assets in such form or
manner as will not require his services in the operation of the affairs of the
companies in which such investments are made, except that Executive shall not
make an investment in the securities of any competing financial institution
without the express approval of the Committee. Executive shall notify the
Committee of any significant participation by him in any trade association or
similar organization.
5. COMPENSATION.
a. ANNUAL SALARY. For all services rendered by Executive, Executive
shall be paid an annual salary ("Annual Salary") of $62,500.00 from the Bank and
$62,500.00 from the Company (for a total Annual Salary of $125,000.00), subject
to adjustment as provided below, which will be paid in equal periodic
installments according to the Employer's customary payroll practices, but not
less frequently than monthly. The Annual Salary will be reviewed by the
Committee not less frequently than annually, and may be adjusted upward or
downward in the sole discretion of the Committee, but in no event will the
Annual Salary be less than a total of $125,000.00 per year.
b. INCENTIVE COMPENSATION. In addition to Executive's Annual Salary,
Executive shall be eligible to receive performance incentive compensation as set
forth in a separate Incentive Agreement.
c. STOCK OPTIONS. The Company shall grant Executive the option to
purchase shares of Common Stock of the Company as set forth in a separate Stock
Option Agreement.
d. BENEFITS. Executive will, during the term of this Agreement, be
permitted to participate in such life insurance, hospitalization, major medical,
and other employee benefit plans of Employer that may be in effect from time to
time, to the extent Executive is eligible under the terms of those plans.
e. OTHER BENEFITS. In addition to the compensation described above,
Executive shall receive the following benefits at the Bank's and/or Company's
expense during the term of this Agreement:
2
<PAGE>
i. CAR ALLOWANCE. Executive shall receive a car allowance of
$750.00 per month for the purchase or lease of an automobile for Executive's
business use in connection with his employment under this Agreement. Executive
shall maintain the automobile at his own expense. Further, Executive shall
obtain and maintain, at his own expense, liability insurance on the automobile,
including excess liability (umbrella) insurance coverage in an amount not less
than $1 million dollars per occurrence, with underlying insurance coverage as
required by such excess liability insurance policy, and Executive will furnish
proof of such insurance to Employer as requested by Employer. Other than the
foregoing car allowance, Executive shall not be compensated or reimbursed by
Employer for any expenses incurred by Executive with respect to the automobile.
ii. VACATION. Executive shall be entitled to four weeks vacation
per year and shall take vacation as required by applicable banking regulations.
iii. SICK LEAVE. Executive shall be entitled to such sick leave as
may be determined in the sole discretion of the Committee.
iv. WORKING FACILITIES. Employer shall furnish Executive with
office space, equipment, supplies and such other facilities and personnel as
Employer deems necessary or appropriate for the performance of Executive's
duties under this Agreement.
v. EXPENSES. Executive may incur reasonable and provable expenses
incurred in the discharge of the business of the Bank or the Company. Executive
will be reimbursed by Employer, as appropriate, for all such expenses upon
Executive's periodic presentation of an itemized account of such expenditures
with receipts attached, subject to the subsequent review and approval of the
Committee.
6. TERMINATION.
a. FOR CAUSE. This Agreement may be terminated by Employer without
notice and without further obligations, other than for monies already paid to
and received by Executive, for any of the following reasons:
i. failure of Executive to follow reasonable written instructions
or policies of the Board of Directors of the Company or Bank;
ii. gross negligence or willful misconduct of Executive materially
damaging to the business of the Company or the Bank during the term of this
Agreement, or at any time while Executive was employed by the Company or Bank
prior to the term of this Agreement, if not disclosed to the Company or Bank
prior to the commencement of the term of this Agreement; or
iii. conviction of Executive during the term of this Agreement of
a crime involving breach of trust or moral turpitude; or
3
<PAGE>
iv. at the request of any bank regulatory authority with
jurisdiction over the Company or Bank.
In the event that the Employer discharges Executive alleging "for
cause" under this Section 6.a. and it is subsequently determined judicially that
the termination was "without cause," then such discharge shall be deemed a
discharge without cause subject to the provisions of Section 6.b. hereof. In the
event that the Employer discharges Executive alleging "for cause" under this
Section 6.a., such notice of discharge shall be accompanied by a written and
specific description of the circumstances alleging such "for cause". Any
challenge or objection to the Employer's discharge of Executive "for cause" made
by Executive in a judicial or administrative proceeding brought by Executive
against Employer must be filed by Executive with the appropriate court or agency
within six (6) months of Executive's termination.
b. WITHOUT CAUSE. This Agreement may be terminated by Employer without
cause at any time during the term of this Agreement upon thirty (30) days' prior
written notice to Executive subject to the condition that Executive shall be
entitled, as liquidated damages in lieu of all other claims, to the following
severance payment:
i. During the first twelve (12) months of the initial term of this
Agreement, Executive shall be entitled to a severance payment equal to
Executive's Annual Salary.
ii. After the first twelve (12) months to the end of the
thirty-sixth (36th) month of the initial term of this Agreement, Executive shall
be entitled to a severance payment equal to one- year's then current Annual
Salary of Executive plus an additional amount equal to one-twenty-fourth (1/24)
of the Executive's then current Annual Salary for each additional month of
service rendered by Executive after the first twelve (12) months of the term of
this Agreement.
iii. After the first 24 months of the initial three (3) year term
of this Agreement, Executive shall be entitled to a severance payment equal to
two (2) times Executive's then current Annual Salary.
iv. The maximum severance payment to which Executive shall be
entitled under this Section 6.b. shall be equal to two (2) times Executive's
then current Annual Salary.
A severance payment to Executive under this Section 6.b. shall be: (a)
in cash in a lump-sum, subject to and minus applicable withholding, (b) made not
later than ten (10) days after the date upon which the notice of termination is
received by Executive, and (c) in lieu of any other compensation required under
this Agreement. By written mutual agreement of Executive and Employer, payments
made to Executive under this Section 6.b. may be paid in installments over a
period of time.
c. CHANGE IN CONTROL OF THE COMPANY. In the event of a "change in
control" of the Company or the Bank, as defined herein, and only to the extent
permitted by applicable statutes
4
<PAGE>
and regulations, Executive shall be entitled, for a period of thirty (30) days
from the date of closing of the transaction effecting such change in control and
at his election, to give written notice to Employer of termination of this
Agreement and to receive, as liquidated damages in lieu of all other claims, a
cash severance payment equal to two times (200%) of the Executive's Annual
Salary. The severance payments provided for in this Section 6.c. shall be: (a)
in cash in a lump-sum, subject to and minus applicable withholding, (b)
commencing not later than ten (10) days after the date of notice of termination
by Executive under this Section 6.c. or ten (10) days after the date of closing
of the transaction effecting the change in control of the Company or the Bank,
whichever is later, and (c) in lieu of any other compensation required under
this Agreement. By written mutual agreement of Executive and Employer, payments
made to Executive under this Section 6.c. may be paid in installments over a
period of time.
As used in this agreement, a "change in control of this Company or the
Bank" shall mean a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Exchange Act, whether or not the Company or the Bank in fact is
required to comply with Regulation 14A; provided that, without limitation, such
a change in control shall be deemed to have occurred if any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act in effect on the
date first written above), other than the Company or the Bank, respectively, is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company or the Bank
representing 20% or more of the combined voting power of the Company's or the
Bank's then outstanding securities.
d. BY EXECUTIVE. Executive may upon sixty (60) days' prior written
notice to Employer terminate this Agreement without cause at any time during the
term of this Agreement. In the event of termination of this Agreement by
Executive, the Employer shall have no further obligation to Executive other than
for monies paid to and received by Executive.
e. DEATH. This Agreement shall terminate upon Executive's death.
f. DISABILITY. Employer may terminate this Agreement as a result of
Executive's physical or mental incapacity in accordance with Executive's
disability policy.
g. GENERAL. Upon termination of this Agreement under this Section 6,
this Agreement shall be null and void and of no further effect. Any termination
of this Agreement shall constitute a termination on the same basis as to both
the Company and the Bank.
7. DEATH. In the event of Executive's death during the term of this Agreement,
Employer shall pay to Executive's designated beneficiary, or if Executive has
failed to designate a beneficiary, to his estate, an amount equal to the
periodic salary installment that would otherwise have been payable to Executive
under Section 5.a. hereof through the end of the month in which Executive's
death occurred plus an amount equal to three-twelfths (3/12) of the Executive's
then current Annual Salary. Employer shall also continue to provide Executive's
survivors, for ninety (90)
5
<PAGE>
days following the Executive's death, the same insurance benefits that Employer
provided them prior to Executive's death
8. NON-COMPETITION AND NON-SOLICITATION.
a. Executive acknowledges that he has performed services or will
perform services hereunder which directly affect Employer's business.
Accordingly, the parties deem it necessary to enter into the protective
agreement set forth below, the terms and condition of which have been negotiated
by and between the parties hereto.
b. If this Agreement is terminated as provided in Section 6(d) hereof,
Executive shall not, for a period of one year after such termination, engage
directly or indirectly in any service to or employment by a bank or banking
holding company or savings and loan or similar institution within Collier
County, Florida.
c. The covenants of Executive set forth in this Section 8 are separate
and independent covenants for which valuable consideration has been paid, the
receipt, adequacy and sufficiency of which are acknowledged by Executive, and
have also been made by Executive to induce Employer to enter into this
Agreement. Each of the aforesaid covenants may be availed of or relied upon by
Employer in any court of competent jurisdiction, and shall form the basis of
injunctive relief and damages including expenses of litigation (including but
not limited to reasonable attorney's fees) suffered by Employer arising out of
any breach of the aforesaid covenants by Executive. The covenants of Executive
set forth in this Section 8 are cumulative to each other and to all other
covenants of Executive in favor of Employer contained in this Agreement and
shall survive the termination of this Agreement for the purposes intended. If
any covenant, term, or condition contained in this Section 8 become or be
declared invalid or unenforceable by a court of competent jurisdiction, then the
parties may request that such court judicially modify such unenforceable
provision consistent with the intent of this Section 8 so that it shall be
enforceable as modified, and in any event the invalidity of any provision of
this Section 8 shall not affect the validity of any other provision in this
Section 8 or elsewhere in this Agreement.
9. NOTICES. All notices under this Agreement must be in writing and either hand
delivered or delivered by overnight courier, facsimile transmission or mailed
through the United States Postal Service by certified or registered mail, return
receipt requested, to the residence or business office in the case of Executive,
or to its principal office in the case of Employer.
10. WAIVER OF BREACH; MODIFICATION. The waiver by Employer of a breach of any
provision of this Agreement by Executive shall not operate or be construed as a
waiver of any subsequent breach by Executive. No waiver of a breach and no
modification or amendment of this Agreement shall be valid unless it is in
writing and signed by the Executive and by a duly designated member of the
Committee on behalf of the Employer.
6
<PAGE>
11. ASSIGNMENT AND SUCCESSORS. Executive acknowledges that the services to be
rendered by him are unique and personal. Accordingly, Executive may not assign
any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of Employer under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of
Employer, including any successor of the Company or the Bank by reason of
dissolution, merger, consolidation, sale of assets or other reorganization of
the Company or Bank.
12. GOVERNING LAW. This Agreement shall be governed and construed in accordance
with the laws of the State of Florida.
13. HEADINGS. The headings of this Agreement are intended solely for convenience
of reference and shall be given no effect in the interpretation of this
Agreement.
14. ENTIRE AGREEMENT. This Agreement contains the entire understanding of the
parties hereto regarding employment of Executive, and supersedes and replaces
any prior agreement relating thereto. It may not be changed orally but only by
an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, extension, or discharge is sought.
15. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute one and the same
instrument.
WHEREAS, as of the day and date first above set forth, the parties
hereto execute this Agreement.
COASTAL BANK CORPORATION SIDNEY T. JACKSON
By
--------------------- -------------------------
Title:
---------------
COASTAL BANK
By
----------------------
Title:
----------------
7
EXHIBIT 10.3
STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of the ________ day of _____________________,
1997, by and among Coastal Bank Corporation (the "Company"), Coastal Bank, N.A.
(in organization), a proposed national bank to be organized under the laws of
the United States (the "Bank") (the Company and the Bank are collectively
referred to herein as the "Employer"), and Sidney T. Jackson (the "Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Company, as organizers of the
Bank, are seeking approval from the Office of the Comptroller of the Currency
and the Federal Deposit Insurance Corporation to charter a national bank, the
deposits of which will be federally insured, in Naples, Florida; and
WHEREAS, the Company will seek approval from the Federal Reserve Bank
of Atlanta and the Federal Reserve Board to acquire the Bank and to become a
bank holding company; and
WHEREAS, Employer has agreed to employ Executive as the President and
Chief Executive Officer of the Company and the Chief Executive Officer of the
Bank pursuant to an Employment Agreement dated as of ________________________ ,
1997 by and between Employer and Executive ("Employment Agreement"); and
WHEREAS, the Bank and the Company desire to offer certain compensation
and incentives to Executive for outstanding performance of his duties under said
Employment Agreement, including the stock option granted to Executive in this
Agreement.
NOW THEREFORE, in consideration of the foregoing and the covenants
contained herein, the parties hereto agree as follows:
1. GRANT OF OPTIONS.
Subject to the terms and conditions set forth herein, the Company
hereby grants to Executive the right to purchase up to 25,000 shares of the
Company's common stock, par value $.01 per share ("Stock"), at a price of $10.00
per share, subject to adjustment as provided in Section 4 hereof ("Option").
2. ADMINISTRATION.
2.1 COMPOSITION OF THE COMMITTEE. This Agreement shall be administered
by a committee (the "Committee") appointed by the Board of Directors of the
Company, composed of all of the Non-Employee Directors of the Company, as
defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934
("Exchange Act").
<PAGE>
2.2 POWERS OF THE COMMITTEE. The Committee shall have the authority to
administer, construe and interpret this Agreement and to make all determinations
necessary or advisable for the administration of this Agreement. Any
determination, decision or action of the Committee in connection with the
construction, interpretation, administration or application of this Agreement
shall be final, conclusive and binding upon the Executive and any person validly
claiming under or through the Executive, provided however that the Committee may
not exercise the powers provided by this Subsection 2.2 in an arbitrary and
capricious manner.
3. EXERCISE OF PURCHASE RIGHTS.
3.1 EXERCISEABILITY. Except as provided below with respect to a change
of control, Executive may exercise the Option only as follows:
(i) no part of the Option may be exercised prior to April 1, 1999;
(ii) beginning April 1, 1999, the Option may be exercised to a
maximum of 5,000 of the shares of Stock subject to this Agreement;
(iii) beginning April 1, 2000, the Option may be exercised up to
an additional 5,000 of the shares of Stock subject to this Agreement.
(iv) beginning April 1, 2001, the Option may be exercised up to an
additional 5,000 of the shares of Stock subject to this Agreement.
(v) beginning April 1, 2002, the Option may be exercised up to an
additional 5,000 of the shares of Stock subject to this Agreement.
(vi) beginning April 1, 2003, the Option may be exercised up to an
additional 5,000 of the shares of Stock subject to this Agreement.
To the extent that any portion of the Option has not already been
exercised, Executive may immediately exercise the remaining portion of the
Option upon a change of control of the Company or the Bank. As used in this
agreement, a "change in control of this Company or the Bank" shall mean a change
in control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act,
whether or not the Company or the Bank in fact is required to comply with
Regulation 14A; provided that, without limitation, such a change in control
shall be deemed to have occurred if any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act in effect on the date first written
above), other than the Company or the Bank, respectively, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company or the Bank representing 20% or more
of the combined voting power of the Company's or the Bank's then outstanding
securities.
2
<PAGE>
Notwithstanding the foregoing, to the extent that any portion of the
Option has not been exercised, this Agreement shall terminate and be of no
further force and effect, and the Option shall expire, on the earliest of (a)
ninety (90) days after termination of Executive's employment with the Company
and the Bank for any reason except death, disability or retirement, (b) twelve
months after termination of Executive's employment with the Company and the Bank
because of his death, disability or retirement, or (c) January 1, 2007.
3.2 EXERCISE OF OPTION. The Option may be exercised, in whole or in
part, by the delivery to the Company of written notice of such exercise,
accompanied by (i) full payment of the purchase price with respect to that
portion of the Option being exercised and (ii) any amounts required to be
withheld pursuant to applicable income tax laws in connection with such
exercise. Until the Company notifies Executive to the contrary, the form
attached to this Agreement as Exhibit A shall be used to exercise the Option.
The aggregate purchase price for the shares of Stock to be purchased shall be
paid in cash, by certified check or by such other lawful consideration as the
Committee may approve. Upon the exercise of the Option, the Company shall
deliver to Executive a certificate or certificates representing the number of
shares of Stock being issued to and purchased by Executive, free and clear of
encumbrances.
3.3 RESTRICTION UPON SHARES OF STOCK ISSUED UPON EXERCISE. Executive
further agrees, for himself and his successors, that, upon the issuance of any
shares of Stock upon exercise of the Option, he will, upon the request of the
Company, agree in writing that he is acquiring such shares for investment only
and not with a view to resale, and that he will not sell, pledge or otherwise
dispose of such shares so issued unless and until (a) the Company is furnished
with an opinion of counsel to the effect that registration of such shares
pursuant to the Securities Act of 1933, as amended, is not required by that Act
and the rules and regulations thereunder; (b) the staff of the Securities and
Exchange Commission has issued a "no action" letter with respect to such
disposition; or (c) such registration or notification as is required, in the
opinion of counsel for the Company, for the lawful disposition of such shares
has been filed by the Company and has become effective; provided, however, that
the Company is not obligated hereby to file any such registration or
notification. Executive further agrees that the Company may place a legend
embodying such restriction on the certificates evidencing such shares.
4. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
The type and number of shares of Stock subject to the Option and the
purchase price per share shall be subject to such adjustment, if any, as the
Committee in its sole discretion deems appropriate to reflect such events as
stock dividends, stock splits, recapitalizations, mergers, consolidations or
reorganizations of or by the Company.
5. RIGHTS AS STOCKHOLDER.
Executive shall have no rights as a stockholder with respect to any
shares of Stock subject to the Option until and unless as certificate or
certificates representing such shares are issued to
3
<PAGE>
Executive pursuant to Section 3.2 of this Agreement. Except as provided in
Section 4, no adjustment shall be made for dividends or other rights for which
the record date is prior to the issuance of such certificate or certificates.
6. NO RIGHT TO EMPLOYMENT.
Neither the granting of the Option evidenced by this Agreement nor any
term or provision of this Agreement shall constitute or be evidence of any
understanding, express or implied, on the part of the Company or the Bank to
employ Executive for any period of time.
7. NONTRANSFERABILITY.
The Option is not transferable by Executive other than by will or by
the laws of descent and distribution, and is exercisable, during Executive's
lifetime, only by Executive or, during his disability, by his legal
representative, or, after his death, by his estate.
8. MISCELLANEOUS.
8.1 HEADINGS. The headings in this Agreement are inserted for
convenience only and shall have no significance in the interpretation of this
Agreement.
8.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the transactions contemplated hereunder
other than the Employment Agreement and documents referred to therein and
supersedes all prior arrangements or understandings with respect thereto written
or oral. No agreements or representations, oral or otherwise, expressed or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
8.3 MODIFICATION. No modification or amendment of this Agreement shall
be valid unless it is in writing and signed by the Executive and by a duly
designated member of the Committee on behalf of the Employer.
8.4 SUCCESSORS. The terms and conditions of this Agreement shall be
binding upon and inure to the benefits of the parties thereto and their
respective heirs, personal representatives and successors.
8.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the state of Florida applicable to agreements made
and entirely to be performed within such jurisdiction except to the extend that
federal law may be applicable.
8.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
4
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first written above.
COASTAL BANK CORPORATION SIDNEY T. JACKSON
By
---------------------- ------------------------
Title:
-------------
COASTAL BANK
By
----------------------
Title:
-------------
5
<PAGE>
EXHIBIT A
EXERCISE OF OPTION
Board of Directors
Coastal Bank Corporation
Gentlemen:
The undersigned, the optionee under the Stock Option Agreement dated as
of_____ ,1997 hereby irrevocably elects to exercise the Option granted in the
Agreement to purchase _____ shares of Common Stock of Coastal Bank Corporation,
par value $.01 per share, and herewith makes payment of $ ____________.
Dated:
------------- -----------------------
Sidney T. Jackson
Date Received:
---------------
Received by:
-----------------
Title:
-----------------------
6
EXHIBIT 10.4
INCENTIVE AGREEMENT
THIS AGREEMENT, dated as of the ________ day of ____________________,
1997, by and among Coastal Bank Corporation (the "Company"), Coastal Bank, N.A.
(in organization), a proposed national bank to be organized under the laws of
the United States (the "Bank") (the Company and the Bank are collectively
referred to herein as the "Employer"), and Sidney T. Jackson (the "Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Company, as organizers of the
Bank, are seeking approval from the Office of the Comptroller of the Currency
and the Federal Deposit Insurance Corporation to charter a national bank, the
deposits of which will be federally insured, in Naples, Florida; and
WHEREAS, the Company will seek approval from the Federal Reserve Bank
of Atlanta and the Federal Reserve Board to acquire the Bank and to become a
bank holding company; and
WHEREAS, Employer has agreed to employ Executive as the President and
Chief Executive Officer of the Company and the Chief Executive Officer of the
Bank pursuant to an Employment Agreement dated as of ________________________,
1997 by and between Employer and Executive ("Employment Agreement"); and
WHEREAS, the Bank and the Company desire to offer certain compensation
and incentives to Executive for outstanding performance of his duties under said
Employment Agreement, including the Cash Bonus Award granted to Executive in
this Agreement.
NOW THEREFORE, in consideration of the foregoing and the covenants
contained herein, the parties hereto agree as follows:
1. ADMINISTRATION.
a. COMPOSITION OF THE COMMITTEE. This Agreement shall be administered
by a committee (the "Committee") appointed by the Board of Directors of the
Company, composed of all of the Non-Employee Directors of the Company, as
defined in Rule 16b-3, promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
b. POWERS OF THE COMMITTEE. The Committee shall have the authority to
administer, construe and interpret this Agreement and to make all determinations
necessary or advisable for the administration of this Agreement. Any
determination, decision or action of the Committee in connection with the
construction, interpretation, administration or application of this Agreement
shall be final, conclusive and binding upon the Executive and any person validly
claiming under or through the Executive, provided however that the Committee may
not exercise the powers provided by this Subsection 1.b. in an arbitrary and
capricious manner.
1
<PAGE>
2. CONDITIONS TO INCENTIVE COMPENSATION. The grant of the Cash Bonus Award set
forth in this Agreement is subject to the following pre-conditions, all of which
must be satisfied prior to the vesting of the Cash Bonus Award hereunder:
a. Total "core" deposits of the Bank as of December 31, 1998 must be
equal to or greater than $40 million;
b. The Committee must deem the Executive's performance satisfactory
based upon the status of the Bank's internal controls, loan documentation,
credit underwriting, interest rate exposure, asset growth, asset quality and
earnings and any other factors or criteria deemed relevant by the Committee in
its sole discretion which other factors and criteria must be established by the
Committee and communicated to the Executive not later than December 31, 1997;
c. The overall condition of the Bank must be "satisfactory" in the
opinion of the Comptroller of the Currency ("OCC") as set forth in the most
current OCC Report of Supervisory Activity provided to the Board of Directors of
the Bank and the "CAMELS" rating of the Bank shall not be less than a "2" (or
equal to a "2" if a different rating system is used by the OCC); and,
d. The Bank must be "adequately capitalized" as defined under
regulations promulgated by the OCC pursuant to the Federal Deposit Insurance
Corporation Improvement Act of 1991.
3. CASH BONUS AWARDS. On April 1, 1999, the Executive shall be awarded a Cash
Bonus Award of $40,000.00, subject to the terms and conditions of this
Agreement.
4. MISCELLANEOUS.
a. WITHHOLDING TAXES. To the extent required by federal, state, local
or foreign law, the Executive shall make arrangements acceptable to the Company
for the satisfaction of any withholding tax obligations that rise by reason of
the Cash Bonus Award provided herein. The Company shall not be required to make
payment of the Cash Bonus Award to the Executive until it concludes that such
obligations have been satisfied.
b. DEFERRAL ELECTIONS. The Committee may permit the Executive to elect
to defer his receipt of the payment of cash that would otherwise be due the
Executive under this Agreement. If any such election is permitted, the Committee
shall establish rules and procedures for such payment deferrals, including
possible payment or crediting of reasonable interest on such deferred amounts
and taking into consideration the potential impact on the Executive's current
tax liability.
c. UNFUNDED. The Cash Bonus Award granted under this Agreement shall be
unfunded. Any liability of the Company to the Executive with respect to the Cash
Bonus Award under this Agreement shall be based solely upon a contractual
obligation that may be effected pursuant to this Agreement. Any such contractual
obligation of the Company shall not be deemed to be secured by any pledge of, or
other encumbrances on, any property of the Company.
2
<PAGE>
d. NO RIGHT TO EMPLOYMENT. Neither the granting of the Cash Bonus Award
under this Agreement nor any term or provision of this Agreement shall
constitute or be evidence of any understanding, express or implied, on the part
of the Company or the Bank to employ the Executive for any period of time.
e. OTHER COMPANY COMPENSATION AND BENEFIT PROGRAMS. Payments received
by the Executive under this Agreement shall not be deemed a part of the
Executive's regular recurring compensation for purposes of any applicable
severance benefits and shall not be included in, nor have any effect on, the
determination of benefits under any employee benefit plan or similar arrangement
provided by the Company or the Bank unless expressly so provided by such plan or
arrangement. The Company may adopt such other compensation programs as it deems
necessary to attract, retain and reward employees for their service with the
Company or the Bank.
f. HEADINGS. The headings in this Agreement are inserted for
convenience only and shall have no significance in the interpretation of this
Agreement.
g. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the transactions contemplated hereunder
other than the Employment Agreement and documents referred to therein and
supersedes all prior arrangements or understandings with respect thereto written
or oral. No agreements or representations, oral or otherwise, expressed or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
h. MODIFICATION. No modification or amendment of this Agreement shall
be valid unless it is in writing and signed by the Executive and by a duly
designated member of the Committee on behalf of the Employer.
i. TERMINATION. This Agreement shall terminate and be of no further
force and effect, and the Cash Bonus Award shall expire, on the termination of
the Executive's employment with the Company and the Bank for any reason.
j. SUCCESSORS. The terms and conditions of this Agreement shall be
binding upon and inure to the benefits of the parties thereto and their
respective heirs, personal representatives and successors.
k. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with
3
<PAGE>
the laws of the State of Florida applicable to agreements made and entirely to
be performed within such jurisdiction except to the extend that federal law may
be applicable.
l. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first written above.
COASTAL BANK CORPORATION SIDNEY T. JACKSON
By
---------------------- ---------------------
Title:
----------------
COASTAL BANK
By
----------------------
Title:
----------------
4
EXHIBIT 10.5
RESTATED FUTURE AGREEMENTS
This Agreement is dated this 20 day of AUGUST , 1997 and is by and
between COASTAL BANK CORPORATION, formerly known as Coastal Bancorp., Inc.
(hereinafter referred to as "Coastal") and ASHTIN KELLY & CO., INC. (hereinafter
referred to as "Ashtin Kelly").
WHEREAS, the parties hereto previously entered into that certain
agreement entitled "Future Agreements" dated March 25, 1997 ("Prior Agreement');
and
WHEREAS, since the date of the Prior Agreement, certain events have
transpired making various provisions of the Prior Agreement obsolete and no
longer applicable; and
WHEREAS, the parties now wish to revise and restate the Prior Agreement
by replacing the Prior Agreement in its entirety with this Agreement.
NOW THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00), and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. RECITALS. The above recitals are true and correct and are incorporated
herein by reference.
2. RENTAL SPACE. Coastal has applied for approval from the federal government
to charter a national bank to be called Coastal Bank, N.A. (hereinafter
referred to as "Bank") which proposes to open and maintain its main banking
office (hereinafter referred to as "Bank Main Office") at 1010 Fifth Avenue
South, Naples, Florida. From time to time, the Bank also may open
additional banking offices (hereinafter referred to as "Bank Branch
Offices"). Coastal hereby agrees to sublease to Ashtin Kelly, for the
purpose of Ashtin Kelly conducting its investment and brokerage business,
visible space located on the first floor of the Bank Main Office in an area
adjoining the Bank Main Office. Additionally, Coastal hereby grants to
Ashtin Kelly, for the purpose of Ashtin Kelly
1
<PAGE>
conducting its investment and brokerage business, the exclusive right of first
refusal, subject to the prior approval of the Board of Directors of Coastal, to
sublease any excess space (hereinafter referred to as "Ashtin Space") at future
Bank Branch Offices. To the extent that the structure of a subject site permits,
each Ashtin Space shall be clearly visible from the main entrance of the Bank
Main Office or Bank Branch Office, as applicable, and shall be of such
reasonable size and configuration as is reasonably necessary for the operation
of Ashtin Kelly's business.
The foregoing exclusive rights are hereby granted to Ashtin Kelly for
each and every Bank Branch Office that may be opened by Coastal or the Bank in
the future. However, the foregoing shall be subject to the condition, however,
that the leasing or subleasing of such Ashtin Space to Ashtin Kelly by Coastal
(or the Bank) will not be in violation of applicable law. Each right of first
refusal granted in this Agreement by Coastal to Ashtin Kelly is further
conditioned upon (a) the existence of sufficient excess space at a given subject
site, after satisfaction of the space needs and requirements of Coastal and/or
the Bank, to lease or sublease to Ashtin Kelly and (b) the prior written
approval and consent of the Board of Directors of Coastal to each lease
agreement. With respect to each Ashtin Space, Ashtin Kelly and Coastal shall
enter into a lease, rental or sublease agreement containing such terms and
conditions as are standard for the specific location of the subject site and
shall be subject to the terms and conditions of any master lease as may be in
effect between Coastal (or the Bank) and any landlord of the property in which
the Bank Main Office or Bank Branch Office, as applicable, is located. Further,
each such lease agreement between Ashtin Kelly and Coastal (or the Bank) shall
be negotiated at arms-length and shall be at the then prevailing market rate of
rent. The initial term of any such lease agreement shall be for one (1) year,
with an option to renew for additional one (1) year periods. Each such one (1)
year renewal option, which
2
<PAGE>
may be exercisable by Ashtin Kelly, shall be subject to the prior written
approval and consent of the Board of Directors of Coastal which approval and
consent may not be unreasonably withheld. It shall not be unreasonable for the
Board of Directors of Coastal to withhold its approval and consent of any
renewal by Ashtin Kelly if Ashtin Kelly is in default or in violation of any
existing lease or other agreement between the parties or if Ashtin Kelly has
acted in any manner so as to call its reputation or that of Coastal or the Bank
into question. Any lease agreement, and any renewal thereof, shall be subject to
the prior review and approval of Ashtin Kelly's legal counsel and the prior
review and approval of Coastal's legal counsel, which legal counsel shall not be
the same counsel as that of Ashtin Kelly unless the Board of Directors of
Coastal has executed a proper written conflict of interest waiver.
3. FUTURE OFFERINGS. The parties hereby acknowledge and agree that future
offerings of Coastal may be negotiated at some time in the future and that
Ashtin Kelly will have the right to participate in these future offering
discussions and to submit a proposal if an outside selling group is used.
4. EFFECTIVE AGREEMENT. This Agreement supersedes and replaces, in its
entirety, the Prior Agreement.
5. MISCELLANEOUS. This Agreement sets forth the entire understanding of the
parties and supersedes any and all prior agreements, arrangements and
understandings relating to the subject matter hereof. This Agreement shall
be binding upon and inure to the benefit of the parties and their
respective successors and assigns. The paragraph headings of this Agreement
are for convenience of reference only and do not form a part hereof and do
not in any way modify, interpret or construe the intentions of the parties.
This Agreement may be executed in one or more counterparts which together
shall constitute one and the same instrument. The construction and
performance of this
3
<PAGE>
Agreement shall be in accordance with and governed by the laws of the State of
Florida. The invalidity or unenforceability of any one or more phrases,
sentences or provisions of this Agreement shall not effect the validity or
enforceability of the remaining portions of this Agreement unless to do so would
be clearly contrary to the intent of both parties as evidenced by the totality
of this Agreement.
IN WITNESS WHEREOF, the parties have hereto set their hands and seals
as of the first day above written.
COASTAL BANK CORPORATION f/k/a
Coastal Bancorp., Inc.
/s/ ANN E. CROWLEY By: /s/ SIDNEY T. JACKSON
- --------------------- -----------------------
Witness Sidney T. Jackson
Its: President
/s/ RONALD KENNEDY
- --------------------
Witness
ASHTIN KELLY & CO., INC.
/s/ By: /s/ W. JONATHAN WRIDE
- --------------------- ------------------------
Witness W. Jonathan Wride
Its: President
/s/ NORA AMBROSE
- ---------------------
Witness
4
EXHIBIT 23.2
CONSENT OF HILL, BARTH & KING, INC., INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form SB-2 and related Prospectus of Coastal Bank
Corporation for the registration of 1,725,000 shares of its common stock and to
the incorporation therein of our report dated September 5, 1997, except for Note
C as to which the date is October 29, 1997, relating to the financial statements
of Coastal Bank Corporation as of August 31, 1997 and for the period from
January 23, 1997 (date of inception) to August 31, 1997.
HILL, BARTH & KING, INC.
Certified Public Accountants
Naples, Florida
October 31, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE AUDITED FINANCIAL
STATEMENTS DATED AUGUST 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 7-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-23-1997
<PERIOD-END> AUG-31-1997
<CASH> 35,596
<INT-BEARING-DEPOSITS> 376,597
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 531,140
<DEPOSITS> 0
<SHORT-TERM> 750,000
<LIABILITIES-OTHER> 121,029
<LONG-TERM> 0
0
0
<COMMON> 1
<OTHER-SE> (339,890)
<TOTAL-LIABILITIES-AND-EQUITY> 531,140
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 6,597
<INTEREST-TOTAL> 6,597
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 19,518
<INTEREST-INCOME-NET> (12,921)
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 327,968
<INCOME-PRETAX> (340,889)
<INCOME-PRE-EXTRAORDINARY> (340,889)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (340,889)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
