As filed with the Securities and Exchange Commission on November 9, 1998
Registration No. 333-39203
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AMENDMENT NO. 1
MARINE BANCSHARES, INC.
(Name of Small Business Issuer in its Charter)
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FLORIDA 6712 65-0729764
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
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VANDERBILT BEACH ROAD VANDERBILT BEACH ROAD
AND AIRPORT PULLING ROAD AND AIRPORT PULLING ROAD
NAPLES, FLORIDA 34109 NAPLES, FLORIDA 34109
(941) 434-0441
(Address and telephone number of (Address of principal place of business or intended
principal executive offices) principal place of business)
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RICHARD E. HORNE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
501 GOODLETTE ROAD NORTH, SUITE D-12
NAPLES, FLORIDA 34102
(941)434-0441
(Name, address and telephone number of agent for service)
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COPIES TO:
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ROBERT C. SCHWARTZ, ESQ. RICHARD A. DENMON, ESQ.
SMITH, GAMBRELL & RUSSELL, LLP CARLTON, FIELDS, WARD, EMMANUEL, SMITH & CUTLER, P.A.
PROMENADE II, SUITE 3100 ONE HARBOUR PLACE
1230 PEACHTREE STREET, N.E. 777 SOUTH HARBOUR ISLAND BOULEVARD
ATLANTA, GEORGIA 30309-3592 TAMPA, FLORIDA 33602
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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 the earlier effective
registration statement for the same offering. |_| ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| ____________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
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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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 NOVEMBER 9, 1998
P R O S P E C T U S
1,150,000 COMMON SHARES
[LOGO]
(A PROPOSED BANK HOLDING COMPANY FOR MARINE NATIONAL BANK OF NAPLES)
COMMON SHARES
All of the common shares, par value $.01 per share (the "Common Shares"),
are offered hereby by Marine Bancshares, Inc. (the "Company"), a Florida
corporation and proposed bank holding company organized primarily to own and
hold all of the common stock of Marine National Bank of Naples, a national bank
(in organization) to be located in Naples, Florida (the "Bank"). Neither the
Company nor the Bank has ever conducted any active business operations other
than matters related to their initial organization and the raising of capital.
The commencement of such operations is contingent upon receipt of various
regulatory approvals by federal agencies. See "Business." Prior to this offering
(the "Offering") there has been no public trading market for the Common Shares.
The offering price set forth below was determined by negotiations between the
Company and the Underwriter. See "Underwriting" for a discussion of the factors
considered in determining the initial public offering price. Ashtin Kelly & Co.
(the "Underwriter") has advised the Company that it anticipates making a market
in the Common Shares following completion of the Offering. The Company expects
that quotations for the Common Shares will be reported on the OTC Bulletin Board
under the symbol "MNBK." Unless otherwise waived by the Company, Common Shares
will be sold only in minimum lots of 250 shares ($2,500) and any one investor
(together with the investor's affiliates) will be permitted to purchase a
maximum of 57,500 Common Shares ($575,000).
AN INVESTMENT IN THE COMMON SHARES 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. SEE "RISK FACTORS"
BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON SHARES OFFERED HEREBY.
THE COMMON SHARES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER
OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
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
PRICE TO PUBLIC AND COMMISSIONS(1)(2) PROCEEDS TO COMPANY(3)
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Per Share................... $10.00 $0.57 $9.43
Total(4).................... $11,500,000 $653,150 $10,846,850
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(1) The underwriting discounts and commissions shall be $0.39 per share for
500,000 Common Shares and $0.85 for each remaining share. The Company
will identify to the Underwriter certain potential purchasers of the Common
Shares, and the Underwriter has agreed with the Company that no
underwriting discount or commission will be assessed for sales to such
investors of up to 500,000 Common Shares. Amounts herein assume that
111,000 (i.e. the shares expected to be purchased in this Offering by
directors and executive officers of the Company) of such 500,000 Common
Shares are sold without underwriting discounts or commissions. In addition,
the Company has agreed to pay a non-accountable expense allowance to the
Underwriter of $45,000 (and, to the extent that the over-allotment option
is exercised, an additional 3% of the gross proceeds received from the sale
of Common Shares pursuant to such exercise). See "Underwriting."
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting a non-accountable expense allowance of $45,000 to be paid
to the Underwriter, and other offering expenses payable by the Company
estimated at $250,000, which amount does not include certain organization
and other operating expenses which were $776,608 as of September 30, 1998,
and which will continue to be incurred until the Bank commences operations.
(4) The Company has granted the Underwriter a 30-day option to purchase up to
172,500 additional Common Shares on the same terms and conditions set forth
above to cover over-allotments, if any. If such option is exercised in
full, the total Price to Public, Underwriting Discounts and Commissions,
and Proceeds to Company will be $13,225,000, $799,775 and $12,425,225,
respectively. See "Underwriting."
-----------------
The Common Shares are offered by the Underwriter subject to prior sale,
when, as and if delivered to and accepted by the Underwriter. The Underwriter
reserves the right to withdraw, cancel, or modify this Offering without notice
and to reject any orders in whole or in part. It is expected that delivery of
the certificates representing the Common Shares will be made against payment
therefor on or about __________, 1998 through the Depository Trust Company or at
the offices of Ashtin Kelly & Co., Naples, Florida.
ASHTIN KELLY & CO.
THE DATE OF THIS PROSPECTUS IS __________________, 1998.
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[INSERT MAP]
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
COMMON SHARES, INCLUDING OVER- ALLOTTING COMMON SHARES, STABILIZING
TRANSACTIONS, SYNDICATE SHORT-COVERING TRANSACTIONS, AND PENALTY BIDS. SUCH
TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME WITHOUT NOTICE. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
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AVAILABLE INFORMATION
The Company has filed a Registration Statement on Form SB-2 (together
with all amendments and exhibits thereto, the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the Common Shares
offered hereby. This Prospectus, which is part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission. For further
information pertaining to the Company and to the Common Shares offered hereby,
reference is made to the Registration Statement, including the exhibits filed as
a part thereof, copies of which may be inspected, without charge, at the Public
Reference Section of the Commission maintained by the Commission at its
principal office located at Judiciary Plaza, 450 Fifth Street, NW, Washington,
D.C. 20549, and at the Commission's following regional offices: New York
Regional Office, Seven World Trade Center, Suite 1300, New York, New York,
10048; and Chicago Regional Office, Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of all or any portion
of the Registration Statement may be obtained from the Public Reference Section
of the Commission at its Washington, D.C. address upon payment of prescribed
fees. In addition, the Company is required to file electronic versions of these
documents with the Commission through the Commission's Electronic Data
Gathering, Analysis and Retrieval (EDGAR) system. The Commission maintains a
World Wide Web site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.
Statements made in this Prospectus as to the contents of any contract,
agreement or other document are not necessarily complete and represent summaries
of such documents. All material elements of such documents are disclosed in the
Prospectus. With respect to each such contract, agreement or other document
filed as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved, and each
statement regarding such document shall be deemed qualified in its entirety by
such reference.
The Company intends to furnish its shareholders with annual reports
containing financial statements audited by independent public accountants and
with quarterly reports containing unaudited financial information for each of
the three quarters of each fiscal year. In addition, the Company will be
required, under Section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), to file annual and quarterly reports to the Commission.
Copies of such reports will be made available to the Company's shareholders.
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS AND
NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS THE CONTEXT
REQUIRES 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 UNDERWRITER'S OVER-ALLOTMENT OPTION.
THE COMPANY AND THE BANK
Marine Bancshares, Inc. (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 Marine National Bank of Naples, a national bank (in
organization) (the "Bank"). Neither the Company nor the Bank has commenced any
active business operations, and neither will do so unless and until the
requisite regulatory approvals have been obtained. The Company intends to use
the net proceeds from the Offering to purchase all of the capital stock of the
Bank, to repay notes issued in connection with funds borrowed to finance
organizational expenses, and for other general corporate purposes. The Company
and the Bank have filed applications with all necessary bank regulatory
agencies. On __________, 1998, the Office of the Comptroller of the Currency
(the "OCC") approved the Bank's charter application, subject to certain terms
and conditions specified in such approval (the "OCC Preliminary Approval").
Although no assurances can be given, the Company expects to satisfy all
conditions for organizing the Bank and to open the Bank for business during the
second quarter of 1999, or as soon thereafter as practicable. The Bank intends
to offer a full range of commercial and consumer banking services in the western
portion of Collier County, Florida (including the cities of Naples and Marco
Island). The Bank expects to incur a substantial loss in its initial years of
operations.
The Bank is being formed by local business persons who have identified
the need for a consumer-oriented independent community bank in Collier County,
Florida to serve its growing population and expanding business base. 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. As a result the Company believes
that there has been a decline in the level of personal customer service. It is
the Company's belief that the large banking institutions located in this area
are inflexible, slow in their decision-making processes, and are not currently
meeting the banking needs of individuals and small- to medium-sized businesses.
The Company believes that, as a result of this industry consolidation, there is
an opportunity to build a profitable banking business through the establishment
of a local banking institution operated by local business persons and by
experienced banking personnel who are familiar with the community and are
dedicated to providing fast, efficient, and personalized service to the market
area. The Boards of Directors of the Company and Bank are comprised of local
business persons who will actively promote the Bank in the community. The Bank
will be one of only four locally-managed community banks with its main office
located in western Collier County.
The Bank will engage in a general commercial and retail banking
business and, as part of its regular business operations, anticipates offering a
full compliment of loans, including commercial, consumer, and real estate loans.
While the Bank anticipates that its lending activities will include residential
real estate and consumer loans, it expects to focus its efforts on lending
relationships with small to medium-sized businesses. The Company's primary
initial focus will be the development of the Bank's business from a single
office location. As warranted, the Company will consider diversifying its
activities over time to include additional services, banking locations, and
acquisitions. See "Risk Factors -- Lending Risks."
STRATEGY
The Bank's strategy is to attain market share by attracting customers
through a superior level of prompt and personalized banking service. The
consumer-oriented community banking focus of the Bank will provide customers
with locally-based decision makers who are familiar with their customers, their
business environment, and
3
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competitive demands, who are able to quickly evaluate and respond to loan
applications, and who have the ability to craft personalized banking solutions
to the customer's needs without extensive bureaucratic delays.
Businesses will be solicited through the personal efforts of the Bank's
directors and officers. Management believes that a locally-based independent
bank is often perceived by the local business community as possessing a clearer
understanding of local commerce and its needs. Consequently, the Company expects
that the Bank will be able to make prudent lending decisions quickly and more
equitably than its competitors without compromising asset quality or the Bank's
profitability. In addition, in order to broaden the Bank's deposit base,
management intends to offer to commercial customers certain amenities, including
the use of a courier service to provide pick-up and delivery for daily deposits
and special banking service packages for employees. The Bank also intends to
offer senior citizens packages on an affordable basis to the large number of
retired persons in the Bank's PSA.
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's personal but high-tech approach is expected to
appeal to the business community and to younger customers seeking the
convenience of high tech and electronic banking. See "Business--Business
Strategy."
PREMISES AND BANK MARKET AREA
The Company and the Bank currently maintain temporary offices located
at 501 Goodlette Road North, Suite D-12, Naples, Florida 34102, and their
telephone number at that address is (941) 434-0441. The Company has entered into
an agreement with a non-affiliated third party to lease a 7,500 square foot
office facility to be located at the northwest intersection of Vanderbilt Road
and Airport Pulling Road in Naples, Florida. This facility, which is expected to
be available for occupancy during the second quarter of 1999, is conveniently
located for the majority of the residents of western Collier County.
The Bank's proposed primary service area ("PSA") is western Collier
County (including Naples and Marco Island). This area has experienced
substantial growth during recent years. According to the Enterprise Florida,
Inc. Department of Research, between 1980 and 1990, the population of Collier
County almost doubled. The estimated year-round population of Collier County in
1998 is 203,000 and, by the 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 the return of
seasonal residents. Collier County's economic base is built primarily on
services, retail trade, agriculture, tourism, 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. The Company believes that it will be situated to take advantage of
the expected economic and demographic growth in the Bank's PSA.
MANAGEMENT
In the opinion of the Company, the directors and officers of the
Company are (with the exception of Mr. Richard E. Horne, who relocated to Naples
in September, 1998) recognized and established individuals in the local
community. As a group, they believe that they have significant banking and
business experience with many close, long-term ties to the Naples area. Richard
E. Horne, the President and Chief Executive Officer of the Company and the
proposed President and Chief Executive Officer of the Bank, has a total of 24
years of experience in the financial services industry. Most recently, Mr. Horne
served as Executive Vice President and Chief Lending Officer with Trustmark
National Bank, of Jackson, Mississippi, which as of December 31, 1997, had total
assets of approximately $5.5 billion.
In the opinion of the Company, the directors of the Company represent a
wide range of business, banking, and investment knowledge in the Naples area.
William J. Ryan is the former President and Chief Executive Officer of Palmer
Wireless, Inc., a Fort Myers, Florida communications technology company, the
common stock of which is listed on Nasdaq. Mr. Ryan has 15 years of experience
as a bank director and has served in such capacity with C&S Bank, Fort Myers,
Florida, Norwest Bank, Des Moines, Iowa, and First National Bank, Naples,
Florida. Pierce T. Neese is the current Chairman and Chief Executive Officer of
Etowah Bank in
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Canton, Georgia, with over 40 years experience in community banking. Earl G.
Hodges is a licensed mortician and consultant to Hodges Funeral Chapel, a
company that he founded in Naples in 1962. Mr. Hodges has served as Chairman of
the Board of Marine Savings and Loan Association, Naples and as an Advisory
Board member of First Florida Bank, N.A., Collier County. William L. McDaniel,
Jr. is President of The Realty Company and a licensed real estate broker in
Naples. Donald W. Ketterhagen is a practicing physician in Naples.
The Company's directors believe that their long-standing ties to the
community, and their personal familiarity with potential customers in the Bank's
PSA will enable them to successfully pursue business opportunities for the Bank.
The directors likewise believe that their personal involvement in the business
and community affairs of the Naples area will be attractive to other individual
and business bank customers seeking to do business with a locally-owned and
managed bank.
The directors and members of management of the Company and the Bank
currently intend to purchase, in the aggregate, approximately 111,000 Common
Shares in the Offering. In addition, such individuals will receive warrants to
purchase additional Common Shares at a ratio of one warrant for each Common
Share purchased in the Offering. See "Description of Capital Stock --
Organizers' Warrants." Upon the closing of the Offering, the Company also
intends to repurchase from Mr. Horne the 100 Common Shares issued to him to
facilitate the organization of the Company at the aggregate issue price of $100.
FAILURE TO COMMENCE OPERATIONS
As a result of organizational expenses, the Company has an accumulated
deficit as of September 30, 1998 of $776,608. Subsequent to the Offering, events
may occur which could delay or prevent the Bank from commencing business,
resulting in an increase in the Company's accumulated deficit as operating
expenses continue to be incurred. The proceeds of the Offering may be subject to
claims of creditors of the Bank and the Company, including the holders of notes
relating to the Company's organizational loans. Since the Company may use such
proceeds to repay the organizational loans, if banking operations are not
commenced and a liquidation of the Company were to occur, investors would likely
realize substantially less than the $10 per share public offering price. See
"Risk Factors--Failure to Commence Operations."
COMPETITION
The banking business in Collier County is highly competitive, and the
Bank expects to encounter strong competition both in making loans and attracting
deposits. 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, by responding in a timely manner to product and service
requests and by exhibiting an active interest in the customers' business and
personal financial needs. See "Risk Factors--Competition" and
"Business--Competition."
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THE OFFERING
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Securities Offered............. 1,150,000 Common Shares, $.01 par value, of the Company(1)
Minimum Purchase............... 250 shares ($2,500)
Maximum Purchase............... 57,500 shares ($575,000)
Common Shares to be outstanding
after the Offering.............. 1,150,000 shares(1)(2)
Estimated Net Proceeds.......... $10,846,850(1)(3)
Use of Proceeds by Company...... The Company will invest $9 million of the estimated net proceeds in the Bank to
provide the Bank's initial capitalization by purchasing all of the Bank's capital stock.
Additionally, a total of $969,142 of the net proceeds of the Offering will be used by the
Company to repay (i) the principal and accrued interest on a bank line of credit,(ii) the
principal, fees, and accrued interest on certain organizational loans, and (iii) certain
advances from directors of the Company. The Company will use $100 of the net proceeds to
redeem the 100 Common Shares issued to facilitate the Company's organization. After
satisfaction of certain additional liabilities of the Company, the remaining net proceeds of
approximately $593,000 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. These 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."
Use of Proceeds by Bank ........ The Bank will use approximately $150,000 of the $9 million received from the sale of
its capital stock to the Company to pay a portion of the cost to build-out
the leased premises, which will serve as its main office, approximately $321,800
to purchase furniture, fixtures, equipment, and other necessary assets for
the Bank's operations and approximately $95,000 to repay money borrowed from the
Company for the Bank's organizing expenses. It is currently anticipated
that the balance of the net proceeds received by the Bank, expected to be
approximately $8,433,200, will be used to fund loans and other investments and
for the payment of operating expenses.
Risk Factors................... An investment in the Common Shares is highly speculative, involves a high degree of risk,
and should be considered only by those who can afford the loss of their
entire investment. Accordingly, prior to making an investment decision,
prospective purchasers should consider all of the information set forth in this
Prospectus and should evaluate the statements set forth in "Risk Factors"
beginning on page 8.
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(1) Assumes no exercise of over-allotment option granted to Underwriter to
purchase up to 172,500 Common Shares at the initial public offering price.
See "Underwriting.
(2) Does not include 111,000 Common Shares subject to Warrants to be issued to
organizers upon completion of the Offering and 25,000 Common Shares subject
to options to be granted to Richard E. Horne after the Offering.
(3) Before deducting a non-accountable expense allowance of $45,000 to be paid
to the Underwriter and other offering expenses payable by the Company
estimated at $250,000, which amount does not include certain organization
and other operating expenses which were $776,608 as of September 30, 1998,
and which will continue to be incurred while the Bank commences operations.
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SUMMARY FINANCIAL DATA
SEPTEMBER 30, 1998
ACTUAL AS ADJUSTED(1)
BALANCE SHEET DATA:
Cash and securities................... $ 2,799 $9,661,403
Total assets.......................... 182,765 $9,721,242
Total liabilities..................... 959,273 0
Shareholders' equity (deficit)......... $(776,508) $9,721,242
- --------------
(1) Adjusted to reflect the application of the estimated net proceeds from the
Offering. See "Use of Proceeds."
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RISK FACTORS
AN INVESTMENT IN THE COMMON SHARES OFFERED HEREBY IS HIGHLY
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 SHARES AND
SHOULD BE CAREFULLY CONSIDERED BY PROSPECTIVE INVESTORS PRIOR TO PURCHASING
COMMON SHARES. 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 SHARES.
NEED TO OBTAIN REGULATORY APPROVALS
The Company filed applications on behalf of the Bank with the OCC and
with the Federal Deposit Insurance Corporation (the "FDIC") on July 27, 1998,
for authority to organize as a national bank, the deposits of which will be
federally insured to the extent permitted by law, and to conduct a commercial
banking business in Naples, Florida. Upon the receipt of the OCC Preliminary
Approval on ___________, 1998, the Company applied for approval from the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board") to
become the holding company of the Bank.
The Bank will not be authorized to conduct its banking business until
it receives final approvals from the OCC and the FDIC. The grant of 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 $9 million of the proceeds from the Offering
to purchase all of the capital stock of the Bank. See "Use of Proceeds". While
the Company currently anticipates receiving final OCC, FDIC, and Federal Reserve
Board approvals during the second quarter of 1999, no assurances can be given
that the required approvals will be granted in a timely manner, if at all. In
consequence of start-up expenditures, the Company has, as of October 31, 1998,
an accumulated deficit of $806,724. 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".
NEED TO REPAY DEBT
In order to obtain funding for its start-up and organizational
expenses, during 1997 the Company issued to a total of twenty-nine individuals a
series of promissory notes in an aggregate principal amount of $900,000 (the
"Organizational Loans"). The proceeds of certain of these Organizational Loans
were used to repay certain prior Organizational Loans, and the remaining balance
of $700,000 matures on December 31, 1998. In addition, the Company has received
non-interest bearing advances of funds from various of its directors in an
aggregate amount of $40,000 (the "Advances"), and has obtained a revolving line
of credit (the "Line of Credit") in the maximum amount of $75,000 from The
Banker's Bank, of Atlanta, Georgia, under the terms of which $75,000 was owing
as of November 4, 1998. The Company intends to use the proceeds of the Offering
to repay the Organizational Loans, the Advances, and the Line of Credit
(collectively, the "Debt"). In the event that, subsequent to the Offering, the
Company were to be liquidated, to the extent the Debt is repaid with proceeds of
the Offering, investors in the Offering would likely realize substantially less
than the $10 per share public offering price and would suffer a significant
loss. See "Management's Discussion and Analysis or Plan of Operation".
FAILURE TO COMMENCE OPERATIONS
Subsequent to the sale of the Common Shares of the Company, events may
occur which could have the effect of delaying or preventing the Bank from
commencing business. Any delay in commencing operations will increase the
Company's 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 would continue to increase (and book value per
share would decrease) as operating expenses such as salaries and other
administrative expenses continue to be incurred. After the Offering and prior to
the time the Company and the Bank receive final approval from the OCC , FDIC and
Federal Reserve Board, the proceeds from the Offering will be available for
general operating expenses of the Company and the Bank, including costs
associated with opening the Bank's main facility. The Company intends to use a
total of $969,142 of the net proceeds from the offering to repay (i) the
principal and accrued interest on the Line of Credit, (ii) the principal, fees
and accrued interest on the Organizational Loans, and (iii) the Advances. As a
result, if a liquidation of the Company were to occur, investors in the Offering
would likely realize substantially less than the $10 per share public offering
price and would suffer a significant loss. The Company expects to use
approximately $246,528 of the proceeds of the Offering by the end of the
second quarter of 1999 for general operating expenses.
Although the Company anticipates receipt of all necessary government
approvals by the second quarter of 1999, there can be no assurance as to the
timing or actual receipt of such approvals or the commencement of operations. In
the event that all necessary regulatory approvals are not obtained within the
anticipated time frame, the Company will continue to actively pursue such
regulatory approvals. No deadlines have been established, however, within which
the Company must obtain such approvals or commence operations. Further, the
Company
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does not plan to return funds invested by purchasers of Common Shares
in the event of a failure or delay in receiving such approvals or in commencing
Bank operations. Accordingly, if the Company does not obtain such approvals or
otherwise does not commence Bank operations for any reason whatsoever, investors
could lose their entire investment in the Common Shares. See "-- Need to Repay
Debt", "Use of Proceeds", and "Capitalization".
LACK OF 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 performance. Moreover, as of
September 30, 1998, the Company had an accumulated deficit of $776,508. Because
the Company is only recently formed and the Bank will not have obtained the
necessary regulatory approvals or 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, would be 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. 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 since they will be new loans to new borrowers. It will thus
take several years to determine the borrowers' payment histories, and the
quality of the Bank's loan portfolio cannot be determined until that time.
Accordingly, the adequacy of the Bank's underwriting criteria, monitoring
procedures, and loan loss reserve policies will be difficult to measure and
evaluate during the initial years of operation, thereby increasing the risk of
potential loan losses and the lack of adequate reserves therefor. Typically,
most newly formed banking institutions incur substantial initial expenses and
are not profitable, if at all, until several years after commencing business
operations. Because profitability depends upon numerous factors, many of which
are beyond the control of management, there can be no assurance as to when, if
ever, the Company will operate profitably.
DETERMINATION OF OFFERING PRICE
The initial offering price of $10.00 per share was arbitrarily
determined solely by negotiations between the Company and the Underwriter. This
price is not based upon earnings or any history of operations, does not
necessarily bear any relationship to the Company's net worth, book value,
revenues, or other established criteria of value, and should not be construed as
indicative of the actual present or anticipated future value of the Common
Shares. If a market should develop for the Common Shares of the Company, there
is no assurance that any of the Common Shares offered hereby could be resold for
the initial offering price or any other amount. See "Underwriting."
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NO PRIOR PUBLIC MARKET; LIMITED TRADING MARKET EXPECTED
Prior to the Offering, there has been no public trading market for the
Common Shares. The Company expects that quotations for the Common Shares will be
reported on the OTC Bulletin Board under the symbol "MNBK." The Underwriter
has advised the Company that it presently intends to make a market in the Common
Shares 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 Shares or that an active and liquid trading market will develop or,
if developed, that it will be sustained. The Underwriter will have no obligation
to make a market in the Common Shares, however, and, if commenced, may cease
market-making activities 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 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 the
Offering, the lack of earnings history for the Company, and the absence of an
expectation of dividends in the near future mean that there can be no assurance
that an active and liquid market for the Common Shares will develop. If a
trading market for the Common Shares does not develop or is not maintained, an
investor may find it difficult to liquidate his investment in the Company. 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 Shares should carefully consider the potentially
illiquid and long-term nature of their investment in the shares offered hereby.
DEPENDENCE ON MANAGEMENT
The Company and the Bank are, and for the foreseeable future will be,
dependent upon the services of Richard E. Horne, as President and Chief
Executive Officer of both the Company and the Bank. The loss of the services of
Mr. Horne for any reason whatsoever could have a material adverse effect on the
operations of the Company and the Bank. The Company has attempted to secure Mr.
Horne's services by entering into an employment agreement with him. The terms of
the employment agreement are intended not only to retain his services for a
period of time, but also to encourage and promote his active involvement by
providing certain performance-based compensation incentives. The Company's
success also depends in part upon the Bank's ability to identify, attract,
develop, and retain qualified directors, officers, and other employees. It is
expected that the competition for such personnel will be intense, and there can
be no assurance that the Company will be able to identify, attract, develop, and
retain qualified directors, officers, or other employees. See "Management."
COMPETITION
The banking business is highly competitive. The Bank, as a finanial
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, asset-based nonbank lenders, and
governmental organizations that may offer subsidized financing at rates lower
than those that may be offered by the Bank, all of which may solicit 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, 1998, approximately 21 financial institutions with a
total of 91 branches were located in Collier County, Florida, which contains the
Bank's proposed PSA. These financial institutions aggressively compete for
business in the Bank's proposed PSA. 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 -- Competition."
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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. Commercial loans also carry additional risks
since they usually involve larger loan balances to single borrowers or a related
group of borrowers, resulting in a more concentrated loan portfolio, and their
repayment is usually dependent upon the successful operation of the borrower's
commercial enterprise. Accordingly, commercial loans also are affected more by
adverse conditions in the general economy than residential real estate 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 on the value of the Common Shares.
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
portfolio could have a positive or negative effect on the Bank's net income,
capital, and liquidity. Fluctuations in interest rates are not predictable or
controllable. 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 Board. As a national bank, the deposits
of which will be federally-insured to the extent permitted by law, the Bank will
be subject to regulation and supervision primarily by the OCC 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
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financial institutions. These regulations are intended primarily for the
protection of depositors, not for the benefit of investors, and they restrict or
limit the manner in which the Company and the Bank may conduct business and
obtain financing. The Company and the Bank are also subject to changes in
federal and state law, regulations, governmental policies, income tax laws and
accounting principles. The effects of any potential changes cannot be predicted,
but they could adversely affect the future businesses and operations of the
Company and the Bank. See "Supervision and Regulation."
NEED FOR CAPITAL; LIMITATION ON GROWTH
The Company believes that the net proceeds of the Offering will satisfy
its cash requirements for the twelve month period following the opening of the
Bank. Such amounts are expected to be sufficient to commence and conduct planned
business activities during that period. Capital in excess of that which will be
provided by the 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 on acceptable terms, or at all.
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
$9,000,000, less organizational expenses of $95,000, the Bank's initial general
lending limit to one borrower will be approximately $1,220,000 plus an
additional $810,000 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.
YEAR 2000 COMPLIANCE
The Company's and the Bank's business is highly dependent on
communications and information systems, including systems which monitor deposit
and lending accounts. As the year 2000 ("Year 2000") approaches, an important
business issue has emerged regarding existing application software programs and
operating systems. Many existing application software products were designed to
accommodate a two-digit year. For example, "98" is stored on the system and
represents 1998 and "00" represents 1900. As a result, any of the Company's or
its vendors' computer programs or equipment that are date dependent may, for
example, recognize a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculations causing disruption of
operations, a temporary inability to process transactions, send invoices or
engage in similar normal business activity. The Bank will utilize a third-party
vendor to provide its primary banking applications, including core processing
systems. The Bank intends to choose a third party vendor that has modified or
upgraded its computer applications to ensure timely Year 2000 compliance. In
addition, the Company and the Bank intend to implement a Year 2000 compliance
program whereby the Bank will review the Year 2000 issue that may be faced by
its other third-party vendors and loan and deposit customers. Under such
program, the Company will examine the need for modifications or replacement of
all non-Year 2000 compliant pieces of software. The Company does not currently
expect that the cost of its and the Bank's Year 2000 compliance program will be
material to its financial condition and expects that it will satisfy such
compliance program without material disruption of its operations. Management of
the Company intends to evaluate the potential effect on its third party vendor's
data processing systems resulting from Year 2000 issues and to obtain a
representation from such vendor that it's core processing systems will be fully
Year 2000 compliant prior to the opening of the Bank for business. In the event
that the Company, the Bank, such vendor or its other significant vendors or loan
customers do not successfully
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and timely achieve Year 2000 compliance, the Bank's business, future prospects,
financial condition or results of operations could be materially adversely
affected. See "Management's Discussion and Analysis or Plan of Operation."
NEED TO MAINTAIN TECHNOLOGY
The banking industry is undergoing rapid technological change with
frequent introductions of new technology-driven products and services, including
developments in telecommunications, data processing, computers, automation,
Internet-based banking, telebanking, debit cards, and so-called "smart cards".
In addition to allowing better service to 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 personnel. To be and remain competitive, evolving
technology may require the Bank to expend significant amounts on computer
hardware and software and on compensation for knowledgeable and technically
skilled employees. There can be no assurance that the Bank will be able to
effectively implement new technology-driven products and services 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
Shares 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 Shares, 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
earnings are available, the Bank's payment of dividends is restricted under
certain circumstances by OCC regulations. Further, 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
** 1 Under the Federal Change in Bank Control Act (the "Control Act"),
a notice must be submitted to the Federal Reserve Board 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 Board determines that the acquisition will not result in a
change of control of the Company. Under the Control Act, the Federal Reserve
Board 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
"BHCA") a company is generally required to obtain prior approval of the Federal
Reserve Board 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 and the charter documents of the Company contain provisions
that might have the effect of inhibiting a non-negotiated merger or other
business combination involving the Company. See "Description of Capital Stock."
Further, the Company has agreed, subject to the federal banking
agencies having no objection thereto, to
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enter into an employment agreement and stock option agreement with Richard E.
Horne, the President and Chief Executive Officer of the Company and the Bank.
The Company and the Bank will likely 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 employment termination of
these executives. See "Management."
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Second Amended and Restated Articles of Incorporation and
Amended and Restated Bylaws provide for the indemnification of its directors,
officers, employees, and agents from liabilities incurred in connection with
such individuals' service in those capacities. 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.
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FORWARD LOOKING STATEMENTS
This Prospectus contains certain "forward-looking statements", such as
statements relating to the financial condition and prospects, lending risks,
Year 2000 readiness, plans for future business development and marketing
activities, capital spending and financing sources, capital structure, the
effects of regulation and competition, and the prospective business of both the
Company and the Bank. Where used in this Prospectus, the words "anticipate,"
"believe," "estimate," "expect," "intend," and similar words and expressions, as
they relate to the Company or the Bank or their respective managements, identify
forward-looking statements. Such forward-looking statements reflect the current
views of the Company and are based on information currently available to the
management of the Company and the Bank and upon current expectations, estimates,
and projections about the Company and its industry, management's beliefs with
respect thereto, and certain assumptions made by management. These
forward-looking statements are not guarantees of future performance and are
subject to risks, uncertainties, and other factors which could cause actual
results to differ materially from those expressed or implied by such
forward-looking statements. Potential risks and uncertainties include, but are
not limited to: (i) significant increases in competitive pressure in the banking
and financial services industries; (ii) changes in the interest rate environment
which could reduce anticipated or actual margins; (iii) changes in political
conditions or the legislative or regulatory environment; (iv) general economic
conditions, either nationally or regionally (especially in southwest Florida),
becoming less favorable than expected resulting in, among other things, a
deterioration in credit quality; (v) changes occurring in business conditions
and inflation; (vi) changes in technology; (vii) changes in monetary and tax
policies; (viii) changes in the securities markets; and (ix) other risks and
uncertainties detailed from time to time in the filings of the Company with the
Commission. The most significant of such risks, uncertainties and other factors
are discussed under the heading "Risk Factors," beginning on page 8 of this
Prospectus, and prospective investors are urged to carefully consider such
factors.
RECENT DEVELOPMENTS
Prior to the Company's July 27, 1998 application currently pending, the
Company had on June 30, 1997 submitted a similar application to the OCC (the
"Initial Application"). The Initial Application was withdrawn by the Company
with the permission of the OCC on December 9, 1997.
On December 26, 1997, the Company terminated a lease with Dooner Family
Equities, Ltd. with respect to real property located at 1010 Fifth Avenue South,
Naples, Florida, intended to be occupied by the Bank, thereby forfeiting a
non-refundable $20,000 deposit. See "Management's Discussion and Analysis or
Plan of Operations".
On July 15, 1998, the Company obtained a revolving line of credit from
The Banker's Bank, Atlanta, Georgia, in the maximum principal amount of $75,000.
Each member of the Company's Board of Directors has guaranteed the Company's
obligation to repay the Line of Credit. As of November 4, 1998, the principal
amount outstanding under the Line of Credit was $75,000.
As of September 30, 1998 , the date of the Company's most recent
audited financial statements, the Company's accumulated deficit was $776,608.
Since September 30, 1998, the Company has continued to incur pre-opening
expenses and as of October 31, 1998, the accumulated deficit was $806,724. The
additional expenses incurred related principally to legal and professional
advisory fees incurred in the regulatory application process and in connection
with the Offering, employee salaries and benefits, office supplies, equipment
rental.
As of November 2, 1998, the Company issued Amended and Restated
Promissory Notes to the lenders under the outstanding Organizational Loans for
the purpose of correcting certain technical imperfections in the documentation
relating to the Organizational Loans.
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USE OF PROCEEDS
Net proceeds to the Company from the sale of the 1,150,000 Common
Shares offered hereby are estimated to be $10,551,850 ($12,078,475 if the
Underwriter's over-allotment option is exercised in full), after deduction of
the underwriting discounts and commissions and estimated offering expenses.
The Company will use $9 million of the net proceeds of the Offering to
purchase all of the capital stock of the Bank, providing the Bank's initial
capitalization. Of this amount, the Bank expects to use approximately $150,000
to pay a portion of the cost of the build out of the leased premises in which
the Bank's offices will be located, approximately $321,800 to purchase necessary
furniture, fixtures, equipment and other necessary assets for the Bank's
offices, and approximately $95,000 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.
After capitalizing the Bank, as set forth above, the Company will use a
portion of the remaining net proceeds of the Offering as follows: (i) to repay
the principal and accrued interest on the Line of Credit of approximately
$75,000, (ii) to repay $700,000 aggregate principal amount outstanding on the
Organizational Loans, together with accrued interest and fees aggregating
$145,416 thereon, (iii) to repay the Advances made by certain directors in the
aggregate amount of $40,000, and (iv) for general corporate purposes. The
Company will further use $100 of the net proceeds of the Offering to redeem the
Common Shares issued to facilitate the Company's organization. The Line of
Credit bears interest at a variable rate to be adjusted based on the changes in
a published "Prime Rate", and set initially at 8.5% per annum. Payments of
accrued interest on the Line of Credit are to be made quarterly beginning
October 15, 1998. The Line of Credit matures on July 15, 1999. The
Organizational Loans bear interest at the rate of 8% per annum from their
respective dates of issuance to March 31, 1998, and at the rate of 13% per annum
from March 31, 1998 until paid. The Organizational Loans mature on December 31,
1998. The Advances do not bear interest, and the letter agreements documenting
the Advances do not provide for a right of repayment on any date. For each month
that the Organizational Loans remain outstanding thereafter, aggregate interest
will accrue at the rate of approximately $7,900 per month.
The proceeds of the Organizational Loans, Advances, and the Line of
Credit have been used by the Company to pay organizational and pre-opening
expenses of the Company and the Bank. These expenses include (i) a loan referral
fee equal to 10% of the aggregate principal amount of the Organizational Loans
paid to the Underwriter for its efforts in locating the lenders, (ii) attorney,
accounting and consulting fees, (iii) repayment of the principal, interest and
funding fees of five Organizational Loans, and (iv) office and equipment rental
and purchase, employee salaries and benefits, and government filing and
application fees.
The remaining proceeds of the Offering 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. The Company believes
that the net proceeds of the Offering will satisfy the Company's cash
requirements for at least the twelve month period following the opening of the
Bank. Pending the use of proceeds for such purpose, the Company expects to
invest the proceeds of the Offering in short-term investment grade securities.
See "Management's Discussion and Analysis or Plan of Operations".
DIVIDEND POLICY
Holders of the Company's Common Shares are entitled to receive cash
dividends when and if declared by its Board of Directors out of funds legally
available therefor. Prior to the Offering, the Company has not paid any cash
dividends on its Common Shares. It is not anticipated that the Company will pay
any cash dividends on its Common Shares in the foreseeable future.
The source of dividends to the Company's shareholders, if any, in the
future will depend primarily upon the earnings of the Bank and its ability to
pay dividends to the Company, as to which there can be no assurance. The payment
of dividends by the Bank is subject to a determination by the Bank's Board of
Directors and will depend upon a number of factors, including capital
requirements, regulatory limitations, the Bank's results of operations and
financial condition, tax considerations, and general economic conditions.
The Bank is restricted in its ability to pay dividends under the
national banking laws and by regulations of the OCC. Pursuant to 12 U.S.C. ss.
56, a national bank may not pay dividends from its capital. In addition, no
dividends may be made in an amount greater than a national bank's undivided
profits, subject to other applicable provisions of law. Payments of dividends
out of undivided profits are further limited by 12 U.S.C. ss. 60(a), which
prohibits a bank from declaring a dividend on its shares of common stock until
its surplus equals its common capital, unless there has been transferred to
surplus not less than one-tenth 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. ss. 60(b), the approval of the OCC 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
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transfers to surplus or a fund for the retirement of any preferred stock.
Under Federal law and Federal Reserve Board policy, a bank holding
company is required to serve as a source of financial strength to each of its
subsidiary banks and to commit resources to support each such bank. Consistent
with this requirement, the Federal Reserve has stated that, as a matter of
prudent banking, a bank holding company generally should not maintain a rate of
cash dividends unless the available net income of the bank holding company is
sufficient to fully fund the dividends, and the prospective rate of earnings
retention appears to be consistent with the company's capital needs, asset
quality, and overall financial condition. See "Risk Factors -- Limited Operating
History."
The ability of the Bank and the Company to pay cash dividends in the
future could be further influenced by bank regulatory policies or agreements and
capital guidelines.
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CAPITALIZATION
The following table sets forth, as of September 30, 1998, the
capitalization of the Company, and as adjusted to give effect to the receipt of
the estimated net proceeds from the sale of the 1,150,000 Common Shares offered
hereby at a public offering price of $10.00 per share:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
ACTUAL AS ADJUSTED(1)(2)
<S> <C> <C>
Long term and short term debt........................................ $ 959,273 $ --
Shareholders' equity:
Common Shares, $.01 par value, 10,000,000 shares authorized,
100 shares issued and outstanding; as adjusted 1,150,000
shares issued ($10 each) and outstanding(3)........................ 1 11,500
Preferred Shares, $.01 par value, 2,000,000 shares authorized;
no shares issued or outstanding...................................... -- --
Additional paid-in capital........................................... 99 10,540,350
Accumulated deficit(4)............................................... (776,608) (830,608)
Total shareholders' equity........................................... $(776,508) $ 9,721,242
</TABLE>
- ------------
(1) As adjusted to give effect to the Offering and receipt of the net proceeds
of the Offering.
(2) The amount reflected assumes that the Company receives the net proceeds of
the Offering on December 31, 1998 and that the over-allotment option granted
to the Underwriter is not exercised.
(3) Does not include (i) 100 shares of common stock issued to facilitate
organization of the Company to be redeemed at their original aggregate cost
of $100, (ii) 111,000 Common Shares issuable upon exercise of the Organizer
Warrants, (iii) 25,000 Common Shares issuable upon exercise of options to be
granted to Richard E. Horne under a stock option agreement to be entered
into by Mr. Horne and the Company. See "Management--Stock Option Agreement."
(4) This amount reflects pre-opening expenses, incurred through September 30,
1998 (consisting primarily of salaries, employee benefits, legal and
consulting fees, interest, a loan funding fee, a loan referral fee paid to
the Underwriter, and office and equipment rental), as well as additional
start-up and pre-opening expenses through the end of the offering period.
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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.
Neither the Company nor the Bank has commenced any active business operations,
and neither will do so unless and until the requisite regulatory approvals have
been obtained. The Company intends to use the net proceeds from the Offering to
purchase all of the capital stock of the Bank, to repay notes issued in
connection with funds borrowed to finance organizational expenses, and for
other general corporate purposes. The Company and the Bank have filed
applications with all necessary bank regulatory agencies. On __________, 1998,
the Office of the Comptroller of the Currency (the "OCC") approved the Bank's
charter application, subject to certain terms and conditions specified in such
approval (the "OCC Preliminary Approval"). Although no assurances can be given,
the Company expects to satisfy all conditions for organizing the Bank and to
open the Bank for business during the second quarter of 1999, or as soon
thereafter as practicable.
The Bank is being formed by local business persons who have identified
the need for a consumer-oriented independent community bank in Collier County,
Florida to serve its growing population and expanding business base. 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 Company, a decline in the level of personal customer service. It is the
Company's belief that the large banking institutions located in this area are
inflexible, slow in their decision-making process, and are not currently meeting
the banking needs of individuals and small-to-medium sized businesses. The
Company believes that, as a result of this industry consolidation, there is an
opportunity to build a profitable banking business through the establishment of
a local banking institution operated by local business persons and by
experienced banking personnel who are familiar with the community and are
dedicated to providing fast, efficient, and personalized service to the market
area. Consistent with this objective, the Bank has attracted and intends to seek
additional experienced bank personnel, most of whom are expected to reside in
the area, who will know the Bank's customers, and will be able to provide them
with personalized service. Further, the Boards of Directors of both the Company
and the Bank are comprised of local business persons who will actively promote
the Bank in the community. The Bank will be one of only four locally managed
community banks with its main office located in western Collier County.
The Bank intends to be a full service commercial bank. The business of
the Bank will consist of attracting deposits from the general public in the PSA
and using those deposits, together with funds derived from other sources, to
originate a variety of commercial, consumer, and residential real estate loans.
While the Bank anticipates that its lending activities will include residential
real estate and consumer loans, it expects to focus its efforts on lending
relationships with small to medium-sized businesses. The Bank focuses on the
smaller commercial customer because management believes that this segment offers
the greatest concentration of potential business. Also, the small to mid-size
commercial market segment has historically shown a willingness to borrow and
carry larger balances. Finally, the Company believes that this market segment
tends to be more loyal in its banking relationships. The Bank intends to offer a
full range of deposit services that are typically available at most banking
institutions, including personal and business checking accounts, senior checking
accounts, interest-bearing checking accounts, savings accounts, and other time
deposits of various types, ranging from daily money market accounts to
longer-term certificates of deposit. The transaction accounts and time
certificates will be tailored to the principal market area at rates competitive
to those offered in the area. In addition, retirement accounts such as
Individual Retirement Accounts (up to applicable limits) will be made available.
The Bank's deposits will be insured up to applicable limits by the FDIC. The
Bank also intends to offer commercial loans, consumer installment loans, real
estate loans, construction loans, second mortgage loans (including home equity
loans), and lines of credit. Commercial loans will include both secured and
unsecured loans for working capital (including inventory and receivables),
business expansion (including acquisition of real estate and improvements), and
purchase of machinery and equipment. Consumer loans will include secured and
unsecured loans for financing automobiles, boats, home improvements and
19
<PAGE>
personal investments. Other services the Bank is expected to offer will include
ATM and debit cards with access to local and state networks, official bank
checks and money orders, travelers checks, bank by mail, safe deposit boxes,
wire transfers, direct deposit of payroll and social security checks, automatic
drafts for various accounts, VISA and MasterCard credit cards, and U.S. Savings
Bonds. The Bank does not anticipate initially providing fiduciary services or
Internet based services. The need for such services, however, will be reviewed
periodically for possible future inclusion among the Bank's products and
services.
The revenues of the Bank will be primarily derived from interest on,
and fees received in connection with, commercial, real estate, and other loans,
from the sales of loans, and from interest on and dividends from investment
securities and short-term investments. The principal sources of funds for the
Bank's lending activities will be its deposits, amortization and repayment of
loans, sales of loans, and the sale of investment securities. The principal
expenses of the Bank will be the interest paid on deposits and operating and
general administrative expenses.
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 Board, 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 the Offering remaining
after the Company capitalizes the Bank (including the net proceeds from any
exercise of the Underwriters' over-allotment option, 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.
As is the case with banking institutions generally, the Bank's
operations will be materially and significantly influenced by general economic
conditions and by related monetary and fiscal policies of financial institution
regulatory agencies, including the Federal Reserve Board and the FDIC. Deposit
flows and cost of funds are influenced by interest rates on competing
investments and general market rates of interest. Lending activities are
affected by the demand for financing of real estate and other types of loans,
which in turn is affected by the interest rates at which such financing may be
offered and other factors affecting local demand and availability of funds.
The Company's primary initial focus will be the development of the
Bank's business from a single office location. As warranted, the Company will
consider diversifying its activities over time to include additional services
and banking locations. The Company has no present plans to acquire or establish
any operating subsidiaries other than the Bank. It is expected, however, that
the Company may make acquisitions in the future if the Company becomes
profitable and such acquisitions are deemed to be in the best interests of the
Company and its shareholders. Such acquisitions, if any, will be subject to
certain regulatory approvals and requirements. See "Supervision and Regulation."
BUSINESS STRATEGY
The Bank's strategy is to attain market share by attracting customers
through a superior level of prompt and personalized banking service. The goal of
management is to create a customer-driven financial institution that gives high
value to its customers by delivering customized, quality products and services.
The consumer-oriented community banking focus of the Bank will provide customers
with locally-based decision makers who are familiar with their customers, their
business environment, and competitive demands, who are able to quickly evaluate
and respond to loan applications, and who have the ability to craft personalized
banking solutions to the customer's needs without extensive bureaucratic delays.
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.
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Businesses will be solicited through the personal efforts of the Bank's
directors and officers. Management believes that a locally-based independent
bank is often perceived by the local business community as possessing a clearer
understanding of local commerce and its needs. Consequently, the Company expects
that the Bank will be able to make prudent lending decisions quickly and more
equitably than its competitors without compromising asset quality or the Bank's
profitability.
** 2 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 market the Bank actively through their
business and social contacts. All of the directors are active members of the
Naples community and their continued community involvement will provide an
opportunity to promote the Bank, its products, and services. Management of the
Bank intends to utilize advertising and selling efforts in order to build a
distinct institutional image for the Bank and to attract a customer base. In
addition, in order to broaden the Bank's deposit base, management intends to
offer to commercial customers certain amenities, including the use of a courier
service to provide pick-up and delivery for daily deposits and special banking
service packages for employees. The Bank also intends to offer senior citizens
packages on an affordable basis to the large number of retired persons in the
Bank's PSA.
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.
* 2 MOVED FROM HERE; TEXT NOT SHOWN
COMPETITION
Competition in the Bank's market area is intense, and market share is
fragmented among a number of financial institutions. According to statistics
compiled by the FDIC, as of June 30, 1998 approximately 21 financial
institutions with a total of 91 branches were located in Collier County. The
Bank will also encounter 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 of approximately $1,220,000 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 the products offered by competitors of the Bank
and advantageous to the Bank.
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 proposed PSA will be the western portion of Collier County,
Florida, which
21
<PAGE>
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 depiction of the Bank's proposed PSA, see
the map on the inside cover of this Prospectus.
BANK LOCATION AND FACILITIES
The proposed main office of the Bank is located in the northern sector
of Naples at the northwest corner of Airport Pulling Road and Vanderbilt Beach
Road. Based on 1997 traffic counts, the intersection ranks as the third busiest
in the county. This particular section of Collier County has been recognized as
a primary growth area for residential and commercial development and is expected
to be a hub of Naples within the next five years.
The Company is party to a lease (the Lease) with Gulf Coast Commercial
Corporation, an unaffiliated third party real estate development company,
that will construct a multi-story office building of which the Bank will occupy
approximately 7,500 square feet of space on two floors, consisting of a lobby,
executive and customer service offices, teller stations and vault operations.
The property will also contain a drive-through facility of four lanes and
adequate paved parking for customers and employees. The term of the Lease will
be ten years beginning on the earlier of (i) thirty days after the lessor
thereunder receives a certificate of occupancy for the building, and (ii) the
date the Bank opens for business. Under the Lease, the Company has two options
to renew the Lease term, each for a five year period. The annual base rental
amounts for the first and second years of the Lease term will be $159,000 and
$189,000, respectively, with automatic increases for each year of the term
thereafter of between 3% and 6%, based upon increases in the Consumer Price
Index. Additional rental amounts will be due for the use of certain common areas
and other items. The Company expects that this facility will be completed and
available for the Bank's use in the second quarter of 1999.
Major construction projects are also underway within close proximity to
the Bank's proposed main office. Commercial sites are planned for the three
other corners of the Bank's intersection. In addition, North Collier Community
Hospital has opened a 100-bed facility 2.5 miles from the proposed Bank site.
The Cleveland Clinic, approximately 3 miles from the Bank, is constructing a
70-bed medical unit on the corner of I-75 and Pine Ridge Road. The Ritz Carlton
has publicly announced that it will begin construction next year on a second
resort property in Naples. The luxury hotel chain plans to establish a 295-room
golf lodge on the northeast corner of Airport Pulling Road and Vanderbilt Beach
Road Extension, across from the Bank site. Management believes that this $35
million project will add significantly to the prestige of the area, as well as
potential bank customers through increased employment levels and traffic
patterns.
Adjoining the proposed Bank site, Pelican Bay Development Inc. has
publicly disclosed its plans to build an upscale mall that will become a major
addition to Pelican Marsh Golf & C.C., a very high end residential community.
Within a five mile radius of the Bank are four major shopping centers that
occupy over 600,000 square feet of space and serve the surrounding affluent
communities.
ECONOMIC AND DEMOGRAPHIC FACTORS
Collier County, Florida had an estimated year round population for 1998
of 203,000 residents, the vast majority of whom live in the western portion of
the county. According to Enterprise Florida, Inc., Department of Research, the
county's population rises each year by approximately one-third during the winter
season (November through April). According to information published by the
Collier County Economic Development Council, 28.4 residential building permits
per 1,000 residents were issued in the Naples area during 1997, ranking the
Naples area first in the country in number of building permits issued per
capita. Based upon a study conducted by the University of Florida Bureau of
Economic and Business Research, the Southwest Florida region has been, and is
expected to 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
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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 of Florida through a modern, well-maintained federal and state
superhighway 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 50,901 to the current estimate of 203,000, 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, the median age in
Collier County in 1995 was 42.5 years.
According to statistics of the U.S. Department of Housing and Urban
Development, in 1995 the median family income in Collier County was $48,800 and,
according to data compiled by the Collier County Economic Development Council,
the 1995 average household effective buying income was $55,928, both figures
being the highest in the State of Florida. Based on data compiled by the Collier
County Economic Development Council, the 1996 median value of a single family
home in Collier County was $136,483.
Collier County's economic base is built on services, retail trade,
tourism, agriculture, government and construction. Historically, employment
within the county has been seasonal and associated with the seasonally based
tourist economy and the return of part-year residents during the winter months.
In 1997, the unemployment rate for Collier County was 6.0%, 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
employment segment with 31%, followed by retail trade with 24%, agriculture
with 14%, government with 10%, and construction with 9%.
PRODUCTS AND SERVICES
The Bank is being established to meet the local consumer and commercial
financing needs of the residents and businesses of the Bank's PSA. Consequently,
the Bank intends to aggressively seek creditworthy loans in this limited
geographic area. The Bank will make commercial loans to small - to medium-sized
businesses and professional concerns, consumer loans to individuals, primary and
secondary mortgage loans for the acquisition or improvement of personal
residences, and real estate related loans, including construction loans for
residential and commercial properties.
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 it can achieve quality control 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
23
<PAGE>
identified problem loans will be reviewed with the Board of Directors on a
monthly basis.
Under the regulations of the OCC, 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 $1,220,000, plus an additional $810,000 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 limits.
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. The Bank intends to offer a variety of commercial loan services including
term loans, lines of credit, and equipment receivables financing. A broad range
of short-to-medium term commercial loans, both collateralized and
uncollateralized, will be made available to businesses for working capital
(including inventory and receivables), business expansion (including
acquisitions of real estate and improvements), and the purchase of machinery and
equipment. The purpose of a particular loan will determine its structure.
The Bank's commercial loans are expected to be underwritten primarily
on the basis of the borrower's ability to service such debt from income. As a
general practice, the Bank expects to take as collateral a security interest in
any available real estate, equipment, or other chattel, although such loans may
be made on an uncollateralized basis. Secured working capital loans are expected
to be primarily collateralized by short term assets, whereas term loans are
expected to be collateralized primarily by long term assets.
Unlike residential mortgage loans, which are generally made on the
basis of the borrower's ability to make repayment from his employment and other
income and which are collateralized by real property whose value tends to be
easily ascertainable, commercial loans are typically made on the basis of the
borrower's ability to make repayment from the cash flow of its business and are
generally collateralized by business assets, such as accounts receivable,
equipment and inventory. As a result, the availability of funds for the
repayment of commercial loans may be substantially dependent on the success of
the business itself. Further, the collateral securing the loans, which may
depreciate over time, occasionally cannot be appraised with as much precision as
residential real estate, and may fluctuate in value based on the success of the
business. 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.
RESIDENTIAL REAL ESTATE LOANS. The Bank will make real estate loans,
consisting primarily of one to four- unit family structures. The loans, which
will generally be 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 all fixed rate loans in
the secondary market. 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 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 and qualified builders. 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 diverted to another
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<PAGE>
project. The loan-to-value ratio for such loans will generally be 80% of the
lower of 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.
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, second mortgages,
home equity lines of credit, and investments. Consumer loans will be attractive
to the Bank because they typically have a shorter term and carry higher interest
rates than that charged on other types of loans. Consumer loans, however, do
pose additional risks of collectibility when compared to traditional types of
loans granted by commercial banks such as residential mortgage loans. In many
instances, the Bank will be required to rely on the borrower's ability to repay
since the collateral may be of reduced value at the time of collection.
Accordingly, the initial determination of the borrower's ability to repay is of
primary importance in the underwriting of consumer loans. Additional 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 personal and business
checking accounts, senior checking accounts, interest-bearing checking accounts,
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 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 PSA, 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 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
Funds generated by the Bank as a result of increases in deposits,
decreases in loans, or otherwise which are not immediately used by the Bank will
be invested in securities to be held in the investment portfolio. Such
investments are expected to consist primarily of 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 laws and
regulations applicable to national banks. The investment portfolio will be
structured so that it provides for an ongoing source of funds for meeting loan
and deposit demands and for reinvestment opportunities to take advantage of
changes in the interest rate environment.
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
Data processing services will be purchased on a contract basis,
reducing the number of persons otherwise
25
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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 present, the
Company's only full-time employees are Mr. Richard E. Horne and Mr. Sidney T.
Jackson.
The Bank intends to hire additional officers and employees prior to
commencement of the Bank's operations. The Bank plans to employ as officers and
employees primarily persons from the Naples area who have substantial experience
and proven records in banking. The Bank plans to pay competitive salaries to
attract and retain such officers and employees.
LEGAL PROCEEDINGS
** 3 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 the Offering.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION
The Company is still in a developmental stage and will remain in that
stage until the Offering is completed and the Bank commences operations. The
Company's ability to commence operations is contingent upon obtaining adequate
financial resources through the Offering.
ORGANIZATIONAL LOANS, ADVANCES AND LINE OF CREDIT
In order to obtain funding for its start-up and organizational
expenses, during 1997 the Company issued to twenty-nine individuals a series of
promissory notes for the Organizational Loans in an aggregate principal amount
of $900,000. The proceeds of certain of these Organizational Loans were used to
repay prior Organizational Loans in an aggregate principal amount of $200,000.
The remaining balance on the Organizational Loans of $700,000 matures on
December 31, 1998. The Organizational Loans are currently evidenced by 24
separate promissory notes ranging in principal amount from $25,000 to $100,000.
The interest rate on the 0rganizational Loans is 8% per annum from their
respective dates of issuance to March 31, 1998, and 13% per annum from March 31,
1998 until the date of payment, and a funding fee equal to 8% of the principal
is due each lender at maturity. All of the notes may be prepaid without penalty.
Assuming a repayment date of November 4, 1998, approximately $854,142 of the net
proceeds of the Offering will be used to pay the principal, accrued interest and
fees for these loans.
The Company has received the Advances from various of its directors in
an aggregate amount of $40,000. The Advances do not bear interest, and the
letter agreements documenting the Advances do not provide for a right of
repayment on any date.
The Company has obtained the Line of Credit in the maximum amount of
$75,000 from The Banker's Bank, of Atlanta, Georgia, under the terms of which
$75,000 was owing as of November 4, 1998. The Line of Credit bears interest at a
variable rate to be adjusted based on the changes in a published "Prime Rate",
and set initially at 8.5% per annum. Payments of accrued interest on the Line of
Credit are to be made quarterly beginning October 15, 1998. The Line of Credit
matures on July 15, 1999.
Since September 30, 1998, the date of the Company's most recent audited
financial statements, the Company has continued to incur pre-operating expenses.
At September 30, 1998, the Company's accumulated deficit was $776,608. The
additional expenses incurred by the Company since such date related principally
to legal and professional fees incurred in the regulatory application process
and in connection with this Offering, salaries and supplies.
On July 30, 1997, the Company entered into a lease with Dooner Family
Equities, Ltd. (the "Dooner Lease") with respect to real property located at
1010 Fifth Avenue South, Naples, Florida, intended to be occupied by the Bank.
Pursuant to the terms of the Dooner Lease, the Company was required to make a
non-refundable $20,000 deposit to be credited towards the first month's rental
upon commencement of the Lease term. The Dooner Lease was terminable by the
Company in the event that, among other things, the Company and the Bank did not
receive all required regulatory and administrative approvals for the opening of
the Bank and the commencement on its business by December 31, 1997. By letter
dated December 26, 1997, the Company terminated the Dooner Lease, thereby
forfeiting the above deposit.
Pursuant to the terms of the Lease for the Bank's current proposed site
at Airport Pulling Road and Vanderbilt Beach Road, the Company has made a
non-refundable $25,000 deposit, to be credited towards the first month's rental
upon commencement of the Lease term.
The Company believes that the net proceeds of the Offering will satisfy
the Company's cash requirements for at least the twelve month period following
the opening of the Bank. Accordingly, the Company does not anticipate that it
will be necessary to raise additional funds for the operation of the Company and
the Bank over the next twelve months. For additional information regarding
material expenditures during such period, see "Use of Proceeds." For additional
information regarding the plan of operations for the Company and the Bank, see
"Business" and "Management."
27
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company and the Bank and
their ages and positions with the Company and the Bank are set forth below:
<TABLE>
<CAPTION>
POSITION WITH
NAME AGE COMPANY AND BANK(1)
<S> <C> <C>
Richard E. Horne.............................................. 51 Director, President and
Chief Executive Officer
Sidney T. Jackson............................................. 56 Senior Vice President of
the Bank
William J. Ryan............................................... 66 Director
Pierce T. Neese............................................... 58 Director
Earl G. Hodges................................................ 71 Director
William L. McDaniel, Jr....................................... 37 Director
Donald W. Ketterhagen, M.D.................................... 49 Director
</TABLE>
- --------------
(1) Each of these individuals serves the Company and the Bank in the same
capacities set forth above, except that Mr. Jackson is not an officer or
director of the Company.
(2) The Board of Directors of the Company is divided into three classes,
designated Class I, Class II, and Class III. See "-- Board of Directors."
Officers of the Company and the Bank are elected annually by their
respective Boards of Directors.
Each director of the Company will hold office 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.
Officers of the Company and the Bank are elected annually by the respective
Boards of Directors of the Company and the Bank to hold office until the earlier
of their death, resignation, or removal. There are no family relationships among
any Company or Bank directors, officers or key personnel.
Set forth below is a description of the business experience during the
past five years or more and other biographical information for the directors and
executive officers identified above.
RICHARD E. HORNE, a director of the Company and the Bank, has been
elected by the Board of Directors to serve as the President and Chief Executive
Officer of the Company and the Bank. He is an executive level commercial banker
with 24 years experience in the marketing and management of a wide array of
financial services. Most recently, from August 1992 to February 1998, Mr. Horne
held the position of Executive Vice President and Chief Lending Officer at
Trustmark National Bank, the largest bank in Mississippi with assets of $5.5.
billion. During his six years with Trustmark, Mr. Horne had statewide
responsibility for commercial, real estate and mortgage lending. Further, he was
a member of the Executive Management Committee and also served as the
chairperson of the Senior Loan Committee which was responsible for approval of
all credits in excess of $1 million. Mr. Horne was also instrumental in changing
the credit culture by establishing bankwide credit underwriting standards. From
1988-1992, Mr. Horne was a Senior Vice President with Citizens and Southern
National Bank of Florida, responsible for the retail banking group in Broward
County. This consisted of twenty-four branches, 300 employees, $750 million in
28
<PAGE>
deposits and $125 million in small business and consumer loans. Between
1980-1988 as a Vice President, he managed C&S Bank's top performing commercial
lending unit in the Atlanta market targeting businesses with annual revenues of
less than $25 million. Prior to 1980, he held various marketing and credit
positions with Trust Company of Georgia. Mr. Horne completed service with the
U.S. Navy, attaining the rank of Lieutenant (jg). He received a B.S. degree from
Presbyterian College in 1969. Civic involvement has included Board Member Junior
Achievement, American Heart Association, Boys and Girls Clubs, and Chairman,
Metro Housing Partnership in Jackson, Mississippi.
SIDNEY T. JACKSON, an organizer of the Bank, will assume the title of
Senior Vice President of the Bank with direct responsibilities for operations
and administration. Mr. Jackson served as a Director and President of the
Company from April 1997 to April 1998. He has a total of thirty-three years of
banking experience, the past 22 years of which have been spent in senior
positions with banks in Naples. From May 1994 to April 1997, Mr. Jackson was
employed with Southwest Banks where he served as Senior Vice President and
Senior Operations Officer. From 1986 to 1994, he was employed with SunBanks
Naples, N.A. where he held the position of Executive Vice President and Chief
Administration Officer. Mr. Jackson served as the 1996 Chairman of United Way of
Collier County and is a Director with the Collier County 100 Club, Chamber of
Commerce and former President of the Bank Administration Institute. Mr. Jackson
attended the University of Florida and the School of Banking of the South.
WILLIAM J. RYAN, a director of the Company and the Bank, is the former
President and Chief Executive Officer of Palmer Wireless, Inc., Fort Myers,
Florida, a cellular telephone service provider, in which positions he served
from 1982 to 1998. Palmer Wireless, which was recently sold by Mr. Ryan, is a
communications technology company, the shares of which were listed on Nasdaq.
Mr. Ryan moved to the Naples area in 1955 and has been involved in both banking
and community activities. He has fifteen years experience as a bank director and
had served in such capacity with C&S Bank, Fort Myers, Florida; Norwest Bank,
Des Moines, Iowa; and First National Bank, Naples, Florida. He is the Vice
Chairman of the Naples Philharmonic Center for the Arts and a Director and
Member of the Executive Committee of the Naples Community Hospital. His past
community involvement includes serving as Chairman-Economic Development Council
for Collier County, Chairman-Florida State Emergency Communications Committee,
President-Collier County Unit of American Cancer Society and President-Naples
Area Chamber of Commerce. Mr. Ryan is a graduate of the University of Notre
Dame.
PIERCE T. NEESE, a director of the Company and the Bank, has over 40
years experience in community banking and, since 1975, has served as the
Chairman and Chief Executive Officer of Etowah Bank, a $430 million commercial
bank in Canton, Georgia. The Board of Directors of Etowah Bank has recently
completed a merger with Regions Bank, Birmingham. Mr. Neese will continue as an
employee of Regions (Etowah) through the close of the merger and during an
overlap period that will extend into 1999. Mr. Neese has maintained a residence
in Naples for a number of years and will be spending a portion of his time as an
active Florida resident. Mr. Neese expects to impart his extensive banking
expertise to the Board and management with regard to lending decisions and near
term strategies. His civic and community interests in Georgia include, past
President of the Cherokee County Chamber of Commerce, past Chairman-Development
Authority of Cherokee County, Director-Georgia Chamber of Commerce, Member Board
of Trustees-Reinhardt College and past Chairman of the Cherokee County Board of
Education. His social interests have included past President-Canton Golf Club,
past President Cherokee High Band Booster Club and member of the Atlanta
National Golf Club. Mr. Neese intends to become actively involved in civic and
community affairs in Naples.
EARL G. HODGES, a director of the Company and the Bank, is a licensed
mortician and currently a consultant to Hodges Funeral Chapel, Naples, a company
that he started in Naples in 1962. Mr. Hodges sold his ownership in 1993 and
continues to serve as Funeral Director. He also serves as a consultant to Kraeer
Holdings, a funeral home in Pompano Beach. Mr. Hodges received his degree in
Mortuary Science in 1948 and has been in this industry for 50 years. In Naples,
Mr. Hodges also owns NVC, Inc., a rental property company and Preferred Travel
of Naples, Inc., a travel agency. From 1979-1988, he served as Chairman of the
Board of Marine Savings and Loan Association, Naples (now owned by AmSouth) and
from 1989-1992 was an advisory board member of First Florida Bank, N.A. Collier
County. Currently, Mr. Hodges is actively involved in many civic groups,
including: Director-
29
<PAGE>
Collier County 100 Club, President-Collier County Junior Deputy League, Collier
County Sheriff's Citizen Advisory Board and Collier Athletic Club. Formerly, Mr.
Hodges served as President-Naples Area Chamber of Commerce, President-Collier
County United Way, Chairman-American Red Cross and Trustee-Edison Community
College.
WILLIAM L. MCDANIEL, JR., a director of the Company and the Bank, is a
licensed real estate broker in Naples and has served as President of The Realty
Company since 1989. Mr. McDaniel has been involved in construction, land sales,
development, residential sales and commercial management and sales since
relocating to Naples in 1982. He is very active in the Masonic organization,
serving as President of the Masters and Wardens Association and as a
committeeman on the Grand Masters Charity in 1995, and in 1996, as District
Deputy Grand Master. Mr. McDaniel is also a charter member of the East Naples
Kiwanis Club and served as Treasurer from 1984-87. In addition, he was elected
president of the Naples High Twelve Club in 1989. Mr. McDaniel continues to be
involved in other civic endeavors relating to his young family and Vanderbilt
Presbyterian Church.
DONALD W. KETTERHAGEN, M.D., a director of the Company and the Bank, is
a practicing physician in Naples and has served as President of Women's Health
Consultants of S.W. Florida since 1990. He has maintained a practice in Naples
that spans twenty years, primarily in the specialty of obstetrics and
gynecology. In the mid-1980's Dr. Ketterhagen served as President of the Collier
County Medical Society. He also was a board member of YouthHaven, an
organization dedicated to helping children from troubled situations. Most
recently, Dr. Ketterhagen served on the Board of Directors of the Catholic
Social Services Agency. Dr. Ketterhagen received his undergraduate degree from
Notre Dame, completed his medical training at Marquette Medical School and
performed his internship at St. Joseph Hospital, Milwaukee. He is licensed to
practice medicine in Florida and Wisconsin.
Additionally, Mr. Horne intends to identify and propose to the Board of
Directors of the Bank a management team, consisting of a senior lending officer
knowledgeable in the Collier County market, a highly experienced chief financial
officer and a bank business development officer.
BOARD OF DIRECTORS
The number of directors of the Company is currently fixed at six. The
Articles of Incorporation provide for the Board of Directors to consist of not
less than two nor more than twenty-five persons, with the precise number to be
determined from time to time by the Board of Directors. The directors are
divided into three classes, designated Class I, Class II, and Class III. Each
class will consist, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board of Directors. The term of the
Company's initial Class I directors (Richard E. Horne and Earl G. Hodges)
expires at the Company's annual meeting of shareholders in 1999; the term of the
Company's initial Class II directors (William J. Ryan and Donald W. Ketterhagen)
expires at the Company's annual meeting of shareholders in 2000; and the term of
the Company's initial Class III directors (Pierce T. Neese and William L.
McDaniel, Jr.) expires at the Company's annual meeting of shareholders in 2001.
At each annual meeting of shareholders, successors to the class of directors
whose term expires at the annual meeting will be selected for a three-year term.
If the number of directors is changed, an increase or decrease will be
apportioned among the classes so as to maintain the number of directors in each
class as nearly equal as possible. Any director elected to fill a vacancy will
have the same remaining term as that of his predecessor. In the case of the
removal of a director from office, the resulting vacancy on the Board of
Directors shall be filled by the vote of at least three-fourths (3/4) of the
outstanding Common Shares. Any other vacancy on the Board of Directors may be
filled by a majority vote of the remaining directors then in office or by action
of the shareholders. Any director may be removed, with or without cause, at any
regular or special meeting of shareholders called for that purpose.
The effect of the classified Board of Directors is to make it more
difficult for a person, entity or group to effect a change in control of the
Company through the acquisition of a large block of the Company's voting stock.
COMPENSATION OF DIRECTORS
The directors of the Company are not currently compensated for their
attendance at the Company's regularly scheduled or special meetings or for other
services. At such time as the Bank has become profitable, the Company may
consider the grant of appropriate compensation in accordance with applicable
laws and regulations. The directors of the Company will not be compensated for
services in their capacity as directors of the Bank.
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 of Directors
will establish an Investment Committee and the Bank's Board of Directors 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 as well as monitor credit quality.
30
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company to
Sidney T. Jackson, the Company's past Chief Executive Officer during the
Company's last completed fiscal year, which ended December 31, 1997.
SUMMARY COMPENSATION TABLE
YEAR SALARY
NAME AND PRINCIPAL POSITION(S) ($)
Sidney T. Jackson 1997 59,937
Senior Vice President of Bank (1)
- --------------------------------------
(1) Mr. Jackson was the President and CEO of the Company from its inception
to March 31, 1998, at which time Mr. Horne assumed such positions.
EMPLOYMENT AGREEMENT
Prior to commencement of the Bank's operations, and provided that they
receive no objection thereto from federal bank regulatory agencies, the Company
and the Bank intend to enter into an employment agreement with Richard E. Horne
(the "Employment Agreement"). Under the terms of the Employment Agreement, Mr.
Horne will be employed by the Company and the Bank as their President and Chief
Executive Officer. The Employment Agreement will have a term of three years
commencing on the date the Bank opens for business. Under the terms of the
Employment Agreement, Mr. Horne will receive an annual base salary of $120,000
and a monthly automobile allowance of $600, which amounts will be paid in equal
shares by the Company and the Bank. Under the Employment Agreement, beginning on
the second anniversary of the date the Bank opens for business and in the
discretion of the Company's Board of Directors, Mr. Horne will also be entitled
to receive incentive compensation in the form of a cash bonus of up to fifty
percent (50%) of his annual base salary, upon the achievement of certain
performance goals. Mr. Horne will also be permitted to participate in life
insurance, hospitalization, health insurance, disability 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 collectively required to make a cash payment to Mr. Horne equal to 200%
of the compensation, including any bonus, paid to Mr. Horne during the one-year
period preceding the date of the change of control. The Employment Agreement is
terminable at any time by either the Company or by Mr. Horne upon thirty days
prior written notice. The Employment Agreement provides severance compensation
in the event that Mr. Horne is terminated without cause consisting of payment of
his base salary for a period of six months. In the event Mr. Horne voluntarily
terminates his employment with the Company and the Bank, Mr. Horne will be
prohibited for a period of 12 months thereafter from engaging, directly or
indirectly, in any service to or employment by a financial institution located
in Collier or Lee Counties, Florida.
In addition, the Employment Agreement requires the Company to enter
into a separate stock option agreement pursuant to which Mr. Horne will receive,
under the terms of the Marine Bancshares 1998 Stock Option Plan, incentive stock
options to purchase 25,000 Common Shares of the Company. See "Stock Option
Agreement" and "Stock Option Plan" below.
The Company and the Bank also anticipate entering into similar
employment and stock option agreements with approximately three other members of
the senior management team who have not yet been identified by the
31
<PAGE>
Company.
STOCK OPTION AGREEMENT
The Company intends to enter into a stock option agreement with Mr.
Horne (the "Stock Option Agreement"). Under the Stock Option Agreement, Mr.
Horne will be granted incentive stock options (the "Options") to purchase 25,000
Common Shares for $10.00 per share, an amount equal to the public offering price
of the Common Shares. The number of shares subject to the Option and the Option
price are both subject to an anti-dilution adjustment.
Under the terms of the Stock Option Agreement, no portion of the Option
may be exercised, except as noted below, prior to the date that the Bank opens
for business (the "Commencement Date"). The Option becomes exercisable in equal
portions of up to a maximum of 5,000 Common Shares on the Commencement Date and
on the first, second, third and fourth anniversaries of the Commencement Date.
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. Horne 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. Horne's employment with the
Company and the Bank for any reason except death, disability or retirement, (b)
twelve months after termination of Mr. Horne's employment with the Company and
the Bank because of his death, disability or retirement, or (c) the seventh
anniversary of the Commencement Date.
STOCK OPTION PLAN
On October 28, 1998, the Board of Directors of the Company adopted the
Marine Bancshares, Inc. 1998 Stock Option Plan (the "1998 Plan") to promote the
Company's growth and financial success. The 1998 Plan was approved by the
Company's sole shareholder on October 28, 1998. Options may be granted under the
1998 Plan to the Company's directors, officers and employees, as well as to
certain consultants and advisors. The 1998 Plan contemplates the grant of
non-qualified stock options and incentive stock options as defined in Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). The 1998 Plan
is not qualified under Section 401(a) of the Code and is not subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended.
The 1998 Plan provides for option grants to purchase up to an aggregate of
900,000 Common Shares, subject to adjustment under certain circumstances (the
"Option Shares"). The aggregate fair market value (determined at the time the
option is granted) of the Common Shares with respect to which incentive stock
options are exercisable for the first time by an optionee during a calendar year
may not exceed $100,000. This limitation does not apply to non-qualified stock
options. The 1998 Plan will expire upon the earlier to occur of: (i) the date on
which all Option Shares have been issued upon exercise of options under the 1998
Plan; or (ii) the tenth anniversary of the 1998 Plan's effective date. The 1998
Plan will be administered by the Board of Directors or by a Committee appointed
by the Board and consisting of at least two non-employee Board members. The
exercise price of options granted under the 1998 Plan will be determined by the
Board of Directors, but will in no event be less than 100% of the Market Price
(as defined in the 1998 Plan) of one Common Share on the option grant date (110%
in the case of a Ten Percent Owner, as defined in the 1998 Plan); provided,
however, that non-qualified stock options may be granted at an exercise price of
no less than 75% of the Market Price of the Common Shares on the date of grant.
Vested options under the 1998 Plan may be exercised in whole or in part, but in
no event later than ten (10) years from the grant date (five years in the case
of an incentive stock option granted to a Ten Percent Owner). If the optionee of
an incentive stock option during his or her lifetime ceases to be an employee of
the Company or any subsidiary of the Company for any reason other than his or
her death or total disability, any option or unexercised portion thereof which
is exercisable on the date the optionee ceases employment will expire three
months following the date the optionee ceases to be an employee of the Company
or of a subsidiary of the Company, but in no event after the term provided in
the optionee's option agreement. If an optionee dies or becomes totally disabled
while he or she is an employee of the Company or of a subsidiary of the Company,
the option may be exercised by a legatee or legatees of the optionee under his
or her last will or by his or her personal representative or representatives at
any time within one year following his or her death or total disability, but in
no event after the term provided in his or her option agreement. The foregoing
limitations with respect to termination of employment or death do not apply to
optionees of non-qualified stock options. Options granted under the 1998 Plan
will only be assignable or transferable by the optionee by will or the laws of
descent and distribution. During the optionee's lifetime, options are only
exercisable by him or her. The Board of Directors may at any time terminate,
modify or amend the 1998 Plan in any respect, except that without shareholder
approval the Board of Directors may not (i) increase the number of Option Shares
or (ii) change the class of 1998 Plan participants eligible for qualified
incentive options. In no event will the termination, modification or amendment
of the 1998 Plan, without the written consent of an optionee, affect his or her
rights under an option or right previously granted to him or her.
32
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED 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 (i) will be made in the
ordinary course of business, (ii) will be made 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 (iii) in the
opinion of management, will not involve more than the normal risk of
collectibility or present other unfavorable features to the Company or 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. Certain laws of the State of Florida also 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 has borrowed from certain individual lenders an aggregate
amount of $900,000 to pay organizational and pre-opening expenses for the
Company and the Bank, of which $700,000 in aggregate principal amount remains
outstanding. Sidney T. Jackson, Senior Vice President of the Bank, 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 proceeds of the Offering.
See "Use of Proceeds."
ADVANCES
The Company has received Advances in an aggregate amount of $40,000
from the following members of its Board of Directors: Earl G. Hodges, William L.
McDaniel, Jr., William J. Ryan and Donald W. Ketterhagen. The Advances do not
bear interest, and the letter agreements executed by the Company and the above
directors with respect to the Advances do not provide for a right of repayment
on any date. A portion of the proceeds from the Offering will be used to repay
the Advances.
ORGANIZERS' WARRANTS
In connection with the Offering, each member of the Company's Board of
Directors and its organizers will be granted warrants to purchase one Common
Share for each Common Share purchased by such director or other organizer in the
Offering. The exercise price for such warrants will be $10.00 per share, the
offering price of the Common Shares in the Offering. The warrants will vest in
equal annual increments over a three year period commencing on the first
anniversary of the closing date for the Offering and will terminate on the 10th
anniversary of such closing date. The Company has reserved 111,000 Common Shares
for issuance pursuant to exercise of the warrants.
33
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Except for 100 shares issued and sold to Richard E. Horne for the sole
purpose of incorporating the Company, the Company currently has no Common Shares
outstanding. These organizational shares will be repurchased by the Company at
their original aggregate issue price of $100 concurrently with the closing of
the Offering.
The following table sets forth certain information regarding the
anticipated beneficial ownership of the Company's Common Shares by: (i) each
director and each executive officer of the Company and (ii) all directors and
executive officers of the Company as a group. No person is expected to be the
beneficial owner of more than 5% of the outstanding Common Shares following the
Offering. Except as otherwise indicated, the persons named in the table will
have sole voting and investment power with respect to all of the Common Shares
expected to be owned by them.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
NUMBER PERCENT
NAME OF BENEFICIAL OWNER OF SHARES (1) OF CLASS (2)
<S> <C> <C>
Earl G. Hodges 25,000 2.2%
Richard E. Horne(3) 12,500 1.1%
Donald W. Ketterhagen 11,000 1.0%
William L. McDaniel 20,000 1.7%
Sidney T. Jackson 12,500 1.1%
Pierce T. Neese 10,000 0.9%
William J. Ryan 25,000 2.2%
All directors and executive officers as a group (7 persons)(3) 116,000 10.0%
</TABLE>
(1) In accordance with Rule 13d-3 promulgated pursuant to the Securities
Exchange Act of 1934, a person is deemed to be the beneficial owner of
a security for purposes of the rule if he or she has or shares voting
power or dispositive power with respect to such security or has the
right to acquire such ownership within sixty days. As used herein,
"voting power" is the power to vote or direct the voting of shares, and
"dispositive power" is the power to dispose or direct the disposition
of shares, irrespective of any economic interest therein.
(2) In calculating the percentage ownership for a given individual or
group, the number of common shares outstanding includes unissued shares
subject to options, warrants, rights or conversion privileges
exercisable within sixty days held by such individual or group, but are
not deemed outstanding by any other person or group. This information
assumes no exercise of the over-allotment option granted to the
Underwriter.
(3) Includes options to purchase 5,000 Common Shares granted pursuant to
the Stock Option Agreement, which options vest immediately upon
execution thereof. See "Management--Stock Option Agreement."
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<PAGE>
SUPERVISION AND REGULATION
GENERAL
The Company and the Bank will operate in a highly regulated
environment, and the business activities of the Company and the Bank will be
supervised by a number of federal regulatory agencies, including the Federal
Reserve Board, the OCC and the FDIC.
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 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.
The Company will be regulated by the Federal Reserve Board under the
federal Bank Holding Company Act of 1956 (the "BHCA"), which requires every bank
holding company to obtain the prior approval of the Federal Reserve Board before
acquiring more than 5% of the voting shares of any bank or all or substantially
all of the assets of a bank, or before merging or consolidating with another
bank holding company. The Federal Reserve Board (pursuant to regulation and
published policy statements) has maintained that a bank holding company must
serve as a source of financial strength to its subsidiary banks. In adhering to
the Federal Reserve Board policy, the Company may be required to provide
financial support to its subsidiary bank at a time when, absent such Federal
Reserve Board policy, the Company would not deem it advisable to provide such
assistance.
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994, which became effective in November 1994, the restrictions on interstate
acquisitions of banks by bank holding companies were repealed as of September
29, 1995, such that the Company and any other bank holding company located in
Florida is able to acquire a bank located in any other state, and a bank holding
company located outside Florida can acquire any Florida-based bank, in either
case subject to certain deposit percentage and other restrictions. Beginning on
June 1, 1997, the legislation provides that unless an individual state has
elected to prohibit out-of-state banks from operating interstate branches within
its territory, adequately capitalized and managed bank holding companies will be
able to consolidate their multi-state bank operations into a single bank
subsidiary and to branch on an interstate basis. De novo branching by an
out-of-state bank would be permitted only if it is expressly permitted by the
laws of the host state. Florida does not permit de novo branching by an
out-of-state bank. Therefore, the only method by which an out-of-state bank or
bank holding company may enter Florida is through an acquisition. The authority
of a bank to establish and operate branches within a state will continue to be
subject to applicable state branching laws.
A bank holding company is generally prohibited from acquiring control
of any company which is not a bank and from engaging in any business other than
the business of banking or managing and controlling banks. However, there are
certain activities which have been identified by the Federal Reserve Board to be
so closely related to banking as to be a proper incident thereto and thus
permissible for bank holding companies. Effective April 21, 1997, the Federal
Reserve Board revised and expanded the list of permissible non-banking
activities, which now includes the following: extending credit and servicing
loans; acting as investment or financial advisor to subsidiaries and certain
outside companies; leasing personal and real property or acting as a broker with
respect thereto; providing management and employee benefits consulting and
career counseling services to nonaffiliated banks and nonbank depository
institutions; operating certain nonbank depository institutions; performing
certain trust company functions; providing certain agency transactional
services, including securities brokerage services, riskless principal
transactions, private placement services, and acting as a futures commission
merchant; providing data processing and data transmission services; acting as an
insurance agent or underwriter with respect to certain limited types of
insurance; performing real estate appraisals; arranging commercial real estate
equity financing; providing check-guaranty,
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collection agency and credit bureau services; engaging in asset management,
servicing and collection activities; providing real estate settlement services;
acquiring certain debt which is in default; underwriting and dealing in
obligations of the United States, the states and their political subdivisions;
engaging as a principal in foreign exchange trading and dealing in precious
metals; providing other support services such as courier services and the
printing and selling of checks; and investing in programs designed to promote
community welfare.
In determining whether an activity is so closely related to banking as
to be permissible for bank holding companies, the Federal Reserve Board is
required to consider whether the performance of such activities by a bank
holding company or its subsidiaries can reasonably be expected to produce
benefits to the public such as greater convenience, increased competition and
gains in efficiency that outweigh the possible adverse effects such as undue
concentration of resources, decreased or unfair competition, conflicts of
interest and unsound banking practices. Generally, bank holding companies are
required to obtain the prior approval of the Federal Reserve Board to engage in
any new activity not previously approved by the Federal Reserve Board. The
Company has no current plans to engage in any business other than the business
of owning and controlling the Bank.
The Bank, as a subsidiary of the Company, is subject to restrictions
under federal law in dealing with the Company and other affiliates, if any.
These restrictions apply to extensions of credit to an affiliate, investments in
the securities of an affiliate and the purchase of assets from an affiliate.
Loans and extensions of credit by national banks are subject to legal
lending limitations. Under federal law, a national bank may grant unsecured
loans and extensions of credit in an amount up to 15% of its unimpaired capital
and surplus to any person if the loans and extensions of credit are not fully
secured by collateral having a market value at least equal to their face amount.
In addition, a national bank may grant loans and extensions of credit to a
single person in an amount up to 10% of its unimpaired capital and surplus,
provided that the transactions are fully secured by readily marketable
collateral having a market value, determined by reliable and continuously
available price quotations, at least equal to the amount of funds outstanding.
This 10% limitation is separate from, and in addition to, the 15% limitation for
unsecured loans. Loans and extensions of credit may exceed the general lending
limit if they qualify under one of several exceptions. Such exceptions include
certain loans or extensions of credit arising from the discount of commercial or
business paper, the purchase of bankers' acceptances, loans secured by documents
of title, loans secured by U.S. obligations and loans to or guaranteed by the
federal government.
CAPITAL ADEQUACY REQUIREMENTS
Both the Company and the Bank are subject to regulatory capital
requirements imposed by the Federal Reserve Board and the OCC. The Federal
Reserve Board and the OCC have issued risk-based capital guidelines for bank
holding companies and banks which make regulatory capital requirements more
sensitive to differences in risk profiles of various banking organizations. The
capital adequacy guidelines issued by the Federal Reserve Board are applied to
bank holding companies on a consolidated basis. The OCC's risk capital
guidelines apply directly to national banks regardless of whether they are
subsidiaries of a bank holding company. Both agencies' requirements (which are
substantially similar), provide that banking organizations must have capital
equivalent to 8% of weighted risk assets. The risk weights assigned to assets
are based primarily on credit risks. Both the Federal Reserve Board and the OCC
have also implemented new minimum capital leverage ratios to be used in tandem
with the risk-based
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guidelines in assessing the overall capital adequacy of banks and bank holding
companies. Under these rules, banking institutions are required to maintain a
ratio of 3% "Tier 1" capital to total assets (net of goodwill). Tier 1 capital
includes common shareholders equity, noncumulative perpetual preferred stock and
minority interests in the equity accounts of consolidated subsidiaries, less
certain intangible assets.
The OCC's guidelines provide that intangible assets are generally
deducted from Tier 1 capital in calculating a bank's risk-based capital ratio.
However, certain intangible assets which meet specified criteria ("qualifying
intangibles"), such as mortgage servicing rights, are retained as a part of Tier
1 capital. The OCC currently maintains that only mortgage servicing rights and
purchased credit card relationships meet the criteria to be considered
qualifying intangibles. The OCC's guidelines formerly provided that the amount
of such qualifying intangibles that may be included in Tier 1 capital was
strictly limited to a maximum of 25% of total Tier 1 capital. The OCC has
amended its guidelines to increase the limitation on such qualifying intangibles
from 25% to 50% of Tier 1 capital and further to permit the inclusion of
purchased credit card relationships as a qualifying intangible asset.
In addition, the OCC has adopted rules which clarify treatment of asset
sales with recourse not reported on a bank's balance sheet. Among assets
affected are mortgages sold with recourse under Federal National Mortgage
Association, Federal Home Loan Mortgage Corporation and Federal Farm Credit Bank
programs. The rules clarify that even though those transactions are treated as
asset sales for bank Call Report purposes, those assets will still be subject to
a capital charge under the risk-based capital guidelines.
Both the risk-based capital guidelines and the leverage ratio are
minimum requirements, applicable only to top-rated banking institutions.
Institutions operating at or near these levels are expected to have well
diversified risk, high asset quality, high liquidity, good earnings and in
general, have to be considered strong banking organizations rated composite 1
under the CAMEL rating system for banks. Institutions with lower ratings and
institutions with high levels of risk or experiencing or anticipating
significant growth would be expected to maintain ratios 100 to 200 basis points
above the stated minimums.
The OCC, the Federal Reserve Board and the FDIC have adopted
regulations revising their risk-based capital guidelines to ensure that the
guidelines take adequate account of interest rate risk. Interest rate risk is
the adverse effect that changes in market interest rates may have on a bank's
financial condition and is inherent to the business of banking. Under the new
regulations, when evaluating a bank's capital adequacy, the agency's capital
standards now explicitly include a bank's exposure to declines in the economic
value of its capital due to changes in interest rates. The exposure of a bank's
economic value generally represents the change in the present value of its
assets, less the change in the value of its liabilities, plus the change in the
value of its interest rate off-balance sheet contracts. Concurrently, the
agencies issued a joint policy statement, effective June 26, 1996, to provide
guidance on sound practices for managing interest rate risk. In the policy
statement, the agencies emphasize the necessity of adequate oversight by a
bank's Board of Directors and senior management and of a comprehensive risk
management process. The policy statement also describes the critical factors
affecting the agencies' evaluations of a bank's interest rate risk when making a
determination of capital adequacy. The agencies' risk assessment approach used
to evaluate a bank's capital adequacy for interest rate risk relies on a
combination of quantitative and qualitative factors. Banks that are found to
have high levels of exposure and/or weak management practices will be directed
by the agencies to take corrective action.
The Federal Reserve Board'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 1,150,000 Common Shares 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
Board's capital guidelines, would exceed these requirements.
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PROMPT CORRECTIVE ACTION
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"FDICIA"), enacted on December 19, 1991, provides for the development of a
regulatory monitoring system requiring prompt corrective action on the part of
banking regulators with regard to certain classes of undercapitalized
institutions. While the FDICIA does not change any of the minimum capital
requirements, it directs each of the federal banking agencies to issue
regulations putting the monitoring plan into effect. The FDICIA creates five
"capital categories" ("well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized") which are defined in the FDICIA and which will be used to
determine the severity of corrective action the appropriate regulator may take
in the event an institution reaches a given level of undercapitalization. For
example, an institution which becomes "undercapitalized" must submit a capital
restoration plan to the appropriate regulator outlining the steps it will take
to become adequately capitalized. Upon approving the plan, the regulator will
monitor the institution's compliance. Before a capital restoration plan will be
approved, any entity controlling a bank (i.e., holding companies) must guarantee
compliance with the plan until the institution has been adequately capitalized
for four consecutive calendar quarters. The liability of the holding company is
limited to the lesser of five percent of the institution's total assets or the
amount which is necessary to bring the institution into compliance with all
capital standards. In addition, "undercapitalized" institutions will be
restricted from paying management fees, dividends and other capital
distributions, will be subject to certain asset growth restrictions and will be
required to obtain prior approval from the appropriate regulator to open new
branches or expand into new lines of business.
As an institution's capital levels decline, the extent of action to be
taken by the appropriate regulator increases, restricting the types of
transactions in which the institution may engage and ultimately providing for
the appointment of a receiver for certain institutions deemed to be critically
undercapitalized.
In order to comply with the FDICIA, the Federal Reserve Board, the OCC
and the FDIC have adopted regulations defining operational and managerial
standards relating to internal controls, loan documentation, credit underwriting
criteria, interest rate exposure, asset growth, and compensation, fees and
benefits.
In response to the directive issued under the FDICIA, the regulators
have established regulations which, among other things, prescribe the capital
thresholds for each of the five capital categories established by the FDICIA.
The following table reflects the capital thresholds:
* 1 moved from here; text not shown
<TABLE>
<CAPTION>
TOTAL RISK- TIER 1 RISK- TIER 1
BASED CAPITAL BASED LEVERAGE
RATIO CAPITAL RATIO
RATIO
<S> <C> <C> <C>
Well capitalized (1)............................. greater than 10% greater than 6% greater than 5%
Adequately Capitalized (1)....................... greater than 8 greater than 4 greater than 4(2)
Undercapitalized (4)............................. less than 8 less than 4 less than 4(3)
Significantly Undercapitalized (4)............... less than 6 less than 3 less than 3
Critically Undercapitalized...................... -- -- less than 2(5)
</TABLE>
- ----------------
(1) An institution must meet all three minimums.
(2) 3% for composite 1-rated institutions, subject to appropriate federal
banking agency guidelines.
(3) less than 3% for composite 1-rated institutions, subject to appropriate
federal banking agency guidelines.
(4) An institution falls into this category if it is below the specified capital
level for any of the three capital measures.
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(5) Ratio of tangible equity to total assets.
The scope of regulation and permissible activities of the Company and
the Bank is subject to change by future federal and state legislation. In
addition, regulators sometimes require higher capital levels on a case-by-case
basis based on such factors as the risk characteristics or management of a
particular institution. The Company and the Bank are not aware of any attributes
of their operating plan that would cause regulators to impose higher
requirements.
OTHER REGULATION
FDIC. The deposits of customers with the Bank will be insured by the
FDIC to the fullest extent provided by law. 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 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 it deems such
examination 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.
In addition, in its application to the OCC 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.
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 OCC. 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 OCC 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 OCC 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 of 1977 (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-to moderate-income areas to its
market share of loans in its entire service area, (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.
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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.
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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 of 1974 and the Fair Housing Act of 1968. 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 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, 1998, 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, 1998, 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 in 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
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.
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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
GENERAL
The Company's Articles of Incorporation authorize the Company to issue
(i) up to 10,000,000 Common Shares, par value $.01 per share, of which 1,150,000
shares will be issued pursuant to the Offering, and (ii) up to 2,000,000
Preferred Shares, the par value and other rights of which may be determined by
the Board of Directors at the time it authorizes issuance thereof. No other
classes of capital stock are authorized. Other than the Organizer Warrants and
options to purchase 25,000 Common Shares to be granted to Richard E. Horne under
the Option Agreement , there are no outstanding options to purchase, warrants
for, or securities convertible into, the Common Shares. See "Management--Stock
Options".
COMMON SHARES
All Common Shares 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 Shares in the near future. See
"Dividend Policy." Each holder of Common Shares will be entitled to one vote for
each share on all matters submitted to the vote of the shareholders. There is no
right to cumulative voting. The Common Shares do not have any redemption
provisions and the holders thereof will not have any preemptive or conversion
rights. The outstanding Common Shares are, and all Common Shares issued in
accordance with the terms of the Offering as described in this Prospectus will
be, fully-paid and non-assessable.
PREFERRED SHARES
Under its Articles of Incorporation, the Company is authorized to issue
2,000,000 Preferred Shares. The Board of Directors of the Company is authorized
to issue Preferred Shares 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 Shares. Any
such issuance of Preferred Shares could have the effect of delaying or
preventing a change of control.
ORGANIZERS' WARRANTS
In connection with the Offering, each member of the Company's Board of
Directors and its organizers will be granted warrants to purchase one Common
Share for each Common Share purchased by such directors and other organizers in
the Offering ("the Organizers' Warrants"). The exercise price for the
Organizers' Warrants will be $10.00 per share, the offering price of the Common
Shares in the Offering. The Organizers' Warrants will vest in equal annual
increments over a three year period commencing on the first anniversary of the
closing date for the Offering and will terminate on the 10th anniversary of such
closing date. The Company has reserved 111,000 Common Shares for issuance
pursuant to exercise of the Organizers' Warrants.
SPECIAL SHAREHOLDERS' MEETING
Article II, Section 2 of the Company's Amended and Restated Bylaws
allows a special meeting of shareholders to be called only by: the Board of
Directors, the President or the Secretary of the Company or upon demand made in
conformance with Florida law, by the holder(s) of not less than 10% of all the
votes entitled to be cast on any issue to be considered at such meeting.
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AMENDMENT OF PROVISIONS
Except as set forth below under "--Certain Provisions of the Articles
of Incorporation and By-laws", 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.
CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND BY-LAWS
The Company's Articles of Incorporation contain provisions requiring
supermajority shareholder approval to effect certain extraordinary corporate
transactions which are not approved by three-fourths of the Board of Directors.
The Articles of Incorporation require, in addition to any other approval or
consent required under the laws of the State of Florida, the affirmative vote or
consent of the holders of at least two-thirds (2/3) of the shares of each class
of stock entitled to vote in elections of directors to approve any merger or
consolidation of the Company or any subsidiary of the Company with or into any
Interested Person (as defined), regardless of the identity of the surviving
corporation, any sale, lease or other disposition of all or any substantial part
(assets having an aggregate fair market value in excess of twenty-five percent
(25%) of the total assets of the Company) of the assets of the Company or any
subsidiary of the Company to any Interested Person for cash, real or personal
property, including securities, or any combination thereof, any issuance or
delivery of securities of the Company or a subsidiary of the Company to any
Interested Person in consideration for or in exchange of any securities or other
property (including cash), or the liquidation of the Company ("Covered
Transaction"), if any person who, as of the record date for the determination of
shareholders entitled to notice of any Covered Transaction and to vote thereon
or consent thereto, as of the date of such vote or consent, or immediately
before consummation of any Covered Transaction, owns beneficially five percent
or more of any voting stock of the Company entitled to vote in elections of
directors ("Interested Person") is a party to the transaction, unless
three-fourths (75%) of the entire Board of Directors has approved the
transaction, in which case the affirmative vote of a majority of each class of
stock entitled to vote in elections of directors is required. In addition, the
Articles of Incorporation require, in addition to any approval of the Board of
Directors or any shareholder vote or consent required under Florida law, any
other provision in the Articles of Incorporation or otherwise, the separate
approval by the holders of a majority of the shares of each class of stock of
the Company entitled to vote in elections of directors which are not
beneficially owned, directly or indirectly, by an Interested Person, of any
Covered Transaction other than a liquidation of the Company ("Business
Combination"), if an Interested Person is a party to such transaction; provided,
that such approval is not required if (a) the consideration to be received by
the holders of the stock of the Company meets certain minimal levels determined
by a formula under the Articles of Incorporation (generally the highest price
paid by the Interested Person for any shares which he has acquired), (b) there
has been no reduction in the average dividend rate from that which was obtained
prior to the time the Interested Person became such, and (c) the consideration
to be received by shareholders who are not Interested Persons shall be paid in
cash or in the same form as the Interested Person previously paid for shares of
such class of stock. These Articles of the Company's Articles of Incorporation,
as well as the Article establishing a classified Board of Directors, may be
amended, altered, or repealed only by the affirmative vote or consent of the
holders of at least three-fourths of the shares entitled to vote in elections of
directors.
The effect of these provisions is to make it more difficult for a
person, entity or group to effect a change in control of the Company through the
acquisition of a large block of the Company's voting stock.
The Company has elected to opt-out of the anti-takeover provisions set
forth in Sections 607.0901 (relating to affiliated transactions) and 607.0902
(relating to control share acquisitions) of the Florida Act.
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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 the 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 Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act, and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding is asserted by such director, officer
or controlling person in connection with the securities being registered in the
Offering, the Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
In general, federal banking laws and regulations prohibit 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 registrar and transfer agent for the Common Shares will be American
Stock Transfer & Trust Company.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company expects to have 1,150,000
of its Common Shares outstanding. The 1,150,000 Common Shares purchased in the
Offering (plus any additional shares sold upon
44
<PAGE>
exercise by the Underwriters of their over-allotment option) have been
registered with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933 (the "Securities Act") and may generally be resold
without registration under the Securities Act unless they are acquired by an
"affiliate" of the Company, as defined under Rule 144 promulgated under the
Securities Act ("Rule 144"). 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 Common Shares
pursuant to Rule 144 or another exemption under the Securities Act.
Generally, Rule 144 provides that an "affiliate" of the Company, as the
term "affiliate" is defined in Rule 144, is entitled to sell in "broker's
transactions" or in transactions directly with a "market maker," within any
three-month period , a number of shares that does not exceed the greater of (i)
one percent of the then outstanding Common Shares or (ii) the average weekly
trading volume of the Common Shares during the four calendar weeks preceding
such sale. Sales under Rule 144 are also subject to certain 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 aggregate of approximately 111,000 shares
after completion of the Offering) have agreed, or will agree, not to sell,
contract to sell or otherwise dispose of any Common Shares held by them for a
period of 180 days from the date of this Prospectus without the prior written
consent of the Underwriters. Prior to the Offering, there has been no public
trading market for the Common Shares, 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 Shares after completion of the
Offering.
UNDERWRITING
Under the terms and subject to the conditions set forth in the
underwriting agreement by and between the Underwriter and the Company (the
"Underwriting Agreement"), the Underwriter has agreed to purchase from the
Company, and the Company has agreed to sell to the Underwriter, 1,150,000 Common
Shares to be sold in the Offering.
The Underwriting Agreement provides that the obligation of the
Underwriter to pay for and accept delivery of the Common Shares is subject to
approval of certain matters by its counsel and to various other conditions
precedent. The Underwriter is obligated to purchase and pay for all Common
Shares offered hereby (other than those covered by the over-allotment option
described below), if any Common Shares are purchased.
The Underwriter has advised the Company that the Underwriter proposes
to offer the Common Shares directly to the public initially at the public
offering price set forth on the cover page of this Prospectus and to certain
selected dealers at such price, less a concession not to exceed $0.39 per share
for 500,000 Common Shares and $0.85 for each of the remaining Common Shares sold
pursuant to this Offering, including those sold pursuant to the over-allotment
option (however, no underwriting discounts or commission will be assessed with
respect to sales of up to 500,000 Common Shares to certain investors identified
by the Company to the Underwriter, in writing, prior to effectiveness of the
Registration Statement for the Offering). The Underwriter may allow, and such
selected dealers may reallow, a concession not in excess of $0.42 per share to
certain other dealers. After the initial public offering of the Common Shares,
the public offering price, concession, and reallowance to dealers may be changed
by the Underwriter.
The Common Shares are offered subject to receipt and acceptance by the
Underwriter, and to certain other conditions, including the right to reject
orders in whole or in part.
The Underwriter has advised the Company that it does not intend to
confirm sales of the Common Shares offered hereby to any account over which it
may exercise discretionary authority.
The Company has granted to the Underwriter an option, exercisable
during the 30-day period beginning on the date of this Prospectus, to purchase
up to 172,500 additional Common Shares solely to
45
<PAGE>
cover over-allotments, if any, at the public offering price less the
underwriting discounts and commissions of 8.5% as set forth on the cover page
of this Prospectus.
The Company has agreed to pay the Underwriter a non-accountable expense
allowance of $45,000 upon completion of this Offering (and, to the extent that
the over-allotment option is exercised, an additional amount equal to three
percent of the gross proceeds of the Common Shares underwritten in connection
with such over-allotment exercise). The Underwriting Agreement also provides
that the Underwriter has a right of first refusal for a period of 5 years from
the date of this Prospectus to serve as the Company's underwriter in connection
with any sale of securities by the Company or its affiliates.
Subject to certain limitations, the Company and the Underwriter have
agreed to indemnify each other against certain liabilities, including certain
civil liabilities, under the Securities Act, or to contribute to payments that
the Company or the Underwriter may be requiredd to make in respect thereof.
At the Company's request, the Underwriter has agreed to reserve up to
500,000 Common Shares for sale at the public offering price to directors,
employees, and other persons having certain business relationships with the
Company and the Bank. The number of shares available for sale to the general
public will be reduced to the extent that these persons purchase such reserved
shares. Any reserved shares not purchased will be offered by the Underwriter to
the general public on the same basis as the other shares offered hereby.
The foregoing is a summary of the principal terms of the Underwriting
Agreement and does not purport to be complete. Reference is made to a copy of
the Underwriting Agreement which is on file as an exhibit to the Registration
Statement.
In connection with the offering of the Common Shares, the Underwriter
and selling group members and their respective affiliates may engage in
over-allotment transactions, stabilizing transactions, syndicate covering
transactions, and penalty bids effected in accordance with Rule 104 of the
Commission's Regulation M. Over-allotment transactions are those transactions in
which the Underwriter creates a short position for its own account by selling
more Common Shares than it is committed to purchase from the Company. In such
case, to cover all or part of a short position, the Underwriter may exercise the
over-allotment option described above or may purchase Common Stock in the open
market following completion of the offering. In stabilizing transactions, the
Underwriter may bid for, and purchase, 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 Shares. Syndicate covering
transactions involve purchases of Common Shares in the open market after a
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the Underwriter to reclaim selling concessions from a
syndicate member when the Common Shares originally sold by such syndicate member
are purchased in a syndicate covering transaction to cover syndicate short
positions. Any of the foregoing transactions may cause the price of the Common
Shares to be higher than it would otherwise be in the absence of such
transactions. The Underwriter is not required to engage in any of the foregoing
transactions, and if commenced, such transactions may be discontinued at any
time.
Each of the Company and the directors, executive officers, and existing
shareholders of the Company and the Bank have agreed that, without the prior
written consent of the Underwriter, they will not, for a period of 180 days from
the date of this Prospectus, subject to certain limited exceptions, directly or
indirectly offer, sell, announce an intention to sell, contract to sell, or
otherwise dispose of, any Common Shares or any securities convertible into or
exercisable or exchangeable for the Common Shares.
There has been no public trading market for the Common Shares prior to
this Offering. Consequently, the initial public offering price for the Common
Shares was determined by negotiations between the Company and the Underwriter.
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 Shares. In determining such price, consideration was given to several
factors, including among them the size of the offering, the market conditions
for initial public offerings, the desire that the security being offered be
attractive to individuals, the Underwriter's experience in dealing with initial
public offerings for financial institutions, and other relevant factors. The
Underwriter has advised the Company that it presently intends to make a market
in the Common Shares after the commencement of trading, but no assurances can be
made as to the liquidity of the Common Shares or that an active and liquid
trading market will develop or, if developed, that it will be sustained. The
Underwriter will have no obligation to continue to make a market in the Common
Shares, however, and it may cease market making activities, if commenced, at any
time.
Prior to this Offering, the Company arranged a series of loans from
certain individuals (the Organizational Loans, described elsewhere herein) in
the aggregate principal amount of $900,000 which have been used to pay
organizational and pre-opening expenses of the Company and the Bank. In
connection with such loans, the Company paid the Underwriter a fee equal to 10%
of the aggregate principal amount of the loans ($90,000) as compensation for
referring the individual lenders to the Company. Subsequently, W. Jonathan
Wride, President and CEO of the Underwriter, has purchased from such lenders
$100,000 in aggregate principal amount of the notes evidencing such loans.
* 3 moved from here; text not shown
46
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the Offering will be passed
upon for the Company by Smith, Gambrell & Russell, LLP, Atlanta, Georgia,
counsel to the Company. Certain legal matters in connection with the Offering
will be passed upon for the Underwriter by Carlton, Fields, Ward, Emmanuel,
Smith & Cutler, P.A., Tampa, Florida, counsel to the Underwriter.
EXPERTS
The financial statements of the Company for the period from January 23,
1997 (inception) until September 30, 1998 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.
47
<PAGE>
C O N T E N T S
P A G E
Independent Auditors' Report - - - - - - - - - - - - - - - - - - - - - F-2
Balance Sheet - - - - - - - - - - - - - - - - - - - - - - - - - - - - F-3
Statement of Operations - - - - - - - - - - - - - - - - - - - - - - - F-4
Statement of Shareholders Deficit - - - - - - - - - - - - - - - - - - F-5
Statement of Cash Flows - - - - - - - - - - - - - - - - - - - - - - - F-6
Notes to Financial Statements - - - - - - - - - - - - - - - - - - - - F-7-10
F-1
<PAGE>
Board of Directors
Marine Bancshares, Inc.
Naples, Florida
Independent Auditors' Report
We have audited the accompanying balance sheet of Marine Bancshares,
Inc. (the Company) as of September 30, 1998, and the related statements of
operations, shareholders deficit and cash flows for the period from January 23,
1997 (date of inception) to September 30, 1998. 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 Marine Bancshares,
Inc. as of September 30, 1998, and the results of its operations and its cash
flows for the period from January 23, 1997 (date of inception) to September 30,
1998 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
company will continue as a going concern. As discussed in Note H to the
financial statements, the company's ability to continue as a going concern is
dependent on approval from the Office of the Comptroller of the Currency for a
National Banking Charter and a successful public offering of the Company's
common stock. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
HILL, BARTH & KING, INC.
Certified Public Accountants
Naples, Florida
November 3, 1998
F-2
<PAGE>
<TABLE>
<CAPTION>
MARINE BANCSHARES, INC.
(A Development Stage Company)
BALANCE SHEET
September 30, 1998
A S S E T S
<S> <C>
Cash $ 2,799
------------
TOTAL CASH 2,799
------------
Equipment - NOTE B 16,197
Deferred offering costs 120,127
Prepaid expenses 11,942
Other assets 31,700
------------
$ 182,765
============
LIABILITIES AND SHAREHOLDERS DEFICIT
Liabilities:
Loans payable - NOTE C $ 740,000
Advances from organizers - NOTE D 40,000
Accrued interest payable 89,677
Accrued expenses and other liabilities 89,596
------------
TOTAL LIABILITIES 959,273
------------
Shareholders Deficit - NOTE G:
Preferred stock, par value $.01 per share,
2,000,000 shares authorized; no shares issued
and outstanding 0
Common stock, par value $.01 per share,
10,000,000 shares authorized; 100 shares issued
and outstanding 1
Additional paid-in capital 99
Deficit accumulated during the development stage (776,608)
------------
TOTAL SHAREHOLDERS DEFICIT (776,508)
------------
$ 182,765
============
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
MARINE BANCSHARES, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Period from January 23, 1997 (date of inception) to September 30, 1998
<S> <C>
INCOME
Interest income $ 13,321
EXPENSES
Salaries and employee benefits 173,900
Interest expense and loan fees 261,812
Professional fees 177,147
Other expenses 177,070
------------
TOTAL EXPENSES 789,929
------------
NET LOSS $ (776,608)
============
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
MARINE BANCSHARES, INC.
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS DEFICIT
Period from January 23, 1997 (date of inception) to September 30, 1998
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON PAID-IN DEVELOPMENT
STOCK CAPITAL STAGE TOTAL
----- ------- ----------- -----
<S> <C> <C> <C> <C>
Balance
January 23, 1997 $ 0 $ 0 $ 0 $ 0
Proceeds from issuance
of common stock 1 999 0 1,000
Payment for the
retirement of
common stock (1) (999) 0 (1,000)
Proceeds from issuance
of common stock 1 99 0 100
Net loss 0 0 (776,608) (776,608)
---------------- ---------------- --------------- ------------
Balance (deficit)
September 30, 1998 $ 1 $ 99 $ (776,608) $ (776,508)
================ ================ =============== ============
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE>
<TABLE>
<CAPTION>
MARINE BANCSHARES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Period from January 23, 1997 (date of inception) to September 30, 1998
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(776,608)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 5,108
Increase in prepaid expenses (11,942)
Increase in other assets (151,827)
Increase in accounts payable 89,596
Increase in accrued interest payable 89,677
----------
NET CASH USED IN OPERATING ACTIVITIES (755,996)
----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (21,305)
----------
NET CASH USED IN INVESTING ACTIVITIES (21,305)
----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 1,100
Payments on retirement of common stock (1,000)
Proceeds from loans 940,000
Payments on loans (200,000)
Proceeds from organizer advances 40,000
----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 780,100
----------
NET INCREASE IN CASH 2,799
CASH
Beginning of period 0
----------
End of period $ 2,799
===========
</TABLE>
See accompanying notes to financial statements
F-6
<PAGE>
MARINE BANCSHARES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization:
Marine Bancshares, Inc. formerly known as Coastal Bank Corporation (the
Company) was incorporated under the laws of the state of Florida on January 23,
1997 . The Company's activities to date have been limited to the organization of
Marine National Bank (the Bank), as well as preparation for a $11,500,000 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.
Deferred Offering Costs:
Deferred offering costs consist primarily of legal and accounting fees
related to the initial public stock offering and will be offset against the
offering proceeds when received.
NOTE B - EQUIPMENT
Equipment at September 30, 1998 consists of the following:
Furniture, fixtures and equipment $ 7,155
EDP equipment and software 14,150
-------
21,305
Less accumulated depreciation 5,108
-------
TOTAL $16,197
=======
** 4 Depreciation is computed on the straight-line method over the
estimated useful lives of the depreciable assets. Depreciation expense was
$5,108 for the period ended September 30, 1998.
F-7
<PAGE>
MARINE BANCSHARES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 1998
NOTE C - LOANS PAYABLE
In order to obtain funding for its start-up and organizational
expenses, during 1997 the Company issued to twenty-nine individuals a series of
promissory notes for the Organizational Loans in an aggregate principal amount
of $900,000. The proceeds of certain of these Organizational Loans were used to
repay prior Organizational Loans in an aggregate principal amount of $200,000.
In addition, the Company has obtained restated note agreements from all of the
individual lenders. Under such restated note agreements, the remaining balance
on the Organizational Loans of $700,000 matures on December 31, 1998. The
restated loans currently bear interest at an annual rate of 13% and a loan fee
of 8% of the face amount of the loan becomes due upon maturity. The foregoing
loans and interest costs will be repaid from the offering proceeds.
The company has also obtained a $75,000 line of credit payable to a
bank, guaranteed by the organizers of the bank. As of September 30, 1998, the
company had borrowed $40,000 on the demand note under this agreement. The note
bears interest at the prime rate and varies as the prime varies and matures on
July 15, 1999.
NOTE D - ADVANCES FROM ORGANIZERS
The Company arranged a series of advances from certain individual
organizers in the aggregate amount of $40,000 to pay organizational and
pre-opening expenses for the Bank and the Company. The foregoing advances bear
no interest and will be repaid from proceeds of the Offering. In the event that
the Bank's charter is denied, each organizer will receive back only their pro
rata share of monies remaining after all organizing expenses and expenses
related to closing down the organizational project are paid.
NOTE E - INCOME TAXES
Deferred taxes are recognized for temporary differences between the
basis of assets and liabilities for financial statement and income tax purposes.
The tax effect of the differences that gave rise to a deferred tax asset of
$271,813 and corresponding valuation allowance of ($271,813) at September 30,
1998 relate primarily to the capitalization of preoperating start-up costs which
are amortized over a five year term from the date operations commence for tax
purposes.
F-8
<PAGE>
MARINE BANCSHARES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 1998
NOTE F - COMMITMENTS AND CONTINGENCIES
The Company has committed to lease one and one-half floors of a
multi-story building for its main office location and additional space for a
drive-in facility. The proposed lease has a term of 10 years with the option for
two 5-year renewals; to begin on the earlier of thirty days after the lessor
receives a certificate of occupancy for the building or the date the bank opens
for business. The base annual lease payment is $159,000 for the first year of
the lease, $189,000 for the second year of the lease and increases by the
greater of 3% or the Consumer Price Index (Revised) - All Urban Consumers (U.S.
City Average) in each succeeding year during the initial term or any renewal
period, such increase not to exceed 6% in any one year. 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 six months ending February
28, 1999 with the option to continue on a month-to-month basis.
NOTE G - STOCK OPTIONS AND WARRANTS
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 the date that the bank opens
for business (the "Commencement Date") and on the first, second, third and
fourth anniversaries of the Commencement Date.
The Board of Directors of the Company have also agreed to grant Stock
Purchase Warrants in consideration of the Organizers' efforts in organizing the
Company and the Bank. The Company intends to issue warrants to purchase one
share of Common Stock for each share of Common Stock purchased by each organizer
from the Offering. The Warrants will vest in equal increments over a three-year
period commencing on the date of grant and on each anniversary date thereafter
until fully vested. Warrants may be exercised in whole or in part for $10.00 per
share beginning on the date of grant and expiring 10 years after the grant date.
The Company has reserved 111,000 shares of its Common Stock for issuance
thereunder.
The Board of Directors of the Company has adopted the Marine
Bancshares, Inc. 1998 Stock Option Plan. The plan provides for options to be
issued to directors, officers and employees as well as to certain consultants
and advisors. The Company has reserved 900,000 Common Shares for issuance
thereunder.
F-9
<PAGE>
MARINE BANCSHARES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 1998
NOTE H - GOING CONCERN
As shown in the accompanying financial statements, the Company incurred
a net loss of $776,608 during the development stage, January 23, 1997 (date of
inception) to September 30, 1998, and as of that date, the Company's liabilities
exceeded its assets by $776,508. The ability of the Company to continue as a
going concern is dependent on approval from the Office of the Comptroller of the
Currency for a National Banking Charter and a successful public offering of the
Company's common stock. The financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern.
F-10
<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 UNDERWRITER. 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............................................ 8
Forward-Looking Statements.............................. 15
Recent Developments..................................... 15
Use of Proceeds......................................... 16
Dividend Policy......................................... 16
Capitalization.......................................... 18
Business................................................ 19
Management's Discussion and Analysis
or Plan of Operation............................... 27
Management.............................................. 29
Certain Relationships and Related Transactions.......... 35
Security Ownership of Management
and Certain Beneficial Owners...................... 36
Supervision and Regulation.............................. 37
Description of Capital Stock............................ 43
Shares Eligible for Future Sale......................... 45
Underwriting............................................ 46
Legal Matters........................................... 48
Experts................................................. 48
Index to Financial Statements........................... F-1
UNTIL __________, 1998 (90 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.
1,150,000 SHARES
[LOGO]
COMMON STOCK
------------------------
P R O S P E C T U S
------------------------
ASHTIN KELLY & CO.
NOVEMBER __, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. - INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850(1) of the Florida Business Corporation Act ("FBCA")
permits a Florida corporation to indemnify any person who may be a party to any
third party proceeding by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, against liability
incurred in connection with such proceeding (including any appeal thereof) if he
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 , with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
Section 607.0850(2) of the FBCA permits a Florida corporation to
indemnify any person who may be a party to a derivative action if such person
acted in any of the capacities set forth in the preceding paragraph, against
expenses and amounts paid in settlement not exceeding, in the judgement of the
board of directors, the estimated expenses of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding (including appeals), provided that the person
acted under the standards set forth in the preceding paragraph. However, no
indemnification shall be made for any claim, issue or matter for which such
person is found to be liable unless, and only to the extent that, the court.
determines that, despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses which the court deems proper.
Section 607.0850(4) of the FCBA provides that any indemnification
made under the above provisions, unless pursuant to a court determination, may
be made only after a determination that the person to be indemnified has met the
standard of conduct described above. This determination is to be made by a
majority vote of a quorum consisting of the disinterested directors of the board
of directors, by duly selected independent legal counsel, or by a majority vote
of the disinterested shareholders. The board of directors also may designate a
special committee of disinterested directors to make this determination.
Section 607.0850(3), however, provides that a Florida corporation
must indemnify any director, or officer, employee or agent of a corporation who
has been successful in the defense of any proceeding referred to in Section
607.0850(1) or (2), or in the defense of any claim, issue or matter therein,
against expenses actually and reasonably incurred by him in connection
therewith.
Expenses incurred by a director or officer in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition thereof upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it is ultimately determined that
such director or officer is not entitled to indemnification under Section
607.0850. Expenses incurred by other employees or agents in such a proceeding
may be paid in advance of final disposition thereof upon such terms or
conditions that the board of directors deems appropriate.
The FBCA further provides that the indemnification and advancement
of payment provisions contained therein are not exclusive and it specifically
empowers a corporation to make any other further indemnification or advancement
of expenses under any bylaw, Agreement, vote of shareholders or disinterested
actions taken in other capacities while holding an office. However, a
corporation cannot indemnify or advance expenses if a judgment or other final
adjudication establishes that the actions of the director or officer were
material to the adjudicated cause of action and the director or officer (a)
violated criminal law, unless the director or officer had reasonable cause to
believe his conduct was unlawful, (b) derived an improper personal benefit from
a transaction, (c)was or is a director in a circumstance where the liability
under Section 607.0834 (relating to unlawful distributions) applies, or (d)
engages in willful misconduct or conscious disregard for the best interests of
the corporation in a proceeding by or in right of the corporation to procure a
judgment in its favor or in a proceeding by or in right of a shareholder.
II-1
<PAGE>
Article XII of the Company's Articles of Incorporation provides that
the Company shall indemnify any person who was or is a party to any threatened,
pending or completed action, suit or other type of proceeding, whether civil,
criminal, administrative or investigative, and whether formal or informal, by
reason of the fact that he is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorney's fees),
judgments, fines, penalties and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding,
including any appeal thereof, to the maximum extent permitted by law.
Article IX, Section 1 of the Company's By-Laws provides that the
Company shall indemnify, to the fullest extent authorized by the FBCA, each
person who was or is made a party or is threatened to be made a party to, any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or officer of
the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation , whether the basis
of such proceeding is alleged action in an official capacity or in any other
capacity while serving as a director, officer, employee or agent, against all
expenses, liability, and loss reasonably incurred by such indemnitee in
connection therewith (with certain limitations applicable to proceedings
initiated by such indemnitee).
Article IX, Section 2 of the Company's By-Laws provides that the above
right to indemnification shall include the right (with certain limitations) to
be paid by the Company the expenses (including attorney's fees) incurred in
defending any such proceeding in advance of its final disposition.
Article IX, Section 3 of the Company's By-Laws provides that if a claim
for indemnification is not paid in full by the Company within sixty (60) days
(or, in the case of a claim for an advancement of expenses, twenty (20) days)
after a written assertion thereof has been received by the Company, the
indemnitee may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim.
Article IX, Section 6 of the Company's By-Laws provides that the
Company may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses to
any employee or agent of the Company to the fullest extent of the provisions of
Article IX of the By-Laws with respect to the indemnification and advancement of
expenses of directors and officers of the Company.
II-2
<PAGE>
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............................. 35,500
Legal fees and expenses.................................. 120,000
Blue Sky fees and expenses............................... 35,000
Transfer Agent........................................... 3,500*
Miscellaneous............................................ 12,047
--------
Total.................................................... $250,000
========
- -----------
* Estimated.
ITEM 26. - RECENT SALES OF UNREGISTERED SECURITIES.
Pursuant to the exemption from registration provided by Section 4(2) of
the Securities Act of 1933, the Company issued to twenty-nine individuals a
series of promissory notes for the Organizational Loans in an aggregate
principal amount of $900,000. An aggregate of $200,000 principal amount of the
Organizational Loans has since been repaid and the remaining balance of $700,000
matures on December 31, 1998. The Organizational Loans are currently evidenced
by 24 separate promissory notes ranging in principal amount from $25,000 to
$100,000. All of the notes evidencing the Organizational Loans have been
restated or amended at various times, and each of the lenders thereunder
executed an Amended and Restated Promissory Note with respect to his or her loan
as of November 2, 1998. The interest rate on the Organizational Loans is 8% per
annum from their respective dates of issuance to March 31, 1998, and 13% per
annum from March 31, 1998 until the date of payment, and a funding fee equal to
8% of the principal amount is due each lender at maturity. All of the notes may
be prepaid without penalty. The principal, accrued interest, and fees due on the
Organizational Loans will be paid from the proceeds of the Offering. The
Underwriter has been paid a fee of 10% of the aggregate principal of all loans
made at any time (including loans, the proceeds of which were used to repay
prior loans), for a total fee of $90,000, for referring the lenders to the
Company.
The following describes each security issued in connection with the
Organizational Loans:
To the Dean A. Arnold Trust: A Promissory Note dated July 23, 1997 in
the principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an Amendment to Promissory Note dated April 1, 1998; and an Amended and
Restated Promissory Note dated as of November 2, 1998;
To the Donald L. Arnold Trust: A Promissory Note dated July 23, 1997 in
the principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an Amendment to Promissory Note dated April 1, 1998; and an Amended and
Restated Promissory Note dated as of November 2, 1998;
To the John L. Arnold Trust: A Promissory Note dated July 25, 1997 in
the principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an Amendment to Promissory Note dated April 1, 1998; and an Amended and
Restated Promissory Note dated as of November 2, 1998;
To Robert M. Beckman: A Promissory Note dated August 15, 1997 in the
principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an Amendment to Promissory Note dated April 1, 1998; and an Amended and
Restated Promissory Note dated as of November 2, 1998;
To A. Michael Belanger: A Promissory Note dated March 25, 1997 in the
principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an Amendment to Promissory Note dated April 1, 1998; and an Amended and
Restated Promissory Note dated as of November 2, 1998;
To Sharon C. Bennett: A Promissory Note dated April 28, 1997 in the
principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an Amendment to Promissory Note dated April 2, 1998; and an Amended and
Restated Promissory Note dated as of November 2, 1998;
To Gilbert F. Campbell and Sally Campbell: A Promissory Note dated May
19, 1997 in the principal amount of $25,000.00; a Restated Promissory Note dated
October 15, 1997; an undated Amendment to Promissory Note; and an Amended and
Restated Promissory Note dated as of November 2, 1998;
To James E. Doane: A Promissory Note dated February 25, 1997 in the
principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an Amendment to Promissory Note dated April 8, 1998; and an Amended and
Restated Promissory Note dated as of November 2, 1998;
To James E. Doane, Jr.: A Promissory Note dated February 25, 1997 in
the principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an Amendment to Promissory Note dated April 3, 1998; an Amendment to
Promissory Note dated April 16, 1998; and an Amended and Restated Promissory
Note dated as of November 2, 1998;
To Jeannette L. Epstein, TTEE: A Promissory Note dated March 25, 1997
in the principal amount of $25,000.00; a Restated Promissory Note dated October
15, 1997; an Amendment to Promissory Note dated April 1, 1998; and an Amended
and Restated Promissory Note dated as of November 2, 1998;
To Dr. Jack Freedman: A Promissory Note dated July 22, 1997 in the
principal amount of $25,000.00; and a Restated Promissory Note dated October 15,
1997 which was paid in full as of March 31, 1998.
To Laurie G. and Janet L. Henley: A Promissory Note dated May 12, 1997
in the principal amount of $25,000.00; a Restated Promissory Note dated October
15, 1997; an Amendment to Promissory Note dated April 1, 1998; and an Amended
and Restated Promissory Note dated as of November 2, 1998;
To Sidney T. Jackson: A Promissory Note dated May 30, 1997 in the
principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an undated Amendment to Promissory Note; and an Amended and Restated
Promissory Note dated as of November 2, 1998;
To Jimmie Lou Jacobs: A Promissory Note dated February 25, 1997 in the
principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an undated Amendment to Promissory Note; and an Amended and Restated
Promissory Note dated as of November 2, 1998;
To Karl F. Jentgen: A Promissory Note dated February 25, 1997 in the
principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an Amendment to Promissory Note dated April 1, 1998; and an Amended and
Restated Promissory Note dated as of November 2, 1998;
To Karen F. Juette: A Promissory Note dated July 28, 1997 in the
principal amount of $50,000.00; a Restated Promissory Note dated October 15,
1997; and an Amended and Restated Promissory Note dated as of November 2, 1998;
To J.T.H. Associates: A Promissory Note dated October 29, 1997 in the
principal amount of $100,000.00, which was assigned by J.T.H. Associates to W.
Jonathan Wride by an instrument dated as of June 18, 1998; an Amendment to
Promissory Note dated June 19, 1998; and an Amended and Restated Promissory Note
dated as of November 2, 1998;
To Audrey J. Karcagi: A Promissory Note dated August 15, 1997 in the
principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an Amendment to Promissory Note dated April 1, 1998; and an Amended and
Restated Promissory Note dated as of November 2, 1998;
To Albert H. LeShane and Dorothy M. LeShane: A Promissory Note dated
April 19, 1997 in the principal amount of $25,000.00; a Restated Promissory Note
dated October 15, 1997; an Amendment to Promissory Note dated March 31, 1998;
and an Amended and Restated Promissory Note dated as of November 2, 1998;
To J. Kent Manley, Jr.: A Promissory Note dated March 21, 1997 in the
principal amount of $25,000.00 and paid in full per signature without date.
To Dolores D. Myers: A Promissory Note dated May 19, 1997 in the
principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an Amendment to Promissory Note dated April 1, 1998; and an Amended and
Restated Promissory Note dated as of November 2, 1998;
To the Albert T. Robinson IRA: A Promissory Note dated March 27, 1997
in the principal amount of $100,000.00 and paid in full per signature without
date.
To Joyce L. Ross: A Promissory Note dated October 29, 1997 in the
principal amount of $25,000.00; an Amendment to Promissory Note dated March 31,
1998; and an Amended and Restated Promissory Note dated as of November 2, 1998;
To William Robert Ross: A Promissory Note dated May 2, 1997 in the
principal amount of $25,000.00 and paid in full on October 29, 1997;
To Mary L. Sheffer and Harlan Sheffer: A Promissory Note dated April
19, 1997 in the principal amount of $25,000.00; a Restated Promissory Note dated
October 15, 1997; an Amendment to Promissory Note dated March 31, 1998; and an
Amended and Restated Promissory Note dated as of November 2, 1998;
To Adam Smith: A Promissory Note dated October 28, 1997 in the
principal amount of $25,000.00; an Amendment to Promissory Note dated April 20,
1998; and an Amended and Restated Promissory Note dated as of November 2, 1998;
To Robert E. Stauffer, Jr.: A Promissory Note dated April 19, 1997 in
the principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an Amendment to Promissory Note dated April 1, 1998; and an Amended and
Restated Promissory Note dated as of November 2, 1998;
To John E. Stockton: A Promissory Note dated March 25, 1997 in the
principal amount of $25,000.00; a Restated Promissory Note dated October 15,
1997; an Amendment to Promissory Note dated June 8, 1998; and an Amended and
Restated Promissory Note dated as of November 2, 1998;
To William D. Thompson: A Promissory Note dated May 9, 1997 in the
principal amount of $25,000.00; and a Restated Promissory Note dated October 15,
1997, paid in full by check dated April 2, 1998.
The Company has not previously issued any other securities, except that
the Company has issued 100 Common Shares at $1.00 per share solely for the
purpose of organizing the Company and electing its directors. Mr. Richard E.
Horne, President and Chief Executive Officer of the Company, currently holds
these shares, which will be repurchased at their $1.00 cost and canceled by the
Company concurrently with the closing of the Offering.
II-3
<PAGE>
ITEM 27. - EXHIBITS.
The following exhibits either are filed herewith or will be filed by
amendment, as indicated below:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
1.1 Form of Underwriting Agreement between the Company and Ashtin Kelly & Co.*
3.1 Second Amended and Restated Articles of Incorporation of the Company
3.2 Amended and Restated Bylaws
4.1 See Exhibits 3.1 and 3.2 for provisions of the Second Amended and Restated Articles of Incorporation
and Amended and Restated Bylaws of the Company defining rights of holders of the Company's Common Shares
4.2 Form of Common Share Certificate of the Company*
5.1 Opinion of Smith, Gambrell & Russell, LLP*
10.1 Lease, dated July 9, 1998, between the Company and Wridell Development Corporation, Inc.; Assignment of Leases
dated July 14, 1998, from Wridell Development Corporation, Inc. to Gulf Coast Commercial Corporation*
10.2 Form of Employment Agreement to be executed by the Company, the Bank, and Richard E. Horne
10.3 Form of Stock Option Agreement to be executed by the Company and Richard E. Horne
10.4 Marine Bancshares, Inc. 1998 Stock Option Plan
10.5 Form of Marine Bancshares, Inc. Stock Purchase Warrant
21 Subsidiaries of the Company
23.1 Consent of Smith, Gambrell & Russell, LLP (contained in its opinion at Exhibit 5.1)
23.2 Consent of Hill, Barth & King, Inc.
24 Power of Attorney (included in the signature page of this Amendment No. 1 to the Registration Statement)
27 Financial Data Schedule (for SEC use only)
</TABLE>
- -----------------------------
* To be filed by amendment.
II-4
<PAGE>
ITEM 28. - UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions , or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer 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 small business
issuer 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 Act and will be governed by the final adjudication of such
issue.
The undersigned small business issuer will provide to the Underwriter
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.
II-5
<PAGE>
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 has authorized this Amendment No. 1
to the Registration Statement to be signed on its behalf by the undersigned, in
the City of Naples, State of Florida, on November 9, 1998.
MARINE BANCSHARES, INC.
By: /S/ RICHARD E. HORNE
---------------------------------
Richard E. Horne
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Richard E. Horne and William J. Ryan, and
each of them acting alone, his true and lawful attorneys-in-fact and agent, 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 of 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
Amendment No. 1 to the 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>
/S/ Richard E. Horne Director, President and Chief Executive November 9, 1998
- --------------------------------------- Officer (Principal Executive Officer,
Richard E. Horne Principal Financial Officer and
Principal Accounting Officer)
/S/ William J. Ryan Director November 9, 1998
- ---------------------------------------
William J. Ryan
/S/ Pierce T. Neese Director November 9, 1998
- ---------------------------------------
Pierce T. Neese
/S/ Earl G. Hodges Director November 9, 1998
- ---------------------------------------
Earl G. Hodges
/S/ William L. McDaniel, Jr. Director November 9, 1998
- ---------------------------------------
William L. McDaniel, Jr.
/S/ DONALD W. KETTERHAGEN Director November 9, 1998
- ---------------------------------------
Donald W. Ketterhagen
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
1.1 Form of Underwriting Agreement between the Company and Ashtin Kelly & Co.*
3.1 Second Amended and Restated Articles of Incorporation of the Company
3.2 Amended and Restated Bylaws
4.1 See Exhibits 3.1 and 3.2 for provisions of the Second Amended and Restated Articles of Incorporation
and Amended and Restated Bylaws of the Company defining rights of holders of the Company's Common Shares
4.2 Form of Common Share Certificate of the Company*
5.1 Opinion of Smith, Gambrell & Russell, LLP*
10.1 Lease, dated July 9, 1998, between the Company and Wridell Development Corporation, Inc.; Assignment
of Leases, dated July 14, 1998, from Wridell Development Corporation, Inc. to Gulf Coast Commercial Corporation*
10.2 Form of Employment Agreement to be executed by the Company, the Bank, and Richard E. Horne
10.3 Form of Stock Option Agreement to be executed by the Company and Richard E. Horne
10.4 Marine Bancshares, Inc. 1998 Stock Option Plan
10.5 Form of Marine Bancshares, Inc. Stock Purchase Warrant
21 Subsidiaries of the Company
23.1 Consent of Smith, Gambrell & Russell, LLP (contained in its opinion at Exhibit 5.1)
23.2 Consent of Hill, Barth & King, Inc.
24 Power of Attorney (included in the signature page of this Amendment No. 1 to the Registration Statement)
27 Financial Data Schedule (for SEC use only)
</TABLE>
- -----------------------------
* To be filed by amendment.
EXHIBIT 3.1
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
MARINE BANCSHARES, INC.
Pursuant to Section 607.1003 and Section 607.1007 of the Florida
Business Corporation Act these Second Amended and Restated Articles of
Incorporation of Marine Bancshares, Inc. (the "Corporation") were approved by
the Board of Directors and the Shareholders of the Corporation on October __,
1998.
I. NAME
The corporate name that satisfies the requirements of 607.0401 is
Marine Bancshares, Inc.
II. DURATION
The Corporation shall have perpetual existence.
III. PURPOSES
The Corporation is organized for the following purposes:
To act as a bank holding company and, to the extent permitted under
applicable federal and state laws, now or hereafter existing, to engage in such
business as may be related to banks and to bank holding companies and their
activities;
To acquire, own, hold, sell, exchange, assign, transfer, create
security interests in, pledge or otherwise dispose of shares, or voting trust
certificates or depository receipts for shares, or capital stock of, or any
bonds, notes, debentures or other evidence of indebtedness, options, warrants or
other securities issued by any other business of any lawful character,
including, but not limited to, banks and other businesses providing goods or
services related to banking;
To acquire and hold other investment assets and to engage in any lawful
activities related thereto;
To acquire, own interests in and otherwise participate in and exercise
ownership rights in joint ventures, partnerships, limited partnerships, trusts,
corporations, unincorporated associations and other entities for the furtherance
of all corporate activities; to borrow and to lend money and to buy, sell,
guarantee and otherwise deal in the obligations of others and conduct financing,
brokerage, and discount and factoring businesses in connection with the
foregoing or otherwise;
<PAGE>
In general, to carry on any other lawful business whatsoever, and to
have, enjoy and exercise all the rights, powers and privileges which are now or
which may hereafter be conferred upon corporations organized under the Florida
Business Corporation Act.
IV. CAPITAL STOCK
The aggregate number of shares of capital stock the Corporation shall
have authority to issue shall be 12,000,000 shares, consisting of the following
securities:
A. Ten million (10,000,000) common shares of $.01 par value, designated
"Common Shares." The holders of Common Shares shall be entitled to elect all of
the members of the Board of Directors of the Corporation, shall be entitled to
receive such dividends as may be declared from time to time by the Board of
Directors, shall share on a ratable basis in the net assets of the Corporation
upon dissolution, subject to any preference that may be established for the
Preferred Shares, and shall be entitled to vote as a class on all matters
required or permitted to be submitted to the shareholders of the Corporation.
B. Two million (2,000,000) preferred shares of $.01 par value,
designated "Preferred Shares." The Board of Directors of the Corporation shall
be empowered to divide any and all Preferred Shares into series and to fix and
determine the relative rights and preferences of the shares of any series so
established in accordance with Section 607.062 of the Florida Business
Corporation Act, including (i) the distinctive designation of such Preferred
Shares and the number of shares which shall constitute such Preferred Shares;
(ii) the annual rate of dividends payable on the Preferred Shares, whether
dividends shall be cumulative, and conditions upon which, and the date when,
such dividends shall be accumulated on all Preferred Shares issued prior to the
record date for the first dividend of Preferred Shares; (iii) the time or times
when and the price or prices at which Preferred Shares shall be redeemable at
the option of the holder or of the Corporation and the sinking fund provisions,
if any, for the purchase or redemption of such shares; (iv) the amount payable
on Preferred Shares in the event of any liquidation, dissolution or winding up
of the affairs of the Corporation, whether all or a portion is paid before any
amount is paid on the Common Shares; (v) the rights, if any, of the holders of
Preferred Shares to convert such shares into, or exchange such shares for,
Common Shares or any other series of Preferred Shares and the terms and
conditions of such conversion or exchange; and (vi) whether the Preferred Shares
have voting rights and the extent of such voting rights, if any.
The Board of Directors shall have the power to reclassify any unissued
Preferred Shares from time to time by setting or changing the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption, including but
not limited to, but subject to the limitations described in, the above
provisions.
Any action by the Board of Directors in authorizing the issuance of
Preferred Shares and fixing and determining the provisions thereof is hereby
ratified and approved.
2
<PAGE>
V. REGISTERED OFFICE
The street address of the registered office of the Corporation is 501
Goodlette Road North, Suite D-12, Naples, Florida 34102, and the name of its
registered agent at such address is Richard E. Horne.
VI. PRINCIPAL OFFICE
The street address and mailing address of the principal office of the
Corporation is 501 Goodlette Road North, Suite D-12, Naples, Florida 34102.
VII. BOARD OF DIRECTORS; DIVISION INTO CLASSES
A. The number of directors of the Corporation shall be fixed from time
to time by resolution of the Board of Directors; provided, however that the
number of directors fixed by the Board of Directors shall not be less than two
(2) or more than twenty-five (25).
B. Concurrent with the adoption of these Articles of Incorporation, the
Board of Directors, other than those who may be elected by the holders of
Preferred Shares or any class or series of shares having a preference over the
Common Shares as to dividends or upon liquidation or any resolution or
resolutions providing for the issue of such class or series of shares adopted by
the Board, shall be classified, with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
possible: (i) one class ("Class I") of directors to be originally elected for a
term expiring at the annual meeting of shareholders to be held in 1999, (ii)
another class of directors ("Class II") to be originally elected for a term
expiring at the annual meeting of shareholders to be held in 2000, and (iii)
another class of directors ("Class III") to be originally elected for a term
expiring at the annual meeting of shareholders to be held in 2001, with each
member of each class to hold office until his successors are elected and
qualified. At each annual meeting of the shareholders of the Corporation, the
date of which shall be fixed by or pursuant to the Bylaws of the Corporation,
the successors of the class of directors whose terms expire at that meeting
shall be elected to hold office for a term expiring at the annual meeting of
stockholders held in the third year following the year of their election.
C. Subject to the rights of the holders of any series of Preferred
Shares then outstanding, if any vacancy shall occur in the membership of the
Board of Directors by reason of newly created directorships or resulting from
the resignation, disqualification, retirement or death of a director, the
remaining directors shall continue to act, and such vacancies may be filled by
the affirmative vote of the majority of the directors then in office, although
less than a quorum of the Board of Directors, and if not therefore filled by
action of the directors, may be filled by the shareholders at any meeting held
during the existence of such vacancy. If any vacancy shall occur among the
directors by reason of the removal from office of a director, such vacancy shall
be filled by the vote of three-fourths (3/4) of the outstanding shares of each
class of stock entitled to vote in elections of directors. A director elected to
fill a vacancy shall be elected for the unexpired term of his predecessor in
office. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director. Any increase or
decrease in the number of directors shall be so apportioned among the classes of
directors as to make all classes as nearly equal in size as possible.
3
<PAGE>
D. Notwithstanding the foregoing provisions of this Article VII, any
director whose term of office has expired shall continue to hold office until
his successor shall be elected and qualify.
E. Notwithstanding any other provisions of these Articles of
Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that some lesser percentage may be specified by law, these Articles of
Incorporation or the Bylaws of the Corporation), the affirmative vote of the
holders of at least three-fourths (3/4) of the total number of votes entitled to
be cast by the holders of all of the shares of capital stock of the Corporation
then entitled to vote generally in the election of directors shall be required
to amend, alter, change or repeal, or to adopt any provision as part of these
Articles of Incorporation inconsistent with, this Article VII. The holder of
each share of capital stock entitled to vote thereon shall be entitled to cast
the same number of votes as the holder of such shares is entitled to cast
generally in the election of each director.
VIII. NON-APPLICABILITY OF STATUTE
The Corporation expressly elects not to be governed by (i) Section
607.0901 of the Florida Business Corporation Act, relating to affiliated
transactions, and (ii) Section 607.0902 of the Florida Business Corporation Act,
relating to acquisition of control shares.
IX. AFFILIATED TRANSACTIONS
In addition to any approval of the Board of Directors or any
shareholder vote or consent required by the laws of the State of Florida or any
other provision of these Articles of Incorporation or otherwise, the affirmative
vote or consent of the holders of not less than two-thirds (2/3) of the shares
of each class of stock of the Corporation entitled to vote in elections of
directors shall be required to authorize, adopt or approve a Covered
Transaction; however, the provisions of this Article IX shall not apply to any
Covered Transaction if the Covered Transaction is approved by three-fourths
(3/4) of the entire membership of the Board of Directors of the Corporation, in
which event the affirmative vote of not less than a majority of the holders of
each class of shares of the Corporation entitled to vote in elections of
directors shall be required.
For the purpose of this Article IX:
1. The terms "affiliate" and "associate" shall have the respective
meanings given them in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended,
as in effect on the date hereof.
2. A person shall be the "beneficial owner" of and "beneficially own"
shares of the Corporation (other than shares held in the
Corporation's treasury) (a) which such person and its affiliates
and associates beneficially own, directly or indirectly, whether
of record or not, (b) which such person or any of its affiliates
or associates has the right to acquire, pursuant to any agreement,
upon the exercise of conversion rights, warrants or options, or
otherwise, (c) which such person or any of its affiliates or
associates has the right to sell or vote pursuant to any
agreement, or (d) which are beneficially owned, directly or
indirectly, by any other person with which such first mentioned
person or any of its affiliates or associates has any agreement,
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arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of securities of the Corporation.
3. "Covered Transaction" shall mean:
(a) any merger or consolidation of the Corporation or any
subsidiary of the Corporation with or into any Interested
Person (regardless of the identity of the surviving
corporation);
(b) any sale, lease or other disposition of all or any substantial
part (assets having an aggregate fair market value in excess
of twenty-five percent (25%) of the total assets of the
Corporation) of the assets of the Corporation or any
subsidiary of the Corporation to any Interested Person for
cash, real or personal property, including securities, or any
combination thereof;
(c) any issuance or delivery of securities of the Corporation or a
subsidiary of the Corporation (which the beneficial owner
shall have the right to vote, or to vote upon exercise,
conversion or by contract) to an Interested Person in
consideration for or in exchange of any securities or other
property (including cash); or
(d) the liquidation of the Corporation.
4. "Interested Person" shall mean any person which, as of the record
date for the determination of shareholders entitled to notice of
any Covered Transaction and to vote thereon or consent thereto, or
as of the date of any such vote or consent, or immediately prior
to the consummation of any Covered Transaction, beneficially owns,
directly or indirectly, five percent (5%) or more of the shares of
stock of the Corporation entitled to vote in elections of
directors.
5. "Person" shall mean any individual, partnership, corporation or
other entity.
6. "Subsidiary of the Corporation" shall mean any corporation of
which fifty percent (50%) or more of any class of stock is
beneficially owned, directly or indirectly, by the Corporation.
No amendment to these Articles of Incorporation shall amend, alter,
change or repeal any of the provisions of this Article IX, unless such
amendment, in addition to receiving any shareholder vote or consent required by
the laws of the State of Florida in effect at the time, shall receive the
affirmative vote or consent of the holders of three-fourths (3/4) of the
outstanding shares of each class of stock of the Corporation entitled to vote in
elections of directors.
X. BUSINESS COMBINATIONS
A. In addition to any approval of the Board of Directors or any
shareholder vote or consent required by the laws of the State of Florida or any
other provision of these Articles of
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Incorporation or otherwise, there shall be required for the approval, adoption
or authorization of a Business Combination with an Interested Person the
affirmative vote or consent of the holders of a majority of the shares of each
class of stock of the Corporation entitled to vote in elections of directors,
considered separately for the purposes of this Article X, which are not
beneficially owned, directly or indirectly, by such Interested Person; provided,
however, that said majority voting requirements shall not be applicable if all
of the conditions specified in subparagraphs (1), (2) and (3) below are met:
1. The consideration to be received per share for each class
of shares in such Business Combination by holders of the shares of the
Corporation is payable in cash or Acceptable Securities, or a combination of
both, and such consideration has a fair market value per share with respect to
each class of the Corporation's shares of not less than either:
(a) the highest price (including the highest per share
brokerage commissions, transfer tax and soliciting dealers fees) paid by said
Interested Person in acquiring any of the Corporation's shares of that class; or
(b) a price per share obtained by multiplying the aggregate
earnings per share of shares of the Corporation (appropriately adjusted for any
subdivision of shares, shares dividend or combination of shares during the
period) for the four full consecutive fiscal quarters immediately preceding the
record date for solicitation of votes or consents on such Business Combination
by the figure obtained by dividing the highest per share price (including the
highest per share brokerage commissions, transfer tax and soliciting dealers
fees) paid by such Interested Person in acquiring any of the Corporation's
shares by the aggregate earnings per share of the Corporation for the four full
consecutive fiscal quarters immediately preceding the time when the Interested
Person shall have become the beneficial owner of five percent (5%) or more of
the outstanding shares of the Corporation entitled to vote in elections of
directors.
If any securities were issued by an Interested Person in
exchange for shares of the Corporation prior to the proposed Business
Combination, the fair market value of said securities at the time of issue shall
be used in determining the per share price paid for said shares.
2. After the Interested Person has become the beneficial owner
of five percent (5%) or more of the shares of the Corporation entitled to vote
in the election of directors and prior to the consummation of such Business
Combination, there shall have been no reduction in the rate of dividends payable
on the Corporation's shares which would result in a quarterly dividend rate per
share which is less than the average quarterly dividend rate per share for the
four full consecutive fiscal quarters immediately preceding the time when the
Interested Person shall have become the beneficial owner of said five percent
(5%) or more of the shares of the Corporation, unless such reduction in the rate
of dividends has been approved by three-fourths (3/4) of the entire membership
of the Board of Directors of the Corporation. For the purposes of this
paragraph, "quarterly dividend rate per share" for any quarterly dividend shall
be equal to the percentage said quarterly dividend per share bears to the
earnings per share for the four full fiscal quarters immediately preceding the
declaration of said quarterly dividend.
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3. The consideration to be received by shareholders who are
not Interested Persons shall be in cash or in the same form as the Interested
Person has previously paid for shares of such class of stock; if the Interested
Person has paid for shares of any class of any stock with varying forms of
consideration, the form of consideration for such class of stock shall be either
cash or the form used to acquire the largest number of shares of such class of
stock previously acquired by it.
B. For the purposes of this Article X:
1. "Acceptable Securities" shall mean (a) securities of the
same class or series, with the same rights, powers and benefits and of the same
denomination, term and interest, or dividend, if any, as the securities issued
and delivered by the Interested Person in exchange for the majority of the stock
of the corporation acquired by the Interested Person, or (b) the class of common
stock of the Interested Person which is beneficially owned by most persons.
2. The terms "affiliate" and "associate" shall have the
respective meanings given them in Rule l2b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, as in effect
on the date hereof.
3. A person shall be the "beneficial owner" of and
"beneficially own" shares of the Corporation (other than shares held in the
Corporation's treasury) (a) which such person and its affiliates or associates
beneficially own, directly or indirectly, whether of record or not, (b) which
such person or any of its affiliates or associates has the right to acquire,
pursuant to any agreement, upon the exercise of conversion rights, warrants, or
options, or otherwise, (c) which such person or any of its affiliates or
associates has the right to sell or vote pursuant to any agreement, or (d) which
are beneficially owned, directly or indirectly, by any other person with which
such first mentioned person or any of its affiliates or associates has any
agreement, arrangement or understanding for the purposes of acquiring, holding,
voting or disposing of securities of the Corporation.
4. "Business Combination" shall mean:
a. any merger or consolidation of the Corporation or any
subsidiary of the Corporation with or into any Interested Person (regardless of
the identity of the surviving corporation);
b. any sale, lease or other disposition of all or any
substantial part (assets having a fair market value in excess of twenty-five
percent (25%) of the total assets of the Corporation) of the assets of the
Corporation or any subsidiary of the Corporation to any Interested Person for
cash, real or personal property, including securities, or any combination
thereof; or
c. any issuance or delivery of securities of the
Corporation or a subsidiary of the Corporation (which the beneficial owner shall
have the right to vote, or to vote upon exercise, conversion or by contract) to
an Interested Person in consideration of or in exchange for any securities or
other property (including cash).
5. "Interested Person" shall mean any person which, as of the
record date for the determination of shareholders entitled to notice of any
Business Combination and to vote thereon or
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consent thereto, or as of the date of any such vote or consent, or immediately
prior to the consummation of any Business Combination, beneficially owns,
directly or indirectly, five percent (5%) or more of the shares of stock of the
Corporation entitled to vote in elections of directors.
6. "Person" shall mean an individual, partnership, corporation
or other entity.
7. "Subsidiary of the Corporation" shall mean any corporation
of which fifty percent (50%) or more of any class of stock is beneficially
owned, directly or indirectly, by the Corporation.
C. No amendment to these Articles of Incorporation shall amend, alter,
change or repeal any of the provisions of this Article X, unless such amendment,
in addition to receiving any shareholder vote or consent required by the laws of
the State of Florida in effect at the time, shall receive the affirmative vote
or consent of the holders of three-fourths (3/4) of the outstanding shares of
each class of stock of the Corporation entitled to vote in elections of
directors.
XI. ACQUISITION PROPOSAL
A. The Board of Directors of the Corporation, when evaluating any offer
of another individual, firm, corporation or other entity ("Person") (a) to make
a tender or exchange offer for any equity security of the Corporation, (b) to
merge or consolidate the Corporation with such other Person, or (c) to purchase
or otherwise acquire all or substantially all of the properties and assets of
the Corporation (such offers individually referred to as an "Acquisition
Proposal"), shall, in connection with the exercise of its business judgment in
determining what is in the best interest of the Corporation and its
Shareholders, give due consideration to all relevant factors, including without
limitation, the consideration being offered in the Acquisition Proposal in
relation to the then-current market price of the Corporation's shares, but also
in relation to the then-current value of the Corporation in a freely negotiated
transaction and in relation to the Board of Directors' then-estimate of the
future value of the Corporation as an independent entity, the social and
economic effects on the employees, customers, suppliers, and other constituents
of the Corporation and on the communities in which the Corporation operates or
is located and the desirability of maintaining independence from any other
business or business entity; provided, however, that this Article shall be
deemed solely to grant discretionary authority to the directors and shall not be
deemed to provide any constituency any right to be considered.
B. No amendment to these Articles of Incorporation shall amend, alter,
change or repeal any of the provisions of this Article XI, unless such
amendment, in addition to receiving any shareholder vote or consent required by
the laws of the State of Florida in effect at the time, shall receive the
affirmative vote or consent of the holders of three-fourths (3/4) of the
outstanding shares of each class of stock of the Corporation entitled to vote in
elections of directors.
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XII. INDEMNIFICATION
The Corporation shall indemnify any person who was or is a party to
any, threatened, pending or completed action, suit or other type of proceeding,
whether civil, criminal, administrative or investigative, and whether formal or
informal, by reason of the fact that he is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorney's fees), judgments, fines, penalties and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding, including any appeal thereof, to the maximum extent
permitted by law.
XIII. AMENDMENT OF ARTICLES
Except as otherwise specifically provided herein, these Articles of
Incorporation may be amended, altered, changed or repealed only by the
affirmative vote or consent of the holders of at least a majority of the shares
of each class of stock of the Corporation entitled to vote in elections of
directors.
Signed this ____ day of October, 1998
MARINE BANCSHARES, INC.
By:
-------------------------------------
Name:
Title:
EXHIBIT 3.2
AMENDED AND RESTATED
BYLAWS
OF
MARINE BANCSHARES, INC.
ARTICLE I - OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office of Marine Bancshares,
Inc. (the "Corporation") may be located either within or without the State of
Florida as the board of directors of the Corporation (the "Board of Directors"
or the "Board") may designate.
SECTION 2. REGISTERED OFFICE. The registered office of the Corporation
required by the Florida Business Corporation Act ("FBCA") to be maintained in
the State of Florida may be, but need not be, identical to the principal office
in the State of Florida, and the address of the registered office may be changed
from time to time by the Board of Directors.
ARTICLE II - SHAREHOLDERS
SECTION 1. ANNUAL MEETING. An annual meeting of the shareholders shall
be held for the election of directors and for the transaction of any other
business as may properly come before the meeting on the third Tuesday in March
in each year at such time as may be specified in the notice of meeting, or at
such other date or time as shall be designated, from time to time, by the Board
of Directors and stated in the notice of meeting. If the day fixed for the
annual meeting shall be a legal holiday in the State of Florida, the meeting
shall be held on the next succeeding business day. If the election of directors
is not held on the day designated in these bylaws for any annual meeting of
shareholders, or at any adjournment of the annual meeting, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as may be convenient.
SECTION 2. SPECIAL MEETINGS. Special meetings of shareholders, for any
purpose or purposes, may be called by the Board of Directors, the President, or
the Secretary of the Corporation, or, upon demand made in conformance with the
FBCA, by the holders of not less than ten percent 10% of all the votes entitled
to be cast on any issue to be considered at such meeting, and such special
meeting may not be called by any other person or persons.
SECTION 3. PLACE OF MEETING. The Board of Directors or the President
shall designate the place, either within or without the State of Florida, as the
place of meeting for any annual or special meeting of shareholders. If no
designation is made, the place of meeting shall be the principal office of the
Corporation.
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SECTION 4. NOTICE OF MEETING. Written notice stating the time, date and
place of the meeting of shareholders and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered to each
shareholder of record entitled to vote at such meeting not less than ten (10)
nor more than sixty (60) days before the date of the meeting, either personally,
by telegraph, teletype, or other form of electronic communication, or by mail,
by or at the direction of the President, the Secretary, or the person or persons
calling the meeting. If mailed, such notice shall be deemed delivered when
deposited in the United States mail, postage prepaid, addressed to the
shareholder at his address as it appears on the stock transfer books of the
Corporation. Any shareholder may waive notice of any meeting, before or after
the meeting. Such waiver must be in writing, signed by the shareholder entitled
to the notice, and delivered to the Corporation for inclusion in the minutes or
filing with the corporate records. The attendance of a shareholder at a meeting
shall constitute a waiver of any objection to the lack of notice or defective
notice of such meeting, except when such shareholder at the beginning of the
meeting objects to holding the meeting or transacting business at the meeting.
SECTION 5. ADJOURNMENTS. Any meeting of the shareholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place (such reconvened meeting being referred to herein as the "reconvened
meeting"), and notice need not be given of the new date, time and place of the
reconvened meeting if, prior to such adjournment, the new date, time and place
thereof is announced at the meeting at which the adjournment is taken. If,
however, the Board fixes a new record date or if a new record date for the
reconvened meeting is required to be fixed under law, a notice of the reconvened
meeting shall be given in compliance with Section 4 of this Article II to each
shareholder of record on the new record date entitled to notice of and to vote
at the reconvened meeting.
SECTION 6. RECORD DATE. In order that the Corporation may determine the
shareholders entitled to notice and to vote at any meeting of shareholders, or
to express consent to corporate action in writing without a meeting (to the
extent permitted by law and the Corporation's Articles of Incorporation), or to
receive payment of any dividend or other distribution or allotment of rights, or
to exercise any rights in respect of any change, conversion, exchange of shares,
or for the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date on which the
resolution fixing the record date is adopted by the Board of Directors and which
record date: (1) in the case of a determination of the shareholders entitled to
notice of and to vote at any meeting of shareholders, shall not be more than
seventy (70) and not less than ten (10) days prior to the date of any such
meeting; (2) in the case of a determination of shareholders entitled to take
action by written consent without a meeting, shall not be less than ten (10)
days after the date upon which a resolution fixing the record date is adopted by
the Board, and (3) in the case of any other action, shall not be more than
seventy (70) days prior to the time for such other action.
If no record date is fixed, the record date for determining: (1)
shareholders entitled to notice of and to vote at a meeting of shareholders
shall be at the close of business on the day before the first notice is
delivered to shareholders; (2) shareholders entitled to express consent to
corporate action in writing without a meeting (a) when no prior action of the
Board of Directors is required by the FBCA, shall be the first date on which a
signed written consent setting forth the action taken or
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proposed to be taken is delivered to the Corporation in accordance with
applicable law, or (b) when prior action by the Board of Directors is required
by the FBCA, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action and (3) the record date
for determining the shareholders for any other purpose, shall be the close of
business on the day on which the Board of Directors adopts a resolution relating
thereto.
A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting;
PROVIDED, HOWEVER, that the Board of Directors may, or if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting, the Board of Directors shall, fix a new record date for the reconvened
meeting and a notice of the reconvened meeting shall be given in compliance with
Section 4 of this Article II to each shareholder of record on the new record
date entitled to notice thereof and to vote at the reconvened meeting.
SECTION 7. SHAREHOLDERS' LIST FOR MEETING. After fixing the record date
for a meeting, an alphabetical list of the names of all shareholders entitled to
notice of the meeting, arranged by voting group, with the address of and the
number, class and series, if any, of shares held by each, shall be prepared by
the Secretary of the Corporation. The shareholders' list shall, upon written
demand, be available during regular business hours for inspection by any
shareholder and at his expense for a period of ten (10) days prior to the
meeting date, or such shorter time as may exist between the record date and the
meeting, and continuing through the meeting, at the Corporation's principal
office, at a place set forth in the meeting notice in the city where the meeting
will be held, or at the office of the Corporation's transfer agent or registrar.
The shareholders' list also shall be made available by the Corporation
at the meeting, and any shareholder is entitled to inspect the list at any time
during the meeting or any adjournment. The shareholders' list shall
presumptively determine the identity of shareholders entitled to examine the
shareholders' list or to vote at the meeting.
SECTION 8. QUORUM. At any meeting of the shareholders, the holders of a
majority of the votes entitled to be cast on a matter at such meeting shall
constitute a quorum for action on that matter, except to the extent that the
presence of a larger or smaller number may be required by the Corporation's
articles of incorporation (the "Articles of Incorporation") or by law. Shares of
the Corporation's stock owned, directly or indirectly, by the Corporation or by
any corporation of which the Corporation holds, directly or indirectly, a
majority of the shares entitled to vote in the election of directors of such
other corporation, shall not be counted for quorum purposes, except shares held
by it in a fiduciary capacity. In the absence of a quorum, the holders of a
majority of the shares entitled to vote who are present, in person or by proxy,
may adjourn the meeting from time to time in the manner provided in Article II,
Section 5 of these bylaws. Once a share is represented for any purpose at a
meeting, it is deemed present for quorum purposes for the remainder of that
meeting and any adjournment thereof (unless a new record date is or must be set
for the reconvened meeting) and the subsequent withdrawal of shares of stock or
shareholders, so as to reduce the presence, in person or by proxy, of the number
of shares entitled to vote at the meeting below the number
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required for a quorum, shall not affect the validity of any action taken at the
meeting or any adjournment thereof.
SECTION 9. PROXIES AND VOTING. Except as otherwise provided by the
Articles of Incorporation, each shareholder entitled to vote at any meeting of
shareholders shall be entitled to one (1) vote for each share of stock held by
him which has voting power upon the mater in question.
Every shareholder entitled to vote at a meeting of shareholders, or to
express consent or dissent to a corporate action in writing without a meeting,
or his duly authorized attorney-in-fact, may vote in person or may authorize
another person or persons to act for him by proxy. The proxy must be authorized
by a signed written instrument or by an executed telegram or cablegram appearing
to have been transmitted by such person, or by a photographic, photostatic, or
equivalent reproduction of an appointment form. Such proxy shall be filed with
the Secretary of the Corporation, or other officer or agent authorized to
tabulate votes, before or at the time of such meeting or at the time of
expressing such consent or dissent without a meeting. No proxy shall be valid
after eleven (11) months from the date of its execution, unless a longer period
is expressly provided in the proxy. A duly executed proxy shall be irrevocable
if it conspicuously states that it is irrevocable and if, and only as long as,
it is coupled with an interest sufficient in law to support an irrevocable
power. A shareholder may revoke any proxy which is not irrevocable by attending
the meeting and voting in person, or by filing an instrument in writing with the
Secretary revoking the proxy, or by giving a duly executed proxy bearing a later
date. If an appointment form expressly so provides, any proxy holder may
appoint, in writing, a substitute to act in his place.
All elections of directors shall be determined by a plurality of the
votes cast. Except as otherwise provided by the Articles of Incorporation or the
FBCA, action on all other matters shall be approved if the votes cast favoring
the action exceed the votes cast opposing the action.
SECTION 10. ORGANIZATION AND CONDUCT OF BUSINESS. The Chairman, if any,
or in his absence, the President, if any, or in his absence, a Vice President,
if any, or in his absence, such person designated by the Board of Directors, or
in the absence of such designation, such person as may be chosen by the holders
of a majority of the shares entitled to vote at the meeting and who are present,
in person or by proxy, shall call to order any meeting of shareholders and act
as chairman of the meeting. The Secretary shall act as secretary of the meeting,
but in his absence the chairman of the meeting may appoint any person to act as
secretary of the meeting.
The chairman of any meeting of shareholders shall determine the order
of business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seems to him or her to be in
order. The date and time of the opening and closing of the polls for each matter
upon which shareholders will vote at the meeting shall be announced at the
meeting.
SECTION 11. ADVANCE NOTICE OF SHAREHOLDER-PROPOSED BUSINESS AT ANNUAL
MEETING. To be properly brought before the annual meeting of shareholders,
business must be either (a) specified in the notice of meeting (or any
supplement thereof) given by or at the direction of the
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Board of Directors, (b) otherwise properly brought before the meeting by or at
the direction of the Board of Directors, or (c) otherwise properly brought
before the meeting by a shareholder. In addition to any other applicable
requirements, for business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation, not less than 30 days nor more than 60 days prior to the meeting;
PROVIDED, HOWEVER, that in the event that less than 38 days' notice or prior
public disclosure of the date of the meeting is given or made to shareholders,
notice by the shareholder to be timely must be so received not later than the
close of business on the 8th day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure was made,
whichever first occurs. A shareholder's notice to the Secretary shall set forth
as to each matter the shareholder proposes to bring before the annual meeting
(i) a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and record address of the shareholder proposing such business, (iii)
the class and number of shares of the Corporation which are beneficially owned
by the shareholder, and (iv) any material interest of the shareholder in such
business.
Notwithstanding anything in these bylaws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 11; PROVIDED, HOWEVER, that nothing in this
Section 11 shall be deemed to preclude discussion by any shareholder of any
business properly brought before the annual meeting.
The chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 11 and, if
he should so determine, he shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted.
SECTION 12. PROCEDURE FOR SHAREHOLDER NOMINATION OF DIRECTORS.
Nominations for the election of directors by shareholders of the Corporation
must be made in accordance with the procedures of this Section 12 of Article II
of these bylaws. Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors. Nominations of persons
for election to the Board of Directors of the Corporation at the annual meeting
may be made at a meeting of shareholders by or at the direction of the Board of
Directors, by a nominating committee or person appointed by the Board of
Directors, or by any shareholder of the Corporation entitled to vote for the
election of directors at the meeting who complies with the notice procedures set
forth in this Section 12. Such nominations, other than those made by or at the
direction of the Board, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation. To be timely, a shareholder's notice shall be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 30 days nor more than 60 days prior to the meeting;
PROVIDED, HOWEVER, that in the event that less than 38 days' notice or prior
public disclosure of the date of the meeting is given or made to shareholders,
notice by the shareholder to be timely must be so received not later than the
close of business on the 8th day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made, whichever
first occurs. Such shareholder's notice to the Secretary shall set forth (a) as
to each person whom
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the shareholder proposes to nominate for election or re-election as a director,
(i) the name, age, business address and residence address of the person, (ii)
the principal occupation or employment of the person, (iii) the class and number
of shares of capital stock of the Corporation which are beneficially owned by
the person and (iv) any other information related to the person that is required
to be disclosed in solicitations for proxies for election of directors pursuant
to Regulation 14A under the Securities Exchange Act of 1934, as amended; and (b)
as to the shareholder giving the notice (i) the name and record address of the
shareholder and (ii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the shareholder. The Corporation may
require any proposed nominee to furnish such other information as may reasonably
be required by the Corporation to determine the eligibility of such proposed
nominee to serve as a director of the Corporation. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the procedures set forth herein.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
SECTION 13. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of stock
standing in the name of another corporation may be voted by the officer, agent,
or proxy as prescribed by the bylaws of the corporate shareholder or, in the
absence of any applicable bylaw, by such person as the Board of Directors of the
corporate shareholder may designate. Proof of such designations may be made by
presentation of a certified copy of the bylaws or other instrument of the
corporate shareholder. In the absence of any such designation or, in the case of
conflicting designations by the corporate shareholder, the chairman of the
board, the president, any vice president, the secretary, and the treasurer of
the corporate shareholder shall be presumed to possess, in that order, authority
to vote such shares.
Shares of stock held by an administrator, executor, guardian, personal
representative or conservator may be voted by him, either in person or by proxy,
without a transfer of such shares into his name.
Shares of stock standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name or the name of this
nominee.
Shares of stock standing in the name of a receiver, a trustee in
bankruptcy proceedings, or an assignee for the benefit of creditors may be voted
by him or her without the transfer thereof into his or her name.
A shareholder whose shares of stock are pledged shall be entitled to
vote such shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee or his nominee shall be entitled to vote the
shares so transferred.
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Shares of stock owned by another corporation, the majority of whose
shares of stock entitled to vote for directors is owned or controlled by the
Corporation, shall not be voted, directly or indirectly, at any meeting, except
to the extent permitted by law.
SECTION 14. ACTION BY WRITTEN CONSENT OF SHAREHOLDERS. Any action
required or permitted by the FCBA to be taken at any annual or special meeting
of the shareholders of the Corporation may be taken without a meeting, without
prior notice and without a vote, if (1) a consent or consents in writing,
setting forth the action so taken, shall be signed and dated by the holders of
outstanding shares entitled to vote thereon having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
(2) such consent or consents are delivered to the Corporation by delivery to its
principal office or received by the Secretary or another officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
shareholders are recorded.
No written consent shall be effective to take the corporate action
referred to therein unless, within sixty (60) days of the date of the earliest
dated consent delivered to the Corporation, a written consent or consents signed
by a sufficient number of holders to take action are delivered to the
Corporation in the manner prescribed in the first paragraph of this Section 14
of Article II or as otherwise required by law.
Prompt notice of the taking of corporate action without a meeting shall
be given as required by law to those shareholders who have not consented in
writing or who are not entitled to vote on the action.
Any action taken in the manner provided by this Section 14 of Article
II has the effect of a meeting vote and, to the extent permitted by law, may be
described as such in any document.
ARTICLE III - BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed by or under the direction of, the Board of Directors, which
Board of Directors may, except as otherwise provided by law, the Articles of
Incorporation, or these bylaws, exercise all powers and do all such acts and
things as may be exercised or done by the Corporation.
SECTION 2. NUMBER, TENURE, AND QUALIFICATION. The number of directors
who shall constitute the whole Board shall be between five (5) and twenty-five
(25), as fixed from time to time by resolution of the Board of Directors. The
authorized number of directors may be increased or decreased from time to time
by amendment of these bylaws; PROVIDED, HOWEVER, that the Corporation shall
always have at least one (1) director. Any increase in the number of directors
shall be effective immediately. Any decrease in the number of directors shall be
effective at the time of the next succeeding annual meeting of the shareholders
unless, at the time of such decrease, there shall be vacancies on the Board
which are being eliminated by the decrease, in which case such decrease
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may become effective at any time prior to the next succeeding annual meeting to
the extent of the number of vacancies.
Except as otherwise provided by these bylaws or required by the
Articles of Incorporation or law, each director shall be elected at the annual
meeting of shareholders for a term of one (1) year and shall hold office until
the next annual meeting of shareholders and until his or her successor is duly
elected and qualified, or until his or her earlier death, resignation, or
removal from officer as hereinafter provided by these bylaws. Directors of the
Corporation need not be shareholders of the Corporation.
SECTION 3. CHAIRMAN OF THE BOARD. The Board of Directors may elect a
chairman (the "Chairman") who, if so elected, shall preside at all meetings of
the shareholders and the Board of Directors. The Chairman shall have such other
powers and shall perform all duties as from time to time may be granted or
assigned to him or her by the Board of Directors and as provided by law.
SECTION 4. ANNUAL AND REGULAR MEETINGS. The annual meeting of the Board
of Directors shall be held without other notice than these bylaws, immediately
after and at the same place as the annual meeting of shareholders. The Board of
Directors may provide, by resolution, for the holding of other regular meetings,
which meetings shall be held on such date(s), at such time(s), and at such
place(s) as are established by such resolution. A notice of each regular meeting
other than by resolution shall not be required.
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman, if one is elected, the President, or any two
directors. The Chairman of the Board, if one is elected, or the President shall
fix the place for holding such special meeting.
SECTION 6. NOTICE. Notice of any special meeting of the Board shall be
given at least two (2) days before the meeting by written notice delivered
personally, or by mail, telegraph, teletype, cablegram, or other form of
electronic communication to each director at his business address, unless in
case of emergency the Chairman, if one is elected, or the President shall
prescribe a shorter notice to be given personally or by telegraph, teletype,
cablegram, or other electronic communication to each director at his residence
or business address. If a notice of meeting is sent by regular mail, such notice
shall be deemed delivered five (5) days after its deposit in the United States
mail, if mailed postpaid and correctly addressed. Any director may waive notice
of any meeting, before, at or after the meeting. The attendance of a director at
a meeting shall constitute a waiver of notice of such meeting and a waiver of
any and all objections to the place of the meeting, the time or date of the
meeting, or the manner in which it has been called or convened, except when a
director states, at the beginning of the meeting, any objection to the
transaction of business because the meeting is not lawfully called or convened.
SECTION 7. QUORUM. A majority of the number of directors fixed pursuant
to Section 2 of this Article III shall constitute a quorum for transacting
business at any meeting of the Board of Directors. A majority of the directors
present, whether or not a quorum exists, may adjourn any meeting of the Board of
Directors to another time and place. Notice of any such adjourned meeting
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shall be given to the directors who were not present at the time of the
adjournment and, unless the time and place of the adjourned meeting are
announced at the time of the adjournment, to the other directors.
SECTION 8. VOTE REQUIRED FOR ACTION. Except as otherwise required by
law, the Articles of Incorporation, or these bylaws, the vote of a majority of
the directors present at a meeting in which a quorum is present shall be the act
of the Board of Directors.
SECTION 9. VACANCIES. If any vacancy occurs on the Board of Directors,
including a vacancy resulting from an increase in the number of directors of the
Corporation, such vacancy may be filled by the affirmative vote of a majority of
the directors remaining in office, although less than a quorum of the Board of
Directors, or by a sole remaining director, or by the shareholders. Except as
otherwise provided in the Articles of Incorporation, a director elected to fill
a vacancy, including a vacancy resulting from an increase in the number of
directors of the Corporation, shall hold office only until the next annual
meeting of shareholders and until his or her successor shall have been elected
and qualified or until his or her earlier death, resignation, or removal from
office.
SECTION 10. COMPENSATION. By resolution of the Board of Directors,
directors may receive fixed fees and other compensation for their services as
directors, including, without limitation, their services as members of
committees of the Board of Directors, and reimbursement for expenses incurred
for attendance at meetings of the Board of Directors and its committees. The
compensation of directors shall be on such basis as may be determined by the
Board of Directors. No such payment made to a director under this Section 10 of
Article III shall preclude any director from serving the Corporation in any
other capacity and receiving compensation and reimbursement of expenses
therefor.
SECTION 11. PRESUMPTION OF ASSENT. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken, unless
he objects at the beginning of the meeting to holding it or transacting
specified business at the meeting, or he votes against or abstains from the
action taken.
SECTION 12. CONSTRUCTIVE PRESENCE AT A MEETING. Members of the Board of
Directors may participate in a meeting of the Board through the use of any means
of communication by which all directors participating in the meeting may
simultaneously hear each other during the meeting. A director's participation in
a meeting by this means shall constitute presence in person at the meeting.
SECTION 13. ACTION WITHOUT A MEETING. Any action required or permitted
by law to be taken at any meeting of the Board or a committee thereof, may be
taken without a meeting if all members of the Board or any committee thereof, as
the case may be, consent thereto in writing, and such consent or consents are
filed with the minutes of the proceedings of the Board of Directors or such
committee.
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Any such consents or consent shall describe the action taken and such
action so taken shall be effective when the last director or committee member
executes such consent, unless such consent or consents specify a different
effective date. A consent so signed has the effective of a meeting vote and may
be described as such in any document.
SECTION 14. REMOVAL OF DIRECTORS. The shareholders of the Corporation
may remove one or more directors with or without cause if such shareholder
action is undertaken in the manner prescribed by the FBCA.
ARTICLE IV - COMMITTEES
SECTION 15. COMMITTEES OF THE BOARD OF DIRECTORS. Except as otherwise
provided by the Articles of Incorporation or these bylaws, the Board of
Directors, by a resolution passed by a majority of the full Board of Directors,
may from time to time designate one or more committees of the Board of
Directors, with such lawfully delegable powers and duties as it thereby confers,
to serve at the pleasure of the Board. The Board of Directors shall, for those
committees and any others provided for herein, elect two or more directors to
serve as members and, if it so desires, designate one or more directors as
alternate members who may replace any absent or disqualified member at any
meeting of the committee.
Any committee so designated, to the extent permitted by law and to the
extent provided in the Board of Directors resolution which designates the
committee, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation.
SECTION 16. CONDUCT OF BUSINESS. Each committee designated by the Board
of Directors may determine, make, alter, and repeal the procedural rules for
meeting and conducting its business and shall act in accordance therewith,
except as otherwise required by law or provided by a resolution of the Board of
Directors or these bylaws. In the absence of such rules, each committee shall
conduct its business in the same manner as the Board of Directors conducts its
business pursuant to Article III of these bylaws.
ARTICLE V - OFFICERS
SECTION 1. NUMBER. The officers of the Corporation shall include:
President, Secretary, and Treasurer, each of whom shall be elected by the Board
of Directors. One or more Vice Presidents and such other officers, assistant
officers, and agents as may be deemed necessary may be elected or appointed by
the Board of Directors. A duly appointed officer may appoint one or more
officers or assistant officers if authorized by the Board of Directors.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the Corporation
to be elected by the Board shall be elected annually by the Board at the annual
meeting of the Board held after each annual meeting of shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as may be convenient. Each officer shall hold office
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until his or her successor shall have been elected and qualified or until his or
her earlier resignation, removal from office, or death.
SECTION 3. REMOVAL. Any officer, assistant officer, or agent of the
Corporation may be removed by the Board, either with or without cause, whenever,
in the Board's judgment, the best interests of the Corporation would be served
thereby, but such removal shall be without prejudice to the contractual rights,
if any, of the person so removed. Any officer or assistant officer, if appointed
by another officer, may likewise be removed by the officer who so appointed him
or by the Board of Directors. Election or appointment of an officer or agent
shall not of itself create contract rights.
SECTION 4. VACANCIES. A vacancy, however occurring, in any office may
be filled by the Board of Directors for the unexpired portion of the term.
SECTION 5. PRESIDENT. The President shall be the chief executive
officer of the Corporation and, subject to the provisions of these bylaws and to
the direction of the Board of Directors, shall supervise, control, and have
responsibility for the general management and control of the business and
affairs of the Corporation. The President shall perform all duties and have all
powers which are commonly incident to the office of chief executive or which
from time to time may be assigned or delegated to him by the Board of Directors.
If a Chairman has not been elected or is otherwise absent, the President shall
preside at all meetings of shareholders and at all meetings of the Board of
Directors. The President may sign all stock certificates, deeds, contracts, and
other instruments of the Corporation which the Board of Directors has authorized
to be executed, except in cases where the signing and execution thereof may be
expressly delegated by the Board of Directors or by these bylaws to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
signed or executed. The President also shall have supervision and direction of
all of the other officers, employees and agents of the Corporation.
SECTION 6. VICE PRESIDENT. Each Vice President shall have such powers
and duties as may be delegated to him or her by the Board of Directors. In the
absence of the President or in the event of the President's death or inability
or refusal to act, the Vice President, if one is elected, shall have the duties
of the President, and when so acting, shall have all the powers of, and be
subject to all the restrictions upon, the President. If more than one Vice
President is elected, the Board of Directors shall designate which Vice
President shall serve until the election of a successor President.
SECTION 7. SECRETARY. The Secretary shall: (1) keep the minutes of all
meetings of shareholders and of the Board of Directors in one or more books
provided for that purpose; (2) duly issue all authorized notices in accordance
with the provisions of these bylaws or as required by law; (3) have charge of
and be custodian of the corporate books and records and of the seal of the
Corporation, and shall affix or cause to be affixed the seal of the Corporation
to all documents the execution of which on behalf of the Corporation is duly
authorized; (4) keep a register of the post office address of each shareholder
which shall be furnished to the Secretary by each shareholder; (5) have general
charge of the stock transfer books of the Corporation; (6) authenticate all
records
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of the Corporation; and (7) in general, perform all duties incident to the
office of Secretary and such other duties as the Board of Directors or the
President from time to time prescribe.
SECTION 8. TREASURER. The Treasurer shall: (1) have responsibility for
maintaining the financial records of the Corporation; (2) receive and give
receipts for monies due and payable to the Corporation from any source
whatsoever; (3) deposit all such monies in the name of the Corporation in such
banks, trust companies, or other depositories as shall be selected in accordance
with the provisions of Article VII of these bylaws; (4) make disbursements of
the funds of the Corporation as are authorized; (5) render from time to time an
account of all transactions and of the financial condition of the Corporation;
and (6) in general perform all of the duties incident to the office of Treasurer
as the Board of Directors or the President from time to time may prescribe. If
required by the Board of Directors, the Treasurer shall give a bond for the
faithful discharge of his or her duties in such sum and with such surety or
sureties as the Board of Directors shall determine.
SECTION 9. OFFICER COMPENSATION. The salaries and other compensation
paid to officers of the corporation shall be fixed from time to time by the
Board of Directors and no officer shall be prevented from receiving such salary
or other compensation by reason of the fact that he is also a director of the
Corporation.
SECTION 10. ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS.
Unless otherwise directed by the Board of Directors, the President or any other
officer of the Corporation authorized by the President shall have power to vote
and otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of shareholders of, or with respect to any action of shareholders of,
any other corporation in which this Corporation may hold securities and
otherwise to exercise any and all rights and powers which this Corporation may
possess by reason of its ownership of securities in such other corporation.
ARTICLE VI - RESIGNATIONS
Any director or officer of the Corporation may resign at any time by
delivering written notice to the Board of Directors or its Chairman, or to the
President or the Secretary of the Corporation. Any such resignation shall take
effect when delivered unless the notice specifies a later effective date. If a
resignation is made effective at a later date, the Board of Directors may fill
the pending vacancy before the effective date if the Board of Directors provides
that the successor does not take office until the effective date.
ARTICLE VII - CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The Board of Directors may authorize any officer
or agent to enter into any contract or execute and deliver any instrument in the
name of and on behalf of the corporation, unless otherwise restricted by law.
Such authority may be general or confined to specific instances.
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SECTION 2. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts, or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers, agent or
agents of the Corporation in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 4. DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VIII - CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES OF STOCK. Unless the Board of Directors
provides otherwise, each shareholder shall be entitled to a certificate which
certifies the number and class of shares owned by him or her, signed by or in
the name of the Corporation by (1) the President or a Vice President, and by
either the Secretary or an Assistant Secretary, or the Treasurer or an Assistant
Treasurer, or (2) any other officers or directors of the Corporation designated
by the Board of Directors. Any or all of the signatures on the certificate may
be by facsimile. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent, or registrar at the date of issue.
Certificates representing shares of the Corporation shall be in such
form as shall be determined by the Board of Directors. All certificates for
shares shall be numbered consecutively or otherwise identified. The name and
address of the person to whom the shares represented thereby have been issued,
the number of shares, and the date of issuance shall be entered on the transfer
books of the Corporation.
All certificates representing shares which are subject to restrictions
on transfer or to other restrictions shall have a notation regarding such
restrictions conspicuously imprinted or otherwise referenced thereon.
SECTION 2. TRANSFERS OF STOCK. Transfers of stock shall be made only
upon the transfer books of the Corporation kept at an office of the Corporation
or by transfer agents designated to transfer shares of the stock of the
Corporation. Transfers of stock shall be made on the transfer books of the
Corporation only when the holder of record thereof, or his legal representative,
or his attorney thereunto authorized by a power of attorney duly executed and
filed with the Secretary of the Corporation, shall furnish proper evidence of
authority to transfer, and when there is surrendered for cancellation the
certificate(s) for shares, properly endorsed. The person in whose name shares
stand on the books of the Corporation shall be deemed by the Corporation to be
the owner thereof
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for all purposes. Except where a certificate is issued in accordance with
Section 3 of Article VIII of these bylaws, an outstanding certificate for the
number of shares involved shall be surrendered for cancellation before a new
certificate is issued therefor.
SECTION 3. LOST, STOLEN, OR DESTROYED CERTIFICATES. In the event of the
loss, theft, or destruction of any certificate of stock, another may be issued
in its place pursuant to such regulations as the Board of Directors may
establish concerning proof of such loss theft, or destruction and concerning the
giving of a satisfactory bond or bonds of indemnity.
SECTION 4. REGULATIONS. The issue, transfer, conversion and
registration of certificates of stock shall be governed by such other
regulations as the Board of Directors may establish.
ARTICLE IX - INDEMNIFICATION
SECTION 1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding") by reason of the fact that he or the
persons for whom he is the legal representative is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation or of a
partnership, joint venture, trust, or other enterprise, including service with
respect to an employee benefit plan (hereinafter an "indemnitee"), whether the
basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
direct, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the FBCA, as the same exists
or may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide prior
to such amendment), against all expenses, liability, and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties, and amounts
paid in settlement) reasonably incurred or suffered by such indemnitee in
connection therewith; PROVIDED, HOWEVER, that, except as provided in Section 3
of this Article IX with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
SECTION 2. ADVANCEMENT OF EXPENSES. The right to indemnification
conferred in Section 1 of this Article IX shall include the right to be paid by
the Corporation the expenses (including attorney's fees) incurred in defending
any such proceeding in advance of its final disposition (hereinafter an
"advancement of expenses"); PROVIDED, HOWEVER, that, if the FBCA requires, an
advancement of expenses incurred by an indemnitee in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the Corporation of an
undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee,
to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is not further right to appeal (hereinafter a
"final adjudication") that such
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indemnitee is not entitled to be indemnified for such expenses under Section 1
of this Article IX or otherwise. The rights to indemnification and to the
advancement of expenses conferred in Sections 1 and 2 of this Article IX shall
be contractual rights, and such rights shall continue as to an indemnitee who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
SECTION 3. RIGHT TO INDEMNITEE TO BRING SUIT. If a claim under Section
1 or 2 of this Article IX is not paid in full by the Corporation within sixty
(60) days after a written assertion thereof has been received by the
Corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty (20) days, the indemnitee may
at any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim. If successful in whole or in part in any such suit, or in a
suit brought by the Corporation to recover an advancement of expenses pursuant
to the terms of an undertaking, the indemnitee shall be entitled to be paid also
the expense of prosecuting or defending such suit. In (i) any suit brought by
the indemnitee to enforce a right to indemnification hereunder (but not in a
suit brought by the indemnitee to enforce a right to an advancement of expenses)
it shall be a defense that, and (ii) in any suit brought by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
Corporation shall be entitled to recover such advancement of expenses upon a
final adjudication that, the indemnitee has not met any applicable standard for
indemnification set forth in the FBCA. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
shareholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the FBCA, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its shareholders) that the indemnitee
has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article IX or otherwise, shall be on the
Corporation.
SECTION 4. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification and
to the advancement of expenses conferred in this Article IX shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, the Articles of Incorporation, these bylaws, any agreement, a
vote of shareholders or disinterested directors, or otherwise.
SECTION 5. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust, or other
enterprise against any expense, liability, or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the FBCA.
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SECTION 6. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation
may, to the extent authorized from time to time by the Board of Directors, grant
rights to indemnification and to the advancement of expenses to any employee or
agent of the Corporation to the fullest extent of the provisions of this Article
IX with respect to the indemnification and advancement of expenses of directors
and officers of the Corporation.
SECTION 7. OTHER INDEMNIFICATION. The Corporation's obligation, if any,
to indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, enterprise or non-profit entity shall be reduced by any amount such
person may collect as indemnification from such other corporation, partnership,
joint venture, trust, enterprise or non-profit enterprise.
SECTION 8. AMENDMENT OR REPEAL. Any repeal or modification of the
foregoing provisions of this Article IX shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
ARTICLE X - GENERAL PROVISIONS
SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall begin
on January 1 and end on December 31 in each year.
SECTION 2. DIVIDENDS. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by the Articles of
Incorporation and applicable law.
SECTION 3. SEAL. The Board of Directors shall provide a corporate seal
which shall have the name of the Corporation inscribed thereon and shall be in
such form as may be approved from time to time by the Board of Directors.
SECTION 4. FACSIMILE SIGNATURES. In addition to the provisions for use
of facsimile signatures elsewhere specifically authorized by these bylaws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors or a committee thereof.
SECTION 5. RELIANCE UPON BOOKS, REPORTS AND RECORDS. Each director and
each member of any committee designated by the Board of Directors shall, in the
performance of his duties, be fully protected in relying in good faith upon the
books of account or other records of the Corporation and upon such information,
opinions, reports or statements presented to the Corporation by any of its
officers or employees or committees of the Board of Directors so designated, or
by any other person as to matters which such director or committee member
reasonably believes are within such other person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Corporation.
16
<PAGE>
SECTION 6. TIME PERIODS. In applying any provision of these bylaws
which requires that an act be done or not be done a specified number of days
prior to an event or that an act be done during a period of a specified number
of days prior to an event, calendar days shall be used, the day of the doing of
the act shall be excluded, and the day of the event shall be included.
SECTION 7. CORPORATE RECORDS. The Corporation shall maintain in written
form or in a form capable of conversion into written form (1) permanent records
of minutes of all meetings of its shareholders and Board of Directors or any
committee thereof, or a record of all action taken without a meeting of its
shareholders or Board of Directors or any committee thereof; (2) accurate
accounting records; and (3) a record of its shareholders in a form that permits
preparation of a list of names and addresses of all shareholders in alphabetical
order by class of shares showing the number and series held by each.
Additionally, the Corporation shall keep a copy of (a) its Articles of
Incorporation and all amendments currently in effect; (b) its bylaws, or
restated bylaws, and all amendments currently in effect; (c) resolutions adopted
by its Board of Directors creating one or more classes or series of shares and
affixing their relative rights, preferences, and limitations, if shares issued
pursuant thereto are outstanding; (d) minutes of all shareholders' meetings and
records of all actions taken by shareholders without a meeting for the past
three years; (e) written communications to all shareholders, generally, or all
shareholders of a class or series within the past three years, including the
financial statements furnished for the past three years pursuant to the FBCA;
(f) a list of names and business street addresses of its current directors and
officers, and (g) its most recent annual report delivered to the Florida
Department of State pursuant to the FBCA.
ARTICLE XI - AMENDMENTS
Except as provided by the Articles of Incorporation or by law, any or
all of these bylaws may be altered, amended, or repealed and new bylaws may be
adopted by: (1) a vote of the Board of Directors, unless shareholders, in
amending or repealing the bylaws generally or a particular bylaw provision,
provide expressly that the Board of Directors may not alter, amend, or repeal
the bylaws or that particular bylaw provision, or (2) a vote of shareholders at
any meeting.
ARTICLE XII - EMERGENCY BYLAWS
In the event that a quorum of the Corporation's Board of Directors
cannot readily be assembled because of a catastrophic event, the following
Emergency Bylaws shall be in effect until termination of the emergency:
SECTION 1. NOTICE. Notice of a meeting of the Board of Directors need
only be given to those directors whom it is practicable to reach and may be
given in any practicable manner, including publication by publication or radio.
SECTION 2. OFFICERS. One or more officers of the Corporation present at
the meeting of the Board of Directors may be deemed to be directors for the
meeting, in order of rank and within the same rank in order of seniority, as
necessary to achieve a quorum.
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SECTION 3. QUORUM. The director or directors in attendance at a
meeting, including those persons deemed directors in accordance with Article
XII, Section 2 hereof, shall constitute a quorum.
SECTION 4. ACTIONS BY THE BOARD OF DIRECTORS DURING AN EMERGENCY. To
the extent consistent with this Emergency Bylaws, the Corporation's bylaws shall
remain in effect during an emergency. During and emergency as set forth herein,
the Board of Directors may (a) modify lines of succession to accommodate the
incapacity of any director, officer, employee or agent; and (b) relocate the
principal office or designate alternative principal or regional offices or
authorize the officers to do so.
As approved and adopted by the Board of Directors on October __, 1998.
18
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of the _____ day of
____________________ 1998, by and among Marine Bancshares, Inc., a Florida
corporation (the "Company"), Marine National Bank (Proposed), 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 Richard E. Horne (the "Executive").
W I T N E S S E T H:
WHEREAS, the directors of the Company, as organizers of the Bank, are
seeking approval from the Comptroller of the Currency ("OCC") and the Federal
Deposit Insurance Corporation ("FDIC") to charter a national bank in Collier
County, Florida; and
WHEREAS, Executive is willing to assist the directors of the Company in
the organization of the Bank and to become the President and Chief Executive
Officer of the Bank and the Company in accordance with the terms and conditions
hereinafter set forth;
NOW, THEREFORE, for and in consideration of the mutual premises and
covenants herein contained, the parties hereto agree as follows:
1. CONSULTING SERVICES. From June 15, 1998 through such time as the
Bank opens for business, Executive shall serve as a consultant to Employer for
the purpose of assisting with the organization of the Bank and the Company, and
as a consultant Executive shall be deemed to be an independent contractor.
Executive shall be paid $______ per month, payable bi-weekly, for such
consulting services.
2. EMPLOYMENT. Employer employs Executive and Executive accepts
employment upon the terms and conditions set forth in this Agreement.
3. TERM. The term of employment of Executive under this Agreement
shall be the three year period commencing on the date the Bank opens for
business.
4. COMPENSATION. (a) SALARY. For all services rendered by Executive,
Executive shall be paid an annual base salary of $120,000, payable in equal
semi-monthly installments during the term of this Agreement. Salary payments
shall be subject to withholding and other applicable taxes. Such base salary may
be increased from time to time in the sole discretion of the Board of Directors
of the Bank.
(b) BONUS. Beginning on the second anniversary of the Bank's
opening for business, and in addition to Executive's base salary, Executive
shall be eligible to receive such performance bonuses as may be determined in
the discretion of the Board of Directors of the Bank, which bonuses may be in
<PAGE>
amounts up to fifty percent (50%) of Executive's base salary. No bonus shall be
payable, however, unless the following conditions shall have been fulfilled:
(i) Prior to the granting of any bonus to Executive, the
Board of Directors of the Bank shall consider, and
document its findings in the minutes of the meeting
wherein the issue was considered, Executive's
performance in light of the status of the Bank's
internal controls, loan documentation, credit
underwriting, interest rate exposure, asset growth,
asset quality, earnings, and such other performance
goals and objectives mutually agreed upon between
Executive and such Board of Directors.
(ii) The overall condition of the Bank must be
"satisfactory" in the opinion of the OCC as set forth
in the most current OCC Report of Supervisory
Activity provided to the Board of Directors of the
Bank and the Uniform Financial Institution Rating of
the Bank shall not be less than a "2"; and
(iii) The Bank shall be "well capitalized" as defined under
regulations promulgated by the OCC pursuant to the
Federal Deposit Insurance Corporation Improvement Act
of 1991.
5. TITLE AND DUTIES. Executive shall serve as President and as Chief
Executive Officer of the Bank once the OCC has granted preliminary charter
approval and a member of the Interim Board of Directors and the initial Board of
Directors of the Bank. Executive shall run the day-to-day activities of the Bank
and oversee the Bank, within the framework of the approved annual budget, and
with a sound system of internal controls and in compliance with the policies of
the Board of Directors of the Bank, and all applicable laws and regulations.
Executive shall also serve as President and as Chief Executive Officer of the
Company, and the Company shall nominate Executive for election by the
shareholders as a director of the Company for the term of this Agreement.
6. 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 client development after normal business hours.
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. Executive shall notify Employer of any participation
by him in any trade association or similar organization.
7. EXPENSES. Executive may incur reasonable expenses for promoting
the business of the Bank, including expenses for entertainment, travel, and
similar items. Executive will
2
<PAGE>
be reimbursed for all such expenses upon Executive's monthly presentation of an
itemized account of such expenditures.
8. VACATIONS. Executive shall be entitled each year to a vacation in
accordance with the personnel policy established by the Bank's Board of
Directors during which time Executive's compensation shall be paid in full.
9. ADDITIONAL COMPENSATION. As additional consideration paid to
Executive, Executive shall be provided with health, hospitalization, disability
and term life insurance, and participation in the Bank's incentive compensation
plan (in the event one is adopted by the Board of Directors of the Bank). In
addition, Executive shall be paid $600 per month as an automobile allowance. The
Company shall also grant to Executive options to purchase 25,000 shares of
Common Stock of the Company at a purchase price of $10.00 per share pursuant to
the Company's Incentive Stock Option Plan, as soon as practicable after the Bank
commences business. Twenty (20%) of these options shall vest beginning on the
date the Bank commences business and twenty (20%) shall vest on each of the four
successive anniversaries of the Bank's opening for business. All options shall
be exercisable for a period of seven (7) years from the date of grant.
10. CHANGE IN CONTROL OF THE COMPANY. In the event of a "change in
control" of the Company, as defined herein, 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 a cash payment equal to two
hundred percent (200%) of the compensation, including bonus, if any, received by
Executive in the one-year period immediately preceding the change in control.
The severance payments provided for in this Section 10(a) shall be paid in cash,
commencing not later than ten (10) days after the date of notice of termination
by Executive under this Section 10 or ten (10) days after the date of closing of
the transaction effecting the change in control of the Company, whichever is
later.
(b) For purposes of this Section 10, "change in control" of the
Company shall mean:
(i) any transaction, whether by merger, consolidation,
asset sale, tender offer, reverse stock split, or
otherwise, which results in the acquisition or
beneficial ownership (as such term is defined under
rules and regulations promulgated under the
Securities Exchange Act of 1934, as amended) by any
person or entity or any group of persons or entities
acting in concert, of 50% or more of the outstanding
shares of Common Stock of the Company;
(ii) the sale of all or substantially all of the assets
of the Company; or
(iii) the liquidation of the Company.
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<PAGE>
11. TERMINATION. (a) FOR CAUSE. This Agreement may be terminated by
the Board of Directors of the Bank without notice and without further obligation
for any of the following reasons:
(i) receipt by the Bank of written notice from the OCC
that the OCC has criticized Executive's performance
or his area of responsibility, and has either (a)
rated the Bank a "4" or a "5" under the Uniform
Financial Rating System or (b) has determined that
the Bank is in a "troubled condition" as defined
under Section 914 of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989;
(ii) failure of Executive to follow reasonable written
instructions or policies of the Board of Directors of
the Bank;
(iii) gross negligence or willful misconduct of Executive
materially damaging to the business of the Bank
during the term of this Agreement, or at any time
while he was employed by the Bank prior to the term
of this Agreement, if not disclosed to the Bank prior
to the commencement of the term of this Agreement;
(iv) arrest for, charge in relation to (by criminal
information, indictment or otherwise) or conviction
of Executive during the term of this Agreement of a
crime involving breach of trust or moral turpitude;
or
(v) breach by Executive of any material term of this
Agreement.
In the event that the Bank discharges Executive alleging
"cause" under this Section 11(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 11(b) hereof. In
the event that the Bank discharges Executive alleging "cause" under this Section
11(a), such notice of discharge shall be accompanied by a written and specific
description of the circumstances alleging such "cause." The termination of
Executive for "cause" shall not entitle the Bank to enforcement of the
non-competition covenants contained in Section 13 hereof.
(b) WITHOUT CAUSE.
(i) The Bank may, upon thirty (30) days' written notice
to Executive, terminate this Agreement without cause
at any time during the term of this Agreement upon
the condition that Executive shall be entitled, as
liquidated damages in lieu of all other claims, to
the payment of his base salary for a period of six
months. The severance payments provided for in this
Section 11(b) shall commence not later than thirty
(30) days after the actual date of termination of
employment of Executive. The termination of Executive
"without cause" shall not
4
<PAGE>
entitle the Bank to enforcement of the
non-competition covenants contained in Section 13
hereof.
(ii) Executive may, upon thirty (30) days' 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 Bank shall have no further obligation to
Executive and the Bank shall be entitled to
enforcement of the non-competition covenants
contained in Section 13 hereof.
(iii) In the event this Agreement is terminated without
cause, whether by Executive or by the Bank, any stock
options or unexercised portion thereof, granted
pursuant to Section 9 of this Agreement, whether or
not vested on the date of termination, may be
exercised by Executive within thirty (30) days from
the date of termination, at which time all such
options that have not been so exercised shall expire.
12. DEATH OR DISABILITY. In the event of Executive's death, Employer
shall continue to pay to Executive's designated beneficiary, or, if Executive
has failed to designate a beneficiary, to his estate, the periodic payments of
Executive's base salary pursuant to Section 4 hereof through the end of the
month in which Executive's death occurred. Such compensation shall be in lieu of
any other benefits provided hereunder, except that in the event of a change in
control of the Company, as defined herein, Executive's designated beneficiary or
his estate, as the case may be, shall be entitled to the benefits of Section 10
hereof. The Bank may maintain insurance on its behalf to satisfy in whole or in
part the obligations of this Section 12.
In the event of Executive's disability, as hereinafter defined,
Employer shall pay to Executive the periodic payments of base salary then in
effect through the end of the month in which Executive became disabled.
Executive shall be deemed to have a "disability" if, by reason of physical or
mental impairment, he is incapable of performing his duties hereunder for a
period of sixty (60) consecutive days. Any dispute regarding the existence, the
extent, or the continuance of Executive's disability shall be resolved by the
determination of a duly licensed and practicing physician selected by and
mutually agreeable to both the Board of Directors of the Bank and Executive;
provided, however, if Executive officially establishes his eligibility to
receive social security disability benefits or is deemed disabled under the
terms and conditions of any disability insurance policy carried on Executive by
the Company or the Bank, he shall be deemed to be disabled as provided herein
without further proof. Executive shall make himself available for and submit to
such examinations by said physician as may be directed from time to time by the
physician. Failure to submit to any such examination shall constitute a material
breach of this Agreement.
13. NON-COMPETITION. Executive acknowledges that he has performed
services or will perform services hereunder which directly affect Employer's
business. Accordingly,
5
<PAGE>
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) In the event of termination of employment under this
Agreement by action of Executive pursuant to Section 10(b)(ii) prior to the
expiration of the term of this Agreement, Executive agrees with Employer that
through the actual date of termination of the Agreement, and for a period of
twelve (12) months after such termination date, Executive shall not, without the
prior written consent of Employer, within Collier and Lee County Florida, either
directly or indirectly, serve as an executive officer of any bank, bank holding
company or other financial institution.
(c) The covenants of Executive set forth in this Section 13 are
separate and independent covenants for which valuable consideration has been
paid, the receipt and sufficiency of which are acknowledged by Executive, and
have also been made by Executive to induce Employer to enter into this
Agreement. In the event that a court of competent jurisdiction finds that
Executive has violated the provisions of this Section 13, then, as partial
relief to Employer, all unexercised options granted to Executive pursuant to
Section 9 hereof shall immediately become null and void. Further, 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 13 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. Should any covenant,
term, or condition contained in this Section 13 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 13 so that it shall be enforceable as modified, and
in any event the invalidity of any provision of this Section 13 shall not affect
the validity of any other provision in this Section 13 or elsewhere in this
Agreement.
14. NOTICES. Any notice required or desired to be given under this
Agreement shall be deemed given if in writing sent by certified mail to his
residence in the case of Executive, or to its principal office in the case of
Employer.
15. WAIVER OF BREACH. 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 shall be valid unless in
writing and signed by an authorized officer of Employer.
16. ASSIGNMENT. 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 Executive under this Agreement shall
inure to the benefit of and shall be binding upon
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<PAGE>
the successors and assigns of Employer.
17. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida.
18. 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.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"BANK"
MARINE NATIONAL BANK (PROPOSED)
By:
---------------------------------------
Chairman
By:
---------------------------------------
Secretary
"COMPANY"
MARINE BANCSHARES, INC.
By:
---------------------------------------
Name:
Title:
"EXECUTIVE"
Richard E. Horne
8
EXHIBIT 10.3
STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of the ____ day of ____________, 1998
(the "Agreement"), by and between Marine Bancshares, Inc. (the "Company") and
Richard E. Horne (the "Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Company, as organizers
of Marine National Bank of Naples (in organization), a proposed national bank to
be organized under the laws of the United States (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, the Company and the Bank (collectively referred to
herein as the "Employer") have agreed to employ Executive as the President and
Chief Executive Officer of the Company and the President and Chief Executive
Officer of the Bank pursuant to an Employment Agreement dated as of
_______________, 1998 by and between Employer and Executive ("Employment
Agreement"); and
WHEREAS, the Board of Directors of the Company has adopted
that certain Marine Bancshares, Inc. 1998 Stock Option Plan, as amended (the
"Plan"), a copy of which is attached hereto as Exhibit "A" and incorporated
herein by reference; and
WHEREAS, pursuant to the terms of the Plan and in
consideration of the efforts of Employee on behalf of the Company, the Board of
Directors has selected Employee to participate in the Plan and desires to grant
to Employee certain incentive stock options to purchase shares of the Company's
authorized $.01 par value common stock (the "Stock"), subject to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the
covenants contained herein, the parties hereto agree as follows:
1. INCORPORATION OF PLAN PROVISIONS
This Agreement is subject to and is to be construed in all
respects in a manner which is consistent with the terms of the Plan, the
provisions of which are hereby incorporated by reference into this Agreement.
Unless specifically provided otherwise, all terms used in this Agreement shall
have the same meaning as in the Plan.
<PAGE>
2. GRANT OF OPTIONS.
Subject to the terms and conditions set forth herein, the
Company hereby grants to Executive the right to purchase (the "Option") up to
25,000 shares of the Company's Stock, at a price of $10.00 per share, subject to
adjustment as provided in Section 5 hereof (the "Exercise Price"). This Option
is intended to be an Incentive Stock Option as provided in ss. 422 of the
Internal Revenue Code. The Board of Directors of the Company has determined, in
good faith and in its best judgment, that the fair market value per share of the
Stock as of the date this Option is granted is $10.00.
3. ADMINISTRATION.
3.1 COMPOSITION OF THE COMMITTEE. This Agreement shall be
administered by a committee (the "Committee") appointed by the Board of
Directors of the Company and 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 (the "Exchange Act").
3.2 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 3.2 in an arbitrary and
capricious manner.
4. EXERCISE OF PURCHASE RIGHTS.
4.1 EXERCISABILITY. Except as provided below with respect to
a change of control, Executive may exercise the Option only as follows:
(i) beginning on the day that the Bank opens for business (the
"Commencement Date"), the Option may be exercised to a maximum of 5,000 of the
shares of Stock subject to this Agreement;
(ii) beginning on the first anniversary of the Commencement
Date, the Option may be exercised up to an additional 5,000 of the shares of
Stock subject to this Agreement.
(iii) beginning on the second anniversary of the Commencement
Date, the Option may be exercised up to an additional 5,000 of the shares of
Stock subject to this Agreement;
(iv) beginning on the third anniversary of the Commencement
Date, the Option may be exercised up to an additional 5,000 of the shares of
Stock subject to this Agreement; and
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<PAGE>
(v) beginning on the fourth anniversary of the Commencement
Date, 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 of control of the 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.
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 Employer
for any reason except death, disability or retirement, (b) twelve months after
termination of Executive's employment with the Employer by reason of his death,
disability or retirement, or (c) the seventh (7th) anniversary of the
Commencement Date.
4.2 EXERCISE OF OPTION. Until such time as the Option shall
lapse or expire pursuant to Section 4.1 hereof, the Option may be exercised, in
whole or in part, by delivery to the Company of written notice of such exercise,
accompanied by full payment of the Exercise Price with respect to that portion
of the Option being exercised. 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 Exercise Price for the shares of Stock to be
purchased shall be paid either:
(i) in cash (including by certified check),
(ii) by delivery to the Company of shares of Stock valued at
the Market Price on the date of exercise of the Option,
(iii) by surrender to the Company of that portion of the
Option having an aggregate Option Value Per Share equal to the
portion of the aggregate Exercise Price which will not be paid
in cash or by delivery of shares of Stock pursuant to (i) or
(ii) above, or
(iv) by any combination of the methods described in (i), (ii)
or (iii) above.
Upon each exercise or partial 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
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<PAGE>
purchased by Executive, free and clear of encumbrances.
For purposes of this Section 4.2, "Option Value Per Share"
shall mean, with respect to one share of Stock purchasable pursuant to this
Option, the excess of (i) the Market Price of one share of Stock issuable upon
exercise hereof, as determined with respect to the date notice of exercise is
given by Executive, over (ii) the Exercise Price therefor.
For purposes of this Section 4.2, "Market Price" shall mean
the last trade/closing price of the Stock on the date in question, as quoted by
the National Association of Securities Dealers, Inc. SmallCap Market System (or
other over-the-counter nationally recognized quotation service). If the Stock is
not traded on the Nasdaq SmallCap Market but is registered on a national
securities exchange or on the Nasdaq National Market System, "Market Price"
shall mean the closing sales price of the Stock on such national securities
exchange or National Market System. If the Stock is not traded on a national
securities exchange or through any other nationally recognized quotation
service, then "Market Price" shall mean the fair market value of the Stock as
determined by the Board of Directors of the Company or the Committee, acting in
good faith, under any method consistent with the Code, or Treasury Regulations
thereunder, as the Board of Directors of the Company or the Committee shall in
its discretion select and apply. Subject to the foregoing, the Board of
Directors of the Company or the Committee, in fixing the Market Price, shall
have full authority and discretion and be fully protected in doing so.
4.3 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
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 unless and until (a) the Company is
furnished with an opinion of counsel reasonably acceptable to the Company 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.
5. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
The type and number of shares of Stock subject to the Option
and the Exercise Price with respect thereto shall be adjusted by the Committee
to reflect such events as stock dividends, stock splits, recapitalizations,
mergers, consolidations or reorganizations of or by the Company, so as to
provide to Executive as nearly as possible the same economic effect as
contemplated by the Option prior to such stock dividend, stock split,
recapitalization, merger, consolidation or reorganization.
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6. 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 a certificate or
certificates representing such shares are issued to Executive pursuant to
Section 4.2 of this Agreement. Except as provided in Section 5, 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.
7. 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.
8. 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.
9. MISCELLANEOUS.
9.1 HEADINGS. The headings in this Agreement are inserted for
convenience only and shall have no affect on the interpretation of this
Agreement.
9.2 ENTIRE AGREEMENT. This Agreement, the Employment
Agreement, and the documents referred to therein contain the entire agreement
between the parties with respect to the transactions contemplated hereby and
supersede all prior arrangements or understandings, written or oral, with
respect thereto.
9.3 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.
9.4 SUCCESSORS. The terms and conditions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives and successors.
9.5 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 to be performed entirely within such jurisdiction except to
the extent that federal law may be applicable.
9.6 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.
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement as of the day and year first above written.
MARINE BANCSHARES, INC. RICHARD E. HORNE
By:________________________ _____________________________
Name:
Title:
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EXHIBIT A
EXERCISE OF OPTION
To: The Board of Directors
Marine Bancshares, Inc.
Gentlemen:
The undersigned, as optionee under the Stock Option Agreement by and
between Marine Bancshares, Inc. (the "Company") and Richard E. Horne, dated as
of __________, 1998 (the "Agreement"), hereby irrevocably elects to exercise the
Option granted in the Agreement to purchase ______ shares of Common Stock of the
Company, par value $.01 per share, and herewith makes payment of $___________.
Dated: _______________________ ________________________________
Richard E. Horne
Date Received: ________________
Received by: __________________
Title: ________________________
7
EXHIBIT 10.4
MARINE BANCSHARES, INC.
1998 STOCK OPTION PLAN
EFFECTIVE AS OF ____________, 1998
1. PURPOSE
The primary purpose of the Marine Bancshares, Inc. 1998 Stock Option
Plan (the "Plan") is to encourage and enable eligible directors, officers, key
employees and certain consultants and advisors of Marine Bancshares, Inc. (the
"Company") and its subsidiaries to acquire proprietary interests in the Company
through the ownership of Common Shares of the Company. The Company believes that
directors, officers and key employees who participate in the Plan will have a
closer identification with the Company by virtue of their ability as
shareholders to participate in the Company's growth and earnings. The Plan also
is designed to provide motivation for participating directors, officers and key
employees to remain in the employ of and to give greater effort on behalf of the
Company. It is the intention of the Company that the Plan provide for the award
of "incentive stock options" qualified under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") and the regulations promulgated
thereunder, as well as the award of non-qualified stock options. Accordingly,
the provisions of the Plan related to incentive stock options shall be construed
so as to extend and limit participation in a manner consistent with the
requirements of Section 422 of the Code.
2. DEFINITIONS
The following words or terms shall have the following meanings:
(a) "Agreement" shall mean a stock option agreement between the Company
and an Eligible Employee or Eligible Participant pursuant to the terms of this
Plan.
(b) "Board of Directors" shall mean the Board of Directors of the
Company.
(c) "Committee" shall mean the committee appointed by the Board of
Directors to administer the Plan, if any, as set forth in Section 5 of the Plan.
(d) "Company" shall mean Marine Bancshares, Inc., a Florida corporation.
(e) "Eligible Employee(s)" shall mean key employees regularly employed
by the Company or a Subsidiary (including officers, whether or not they are
directors) as the Board of Directors or the Committee shall select from time to
time.
<PAGE>
(f) "Eligible Participant(s)" shall mean directors, officers, key
employees of the Company and its Subsidiaries, consultants, advisors and other
persons who may not otherwise be eligible to receive qualified incentive options
pursuant to Section 8 of the Plan.
(g) "Market Price" shall mean the closing price of the Company's Common
Shares on the date in question, as quoted by the Nasdaq National Market or the
Nasdaq SmallCap Market (or other nationally recognized quotation service). If
the Company's Common Stock is not traded on the Nasdaq Stock Market but is
registered on a national securities exchange, "Market Price" shall mean the
closing sales price of the Company's Common Shares on such national securities
exchange. If the Company's Common Shares are not traded on a national securities
exchange or through any other nationally recognized quotation service, then
"Market Price" shall mean the fair market value of the Company's Common Shares
as determined by the Board of Directors or the Committee, acting in good faith,
under any method consistent with the Code, or Treasury Regulations thereunder,
as the Board of Directors or the Committee shall in its discretion select and
apply at the time of the grant of the option concerned. Subject to the
foregoing, the Board of Directors or the Committee, in fixing the market price,
shall have full authority and discretion and be fully protected in doing so.
(h) "Optionee" shall mean an Eligible Employee or Eligible Participant
having a right to purchase Common Shares under an Agreement.
(i) "Option(s)" shall mean the right or rights granted to Eligible
Employees or Eligible Participants to purchase Common Shares under the Plan.
(j) "Plan" shall mean this Marine Bancshares, Inc. 1998 Stock Option
Plan.
(k) "Shares," or "Common Shares" shall mean shares of the $.01 par value
common stock of the Company.
(l) "Subsidiary" or "Subsidiaries" shall mean any corporation(s) if the
Company owns or controls, directly or indirectly, more than a majority of the
voting stock of such corporation(s).
(m) "Ten Percent Owner" shall mean an individual who, at the time an
Option is granted, owns directly or indirectly more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or a
Subsidiary.
3. EFFECTIVE DATE
The effective date of the Plan (the "Effective Date") shall be the date
the Plan is adopted by the Board of Directors, or the date the Plan is approved
by the shareholders of the Company, whichever is earliest. The Plan must be
approved by the affirmative vote of not less than a majority of the shares
present and voting at a meeting at which a quorum is present, which shareholder
vote must be taken within twelve (12) months after the date the Plan is adopted
by the Board of Directors. Such shareholder vote shall not alter the Effective
Date. In the event shareholder approval of the
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adoption of the Plan is not obtained within the aforesaid twelve (12) month
period, then any Options granted in the intervening period shall be void.
4. SHARES RESERVED FOR PLAN
The Company's Common Shares to be sold to Eligible Employees and
Eligible Participants under the Plan may at the election of the Board of
Directors be either treasury shares or Shares originally issued for such
purpose. The maximum number of Shares which shall be reserved and made available
for sale under the Plan shall be nine hundred thousand (900,000); provided,
however, that such Shares shall be subject to the adjustments provided in
Section 8(h). Any Shares subject to an Option which for any reason expires or is
terminated unexercised may again be subject to an Option under the Plan.
5. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors or the
Committee. The Committee shall be comprised of not less than two (2) members
appointed by the Board of Directors of the Company from among its members, each
of whom qualifies as a "Non-Employee Director" as such term is defined in Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any successor regulation.
Within the limitations described herein, the Board of Directors of the
Company or the Committee shall administer the Plan, select the Eligible
Employees and Eligible Participants to whom Options will be granted, determine
the number of shares to be optioned to each Eligible Employee and Eligible
Participant and interpret, construe and implement the provisions of the Plan.
The Board of Directors or the Committee shall also determine the price to be
paid for the Shares upon exercise of each Option, the period within which each
Option may be exercised, and the terms and conditions of each Option granted
pursuant to the Plan. The Board of Directors and Committee members shall be
reimbursed for out-of-pocket expenses reasonably incurred in the administration
of the Plan.
If the Plan is administered by the Board of Directors, a majority of the
members of the Board of Directors shall constitute a quorum, and the act of a
majority of the members of the Board of Directors present at any meeting at
which a quorum is present, or acts approved in writing by all members of the
Board of Directors, shall be the acts of the Board of Directors. If the Plan is
administered by the Committee, a majority of the members of the Committee shall
constitute a quorum, and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by all of the
members of the Committee, shall be the acts of the Committee.
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6. ELIGIBILITY
Options granted pursuant to Section 8 shall be granted only to Eligible
Employees. Options granted pursuant to Section 9 may be granted to Eligible
Employees and to Eligible Participants.
7. DURATION OF THE PLAN
The Plan shall remain in effect until all Shares subject to or which may
become subject to the Plan shall have been purchased pursuant to Options granted
under the Plan; provided that Options under the Plan must be granted within ten
(10) years from the Effective Date. The Plan shall expire on the tenth
anniversary of the Effective Date.
8. QUALIFIED INCENTIVE OPTIONS
It is intended that Options granted under this Section 8 shall be
qualified incentive stock options under the provisions of Section 422 of the
Code and the regulations thereunder or corresponding provisions of subsequent
revenue laws and regulations in effect at the time such Options are granted.
Such Options shall be evidenced by stock option agreements in such form, not
inconsistent with this Plan, as the Committee or the Board of Directors shall
approve from time to time, which Agreements shall contain in substance the
following terms and conditions:
(a) PRICE. The purchase price for shares purchased upon exercise will be
equal to 100% of the Market Price on the day the Option is granted; provided
that the purchase price of stock deliverable upon the exercise of a qualified
incentive stock option granted to a Ten Percent Owner under this Section 8 shall
be not less than one hundred ten percent (110%) of the Market Price on the day
the Option is granted, as determined by the Board of Directors or the Committee,
but in no case less than the par value of such stock.
(b) NUMBER OF SHARES. The Agreement shall specify the number of Shares
which the Optionee may purchase under the Option, as determined by the Board of
Directors or the Committee.
(c) EXERCISE OF OPTIONS. The Shares subject to the Option may be
purchased in whole or in part by the Optionee in accordance with the terms of
the Agreement from time to time after shareholder approval of the Plan, as
determined by the Board of Directors or the Committee, but in no event later
than ten (10) years from the date of grant of the Option. Notwithstanding the
foregoing, Shares subject to an Option which is a qualified incentive stock
option granted to a Ten Percent Owner under this Section 8 may be purchased from
time to time but in no event later than five (5) years from the date of grant of
the Option.
(d) MEDIUM AND TIME OF PAYMENT. Stock purchased pursuant to an Agreement
shall be paid for in full at the time of purchase. Payment of the purchase price
shall be in cash or, in lieu of payment of all or part of the purchase price in
cash, the Optionee may surrender to the Company Shares valued at the Market
Price on the date of exercise of the Option in accordance with the terms
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<PAGE>
of the Agreement. Upon receipt of payment, the Company shall, without transfer
or issue tax, deliver to the Optionee (or other person entitled to exercise the
Option) a certificate or certificates for such Shares.
(e) RIGHTS AS A SHAREHOLDER. An Optionee shall have no rights as a
shareholder with respect to any Shares covered by an Option until the date of
issuance of the stock certificate to the Optionee for such Shares. Except as
otherwise expressly provided in the Plan, no adjustments shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued.
(f) NONASSIGNABILITY OF OPTION. No Option shall be assignable or
transferable by the Optionee except by will or by the laws of descent and
distribution. During the lifetime of the Optionee, the Option shall be
exercisable only by him or her.
(g) EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH. In the event that an
Optionee during his or her lifetime ceases to be an employee of the Company or
of any Subsidiary of the Company for any reason (including retirement) other
than death or permanent and total disability, any Option or unexercised portion
thereof which was otherwise exercisable on the date of termination of employment
shall expire unless exercised within a period of three (3) months from the date
on which the Optionee ceased to be an employee, but in no event after the term
provided in the Optionee's Agreement. In the event that an Optionee ceases to be
an employee of the Company or of any Subsidiary of the Company for any reason
(including retirement) other than death or permanent and total disability prior
to the time that an Option or portion thereof becomes exercisable, such Option
or portion thereof which is not then exercisable shall terminate and be null and
void. Whether authorized leave of absence for military or government service
shall constitute termination of employment for the purpose of this Plan shall be
determined by the Board of Directors or the Committee, which determination shall
be final and conclusive.
In the event that an Optionee during his or her lifetime ceases to be an
employee of the Company or any Subsidiary of the Company by reason of death or
permanent and total disability, any Option or unexercised portion thereof which
was otherwise exercisable on the date such Optionee ceased employment shall
expire unless exercised within a period of one (1) year from the date on which
the Optionee ceased to be an employee, but in no event after the term provided
in the Optionee's Agreement. In the event that an Optionee during his or her
lifetime ceases to be an employee of the Company or any Subsidiary of the
Company by reason of death or permanent and total disability, any Option or
portion thereof which was not exercisable on the date such Optionee ceased
employment may, in the discretion of the Board of Directors or the Committee, be
accelerated and become immediately exercisable for a period of one (1) year from
the date on which the Optionee ceased to be an employee, but in no event shall
the exercise period extend past the term provided in the Optionee's Agreement.
"Permanent and total disability" as used in this Plan shall be as
defined in Section 22(e)(3) of the Code.
5
<PAGE>
In the event of the death of an Optionee, the Option shall be
exercisable by his or her personal representatives, heirs or legatees, as
provided herein.
(h) RECAPITALIZATION. In the event that dividends are payable in Shares
of the Company or in the event there are splits, subdivisions or combinations of
Shares of the Company, the number of Shares available under the Plan shall be
increased or decreased proportionately, as the case may be, and the number and
Option exercise price of Shares deliverable upon the exercise thereafter of any
Option theretofore granted shall be increased or decreased proportionately, as
the case may be, as determined to be proper and appropriate by the Board of
Directors or the Committee.
(i) REORGANIZATION. In case the Company is merged or consolidated with
another corporation and the Company is not the surviving corporation, or in case
the property or stock of the Company is acquired by another corporation, or in
case of a separation, reorganization, recapitalization or liquidation of the
Company, the Board of Directors of the Company, or the Board of Directors of any
corporation assuming the obligations of the Company hereunder, shall either (i)
make appropriate provision for the protection of any outstanding Options by the
substitution on an equitable basis of appropriate stock of the Company, or of
the merged, consolidated or otherwise reorganized corporation which will be
issuable in respect to the Shares of the Company, provided only that the excess
of the aggregate fair market value of the Shares subject to option immediately
after such substitution over the purchase price thereof is not more than the
excess of the aggregate fair market value of the Shares subject to option
immediately before such substitution over the purchase price thereof, or (ii)
upon written notice to the Optionee provide that the Option (including, in the
discretion of the Board of Directors, any portion of such Option which is not
then exercisable) must be exercised within sixty (60) days of the date of such
notice or it will be terminated. If any adjustment under this Section 8(i) would
create a fractional Share or a right to acquire a fractional Share, such shall
be disregarded and the number of Shares available under the Plan and the number
of Shares covered under any Options previously granted pursuant to the Plan
shall be the next lower number of Shares, rounding all fractions downward. An
adjustment made under this Section 8(i) by the Board of Directors shall be
conclusive and binding on all affected persons.
Except as otherwise expressly provided in this Plan, the Optionee shall
have no rights by reason of any subdivision or consolidation of shares of stock
of any class, or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class, or by reason of any
dissolution, liquidation, merger, or consolidation or spin-off of assets or
stock of another corporation; and any issuance by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or prices of Shares subject to an Option.
The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
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(j) ANNUAL LIMITATION. The aggregate fair market value (determined at
the time the Option is granted) of the Shares with respect to which incentive
stock options are exercisable for the first time by an Optionee during any
calendar year (under all incentive stock option plans of the Company and its
Subsidiaries) shall not exceed $100,000. Any excess over such amount shall be
deemed to be related to and part of a non-qualified stock option granted
pursuant to Section 9.
(k) GENERAL RESTRICTION. Each Option shall be subject to the requirement
that if at any time the Board of Directors shall determine, in its reasonable
discretion, that the listing, registration or qualification of the Shares
subject to such Option upon any securities exchange or under any state or
federal law, or the consent or approval of any government regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such Option or the issuance or purchase of Shares thereunder, such Option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors. Alternatively, such
Options shall be issued and exercisable only upon such terms and conditions and
with such restrictions as shall be necessary or appropriate to effect exemption
from such listing, registration, or other qualification requirement.
9. NON-QUALIFIED OPTIONS
The Board of Directors or the Committee may grant to Eligible Employees
or Eligible Participants Options under the Plan which are not qualified
incentive stock options under the provisions of Section 422 of the Code. Such
non-qualified options shall be evidenced by Agreements in such form and not
inconsistent with this Plan as the Board of Directors or the Committee shall
approve from time to time, which Agreements shall contain in substance the same
terms and conditions as set forth in Section 8 hereof with respect to qualified
incentive stock options; provided, however, that:
(i) the limitations set forth in Sections 8(a) and 8(c) with
respect to Ten Percent Owners shall not be applicable to non-qualified options
granted to any Ten Percent Owner;
(ii) the limitations set forth in Section 8(g) with respect to
termination of employment or death shall not be applicable to non-qualified
option grants, and any such limitations shall be determined on a case by case
basis by the Board of Directors or the Committee at the time of the
non-qualified option grant;
(iii) the limitation set forth in Section 8(j) with respect to
the annual limitation of incentive stock options shall not be applicable to
non-qualified option grants; and
(iv) non-qualified options may be granted at a purchase price
equal to not less than 75% of the Market Price on the day the Option is granted.
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10. AMENDMENT OF THE PLAN
This Plan may at any time or from time to time be terminated, modified
or amended by the affirmative vote of not less than a majority of the Shares
present and voting thereon by the Company's shareholders at a meeting of the
shareholders at which a quorum is present. The Board of Directors may at any
time and from time to time modify or amend the Plan in any respect, except that
without shareholder approval the Board of Directors may not (1) increase the
maximum number of Shares for which Options may be granted under the Plan (other
than increases due to changes in capitalization as referred to in Section 8(h)
hereof), or (2) change the class of persons eligible for qualified incentive
options. The termination or any modification or amendment of the Plan shall not,
without the written consent of an Optionee, affect his or her rights under an
Option or right previously granted to him or her. With the written consent of
the Optionee affected, the Board of Directors or the Committee may amend
outstanding option agreements in a manner not inconsistent with the Plan.
Without employee consent, the Board of Directors may at any time and from time
to time modify or amend outstanding Agreements in such respects as it shall deem
necessary in order that incentive options granted hereunder shall comply with
the appropriate provisions of the Code and regulations thereunder which are in
effect from time to time respecting "Qualified Incentive Options." The Company's
Board of Directors may also suspend the granting of Options pursuant to the Plan
at any time and may terminate the Plan at any time; provided, however, no such
suspension or termination shall modify or amend any Option granted before such
suspension or termination unless (1) the affected participant consents in
writing to such modification or amendment or (2) there is a dissolution or
liquidation of the Company.
11. BINDING EFFECT
All decisions of the Board of Directors or the Committee involving the
implementation, administration or operation of the Plan or any offering under
the Plan shall be binding on the Company and on all persons eligible or who
become eligible to participate in the Plan.
12. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Shares pursuant to
Options exercised hereunder will be used for general corporate purposes.
8
EXHIBIT 10.5
NEITHER THIS WARRANT, NOR THE SHARES OF COMMON STOCK FOR WHICH IT IS
EXERCISABLE, HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NO
TRANSFER OR ASSIGNMENT OF THIS WARRANT OR THE SHARES ISSUABLE UPON ITS EXERCISE
MAY BE MADE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
OR THE AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF SUCH ACT
IN RESPECT OF SUCH TRANSFER OR ASSIGNMENT.
DATED: ___________, 1998
No. ___ _____ Shares
MARINE BANCSHARES, INC.
STOCK PURCHASE WARRANT
TO PURCHASE SHARES OF COMMON STOCK, $.01 PAR VALUE
This is to certify that, for value received, _________________
("Holder"), or its or his successors, is entitled, upon the due exercise hereof
at any time during the period commencing on the closing date for the Initial
Public Offering (as hereinafter defined) of Marine Bancshares, Inc., a Florida
corporation (the "Commencement Date") and terminating at 5:00 p.m., Atlanta,
Georgia local time, on the tenth anniversary of the Commencement Date, unless
earlier terminated as provided in Section 2 hereunder (the "Termination Date"),
to purchase _____ shares (subject to adjustment as provided herein) of the $.01
par value Common Stock of Marine Bancshares, Inc. at a price per share as
specified in Section 2 of this Warrant and to exercise the other rights, powers
and privileges hereinafter provided, all on the terms and subject to the
conditions specified herein.
Section 1. CERTAIN DEFINITIONS. Unless the context otherwise requires,
the following terms as used in this Warrant shall have the following meanings:
(a) "AVERAGE MARKET VALUE" shall mean the average of the
Closing Prices for the Common Stock for the five trading
days immediately preceding the date of determination.
(b) "BANK" shall mean Marine National Bank of Naples, a
national banking association (in organization) and a
wholly-owned subsidiary of the Company.
(c) "CLOSING PRICE" shall mean:
(i) if the primary market for the Common Stock is a national
securities exchange, the NASDAQ Stock Market, or other
market or quotation system in which last sale transactions
are reported on a contemporaneous basis, the last reported
sales price, regular way, of such security on such
exchange or in such quotation system for such trading day,
or, if there shall not have been a sale on such exchange
or reported through such system on such trading day, the
closing or last bid quotations therefor on such exchange
or quotation system on such trading day;
(ii) if the primary market for the Common Stock is not a
national securities exchange or quotation system in which
last sale transactions are contemporaneously reported, the
last
<PAGE>
MARINE BANCSHARES, INC.
STOCK PURCHASE WARRANT
DATED ___________, 1998
Page 2
bid quotation in the over-the-counter market on such
trading day as reported by the National Association of
Securities Dealers through NASDAQ, its automated system
for reporting quotations, or its successor, or such other
generally accepted source of publicly reported bid
quotations as the Company may reasonably designate; or
(iii) if the Closing Price cannot be ascertained by any of the
methods set forth in the immediately preceding paragraphs
(i) and (ii), such Closing Price shall be deemed to be the
amount equal to a quotient determined by dividing the Fair
Market Value by the number of shares (including any
fractional shares) of Common Stock then outstanding.
(d) "COMMENCEMENT DATE" shall mean the day that the Bank opens for
business.
(e) "COMMON STOCK" shall mean the Company's $.01 par value common
stock, any security into which such common stock shall have been
changed or any security resulting from reclas sification of such
common stock.
(f) "COMPANY" shall mean Marine Bancshares, Inc., a Florida
corporation, and its successors and assigns.
(g) "EXERCISE DATE" shall mean the date on which the Company shall
have received from the Holder all deliveries required by Section
3 of this Warrant.
(h) "FAIR MARKET VALUE" shall mean the price, as determined by a
written appraisal prepared by an appraiser acceptable to the
Company, that would be paid by the most likely hypothetical
buyer in a single transaction, for 100% of the equity capital of
the Company on a going-concern basis. The Company shall pay for
the cost of any such appraisal.
(i) "INITIAL PUBLIC OFFERING" shall mean the initial public offering
of Common Stock by the Company, pursuant to an effective
registration statement on Form SB-2 filed with the United States
Securities and Exchange Commission under the Securities Act of
1933, as amended, which initial public offering is anticipated
to occur and close no later than December 31, 1998.
Section 2. EXERCISE PRICE; TERMINATION. Subject to the adjustments
provided for herein, the exercise price per share of Common Stock issuable
pursuant to this Warrant (the "Exercise Price") shall be equal to $10.00. In the
event that the Company does not close the Initial Public Offering on or before
5:00 p.m., Atlanta, Georgia local time, on December 31, 1998, then this Warrant
and all rights hereunder shall immediately terminate, shall become null and void
and shall be of no further force or effect.
Section 3. EXERCISE OF WARRANT. The Holder of this Warrant may, at any
time on or after the Commencement Date but prior to the Termination Date,
exercise this Warrant in whole at any time or in part from time to time for the
number of shares which such Holder is then entitled to purchase hereunder.
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MARINE BANCSHARES, INC.
STOCK PURCHASE WARRANT
DATED ___________, 1998
Page 3
The Holder may exercise its rights under this Warrant only as follows:
(i) no part of the Warrant may be exercised prior to the
Commencement Date;
(ii) beginning on the first anniversary of the Commencement Date, the
Warrant may be exercised with respect to a maximum of _______ of
the shares of Common Stock subject to this Warrant;
(iii) beginning on the second anniversary of the Commencement Date,
this Warrant may be exercised with respect to an additional
______ of the shares of Common Stock subject to this Warrant;
and
(iv) beginning on the third anniversary of the Commencement Date,
this Warrant may be exercised with respect to an additional
______ of the shares of Common Stock subject to this Warrant.
The Holder may exercise this Warrant, in whole or in part, by
delivering to the Company at its offices maintained pursuant to Section 4 for
such purpose (i) a written notice of such Holder's election to exercise this
Warrant, which notice shall specify the number of shares to be purchased, (ii)
this Warrant, and (iii) a sum equal to the Exercise Price therefor in cash (U.S.
dollars) or by certified or cashier's check.
Such notice shall be substantially in the form of, and shall be subject
to the requirements set forth in, the Election to Subscribe attached as Exhibit
A hereto. Upon delivery thereof, the Company shall, as promptly as practicable
and in any event within ten (10) business days thereafter, cause to be executed
and sent to such Holder a certificate or certificates representing the aggregate
number of shares of Common Stock issuable upon such exercise.
The certificate or certificates for shares of Common Stock so delivered
shall be in such denominations as may be specified in said notice and shall be
registered in the name of such Holder or such other name or names as shall be
designated in said notice. Such certificate or certificates shall be deemed to
have been issued and the person designated to be named in such certificate shall
be deemed to have become a holder of record of such shares, and to have become
entitled, to the extent permitted by law, to the right to vote such shares or to
consent or receive notice as a stockholder, as of the Exercise Date. If this
Warrant shall have been exercised only in part, the Company shall, at the time
of delivery of said certificate or certificates, deliver to such Holder a new
warrant dated the date it is issued, evidencing the rights of such Holder to
purchase the remaining shares of Common Stock issuable pursuant to this Warrant,
which new warrant shall in all other respects be identical with this Warrant,
or, at the request of such Holder, appropriate notation may be made on this
Warrant and the Warrant returned to such Holder.
The Company shall pay all expenses, transfer taxes and other charges
payable in connection with the preparation, issuance and delivery of stock
certificates under this Section 3, except that, in the event such stock
certificates are to be registered in a name or names other than the name of the
Holder, funds sufficient to pay all stock transfer and any other applicable
taxes payable upon the issuance of such certificates shall be paid by the Holder
not later than the Exercise Date.
3
<PAGE>
MARINE BANCSHARES, INC.
STOCK PURCHASE WARRANT
DATED ___________, 1998
Page 4
Section 4. WARRANT REGISTRATION. At all times while any portion of this
Warrant remains outstanding and exercisable the Company shall keep and maintain
at its principal offices a register in which the ownership and any exchange of
this Warrant shall be recorded. The Company shall not at any time, except upon
the dissolution, liquidation or winding up of the Company, close such register
so as to result in the prevention or delay of the proper exercise of this
Warrant.
Section 5. TRANSFERABILITY. This Warrant and all rights hereunder shall
not be transferable by the Holder except by operation of law. The Company may
deem and treat the registered Holder as the absolute owner of this Warrant for
all purposes and shall not be affected by any notice to the contrary.
Section 6. EXCHANGE. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the offices of the Company, for a new warrant or
warrants, in such denominations as Holder shall designate at the time of
surrender for exchange, of like tenor and date, representing in the aggregate
the right to subscribe for and purchase the number of shares which may be
subscribed for and purchased hereunder, each of such new warrants to represent
the right to subscribe for and purchase not less than _____ shares of Common
Stock (except to the extent necessary to reflect the balance of the number of
shares purchasable hereunder).
Section 7. REPRESENTATIONS AND COVENANTS OF ISSUER.
(a) The Company hereby represents to the Holder as follows:
(i) The Company is a corporation duly organized and validly
existing and in good standing under the laws of the State
of Florida.
(ii) The Company has the corporate power and authority to
execute and deliver this Warrant and to perform the terms
hereof, including the issuance of shares of Common Stock
issuable upon exercise hereof. The Company has taken all
action necessary to authorize the execution, delivery and
performance of this Warrant and the issuance of the shares
of Common Stock issuable upon exercise hereof. This
Warrant has been duly authorized and executed by the
Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company
in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles
relating to or limiting creditors' rights generally.
(b) The Company covenants and agrees that all shares of Common Stock
which may be issued upon the exercise of this Warrant will, upon
issuance, be fully paid and nonassessable and free from all
taxes, liens and charges (other than taxes in respect of any
transfer occurring contemporaneously with such issuance).
4
<PAGE>
MARINE BANCSHARES, INC.
STOCK PURCHASE WARRANT
DATED ___________, 1998
Page 5
Section 8. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SHARES
PURCHASABLE. The Exercise Price and number of shares of Common Stock purchasable
pursuant to this Warrant shall be subject to adjustment from time to time as
follows:
(a) In the event the Company shall at any time exchange, as a whole,
by subdivision or combination in any manner or by the making of
a stock dividend, the number of shares of Common Stock then
outstanding into a different number of shares, with or without
par value, then thereafter the number of shares of Common Stock
which the Holder shall be entitled to purchase pursuant to this
Warrant (calculated immediately prior to such change), shall be
increased or decreased, as the case may be, in direct proportion
to the increase or decrease in the number of shares of
outstanding Common Stock of the Company by reason of such
change, and the Exercise Price after such change shall, in the
event of an increase in the number of shares of Common Stock
outstanding, be proportionately reduced, and, in the event of a
decrease in the number of shares of Common Stock outstanding, be
proportionately increased.
(b) In the event of any reclassification or change of outstanding
shares of Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par
value, or as a result of a subdivision, combination or stock
dividend as provided for in Section 8(a)), or in the event of
any consolidation of the Company with, or merger of the Company
into, another corporation, or in the event of any sale of all or
substantially all of the property, assets, business and goodwill
of the Company, the Company, or such successor or purchasing
corporation, as the case may be, shall provide that the Holder
of this Warrant shall thereafter be entitled to purchase, by
exercise of this Warrant, the kind and amount of shares of stock
and other securities and property receivable upon such
reclassification, change, consolidation, merger or sale by a
holder of the number of shares of Common Stock which this
Warrant entitles the Holder to purchase immediately prior to
such reclassification, change, consolidation, merger or sale.
Any such successor corporation thereafter shall be substituted
for the Company for purposes of this Warrant.
Section 9. HOLDER'S RIGHTS. Except as otherwise expressly set forth
herein, this Warrant shall not entitle the Holder to any rights of a stockholder
of the Company, except that if the Company, during the period in which this
Warrant is exercisable, declares a dividend upon the Common Stock payable
otherwise than in cash out of earnings or earned surplus (computed in accordance
with generally accepted accounting principles) or otherwise than in Common Stock
or securities convertible into Common Stock, then the Holder, upon exercise of
this Warrant, shall receive the number of shares of Common Stock purchasable
upon such exercise and, in addition and without further payment, the cash, stock
or other securities or property which the Holder would have received by way of
dividends or other distribution if, continuously since the date hereof, such
Holder (a) had been the record holder of the number of shares of Common Stock
then being purchased, and (b) had retained all such cash, stock and other
securities (other than Common Stock or securities convertible into Common Stock)
and/or other property payable in respect of such Common Stock or in respect of
any stock or securities paid as dividends and originating directly or indirectly
from such Common Stock.
5
<PAGE>
MARINE BANCSHARES, INC.
STOCK PURCHASE WARRANT
DATED ___________, 1998
Page 6
Section 10. NOTICES. If there shall be any adjustment as provided in
Section 8 hereof, or if securities or property other than shares of Common Stock
of the Company shall become purchasable in lieu of shares of Common Stock upon
exercise of this Warrant, the Company shall forthwith cause written notice
thereof to be sent by registered mail, postage prepaid, to the registered Holder
of this Warrant at the address of such Holder shown on the books of the Company,
which notice shall be accompanied by an explanation setting forth in reasonable
detail the basis for the Holder's becoming entitled to purchase such shares and
the number of shares which may be purchased and the exercise price thereof, or
the facts requiring any such adjustment and the exercise price and number of
shares purchasable subsequent to such adjustment, or the kind and amount of any
such securities or property so purchasable upon the exercise of this Warrant, as
the case may be. At the request of the Holder and upon surrender of this
Warrant, the Company shall reissue this Warrant in a form conforming to such
adjustments.
Section 11. CASH IN LIEU OF FRACTIONAL SHARES. The Company shall not be
required to issue fractional shares upon the exercise of this Warrant. If, by
reason of any change made pursuant to Sections 8 or 9 hereof, the Holder of this
Warrant would be entitled, upon the exercise of any rights evidenced hereby, to
receive a fractional share, the Company shall, upon such exercise, pay to the
Holder an amount in cash equal to the Average Market Value of such fractional
interest, determined as of the Exercise Date.
Section 12. LOST, STOLEN, MUTILATED, OR DESTROYED WARRANTS. If this
Warrant shall become lost, stolen, mutilated, or destroyed, the Company shall,
on such terms as to indemnity or otherwise as it may in its reasonable
discretion impose upon the registered Holder hereof (as shown on the register of
Warrants maintained by the Company), issue a new warrant of like denomination,
tenor, and date as the Warrant so lost, stolen, mutilated, or destroyed.
Section 13. LIMITATION OF LIABILITY. No provision hereof, in the
absence of affirmative action by the Holder hereof to purchase shares of Common
Stock, and no enumeration herein of the rights or privileges of the Holder,
shall give rise to any liability of such Holder for the purchase price of the
shares or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
Section 14. APPLICABLE LAW. The validity, interpretation, and
performance of this Warrant shall be governed by the laws of the State of
Florida.
Section 15. SUCCESSORS AND ASSIGNS. This Warrant and the rights
evidenced hereby shall inure to the benefit of and be binding upon the
successors and permitted assigns of the Company and the Holder hereof.
Section 16. HEADINGS. Headings of the paragraphs in this Warrant are
for convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
6
<PAGE>
MARINE BANCSHARES, INC.
STOCK PURCHASE WARRANT
DATED ___________, 1998
Page 7
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
this ___ day of ________, 1998, by its duly authorized officers.
MARINE BANCSHARES, INC.
By:
------------------------------------
Name:
Title:
ATTEST:
- ----------------------------------
Name:
Title:
7
<PAGE>
EXHIBIT A
[Subscription Form to Be Executed Upon Exercise of Warrant]
ELECTION TO SUBSCRIBE
The undersigned registered holder or permitted assignee of such
registered holder of the within Warrant hereby (1) subscribes for ______ Shares
which the undersigned is entitled to purchase under the terms of the within
Warrant, (2) makes the full cash payment therefor called for by the within
Warrant, and (3) directs that the shares issuable upon exercise of said Warrant
be issued as follows:
--------------------------------------------
(Name)
--------------------------------------------
(Address)
Signature
-----------------------------------
Dated
------------------
NOTICE: The signature on this subscription form must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement, or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank or trust company, or by a firm having membership
on a registered national securities exchange.
8
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
Marine National Bank of Naples (in formation)
EXHIBIT 23.2
CONSENT OF HILL, BARTH & KING, INC., INDEPENDENT AUDITORS
We consent to the reference to our firm under tha caption "Experts" in the
Registration Statement on the Pre-Effective Amendment No. 1 to Form SB-2 and
related Prospectus of Marine Bankshares, Inc., formerly known as Coastal Bank
Corporation, for the registration of 1,150,000 shares of its common stock and to
the incorporation therein of our report dated November 3, 1998 relating to the
financial statements of Marine Bancshares, Inc. as of September 30, 1998 and for
the period from January 23, 1997 (date of inception) to September 30, 1998.
HILL, BARTH & KING, INC.
Certified Public Accountants
Naples, Florida
November 3, 1998
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE
AUDITED FINANCIAL STATEMENTS DATED SEPTEMBER 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-23-1997
<PERIOD-END> SEP-30-1998
<CASH> 2,799
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 182,765
<DEPOSITS> 0
<SHORT-TERM> 780,000
<LIABILITIES-OTHER> 179,273
<LONG-TERM> 0
0
0
<COMMON> 1
<OTHER-SE> (776,509)
<TOTAL-LIABILITIES-AND-EQUITY> 182,765
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 13,321
<INTEREST-TOTAL> 13,321
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 89,677
<INTEREST-INCOME-NET> (76,356)
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 700,252
<INCOME-PRETAX> (776,608)
<INCOME-PRE-EXTRAORDINARY> (776,608)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (776,608)
<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>
