AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 18, 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. 2
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MARINE BANCSHARES, INC.
(Name of Small Business Issuer in its Charter)
-------------------------
<TABLE>
<S> <C> <C>
FLORIDA 6712 65-0729764
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
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
principal executive offices) or intended principal place of business)
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)
-------------------------
COPIES TO:
ROBERT C. SCHWARTZ, ESQ. RICHARD A. DENMON, ESQ.
SMITH, GAMBRELL & RUSSELL, LLP CARLTON, FIELDS, WARD, EMMANUEL, SMITH &
PROMENADE II, SUITE 3100 CUTLER, P.A.
1230 PEACHTREE STREET, N.E. ONE HARBOUR PLACE
ATLANTA, GEORGIA 30309-3592 777 SOUTH HARBOUR ISLAND BOULEVARD
TAMPA, FLORIDA 33602
-------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of 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. |_|
-------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities law of any such State.
SUBJECT TO COMPLETION, DATED DECEMBER 18, 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).
THESE ARE SPECULATIVE SECURITIES. 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.
<TABLE>
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UNDERWRITING DISCOUNTS
PRICE TO PUBLIC AND COMMISSIONS(1)(2) PROCEEDS TO COMPANY(3)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.................................. $10.00 $0.28 $ 9.72
- ---------------------------------------------------------------------------------------------------------------------------
Total(4)................................... $11,500,000 $322,500 $11,177,500
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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 (however, no
underwriting discounts or commissions will be assessed with respect to
sales of 500,000 Common Shares to certain investors identified by the
Company to the Underwriter.) 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, $469,125 and $12,755,875,
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 December __, 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 DECEMBER __, 1998.
<PAGE>
[INSERT MAP]
-------------------------
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."
-------------------------
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, including
the Company, that file electronically with the Commission. Copies of the
Registration Statement and its exhibits and schedules are also available at the
Commission's World Wide Web site.
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.
2
<PAGE>
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 December 16, 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 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
3
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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 Beach
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 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.
4
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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 126,500 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."
5
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THE OFFERING
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.............. $11,177,500 (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 approximately $1,014,000 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 $835,500 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. Such factors
include, among other things, the need to
obtain regulatory approvals, the lack of
operating history, the inability to
continue as a going concern if regulatory
approvals are not received, and the
potential anti- takeover effect of
certain provisions of the Company's
Articles of Incorporation. 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.
- -----------------------------------
(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 126,500 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 until the
Bank commences operations.
6
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SUMMARY FINANCIAL DATA
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SEPTEMBER 30, 1998
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ACTUAL AS ADJUSTED(1)
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BALANCE SHEET DATA:
Cash and securities........................................... $ 2,799 $ 9,992,053
Total assets................................................... 182,765 $ 10,051,892
Total liabilities............................................... 959,273 0
Shareholders' equity (deficit)................................. $(776,508) $ 10,051,892
</TABLE>
_____________
(1) Adjusted to reflect the application of the estimated net proceeds from the
Offering. See "Use of Proceeds."
7
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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 December 16, 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 $50,000 (the "Advances"), and has obtained a revolving line
of credit (the "Line of Credit") in the maximum amount of $100,000 from The
Banker's Bank, of Atlanta, Georgia, under the terms of which $95,000 was owing
as of December 16, 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; GOING CONCERN
As of the date of this Prospectus, the Company's liabilities exceed its
assets. However, upon the closing of the Offering, the net proceeds will be used
to repay all of the outstanding liabilities. Upon application of the proceeds,
the Company's assets will exceed its liabilities and it will be able to operate
without a going concern qualification. However, 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
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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 approximately $1,014,000 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. See "--Need to
Repay Debt", "Use of Proceeds", and "Capitalization."
RISK OF DISSOLUTION IF REGULATORY APPROVALS ARE NOT OBTAINED
Although the Company and the Bank have applied for all regulatory
approvals required to commence operations, the Bank has received preliminary
approval from the OCC, and the Company anticipates receipt of all necessary
final approvals by the second quarter of 1999, final approvals may not be
granted in a timely manner, if at all. The closing of the Offering is not
conditioned upon the Company and the Bank receiving final approval to commence
business. If final approval for the Bank to commence banking operations is not
granted within 18 months after the receipt of preliminary approval or other
regulatory requirements are not satisfied, the Company will solicit shareholder
approval for the Company's dissolution and liquidation under Florida law. If the
Company is dissolved and liquidated, it will distribute to shareholders the
Company's net assets remaining after payment, or provision for payment, of all
claims against the Company. Shareholders will receive only a portion, if any, of
their original investment because the proceeds of the Offering will have been
used to pay the expenses and capital costs incurred by the Company. Such
expenses include the expenses of the Offering, the Debt and the other
organizational and pre-opening expenses of the Company and the Bank, and the
claims of creditors. See "--Need to Obtain Regulatory Approvals", "Need to Repay
Debt" and "Failure to Commence Operations".
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 $776,608. 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
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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."
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 financial
institution, will serve as a financial intermediary for its customers and, as
such, will compete with other commercial banks, savings and loan associations,
credit unions, finance companies, mutual funds, insurance companies and
brokerage and investment banking firms, 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
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branching and banking may act to increase competition in the future from larger
out-of-state banks. See "Business -- Competition."
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
11
<PAGE>
investments, restrictions on dividend payments, establishment and closing of
branch offices, entry into certain lines of business and acquisition of other
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 and timely achieve Year 2000 compliance, the
Bank's business,
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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
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 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."
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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. Prior to such withdrawal,
the Company had incurred organizational expenses associated with the Initial
Application (the "Prior Expenses"). Substantially all of the proceeds of the
Organizational Loans were used to fund such Prior Expenses. As of December 31,
1998, the total of the aggregate principal amount, accrued interest and fees
with respect to the Organizational Loans is approximately $868,353. Since the
Company intends to pay such amount in full out of the net proceeds from the
Offering, approximately $868,353 of such net proceeds that would otherwise be
available for the working capital needs of the Company will be used to fund the
Prior Expenses. In order to lessen the effect of the Prior Expenses on the
Company and purchasers of Shares in the Offering, the OCC has required the
Company to effect savings in connection with the Offering in an aggregate amount
of approximately $550,000. The Company has effected such savings by negotiating
underwriting commission and fee concessions from participants in the Offering
and certain advisors to the Company. See "Risk Factors - Need to Repay Debt" and
"Use of Proceeds".
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 Operation".
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.
On November 18, 1998, the Company obtained a new revolving line of credit from
the same lender in the maximum principal amount of $100,000, part of the
proceeds of which were used to repay in full the prior line of credit. Each
member of the Company's Board of Directors has guaranteed the Company's
obligation to repay the Line of Credit. As of December 16, 1998, the principal
amount outstanding under the Line of Credit was $95,000.
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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 and 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.
USE OF PROCEEDS
Net proceeds to the Company from the sale of the 1,150,000 Common
Shares offered hereby are estimated to be $10,882,500 ($12,409,125 if the
Underwriter's over-allotment option is exercised in full), after deduction of
the underwriting discounts and commissions and estimated offering expenses.
USE BY COMPANY
The following table illustrates the intended use by the Company of the
net proceeds of the Offering:
Purchase capital stock of the Bank........................ $9,000,000
To redeem 100 outstanding Common Shares................... 100
Repay Line of Credit...................................... 95,000
Repay Organizational Loans................................ 868,353
Repay Advances............................................ 50,000
General corporate purposes (1)............................ 869,047
Total......................$10,882,500
===========
_____________
(1) 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
Operation."
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 8.0% per
annum. Payments of accrued interest on the Line of Credit are to be made
quarterly beginning February 15, 1999. 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 April 1, 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
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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.
USE BY BANK
The $9,000,000 of the net proceeds of the Offering used by the Company
to purchase all of the capital stock of the Bank will provide the Bank's initial
capitalization. The following table illustrates the intended use by the Bank of
such amount:
<TABLE>
<S> <C>
Build out leased premises for Bank's offices.........................$ 150,000
Furniture, fixtures, equipment and other assets for Bank's offices... 321,800
Repay Company for Bank's organizational expenses..................... 95,000
Loans to customers, investments and other general purposes........... 8,433,200
Total.......................................$9,000,000
==========
</TABLE>
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.
/section/ 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. /section/
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. /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 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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<PAGE>
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 10,871,000
Accumulated deficit(4)............................................... (776,608) (830,608)
Total shareholders' equity........................................... $(776,508) $10,051,892
</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) 126,500 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.
18
<PAGE>
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 December 16, 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 midsize
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 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
19
<PAGE>
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.
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.
20
<PAGE>
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.
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 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.
21
<PAGE>
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 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.
22
<PAGE>
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 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.
23
<PAGE>
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 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.
24
<PAGE>
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 required to handle the operational
functions of the Bank. The Bank is in the process of discussing arrangements
with potential data processing providers.
25
<PAGE>
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
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.
26
<PAGE>
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 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
is due each lender at maturity. All of the notes may be prepaid without penalty.
Assuming a repayment date of December 31, 1998, approximately $868,353 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 $50,000. 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
$100,000 from The Banker's Bank, of Atlanta, Georgia, under the terms of which
$95,000 was owing as of December 16, 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 8.0% per annum. Payments of accrued interest on the Line of
Credit are to be made quarterly beginning February 15, 1999. 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.
LEASE AGREEMENTS
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 of 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.
CASH REQUIREMENTS
27
<PAGE>
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."
28
<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:
POSITION WITH
NAME AGE COMPANY AND BANK(1)(2)
- ---- --- ----------------------
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, Secretary
_____________
(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.
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
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.
29
<PAGE>
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- 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
30
<PAGE>
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 and
the Secretary of the Company, 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.
31
<PAGE>
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.
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
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION(S) YEAR SALARY
- ----------------------------- ----- ------
<S> <C> <C>
Sidney T. Jackson 1997 59,937
Senior Vice President of Bank (1)
</TABLE>
_____________
(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. 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
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<PAGE>
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 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 "Option") 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. 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 200,000 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). 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
33
<PAGE>
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.
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<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 $50,000
from the following members of its Board of Directors: Earl G. Hodges, William L.
McDaniel, Jr., William J. Ryan, Donald W. Ketterhagen and Pierce T. Neese. The
Advances do not bear interest, and none of the letter agreements executed by the
Company and the above directors with respect to the Advances 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 126,500 Common Shares
for issuance pursuant to exercise of the warrants.
For a one-year period following the Offering, the Company will not
grant to officers, directors, employees or 5% shareholders of the Company
warrants or options with respect to Common Shares constituting, in the
aggregate, more than 18.4% of the Common Shares outstanding.
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<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
--------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------- OF SHARES (1) OF CLASS (2)
------------- ------------
<S> <C> <C>
Earl G. Hodges 40,000 3.5%
Richard E. Horne (3) 13,000 1.1%
Donald W. Ketterhagen 11,000 1.0%
William L. McDaniel, Jr. 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) 131,500 11.4%
</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."
36
<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 plans to comply, and to cause the Bank to comply, with all
of the statutes and regulations described herein as may be applicable to them
from time to time.
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, 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
37
<PAGE>
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 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.
38
<PAGE>
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.
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.
39
<PAGE>
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:
<TABLE>
<CAPTION>
TOTAL RISK- TIER 1 RISK- TIER 1
BASED CAPITAL BASED CAPITAL LEVERAGE
RATIO RATIO RATIO
------------- -------------- -----------
<S> <C> >C> <C>
Well capitalized (1)............................. /greater/=10% /greater/=6% /greater/=5
Adequately Capitalized (1)....................... /greater/=8 /greater/=4 /greater =4(2)
Undercapitalized (4)............................. /greater/8 /greater/4 /greater/4(3)
Significantly Undercapitalized (4)............... /greater/6 /greater/3 /greater/3
Critically Undercapitalized...................... -- -- /greater/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.
(5) Ratio of tangible equity to total assets.
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. The Company intends to
comply with the FDICIA.
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.
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
40
<PAGE>
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.
The regulation is designed to provide regulators, institutions and community
groups with an objective and predictable manner with which to evaluate the CRA
performance of financial institutions. The rule became effective on January 1,
1996, when evaluation under streamlined procedures began for institutions with
assets of less than $250 million that are owned by a holding company with total
assets of less than $1 billion.
Congress and the federal agencies responsible for implementing the
nation's fair lending laws, which include the Department of Housing and Urban
Development, the Federal Trade Commission, and the Department of Justice in
addition to the federal banking agencies, have been increasingly concerned that
prospective home buyers and other borrowers are experiencing discrimination in
their efforts to obtain loans. In recent years, the Department of Justice has
filed suit against financial institutions which it determined had engaged in
discriminatory lending, seeking fines and restitution for borrowers who
allegedly suffered from these practices. Most, if not all, of these suits have
been settled (some for substantial sums) without a full adjudication on the
merits.
On March 8, 1994, the federal agencies, in an effort to clarify what
constitutes lending discrimination and to specify the factors the agencies will
consider in determining if lending discrimination exists, announced a joint
policy statement detailing specific discriminatory practices prohibited under
the Equal Credit Opportunity Act 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.
41
<PAGE>
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.
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.
42
<PAGE>
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.
(Such authorization includes the power to issue Preferred Shares which carry
voting or conversion rights that may adversely affect the voting power of the
holders of Common Shares.) 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 126,500 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.
43
<PAGE>
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.
44
<PAGE>
INDEMNIFICATION PROVISIONS
The Articles of Incorporation of the Company provide for the
indemnification of directors, officers, employees and agents of the Company to
the full extent permitted by Florida law. In addition, as permitted by federal
law, the Bank's Articles of Association provide for the indemnification of the
Bank's officers, directors, employees and agents to the fullest extent permitted
by the laws of Florida, subject only to the limits of the corporate powers of a
national bank. Under such provisions, any director, officer, employee, or agent
who, in his or her capacity as such, is made or threatened to be made a party to
any suit or proceeding shall be indemnified if such director or officer acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the Company or the Bank. The Company expects to
purchase directors' and officers' liability insurance. Such insurance may
provide protection whether or not the Company or the Bank would have had the
power to indemnify against such liability. The Company is not aware of any
pending or threatened action, suit or proceeding involving any of its directors,
officers, employees or agents for which indemnification from the Company or the
Bank may be sought. It is possible that the indemnification obligations imposed
under the Company's Articles of Incorporation and 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 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
45
<PAGE>
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 126,500 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 commissions will be assessed with
respect to sales of 500,000 Common Shares to certain investors identified by the
Company to the Underwriter). 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 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 required to make in respect thereof.
At the Company's request, the Underwriter has agreed to reserve 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. Accordingly, the number of shares available for sale to the general public
will be reduced by the number of shares so reserved.
46
<PAGE>
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 Shares in the open
market following completion of the offering. In stabilizing transactions, the
Underwriter may bid for, and purchase, Common Shares at a level above that which
might otherwise prevail on 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.
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.
47
<PAGE>
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.
48
<PAGE>
FINANCIAL STATEMENTS
--------------------
MARINE BANCSHARES, INC.
(A DEVELOPMENT STAGE COMPANY)
SEPTEMBER 30, 1998
C O N T E N T S
PAGE
----
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>
MARINE BANCSHARES, INC.
(A Development Stage Company)
BALANCE SHEET
September 30, 1998
A S S E T S
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
========
See accompanying notes to financial statements
F-3
<PAGE>
MARINE BANCSHARES, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Period from January 23, 1997 (date of inception) to September 30, 1998
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)
===========
See accompanying notes to financial statements
F-4
<PAGE>
MARINE BANCSHARES, INC.
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS DEFICIT
Period from January 23, 1997 (date of inception) to September 30, 1998
<TABLE>
<CAPTION>
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>
MARINE BANCSHARES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Period from January 23, 1997 (date of inception) to September 30, 1998
<TABLE>
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C>
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
=======
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 in an aggregate principal amount of $900,000. The proceeds of
certain of these loans were used to repay prior 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 of $700,00 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 126,500 Common Shares 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. The Company has reserved 200,000
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.
DECEMBER __, 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 FBCA 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.
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,
II-1
<PAGE>
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
II-3
<PAGE>
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
II-4
<PAGE>
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-5
<PAGE>
ITEM 27. - EXHIBITS.
The following exhibits are filed herewith:
EXHIBIT DESCRIPTION
- ------- -----------
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 the
Amendment No. 1 to the Registration Statement)*
27 Financial Data Schedule (for SEC use only)*
- -----------------
* Previously filed.
II-6
<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-7
<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. 2
to the Registration Statement to be signed on its behalf by the undersigned, in
the City of Naples, State of Florida, on December 18, 1998.
MARINE BANCSHARES, INC.
By: /s/ RICHARD E. HORNE
-------------------------------------
Richard E. Horne
President and Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Amendment No. 2 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 December 18, 1998
- ------------------------------- Chief Executive Officer
Richard E. Horne (Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer))
/s/ WILLIAM J. RYAN* Director December 18, 1998
- -------------------------------
William J. Ryan
/s/ PIERCE T. NEESE* Director December 18, 1998
- -------------------------------
Pierce T. Neese
/s/ EARL G. HODGES* Director December 18, 1998
- -------------------------------
Earl G. Hodges
/s/ WILLIAM L. MCDANIEL, JR.* Director December 18, 1998
- -------------------------------
William L. McDaniel, Jr.
/s/ DONALD W. KETTERHAGEN* Director December 18, 1998
- -------------------------------
Donald W. Ketterhagen
* BY: /s/ RICHARD E. HORNE
-------------------------
Richard E. Horne,
Attorney-in-Fact
</TABLE>
II-8
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
1.1 Form of Underwriting Agreement between the Company and Ashtin
Kelly & Co.
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 Company and Wridell
Development Corporation, Inc.; Assignment of Leases, dated
July 14, 1998, from Wridell Development Corporation, Inc. to
Gulf Coast Commercial Corporation
10.4 Marine Bancshares, Inc. 1998 Stock Option Plan
10.5 Form of Marine Bancshares, Inc. Stock Purchase Warrant
23.2 Consent of Hill, Barth & King, Inc.
EXHIBIT 1.1
1,150,000
MARINE BANCSHARES, INC.
COMMON SHARES
(PAR VALUE $0.01 PER SHARE)
UNDERWRITING AGREEMENT
----------------------
December ___, 1998
ASHTIN KELLY & CO.
400 Fifth Avenue South
Naples, FL 34102
Gentlemen:
Marine Bancshares, Inc., a Florida corporation (the "Company"), hereby
confirms its agreement with Ashtin Kelly & Co., as the underwriter (the
"Underwriter"), as follows:
SECTION 1. INTRODUCTION. Subject to the terms and conditions set forth
in this Underwriting Agreement (this "Agreement"), the Company proposes to issue
and sell to the Underwriter an aggregate of 1,150,000 common shares ("Firm
Shares"), $0.01 per value (the "Common Shares"), of the Company. In addition,
the Company proposes to grant to the Underwriter an option to purchase up to
172,500 additional Common Shares (the "Option Shares") as provided in Section 4
hereof. The Firm Shares and the Option Shares are hereinafter referred to
collectively as the "Shares."
As part of the offering of the Firm Shares contemplated by this
Agreement, the Underwriter has agreed to reserve out of the Firm Shares, 500,000
Shares for sale to the Company's employees, officers, and directors and other
parties associated with the Company (collectively, the "Participants,") as set
forth in the Prospectus (as defined below) in the section entitled
"Underwriting" (the "Directed Share Program"). The Shares to be sold by the
Underwriter pursuant to the Directed Share Program (the "Directed Shares') will
be sold by the Underwriter pursuant to this Agreement at the public offering
price as set forth on the cover page of the Prospectus.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Underwriter as follows:
(a) (i) A registration statement on Form SB-2 (File No.
333-39203) with respect to the Shares, including a related preliminary
prospectus, has been carefully prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations of the Securities and Exchange Commission
("Commission") promulgated thereunder, and has been filed with the Commission.
The Company has prepared and filed such amendments thereto, if any, and such
amended preliminary prospectuses, if any, as may have been required to the date
hereof, and will file such additional amendments thereto and such amended
preliminary prospectuses as may hereafter be required.
(ii) For purposes of this Agreement, the term "Registration
Statement" means the registration statement referred to in Section 2(a)(i) of
this Agreement as amended at the time when it was declared effective by the
Commission (including the related prospectus, Part II, any documents or a
portion thereof incorporated by reference therein, all financial schedules and
exhibits thereto, and all information
1
<PAGE>
deemed to be part of the registration statement at the time it became effective
pursuant to Rule 430A(b) under the Securities Act), except that if the Company
files a post-effective amendment to such registration statement which is
declared effective prior to the Closing Date (as defined in Section 4 hereof),
"Registration Statement" shall refer to such registration statement as so
amended. The date on which the Registration Statement is declared effective by
the Commission shall be referred to as the "Effective Date." If the Company has
filed an abbreviated registration statement to register additional Shares
pursuant to Rule 462(b) under the Securities Act (including the exhibits
thereto, the "Rule 462 Registration Statement"), then any reference herein to
the Registration Statement also shall be deemed to include the Rule 462
Registration Statement. "Preliminary Prospectus" shall mean: (A) any prospectus
included in the registration statement, or amendments thereto, before it was
declared effective under the Securities Act, (B) any prospectus filed with the
Commission by the Company with the consent of the Underwriter pursuant to Rule
424(a) under the Securities Act (including documents incorporated by reference
therein), and (C) any prospectus included in the Registration Statement at the
Effective Date that omits the Rule 430A Information (as defined below). The term
"Prospectus" means the final prospectus documents as first filed with the
Commission pursuant to paragraph (1) or (4) of Rule 424(b) under the Securities
Act or, if no filing pursuant to Rule 424(b) is required, shall mean the form of
final prospectus relating to the Shares included in the Registration Statement
at the Effective Date, in either case, including all documents (or portions
thereof) incorporated by reference therein. "Rules and Regulations" means the
rules and regulations adopted by the Commission under either the Securities Act
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
applicable. "Rule 430A Information" means information with respect to the Shares
and the offering thereof which, pursuant to Rule 430A promulgated under the
Securities Act, is permitted to be omitted from the Registration Statement and
the related prospectus at the time the Registration Statement is declared
effective by the Commission.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus complies
in all material respects with the requirements of, and contains all statements
which are required to be stated therein in accordance with, the Securities Act
and the Rules and Regulations, and does not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading; PROVIDED, HOWEVER, that no representation
or warranty is made as to information contained in or omitted from the
Registration Statement, the Prospectus, or any amendment or supplement thereto
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Underwriter specifically for use therein..
(c) The Registration Statement has been declared effective and no stop
order suspending the effectiveness of the Registration Statement or any part
thereof has been issued or is in effect and no proceedings for that purpose have
been initiated, are pending, or, to the Company's knowledge, have been
threatened by the Commission or the securities authority of any state or other
jurisdiction. The Registration Statement and the Prospectus comply and, as
amended or supplemented, will comply, in all material respects with the
requirements of, and contain and, as amended or supplemented, if applicable,
will contain, all statements that are required to be stated therein by, the
Securities Act and the Rules and Regulations. The Registration Statement, at the
Effective Date, did not contain and the Prospectus does not contain and, as
amended or supplemented, if applicable, will not contain, and at all times
subsequent thereto up to each Closing Date will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading; PROVIDED, HOWEVER, that
no representation or warranty is made as to information contained in or omitted
from the Registration Statement, the Prospectus, or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Underwriter specifically for use therein.
2
<PAGE>
(d) The Company has been duly incorporated and is validly existing as a
corporation with active status under the laws of the State of Florida and,
subject to Section 2(i) of this Agreement and commencement of the business of
the Marine National Bank, a national bank (in organization) to be located in
Naples, Florida (the "Bank"), is duly registered and in good standing under the
Bank Holding Company Act of 1956, as amended (the "BHCA"), with the full power
and authority (corporate and other) to own, lease, and operate its properties
and conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement thereto); the Company is duly
registered or qualified to do business as a foreign corporation under the
corporation and banking laws of, and is in good standing as such in, each
jurisdiction in which the conduct of its business or where the nature of its
properties requires such registration or qualification, except to the extent
that the failure to be so registered or qualified would not have a material
adverse effect on the condition (financial or other), business, properties, net
worth, or results of operations of the Company or any of its Subsidiaries (as
defined below) ("Material Adverse Effect"); and no proceeding has been
instituted in any jurisdiction revoking, limiting, or curtailing, or seeking to
revoke, limit, or curtail, such power and authority or qualification.
(e) The Company has the requisite power and authority (corporate and
other) to execute and deliver this Agreement and to perform its obligations
under this Agreement. The execution and delivery of this Agreement, and the
performance by the Company of its obligations hereunder and consummation of the
transactions described herein, have been duly and validly authorized by the
Company. This Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid, and binding obligation of the Company, enforceable
against the Company in accordance with its terms (except in all cases (i) to the
extent that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, moratorium, or similar laws affecting
the enforcement of creditor rights and remedies generally, (ii) that the
availability of the equitable remedy of specific performance and injunctive
relief is subject to the discretion of the court before which the proceeding may
be brought, and (iii) that the enforceability of the indemnification and
contribution provisions hereof may be limited under applicable federal or state
or other securities laws or the public policy underlying such laws.)
(f) Neither the execution and delivery by the Company of this
Agreement, nor the performance by the Company of its obligations hereunder or
the consummation of the transactions contemplated hereby (including the offer,
sale, or delivery of the Shares) and compliance by the Company with any of the
provisions hereof will (i) conflict with, violate, or contravene any provision
of the articles of incorporation, bylaws, or other corporate governance
documents of the Company or any Subsidiary, (ii) violate, conflict with, or
result in a breach of any term, condition, or provision of, or constitute a
default (with or without notice or the lapse of time, or both) under, or give
rise to any right of termination, cancellation, or acceleration of any
obligation or loss of benefit under, or result in the creation of any claim,
lien, pledge, security, interest, charge, or other encumbrance of any kind
whatsoever (a "Lien") upon any assets or properties of the Company or any
Subsidiary pursuant to the terms, provisions, or conditions of any loan
agreement, indenture, note, bond, or other evidence of indebtedness, or of any
agreement, lease, deed of trust, mortgage, contract, or other material agreement
or instrument to which the Company or any Subsidiary is a party or by which any
of them or any of their assets or properties are bound or affected, except where
such a violation, conflict, breach, or default would not have a Material Adverse
Effect, or (iii) conflict with or violate any statute, law, ordinance, rule, or
regulation applicable to the Company, any Subsidiary, or any of their respective
assets or properties, or any order, judgment, writ, injunction, or decree of any
court, or any governmental, regulatory, or administrative agency, commission,
authority, or other body, domestic or foreign, having jurisdiction over the
Company, any Subsidiary, or any of their respective assets or properties. No
consent, approval, filing, authorization, registration, qualification, or order,
including with or by any bank regulatory agency, is required for the execution,
delivery, and performance of this Agreement or the consummation of the
transactions contemplated by this Agreement, other than such that have been
obtained or made, except as such may be required for compliance
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with the Securities Act, the Exchange Act, and the Blue Sky Laws applicable to
the public offering of the Shares by the Underwriter, and the clearance of such
offering and the underwriting arrangements evidenced hereby with the National
Association of Securities Dealers, Inc. ("NASD").
(g) The Company had the outstanding capitalization as set forth under
"Capitalization" in the Registration Statement and the Prospectus as of the date
indicated therein and there has been no change therein since such date. The
Common Shares issued and outstanding prior to the issuance of the Shares to be
sold by the Company hereunder have been duly authorized and validly issued, are
fully paid and nonassessable; the Shares to be sold by the Company hereunder
have been duly authorized and, when issued and paid for against delivery thereof
as contemplated by this Agreement, will be validly issued, fully paid and
nonassessable; and, the securities of the Company conform to the descriptions
thereof contained in the Registration Statement and Prospectus, and the
certificates representing the Shares are in due and proper legal form under, and
conform in all respects to the requirements of, the laws of the State of
Florida. There are no preemptive, preferential, or other rights (including
rights of first refusal) to subscribe for or to purchase any of the Common
Shares (including the Shares) and no Common Shares have been issued in violation
of any such rights, nor are there any restrictions upon the voting or transfer
of any Common Shares (including the Shares) pursuant to the Company's articles
of incorporation, bylaws, and other governing documents, or any agreement or
other instrument to which the Company or any Subsidiary is a party or by which
any of them may be bound. All of the securities previously issued by the Company
and each of its Subsidiaries, including the Common Shares and any warrants and
stock options to purchase Common Shares, were duly offered, sold, issued, or
granted in compliance with, and were registered under or exempt from the
registration requirements of, the Securities Act, and were duly registered or
qualified under, or the subject of an available exemption from, the registration
provisions of all applicable state securities laws ("Blue Sky Laws").
(h) Except as set forth in the Prospectus, the Company does not have
any outstanding options to purchase, or warrants to subscribe for, or any
securities or obligations convertible into or exchangeable for, or any contracts
or commitments to issue or sell, any Common Shares or any such options,
warrants, convertible securities, or obligations, or other rights of any
description, contractual or otherwise, entitling any person to receive any class
of security from the Company. No holder of the Common Shares or other securities
of the Company or any other person has the right, contractual or otherwise, to
cause the Company to register any securities of the Company under the Securities
Act or any Blue Sky Laws.
(i) The Company has prepared and filed with the Board of Governors of
the Federal Reserve System (the "FRB") in accordance with Section 3(a)(1) of the
BHCA and Section 225.15 of Regulation Y promulgated thereunder, an application
to become a bank holding company (together with all exhibits, schedules,
amendments, and supplements thereto, the "BHC Application"). On _____, 1998, the
FRB approved the Company's application to become a bank holding company through
the acquisition of all of the outstanding voting securities of the Bank,
effective upon the Company's compliance with commitments and representations
made in connection with the BHC Application (the "FRB Approval"). The FRB
Approval provides that the acquisition by the Company of the Bank must be made
within the period commencing thirty days after ____, 1998, and ending three
months after such date, unless extended by the FRB. The FRB Approval also
requires the Company to provide the FRB with certain further information set
forth therein within thirty days following the Company's acquisition of the
Bank's voting stock.
(j) The incorporators of the Bank have prepared and filed with the
United States Office of the Comptroller of the Currency ("OCC") in accordance
with the National Bank Act (the "NBA") an Application to Organize a National
Bank (together with all exhibits, schedules, amendments, and supplements
thereto, the "Charter Application"). On ______, 1998, the OCC approved the
Charter Application for authority to organize the Bank, subject to certain terms
and conditions specified in such approval (the "Charter Approval"). The
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Charter Approval remains in full force and effect on the date hereof and on each
of the Closing Dates. The incorporators of the Bank have prepared and filed with
the Federal Deposit Insurance Corporation ("FDIC") in accordance with Section
5(a)(1) of the Federal Deposit Insurance Act, as amended (the "FDIA"), an
Application for Federal Deposit Insurance (together with all exhibits,
schedules, amendments, and supplements thereto, the "Deposit Insurance
Application"). On ______, 1998, the FDIC approved the Deposit Insurance
Application, subject to certain terms and conditions specified in such approval
(the "Deposit Insurance Approval").
(k) The Company has provided the Underwriter with true and complete
copies of the BHC Application, the Charter Application, and the Deposit
Insurance Application, as each has been amended or supplemented from time to
time (the "Applications"), and the FRB Approval, the Charter Approval, and the
Deposit Insurance Approval (the "Regulatory Approvals"). When the Applications
were filed with the respective bank regulatory authorities, and upon the filing
with the Commission or the first delivery to the Underwriter of the Prospectus,
and as of the date of this Agreement and each of the Closing Dates: (i) each
such Application conformed with and will conform with the respective
requirements of the BHCA, the NBA, and the FDIA and the rules and regulations
promulgated thereunder, and (ii) none of the Applications contained or will
contain any untrue statement of a material fact or omitted or will omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. As of each of the Closing Dates, all Regulatory Approvals
are in full force and effect, and no actions or proceedings to suspend, revoke,
or terminate any of such Regulatory Approvals have been taken, or are pending,
or, to the knowledge of the Company, threatened or contemplated, and neither the
Company nor the Bank is in breach of or default under any condition or of any
commitment contained in any Regulatory Approval.
(l) The Company does not have any Subsidiaries and does not, directly
or indirectly, own any equity interest in, or control, any corporation, limited
liability company, association, partnership, joint venture, trust,
proprietorship, or other commercial or business entity or organization, except
that the Company has the sole right to acquire all of the outstanding capital
stock of the Bank, which stock will be acquired upon receipt of all necessary
regulatory approvals, including the Regulatory Approvals, and upon acquisition
of such stock the Bank will be the Company's only subsidiary ("Subsidiary"). On
the First Closing Date (as defined in Section 4 hereof), promptly following the
sale of the Firm Shares to the Underwriter pursuant to this Agreement, a minimum
of $9,000,000 of the net proceeds therefrom shall be contributed by the Company
to the Bank, and after receipt thereof the Bank shall issue shares of its common
stock to the Company, and following such issuance, and at all times subsequent
thereto up to and as of the Second Closing Date (as defined in Section 4
hereof), if any, all of the outstanding shares of capital stock of the Bank (i)
will have been issued to the Company, (ii) when issued to the Company, will have
been duly authorized and validly issued, and will be fully paid and
nonassessable, and (iii) will be owned beneficially and of record by the
Company, free and clear of any claim, lien, encumbrance, or security interest,
or restriction on transfer (except for restrictions under federal or state
banking laws). Subject to receipt by the Bank of such capital contribution from
the Company, and satisfaction of the conditions set forth in the Bank Approvals
(as defined in Section 7(g) hereof), the Bank will be duly organized and validly
existing as a nationally chartered banking association in good standing under
the laws of the United States of America and the State of Florida, with full
power and authority (corporate and other) to own, lease, and operate its
properties and conduct its business as described in the Registration Statement,
the Prospectus, the Applications, and the Regulatory Approvals; the Bank is not
and will not be required to be registered or qualified to do business as a
foreign corporation under the laws of any jurisdiction; and no proceeding has
been instituted in any jurisdiction revoking, limiting, or curtailing, or
seeking to revoke, limit, or curtail, such power and authority or qualification.
Except as described in the Prospectus, no options to purchase, or warrants to
subscribe for, or any securities or obligations convertible into or exchangeable
for, or any contracts or commitments to issue or sell, any capital stock or
ownership interests in the Bank or any such options, warrants, convertible or
exchangeable securities, or obligations or other rights of any description,
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contractual or otherwise, entitling any person to receive any class of security
from the Company, are currently outstanding or, as of each of the Closing Dates,
will be outstanding. The Bank is not and, as of each of the Closing Dates, will
not be subject to any current formal arrangement or memorandum of understanding
with, or cease and desist order by, any bank regulatory agency.
(m) Hill, Barth & King, Inc., the certified public accountants which
have audited, reviewed, and expressed its opinion with respect to certain of the
financial statements and schedules filed with the Commission as a part of the
Registration Statement and included or to be included, as the case may be, in
the Registration Statement and in the Prospectus, and whose report is included
in the Registration Statement and in the Prospectus, were and are independent
accountants as required by, and within the meaning of, the Securities Act and
the Rules and Regulations.
(n) The financial statements and schedules and the related notes
thereto included or to be included, as the case may be, in the Registration
Statement, any Preliminary Prospectus, or the Prospectus present fairly the
financial position of the Company as of the respective dates of such financial
statements and schedules, and the results of operations and changes in equity
and in cash flows of the entities purported to be shown thereby for the
respective periods covered thereby, all prepared in conformity with generally
accepted accounting principles consistently applied throughout the periods
involved, except as may be disclosed in the Registration Statement and the
Prospectus. All adjustments necessary for a fair presentation of the results of
such periods have been made. The financial, operating, and statistical
information relating to the Company and any Subsidiary are accurately and fairly
presented and prepared on a basis consistent with the audited financial
statements and the books and records of the Company.
(o) The Company and each Subsidiary maintains a system of internal
accounting controls sufficient to provide reasonable assurance that: (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
material assets is permitted only in accordance with management's general or
specific authorizations, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(p) Neither the Company nor any Subsidiary is presently, nor with the
giving of notice or the lapse of time, or both, would be (i) in conflict with or
in violation of its articles of incorporation, bylaws, or other corporate
governance documents, (ii) in violation or breach of, or in default in the
performance of any obligation, agreement, or condition contained in any
provision of any loan agreement, indenture, note, bond, or other evidence of
indebtedness, or of any agreement, lease, deed of trust, mortgage, contract, or
other material agreement or instrument to which the Company, or any Subsidiary
is a party or by which any of them or any of their assets or properties are
bound or affected, or (iii) in conflict with or in violation of any law,
ordinance, rule, or regulation applicable to the Company, any Subsidiary, or any
of their respective assets or properties, or any order, judgment, writ,
injunction, or decree of any court, or any governmental, regulatory, or
administrative agency, commission, authority, or other body, domestic or
foreign, having jurisdiction over the Company, any Subsidiary, or any of their
respective assets or properties.
(q) The Company and each Subsidiary have and hold, and at each of the
Closing Dates will have and hold, and are operating in compliance with, and have
fulfilled and performed all of their material obligations with respect to all
permits, certificates, franchises, grants, easements, consents, licenses,
approvals, charters, registrations, authorizations, and orders ("Permits")
required under all laws, rules, and regulations and as are necessary to own
their respective properties and to conduct their respective businesses in the
manner described in the Registration Statement and Prospectus, and all of such
Permits are valid and in full force and effect; and
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there is no pending proceeding, and neither the Company nor any Subsidiary has
received notice of any threatened proceeding, relating to the revocation or
modification of any such Permit. Neither the Company nor any Subsidiary is or
has been (by virtue of any action, omission to act, contract to which it is a
party or by which it is bound, or any occurrence or state of facts whatsoever)
in violation of any law, rule, regulation, or any order, writ, injunction, or
decree to which the Company or any of its Subsidiaries may be subject (including
those relating to any aspect of banking, bank holding companies, environmental
protection, occupational safety and health, and equal employment practices)
heretofore or currently in effect, except any such violation that has been fully
cured or satisfied without recourse or that is not reasonably likely to have a
Material Adverse Effect.
(r) Except as described in or contemplated by the Registration
Statement and the Prospectus, subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus and prior
to each of the Closing Dates: (i) neither the Company nor any of its
Subsidiaries has or will have incurred any material liability or obligation,
direct or contingent, and neither of them has or will have nor entered into any
material transaction not in the ordinary course of business; (ii) neither the
Company nor any Subsidiary has or will have purchased any of its outstanding
capital stock, nor declared, paid, or otherwise made any dividend or other
distribution of any kind with respect to its capital stock, and neither the
Company nor any Subsidiary has or will be delinquent in the payment of principal
or interest on any outstanding debt obligations; and (iii) there has not been
and will not be any change in the capital stock, or any material change in the
indebtedness of the Company or any Subsidiary, or any change or development
involving, or that could be expected to involve, a Material Adverse Effect.
(s) There are no contracts or other documents, transactions,
relationships, statutes, regulations, or rules required to be described in the
Registration Statement or the Prospectus, or to be filed as an exhibit to the
Registration Statement, by the Securities Act or by the Rules and Regulations
that has not been so described or filed as required.
(t) Either the Company or a Subsidiary, as the case may be, has good
and marketable title in fee simple to all items of real property and good and
marketable title to all the personal property and assets reflected as owned by
the Company or any Subsidiary in the financial statements described above (or
elsewhere in the Registration Statement and the Prospectus), in each case free
and clear of all Liens, defects, or adverse intent of any nature except those,
if any, reflected in such financial statements (or elsewhere in the Registration
Statement and the Prospectus) or such as are not material to the Company or any
Subsidiary and do not interfere with the use of the property or the conduct of
the business of the Company or any Subsidiary; and all real property and
buildings held or used by the Company or any Subsidiary under leases, licenses,
franchises, or other agreements are held by them under valid, existing, binding,
and enforceable leases, licenses, franchises, or other agreements with respect
to which it is not in material default with such exceptions as are not material
and do not interfere with the use made and proposed to be made of such property
and buildings or the conduct of the business of the Company or any Subsidiary.
(u) There is no litigation or governmental proceeding, action, or
investigation pending or, to the knowledge of the Company, threatened, to which
the Company or any Subsidiary is a party, or to which property owned or leased
by the Company or any Subsidiary is subject, or related to environmental or
discrimination matters, which is required to be disclosed in the Registration
Statement or the Prospectus by the Securities Act or the Rules and Regulations
and is not so disclosed, or which questions the validity of this Agreement or
any action taken or to be taken pursuant hereto nor, to the Company's knowledge,
is there a basis for any such litigation, proceeding, action, or investigation.
(v) Neither the Company nor any Subsidiary has distributed or will
distribute prior to any Closing Date any offering material in connection with
the offering of the Shares other than the Preliminary Prospectus,
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the Registration Statement, the Prospectus or other materials permitted by the
Securities Act and which distribution was previously approved in writing by the
Underwriter. The Company has not given any information or made any
representation in connection with the offering of the Shares, written or oral,
other than as contained in the Prospectus or the Preliminary Prospectus. Neither
the Company nor any person that controls, is controlled by (including any
Subsidiary), or is under the common control of the Company has taken or will
take, directly or indirectly, any action designed to cause or result in, or
which constitutes or which might reasonably be expected to constitute, under the
Exchange Act or otherwise, stabilization or manipulation of the price of the
Common Shares to facilitate the sale or resale of the Shares.
(w) Neither the Company nor any person that controls, is controlled by
(including any Subsidiary), or is under the common control of the Company has,
directly or indirectly, at any time: (i) made any unlawful contribution to any
candidate for political office, or failed to disclose fully any contribution in
violation of law; or (ii) made any payment to any federal, state, local, or
foreign government officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof or applicable foreign
jurisdictions.
(x) The Company and each Subsidiary has filed all required federal,
state, local, and foreign income and franchise tax returns; all such tax
returns, as filed, are accurate in all material respects and has paid all taxes
shown as due thereon to the extent such taxes have become due; and no tax
deficiency has been asserted or threatened against the Company or any Subsidiary
that would have a Material Adverse Effect, except as described in the
Registration Statement and the Prospectus.
(y) The Company or a Subsidiary owns or possesses adequate right, title
and interest in and to, or have the right to use all patents, patent
applications, trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights, licenses, and other rights, know-how,
and technology (including trade secrets and other unpatented and/or proprietary
or confidential information, systems or procedures) (collectively "Intellectual
Property Rights") necessary for the conduct of the business of the Company or
any of its Subsidiaries or ownership of their respective properties, and neither
the Company nor any Subsidiary has received notice of conflict with the asserted
rights of others in respect thereof which has not been resolved.
(z) In addition to federal deposit insurance of the Bank, the Company
and each Subsidiary have in place and effective such policies of insurance, with
limits of liability in such amounts, as are normal and prudent in the ordinary
course of business similar to that of the Company and each Subsidiary in the
respective jurisdictions in which they conduct business, and the Company has no
reason to believe that the Company and its Subsidiaries will not be able to
renew their existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
their respective businesses at a cost that would not have a Material Adverse
Effect.
(aa) The provisions of any employee pension benefit plan ("Pension
Plan") as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), in which the Company and any Subsidiary is a
participating employer are in substantial compliance with ERISA, and the Company
and each Subsidiary are not in material violation of ERISA. The Company, each
Subsidiary, or the plan sponsor thereof, as the case may be, has duly and timely
filed the reports required to be filed by ERISA in connection with the
maintenance of any Pension Plans in which the Company or any Subsidiary is a
participating employer, and no facts, including any "reportable event" as
defined by ERISA and the regulations thereunder, exist in connection with any
Pension Plan in which the Company or any Subsidiary is a participating employer
which might constitute grounds for the termination of such plan by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate U.S.
District Court of a trustee to administer any such plan. The
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provisions of any employee benefit welfare plan, as defined in Section 3(1) of
ERISA, in which the Company or any Subsidiary is a participating employer, are
in substantial compliance with ERISA and the Company, any Subsidiary, or the
plan sponsor thereof, as the case may be, has duly and timely filed the reports
required to be filed by ERISA in connection with the maintenance of any such
plans.
(ab) Except as set forth in the Registration Statement and the
Prospectus, to the knowledge of the Company, neither the Company nor any
Subsidiary has violated any environmental, safety, or similar law applicable to
their respective businesses, nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any applicable
federal or state wages and hours laws, which in each case might have a Material
Adverse Effect. No labor dispute with or disturbance by the employees of the
Company or any Subsidiary exists or is imminent; and neither the Company nor any
Subsidiary is aware of any existing or imminent labor disturbances by its
employees that might reasonably be expected to have a Material Adverse Effect.
No collective bargaining agreement exists with any of the Company's or any
Subsidiary's employees and no such agreement is imminent. To the knowledge of
the Company, neither the employment by the Company or any Subsidiary of their
key personnel nor the activities of such individuals at the Company or any
Subsidiary conflicts with, constitutes a breach of, or otherwise violates any
employment, noncompetition, nondisclosure, or similar agreement or covenant by
which such individuals may be bound.
(ac) Neither the Company nor any Subsidiary is an "investment company"
or an "affiliated person" of, or a "promoter" or "principal underwriter" for an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (the "Investment Company Act"), and none of them is subject to
regulation under the Investment Company Act.
(ad) The Company has complied with all provisions of Section 517.075,
Florida Statutes, relating to disclosures of doing business with the government
of Cuba or with any person or affiliate located in Cuba.
(ae) All Common Shares outstanding prior to the sale of the Shares to
the Underwriter, and all securities convertible into or exercisable or
exchangeable for Common Shares, are subject to valid, binding, and enforceable
agreements with the Underwriter (collectively, the "Lock-Up Agreements")
pursuant to which the holders thereof agree not to offer, sell, contract to
sell, distribute, grant any option, right, or warrant for the purchase of, or
pledge, hypothecate, make any short sale, or otherwise transfer or dispose of,
directly or indirectly, any of such Common Shares, or any securities convertible
into, or exercisable or exchangeable for, Common Shares, or any other Common
Shares acquired by them during the term of the Lock-Up Agreements (including
Shares purchased pursuant to the public offering thereof), for a period of 180
days after the date of the Prospectus without the prior written consent of the
Underwriter.
(af) The Company has not offered, or caused the Underwriter to offer,
Shares to any person pursuant to the Directed Share Program with the specific
intent to unlawfully influence: (i) a customer or supplier of the Company to
alter the customer's or supplier's level or type of business with the Company,
or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its applications or services.
(ag) All documents delivered or to be delivered by the Company or any
of its representatives in connection with the issuance and sale of the Shares
were on the dates on which they were delivered, or will be on the dates on which
they are to be delivered, true, complete, and correct in all material respects.
Neither this Agreement nor any certificate, statement, or other document
delivered or to be delivered by the Company or any Subsidiary contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
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(ah) The Company has satisfied the conditions for the use of Form SB-2
with respect to the offering of the Shares for sale to the public.
Any certificate signed by any director or officer of the Company and
delivered to the Underwriter or to counsel for the Underwriter shall be deemed a
representation and warranty of the Company to the Underwriter as to the matters
covered thereby.
Any certificate delivered by the Company to its counsel for purposes of
enabling such counsel to render the opinion referred to in Section 7(d) will
also be furnished to the Underwriter and counsel for the Underwriter and shall
be deemed to be additional representations and warranties to the Underwriter by
the Company as to the matters covered thereby.
SECTION 3. TERMS OF PUBLIC OFFERING. The Company has been advised by
the Underwriter that the Underwriter proposes to make a public offering of the
Shares, on the terms and conditions set forth in the Registration Statement, as
soon after the Effective Date as the Underwriter deems it advisable to do so.
SECTION 4. PURCHASE, SALE AND DELIVERY OF SHARES.
(a) On the basis of the representations, warranties, and agreements
contained herein, but subject to the terms and conditions set forth herein, the
Company agrees to issue and sell to the Underwriter, and the Underwriter agrees
to purchase from the Company, the Firm Shares at the following purchase prices:
(i) $10.00 per share for each of the 500,000 Shares purchased and sold pursuant
to the Directed Share Program, (ii) $9.61 per share for 500,000 Shares, and
(iii) $9.15 per share for each remaining Share. The Underwriter agrees to offer
the Shares to the public as set forth in the Prospectus.
(b) At 10:00 a.m., Eastern Standard Time, on the fourth full business
day following the commencement of the initial public offering contemplated by
this Agreement, or at such other time not later than ten (10) full business days
following the date of this Agreement, as the Underwriter and the Company may
agree, the Company will deliver to the Underwriter at the offices of Carlton,
Fields, Ward, Emmanuel, Smith & Cutler, P.A. ("Carlton Fields"), 777 South
Harbour Island Boulevard, Tampa, Florida 33602, or at such other location as is
specified by the Underwriter, certificates representing the Firm Shares to be
purchased by the Underwriter, against payment therefor by the Underwriter of the
purchase price therefor by wire transfer of same day funds payable to the order
of the Company for Firm Shares. Such time of delivery and payment is referred to
in this Agreement as the "First Closing Date."
(c) In addition, on the basis of the representations, warranties, and
agreements contained herein, but subject to the terms and conditions set forth
herein, the Company hereby grants to the Underwriter a one-time option (the
"Option") to purchase from the Company up to 172,500 Option Shares at a purchase
price of $9.15 per share, for use solely in covering any over-allotments made by
the Underwriter in the sale and distribution of the Firm Shares. The Option
granted hereunder may be exercised at any time (but not more than once) within
thirty (30) days after the date of this Agreement, upon notice by the
Underwriter to the Company which sets forth the aggregate number of Option
Shares to be purchased by the Underwriter, the names and denominations in which
the certificates for such shares are to be registered, and the time and place at
which such certificates will be delivered. Such time of delivery may not be
earlier than the First Closing Date and herein is called the "Second Closing
Date." The Second Closing Date shall be determined by the Underwriter and may be
the same as the First Closing Date, but if at any time other than the First
Closing Date, such Second Closing Date shall not be earlier than three nor later
than ten full business days after delivery of such notice to exercise.
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(d) Certificates for the Firm Shares and the Option Shares shall be in
definitive form and shall be registered in such names and in such denominations
as the Underwriter shall request by written notice to the Company not later than
two business days prior to the First Closing Date or the Second Closing Date, as
the case may be. The Company agrees to make such certificates available for
inspection at least twenty-four (24) hours prior to the First Closing Date or
the Second Closing Date, as the case may be, at the offices of its designated
custodian, or at any other location designated by the Underwriter. The
certificates evidencing the Firm Shares and the Option Shares shall be delivered
to the Underwriter on the First Closing Date or the Second Closing Date, as the
case may be, for the account of the Underwriter, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriter duly paid,
against payment of the purchase price therefor.
The First Closing Date and the Second Closing Date are sometimes
referred to together in this Agreement as the "Closing Dates".
SECTION 5. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriter herein contained, the Company covenants and agrees
with the Underwriter that:
(a) If any information shall have been omitted from the Registration
Statement in reliance upon Rule 430A under the Securities Act, the Company will
prepare and timely file with the Commission pursuant to Rule 424(b) under the
Securities Act a Prospectus in a form approved by the Underwriter containing the
Rule 430A Information.
(b) The Company will advise the Underwriter and counsel to the
Underwriter promptly, and, if requested by the Underwriter, will confirm such
advice in writing: (i) if information shall have been omitted from the
Registration Statement in reliance on Rule 430A under the Securities Act, (ii)
when the Prospectus or term sheet (as described in Rule 434(b) under the
Securities Act) has been timely filed pursuant to Rule 424(b) under the
Securities Act, (iii) when any post-effective amendment to the Registration
Statement or any Rule 462 Registration Statement is filed or becomes effective
under the Securities Act, (iv) of any request by the Commission for amendments
or supplements to the Registration Statement, any Preliminary Prospectus, or the
Prospectus, or for additional information, (v) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or
of any notification of the suspension of qualification or registration of the
Shares for offer or sale in any jurisdiction or the initiation or threatening of
any proceedings for such purposes. If at any time the Commission shall issue any
stop order suspending the effectiveness of the Registration Statement or the
Prospectus, the Company will make every reasonable effort to obtain the
withdrawal of such order at the earliest possible time.
(c) The Company will not file any amendment to the Registration
Statement, file any Rule 462(b) Registration Statement, or make any amendment or
supplement to the Prospectus, or file any amendment or supplement to any of the
Applications if: (i) the Underwriter shall not have been previously advised of
such filing, been furnished with a copy thereof prior thereto, and given
reasonable opportunity to review such amendment or supplement, (ii) the
Underwriter shall reasonably object after having been so advised, or (iii) in
the case of a Registration Statement, Rule 462(b) Registration Statement, or
Prospectus, such amendment or supplement is not in compliance with the
Securities Act. The Company will prepare and file with the Commission any
amendments or supplements which, in the opinion of counsel for the Underwriter,
is necessary and advisable in connection with the distribution of the Shares by
the Underwriter.
(d) The Company will furnish to the Underwriter, without charge, eight
(8) signed copies of the Registration Statement as originally filed with the
Commission and of each amendment thereto, including financial statements and all
exhibits thereto, and such number of conformed copies of the Registration
Statement as originally filed and of each amendment thereto as the Underwriter
may reasonably request. The Company has
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delivered to the Underwriter, without charge, in such quantities as the
Underwriter has requested, copies of each form of the Preliminary Prospectus.
The Company confirms its consent to the use, in accordance with the provisions
of the Securities Act and with the securities or Blue Sky Laws of the
jurisdictions in which the Shares are or have been offered by the Underwriter
and by dealers, prior to the date of the Prospectus, of each Preliminary
Prospectus so furnished by the Company.
(e) The Company will furnish to the Underwriter in Naples, Florida,
without charge, prior to 10:00 a.m., Eastern Standard Time on the business day
next succeeding the date of this Agreement and thereafter from time to time for
such period as in the opinion of counsel for the Underwriter a prospectus is
required by law to be delivered in connection with sales by the Underwriter or a
dealer, as many copies of the Prospectus and the Registration Statement, and of
any amendment or supplement thereto, as the Underwriter may reasonably request.
The Company shall comply with all requirements imposed on it by the Securities
Act, as now and hereafter amended, and by the Rules and Regulations, as from
time to time in force, so far as is necessary to permit the completion of the
distribution of the Shares as contemplated by this Agreement and the
Registration Statement and the Prospectus. If, during the period in which the
Prospectus is required by law to be delivered by the Underwriter or a dealer,
any event shall occur or condition exist as a result of which, in the judgment
of the Company or in the opinion of counsel for the Underwriter, it becomes
necessary to amend or supplement the Registration Statement or the Prospectus in
order to make the statements therein, in light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of
counsel to the Underwriter, it is necessary to amend or supplement the
Prospectus to comply with the Securities Act or applicable law, the Company
promptly will prepare and file with the Commission an appropriate amendment or
supplement thereto, and will furnish to the Underwriter and to each dealer to
which Shares may have been sold by the Underwriter and to any other dealers upon
request, without charge, as many copies as the Underwriter may from time to time
reasonably request.
(f) The Company will make generally available to its security holders a
consolidated earnings statement, which need not be audited, as soon as it is
practicable to do so, but in any event not later than fifteen (15) months after
the effective date of the Registration Statement, covering a period of twelve
(12) consecutive calendar months beginning after the effective date of the
Registration Statement, which consolidated earnings statement will satisfy the
provisions of the last paragraph of Section 11(a) of the Securities Act and Rule
158 of the Rules and Regulations promulgated thereunder and will advise the
Underwriter in writing when such statement has been so made available.
(g) The Company shall take or cause to be taken in cooperation with the
Underwriter and counsel to the Underwriter all actions required to register or
qualify the Shares for offer and sale under the securities or Blue Sky Laws of
such jurisdictions as the Underwriter may reasonably designate and will make
such applications, file such documents, and furnish such information as may be
required for that purpose (provided, that the Company shall not be required to
qualify as a foreign corporation or to file a general consent to the service of
process in any jurisdiction where it is not now so qualified or required to file
a consent, except with respect to the offer and sale of the Shares), and will
continue such registrations or qualifications in effect so long as reasonably
requested by the Underwriter to effect the distribution of the Shares
(including, without limitation, the preparation and filing of such statements,
reports, or documents as may be so required and compliance with all undertakings
given pursuant to such registrations or qualifications). In the event that the
registration or qualification of the Shares in any jurisdiction is suspended,
the Company shall so advise the Underwriter in writing.
(h) During the period ending five years after the date of this
Agreement, the Company will furnish to the Underwriter: (i) as soon as
practicable after the end of each fiscal year, copies of the annual report
containing the consolidated audited financial statements of the Company, (ii) as
soon as available, a copy of each
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report, document, and definitive proxy or information statement furnished to or
filed with any securities exchange or the NASD (including the Nasdaq Stock
Market, Inc., or any successor thereto) pursuant to the requirements of such
exchange or the NASD, or with the Commission under the Securities Act or the
Exchange Act, and (iii) copies of all other information or communications
(financial or other) furnished to shareholders of the Company.
(i) The Company shall apply the proceeds from the sale of the Shares to
be sold by it hereunder as set forth in the Prospectus under the heading "Use of
Proceeds" and shall file with the Commission, and will furnish or cause to be
furnished to the Underwriter and counsel to the Underwriter, such reports as may
be required in accordance with Rule 463 under the Securities Act.
(j) Except for the sale of Common Shares pursuant to this Agreement,
neither the Company nor any Subsidiary shall, directly or indirectly, offer,
sell, pledge, contract to sell, issue, distribute, grant or sell any option,
right, or warrant to purchase or otherwise dispose of any Common Shares or
securities convertible into, or exercisable, or exchangeable for, Common Shares
or a derivative of the Common Shares (or an agreement for such) in the open
market or otherwise, for a period of one-hundred eighty days (180) days after
the later of the Effective Date or the date of this Agreement, without the
express prior written consent of the Underwriter.
(k) The Company will not, directly or indirectly, take any action
designed, or which might reasonably be expected to cause or result in or
constitute, under the Securities Act or otherwise, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares.
(l) The Company has (i) caused each director, officer, and current
shareholder of the Company to furnish to the Underwriter, on or before the date
of this Agreement, the Lock-Up Agreements, and (ii) issued stop-transfer
instructions to the transfer agent for the Common Shares with respect to the
Common Shares that are or will be subject to such Lock-Up Agreements, which
stop-transfer instructions shall restrict the transfer of such shares prior to
expiration of the 180-day period specified in the Lock-Up Agreements.
(m) During the period that a prospectus is required by law to be
delivered in connection with sales of the Shares by the Underwriter or a dealer,
the Company will not, directly or indirectly hold any press conference with
respect to the Company, or its financial condition, results of operations,
business, properties, assets, or prospects, or this offering, without the
express written consent of the Underwriter.
(n) The Company shall not invest or otherwise cause the use of proceeds
received by the Company from its sale of the Shares, or otherwise conduct its
business, in such a manner as would require the Company or any Subsidiary to
register as an investment company under the Investment Company Act of 1940, as
amended.
(o) The Company will not prior to the Second Closing Date, if any, (i)
except as specifically described in the Prospectus, acquire any of the Common
Shares, or declare or pay any dividend or make any other distribution upon its
Common Shares payable to shareholders of record on a date prior to the Second
Closing Date, or (ii) incur any material liability or obligation, direct or
contingent, or enter into any material transaction other than in the ordinary
course of business, or any transaction with a related party which is required to
be disclosed in the Prospectus pursuant to Item 404 of Regulation S-B under the
Securities Act.
(p) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar for the Common
Shares.
(q) In connection with the Directed Shares Program, the Company will
ensure that the Directed Shares will be restricted to the extent required by the
NASD or the NASD rules from sale, transfer, assignment,
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pledge, or hypothecation for a period of three months following the Effective
Date. The Underwriter will notify the Company as to which Participants are
required to be restricted. The Company will direct the transfer agent to place
stop transfer restrictions upon such securities for such period of time.
(r) The Company shall comply in all respects with the provisions of all
undertakings contained in the Registration Statement and the undertakings given
by the Company in connection with the registration or qualification of the
Shares for offering and sale under the Blue Sky Laws.
(s) The Company will use its best efforts to satisfy or cause to be
satisfied the conditions to the obligations of the Underwriter in Section 7
hereof.
(t) The Company shall deliver the requisite notice of issuance to the
NASD and shall take all necessary and appropriate action to cause or permit the
quotation and listing of the Common Shares on the OTC Bulletin Board for a
period of at least 36 months, except to the extent during such period that the
Common Shares are listed on a national securities exchange or the Nasdaq Stock
Market.
(u) The Company will advise the Underwriter promptly of and, when
applicable, furnish copies of, any communications with the FRB, OCC, or FDIC
relating to the Applications or the Regulatory Approvals.
(v) During the period ending five years after the date of this
Agreement, the Company shall grant the Underwriter with a right of first refusal
to serve as the Company's underwriter in connection with the sale of any
securities by the Company or any of its Subsidiaries or affiliates, whether or
not currently existing, and to act as a financial advisor thereto in connection
with any of the following transactions involving the Company or any of its
Subsidiaries or affiliates: (i) a merger, consolidation, reorganization,
recapitalization, restructuring, business combination, or other similar
transaction, (ii) the acquisition of controlling interest of 20% or more of
another company, entity, or business thereof, (iii) the disposition of a
controlling interest of 20% or more of any of the Company or any of its
Subsidiaries or affiliates, whether or not currently existing, (iv) the purchase
or lease of all or substantially all of the assets of another company, entity,
or business thereof, (v) the sale or lease of all or substantially all of the
assets of the Company or any of its Subsidiaries or affiliates, or (vi) an
option to engage in any of the transactions set forth in Sections 5(v)(i)
through 5(v)(v).
(w) The Company shall supply the Underwriter and counsel to the
Underwriter, at the Company's cost, with a bound volume of the Underwriting
materials within a reasonable time after the last Closing Date.
SECTION 6. PAYMENT OF EXPENSES AND FEES.
(a) Whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated for any reason, the Company agrees
to pay or cause to be paid all costs, fees, and expenses incurred in connection
with, or incident to the performance of the Company's obligations under this
Agreement, including: (i) the fees, disbursements, and expenses of the Company's
accountants and counsel incurred in connection with the registration and
delivery of the Shares under the Securities Act, (ii) the fees, expenses, and
costs associated with the preparation, filing with the Commission, printing, and
distribution (including costs of mailing, packaging, and shipping copies thereof
to the Underwriter and dealers) of the Registration Statement, each Preliminary
Prospectus, and the Prospectus (including all exhibits and financial statements
thereto, and any amendments and supplements to any of the foregoing); (iii) the
cost of preparing, printing, and authenticating certificates representing the
Shares, and all costs and expenses related to the transfer and delivery of the
Shares to the Underwriter, including any stamp, transfer, or other taxes payable
thereon; (iv) all costs and expenses in connection with the registration and
qualification of the Shares for offer and sale under state securities and Blue
Sky Laws, including filing fees and legal fees and disbursements of counsel for
the Underwriter incurred in
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connection with such registration and qualifications and in connection with the
preparation of the preliminary and supplemental Blue Sky memoranda (such legal
fees, exclusive of disbursements, not to exceed $15,000), (v) the costs of
printing (or reproducing) and delivery of this Agreement, the preliminary and
supplemental Blue Sky Memoranda, the Selected Dealer Agreements, and all other
agreements and documents printed (or reproduced) and delivered in connection
with the offering of the Shares; (vi) all filing fees, and legal fees and
disbursements of counsel to the Underwriter incurred in connection with the
review and qualification of the offering of the Shares by the NASD; (vii) to the
extent appropriate, the fees and expenses related to the approval and quotation
of the Shares on the OTC Bulletin Board; (viii) the costs and charges of any
transfer agent, registrar, or depositary; (ix) transportation, accommodations,
and other expenses incurred by or on behalf of the Underwriter in connection
with the presentations to prospective purchasers of the Shares; (x) conditioned
upon the occurrence of the First Closing, the preparation, printing, and
distribution of one bound volume of the closing documents for each of the
Underwriter and its counsel; and (xi) all other costs incident to the
performance of the obligations of the Company hereunder for which provision is
not otherwise made in this Section 6. It is understood, however, that except as
provided in this Section 6(a), and in Sections 6(b) and 6(c), and in Section 9
entitled "Indemnification and Contribution", the Underwriter will pay all of its
costs and expenses, including fees and disbursements of its counsel, stock
transfer taxes payable on resale of any of the Shares by it, and any advertising
expenses connected with any offers the Underwriter may make.
(b) It is understood that, conditioned upon the occurrence of the First
Closing, the Company shall reimburse the Underwriter for its expenses on a
nonaccountable basis in an amount equal to $45,000 with respect to the sale of
the Firm Shares, which amount shall be paid to the Underwriter on the First
Closing Date, and, to the extent the Option is exercised, an additional amount
equal to 3% of the gross proceeds from the sale of the Option Shares, which
additional amount shall be paid to the Underwriter on the Second Closing Date.
(c) If this Agreement shall be terminated by the Underwriter because of
the conditions in Section 7 of this Agreement are not satisfied, or because this
Agreement is terminated by the Underwriter pursuant to Section 10 of this
Agreement, or by reason of the failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement,
then the Company will reimburse the Underwriter for out-of-pocket expenses
(including fees and disbursements of counsel for the Underwriter) reasonably
incurred by the Underwriter or counsel to the Underwriter in connection with
this Agreement or the offering contemplated hereunder; PROVIDED, HOWEVER, that
reimbursement pursuant to this Section 6(c) shall be limited to an aggregate of
$35,000.
SECTION 7. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITER. The
obligations of the Underwriter under this Agreement to purchase the Shares on
each Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company set forth herein as of the date hereof, as
of the First Closing Date, and if applicable, as of the Second Closing Date, as
the case may be, to the accuracy of the statements of the Company's directors
and officers made pursuant to the provisions hereof, to the performance and
compliance by the Company of its agreements and obligations hereunder, and to
the following additional conditions, except to the extent expressly waived in
writing by the Underwriter:
(a) The Registration Statement and all post-effective amendments
thereto shall have been declared effective by the Commission not later than 5:30
p.m. Eastern Standard Time on the date of this Agreement, or such later time as
shall have been consented to by the Underwriter, and all filings required by
Rule 424(b) and Rule 430A under the Securities Act shall have been timely filed
with the Commission in compliance with the Rules and Regulations, and any
request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been disclosed
to the Underwriter and complied with to the Underwriter's satisfaction. No stop
order suspending the effectiveness of the Registration Statement or any
amendment or supplement thereto shall have been issued and no proceeding for
that purpose
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shall have been initiated or shall be pending, or, to the knowledge of the
Company, threatened or contemplated by the Commission, and no restraining order,
or order of any nature by a federal or state court of competent jurisdiction
shall have been issued which would or purports to prevent the issuance of the
Shares.
(b) Subsequent to the execution and delivery of this Agreement and
prior to each Closing Date, there shall not have occurred any change, or any
development involving, or which might reasonably be expected to involve, a
prospective change, in the ability of the Company or any Subsidiary to conduct
their respective businesses (whether by reason of any court, legislative, other
governmental action, order, decree, or otherwise), or in the general affairs,
condition (financial and otherwise), business, prospects, properties,
management, financial position or earnings, results of operations, or net worth
of the Company or any Subsidiary, whether or not arising from transactions in
the ordinary course of business that, in the Underwriter's judgment, is material
and adverse and makes it, in the Underwriter's judgment, impracticable to market
the Shares on the terms and in the manner contemplated by the Prospectus.
(c) The Underwriter shall have received on each Closing Date, a
certificate of the chief executive officer of the Company, dated as of the First
Closing Date or the Second Closing Date, as the case may be, to the effect that:
(i) The Registration Statement has been declared effective by
the Commission under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement has been issued, and no proceeding
for such purpose is pending, or, to the knowledge of the respective signatories,
threatened or contemplated by the Commission.
(ii) The representations and warranties of the Company set
forth in this Agreement are true and correct as of the date of this Agreement
and as of the First Closing Date or the Second Closing Date, as the case may be,
and the Company has complied with all of the covenants and agreements and
satisfied in all respects all of the conditions to be performed or satisfied by
it on or prior to each such Closing Date.
(iii) Except as set forth in the Registration Statement or the
Prospectus, since the respective dates of the Registration Statement and
Prospectus, neither the Company nor any Subsidiary shall have incurred any
liability or obligation, direct or contingent, neither of them shall have
entered into any material transaction, there shall not have been any change in
the capital stock or other securities of the Company nor any material increase
in the short-term or long-term debt of the Company from that set forth or
contemplated in the Registration Statement or the Prospectus (or any amendment
or supplement thereto).
(iv) Each of the respective signatories of the certificate has
carefully examined the Registration Statement, the Prospectus, and any
amendments or supplements thereto, and such documents contain all statements and
information required to be made therein, and neither the Registration Statement,
the Prospectus, nor any amendment or supplement thereto includes any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and,
since the date on which the Registration Statement was initially filed, no event
has occurred that was required to be set forth in an amended or supplemented
prospectus or in an amendment to the Registration Statement that has not been so
set forth; provided, however, that no representation need be made as to
information contained in or omitted from the Registration Statement or any
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Underwriter.
(v) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been any
material adverse change in the conditions (financial or otherwise) of the
Company or any Subsidiary, or any development involving a prospective material
adverse
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change in the condition (financial or other) of the Company or any Subsidiary or
affecting their businesses (resulting from litigation or otherwise), properties,
net worth, prospects, or results of operations of the Company or any Subsidiary,
whether or not arising from transactions in the ordinary course of business.
(d) The Underwriter shall have received on each Closing Date an opinion
of Smith, Gambrell & Russell, LLP, Atlanta, Georgia, counsel for the Company, in
form reasonably satisfactory to the Underwriter and counsel for the Underwriter,
addressed to the Underwriter and dated as of the First Closing Date or the
Second Closing Date, as the case may be, to the effect that:
(i) The Company has been duly incorporated, is validly
existing as a corporation with active status under the laws of the State of
Florida, and has full power and authority (corporate and other) to own, lease,
and operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto); based upon a review of standard compilations of state corporation and
bank regulatory laws and certificates of officials in such jurisdictions, the
Company is duly qualified to do business as foreign corporation under the
corporation and banking laws of, and is in good standing as such in, each
jurisdiction in which the conduct of its business or where the nature of its
properties requires such registration or qualification, except where the failure
to so register or qualify would not have a Material Adverse Effect; and the
Company is duly registered and in good standing under the BHCA and is a member
in good standing of the Federal Reserve System.
(ii) The Company, prior to the First Closing Date, does not
have any Subsidiaries and does not, directly or indirectly, own any equity
interest in, or control, any corporation, limited liability company,
association, partnership, joint venture, trust, proprietorship, or other
commercial or business entity or organization, except that the Company has the
sole right to acquire all of the outstanding capital stock of the Bank, and upon
acquisition of such stock the Bank will be the Company's only Subsidiary. Upon
contribution to the Bank of the net proceeds from the sale of the Firm Shares as
described in the Prospectus, and the issuance by the Bank of its capital stock
after receipt thereof, and at all times subsequent thereto and as of the Second
Closing Date, if any, all of the outstanding capital stock of the Bank (a) will
have been issued to the Company, (b) when issued to the Company, will have been
duly authorized, validly issued, fully paid and nonassessable, and (c) will be
owned beneficially and of record by the Company, free and clear of any claim,
lien, encumbrance, security interest, or restriction on transfer. Subject to the
receipt of such capital contribution by the Company to the Bank, and
satisfaction of the conditions set forth in the Bank Approvals, the Bank will be
or is duly organized and validly existing as a nationally chartered banking
association in good standing under the laws of the United States of America and
the State of Florida, with full power and authority (corporate and other) to
own, lease, and operate its properties and conduct its business as described in
the Registration Statement, the Prospectus, the Application, and the Regulatory
Approvals. The Bank is not, and will not be required to register or qualify to
do business as a foreign corporation under the laws of any jurisdiction, and is
not, and will not be, subject to any current formal arrangements or memorandum
of understanding with, or cease and desist order by, any bank regulatory agency.
(iii) As of the time each Application was filed with the
respective bank regulatory authorities (FRB, OCC, or FDR) and as of each Closing
Date: (A) to the knowledge of such counsel, each such Application conformed in
all material respects to the applicable respective requirements of the BHCA, the
NBA, and the FDIA and the rules and regulations promulgated thereunder, and (B)
to the knowledge of such counsel after due investigation, as of such times, none
of the Applications contained an untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances in which they were
made, not misleading.
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(iv) The Company has received the FRB Approval and the Bank
has received the Bank Approvals and, to the knowledge of such counsel after due
investigation, as of the date hereof and as of each Closing Date: (A) all such
Regulatory Approvals are in full force and effect, and no actions to suspend,
revoke, or terminate any of such Regulatory Approvals has been taken, have been
initiated or are pending, threatened, or contemplated by any of the FRB, the
OCC, or the FDIC; (B) neither the Company nor the Bank is in breach or default
under any condition or of any commitment contained in any of such Regulatory
Approvals; and (C) each of the Company and the Bank has satisfied all conditions
precedent to such Regulatory Approvals which can be satisfied thereunder by them
as of such date.
(v) The authorized, issued, and outstanding capital stock of
the Company is as set forth under the caption "Capitalization" in the
Prospectus, and the Common Shares conform to the descriptions thereof contained
in the Registration Statement and Prospectus. The certificates for the Shares to
be delivered hereunder are in due and proper legal form and, when duly
countersigned by the Company's transfer agent and delivered to the Underwriter
or upon the order of the Underwriter in accordance with this Agreement, will
comply in all material respects with the requirements of the Florida Business
Corporation Act, and the Company's articles of incorporation and bylaws.
(vi) The Common Shares issued and outstanding prior to the
issuance of the Firm Shares or the Option Shares, as the case may be, to be sold
by the Company hereunder have been duly authorized and validly issued, are fully
paid and nonassessable. There are no preemptive, preferential, or other rights
(including rights of first refusal) to subscribe for or to purchase any of the
Common Shares and no Common Shares have been issued in violation of such rights,
nor are there any restrictions upon the voting or transfer of any Common Shares
pursuant to the Company's articles of incorporation, bylaws, other governing
documents, or any agreement or other instrument to which the Company or any
Subsidiary is a party or by which any of them is bound.
(vii) The Firm Shares or the Option Shares, as the case may
be, to be sold by the Company hereunder have been duly authorized and, when
issued and paid for against delivery thereof in accordance with the terms of
this Agreement, will be validly issued, fully paid and nonassessable, and the
issuance of the Shares will not be in violation of, or subject to, any statutory
preemptive, preferential, or, to the knowledge of such counsel, other rights
(including rights of first refusal) to subscribe for or to purchase such Shares,
nor are there any restrictions on the voting or transfer of such Shares under
the Company's articles of incorporation, bylaws, or other governing documents.
(viii) Except as set forth in the Prospectus, neither the
Company nor any Subsidiary has any outstanding options to purchase, or warrants
to subscribe for, or any securities or obligations convertible or exchangeable
into, or any contracts or commitments to issue or sell, any capital stock or any
such options, warrants, convertible or exchangeable securities, or obligations,
or rights of any description, contractual or otherwise, entitling any person to
receive any class of security of the Company or any Subsidiary. No holder of any
securities of the Company or any Subsidiary or any other person has the right,
contractual or otherwise, to cause the Company to have any such securities
included in the Registration Statement or to register any securities of the
Company or any Subsidiary under the Securities Act or applicable Blue Sky Laws.
(ix) The Registration Statement has been declared effective
under the Securities Act, and to the knowledge of such counsel after
investigation, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted, are pending, threatened, or contemplated. All filings required by
Rule 424 and Rule 430A under the Securities Act have been made in the manner and
within the time period required by such rules and, at the Effective Date and at
each Closing Date, the Registration Statement, the Prospectus, and each
amendment or supplement thereto comply or
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will have complied as to form in all material respects with the requirements of
the Securities Act and the Rules and Regulations (except that counsel shall
express no opinion as to the financial statements and other statistical or
financial data derived therefrom), and no amendments to the Registration
Statement are required to be filed.
(x) Such counsel has participated in the preparation of the
Registration Statement and the Prospectus, including review of and discussion of
the contents thereof, and no facts have come to the attention of such counsel
which lead it to believe that either the Registration Statement, the Prospectus,
or any amendment or supplement thereto, as of their respective effective or
issue dates, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, as amended or
supplemented, if applicable, as of the First Closing Date or the Second Closing
Date, as the case may be, contains any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which made (except, in each case, for the financial statements, notes and
related schedules, and other statistical or financial data included therein, as
to which such counsel need express no opinion).
(xi) The Company has requisite power and authority (corporate
and other) to execute, deliver, and perform this Agreement and to issue, sell,
and deliver the Shares to be sold by it to the Underwriter as provided herein.
The execution and delivery of this Agreement, and the performance by the Company
of its obligations hereunder and consummation of the transactions described
herein, have been duly and validly authorized by the Company, and this Agreement
has been duly executed and delivered by the Company, and constitutes a legal,
valid, and binding obligation of the Company and is enforceable against the
Company in accordance with its terms (except in all cases (i) to the extent that
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, moratorium, or similar laws affecting the
enforcement of creditor rights and remedies generally, (ii) that the
availability of the equitable remedy of specific performance and injunctive
relief is subject to the discretion of the court before which the proceeding may
be brought, and (iii) that the enforceability of the indemnification and
contribution provisions hereof may be limited under applicable federal or state
or other securities laws or the public policy underlying such laws.).
(xii) The execution and delivery by the Company of, and the
performance by the Company of its obligations hereunder (including the offer,
sale, or delivery of the Shares) and consummation of the transactions
contemplated by this Agreement will not (A) conflict with, violate, or
contravene any provision of the articles of incorporation, bylaws, or other
governing documents of the Company or any Subsidiary, (B) to the knowledge of
such counsel, violate, conflict with, constitute a breach of, or a default under
any provision of any agreement, contract, mortgage, deed of trust, lease, loan
agreement, indenture, note, bond or other evidence of indebtedness, or any other
material agreement or instrument to which the Company or any Subsidiary is a
party or by which any of them is bound, or to which any of their properties is
subject, or (C) result in a violation of any statute, law, ordinance, rule,
regulation, or any ruling, order, writ, injunction, judgment, or decree of any
court or any governmental, regulatory, or administrative agency, or commission,
authority, or other body, domestic or foreign, having jurisdiction over the
Company, any Subsidiary, or any of their respective properties, except those, if
any, described in the Registration Statement or the Prospectus.
(xiii) No consent, approval, filing, authorization,
registration, qualification, or order of or with any court or governmental
agency or body (including with or by any bank regulatory agency) is required for
the execution and delivery of this Agreement, and performance by the Company of
its obligations under this Agreement, including the issue and sale of the
Shares, or in connection with the consummation of the transactions contemplated
in this Agreement, except (A) as have been obtained under the Securities Act or
the Exchange Act, or (B) as may be required under state securities or Blue Sky
Laws governing the purchase and distribution of the Shares by the Underwriter
(as to which such counsel shall not express an opinion);
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(xiv) The statements (A) in the Prospectus under "Risk
Factors- Need to Obtain Regulatory Approvals", "- Governmental Regulation and
Monetary Policy", "- Anti-Takeover Provisions", "Dividend Policy", "Management -
Employment Agreement", "- Stock Option Agreement", and "- Stock Option Plan",
"Supervision and Regulation", "Description of Capital Stock", and "Shares
Eligible for Future Sale", and (B) in the Registration Statement in Item 24, in
each case insofar as such statements constitute summaries of legal matters,
documents, or proceedings referred to therein, fairly present the information
called for with respect to such legal matters, documents, and proceedings and
fairly summarize the matters referred to therein;
(xv) To such counsel's knowledge after due investigation and
inquiry (A) there is no litigation or any legal, regulatory, or governmental
proceedings, actions, or investigations pending or threatened to which the
Company or any Subsidiary is or may be a party or to which any of their
properties is or may be subject, or any statutes, regulations, or rules, that
are required to be described or disclosed in the Registration Statement or the
Prospectus that are not so described or disclosed as required, and (B) there are
no agreements, contracts, indentures, leases or other documents or instruments
required to be described, summarized, or otherwise disclosed in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement that has not been so described, summarized, disclosed, or filed.
(xvi) Neither the Company nor any Subsidiary is, nor with the
giving of notice or the lapse of time, or both, would be (A) in conflict with or
in violation of its articles of incorporation, bylaws, or other corporate
governance documents, or (B) in violation of breach of, or in default in the
performance of any obligation, agreement, or condition contained in any
provision of any loan agreement, indenture, note, bond, other evidence of
indebtedness, or of any agreement, lease, deed of trust, contract, or other
material agreement or instrument to which the Company or any Subsidiary is a
party or by which any of them or any of their assets or properties are bound or
affected.
(xvii) The Company and each Subsidiary have and hold, and are
in substantial compliance with, all Permits required under all laws, rules, and
regulations in connection with their respective businesses, and all of such
Permits are valid and in full force and effect; and there is no pending
proceeding, and neither the Company nor any Subsidiary has received notice of
any threatened proceeding, relating to the revocation or modification of any
such Permit. Neither the Company nor any Subsidiary is or has been (by virtue of
any action, omission to act, contract to which it is a party or by which it is
bound, or any occurrence or state of facts whatsoever) in violation of any law,
rule, regulation, or any order, writ, injunction, or decree to which the Company
or any of its Subsidiaries may be subject (including those relating to any
aspect of banking, bank holding companies, environmental protection,
occupational safety and health, and equal employment practices) heretofore or
currently in effect, except any such violation that has been fully cured or
satisfied without recourse or that is not reasonably likely to have a Material
Adverse Effect;
(xviii) The Company is not an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act and, upon its receipt of the net proceeds from the sale
of the Shares and the application thereof in accordance with the description
thereof set forth in the Prospectus, will not become or be deemed to be an
"investment company" thereunder; and
(xix) To the knowledge of such counsel, the conditions for use
of Form SB-2 have been satisfied with respect to the Registration Statement.
In rendering such opinion such counsel may rely as to factual
matters on certificates of officers of the Company and of state officials and,
as to legal matters in jurisdictions other than those in which it is domiciled,
on opinions of local counsel, in each case satisfactory to the Underwriter, in
which case their opinion
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<PAGE>
shall state that they are so doing and copies of such certificates or opinions
will be attached to their opinion unless such certificates or opinions or the
information therein has been furnished to the Underwriter in other form.
(e) The Underwriter shall have received an opinion of Carlton Fields,
counsel for the Underwriter, dated the First Closing Date or the Second Closing
Date, as the case may be, with respect to the issuance and sale of the Shares by
the Company, the Registration Statement, and other related matters as the
Underwriter may reasonably require, and the Company shall have furnished to such
counsel such documents and shall have exhibited to them such papers and records
as they reasonably request for the purpose of enabling them to pass upon such
matters.
(f) The Underwriter shall have received, on each of the date of this
Agreement, the First Closing Date, and the Second Closing Date, as the case may
be, a letter addressed to the Underwriter, from Hill Barth & King, Inc., the
Company's independent accountants, the first letter to be dated the date of this
Agreement, the second letter to be dated the First Closing Date, and the third
letter (in the event of a Second Closing) to be dated the Second Closing Date,
which shall be in form and substance reasonably satisfactory to the Underwriter
and shall contain information of the type ordinarily included in accountants'
"comfort letters" with respect to the financial statements and certain financial
information contained in the Prospectus, which information shall be as of a date
within five days of the date of such letter; provided, however, that the letters
delivered on each Closing Date shall use a "cut-off date" not earlier than the
date of this Agreement. There shall not have been any change or decrease set
forth in any letter referred to in this Section 7(f) that makes it impracticable
or inadvisable in the judgment of the Underwriter to proceed with the public
offering or purchase of the Shares as contemplated hereby.
(g) As of the First Closing Date, the Bank will have received the
Charter Approval and Deposit Insurance Approval (together, the "Bank Approvals")
from the OCC and the FDIC, respectively, and the Company will have received the
FRB Approval from the FRB, and as of each Closing Date (i) the Regulatory
Approvals will be in full force and effect and no action to suspend, revoke, or
terminate any of the Regulatory Approvals will have been taken, or proceedings
for such purposes initiated or threatened, by the FRB, the OCC, or the FDIC,
(ii) neither the Bank nor the Company will be in breach or default under any
condition precedent of or commitment contained in any of the Regulatory
Approvals that can be satisfied as of such date, and (iii) the Bank and the
Company will have satisfied their respective conditions precedent to the
Regulatory Approvals that can be satisfied as of such date.
(h) The Company shall have furnished to the Underwriter such further
certificates and documents as the Underwriter may reasonably request (including
certificates of officers of the Company).
(i) The Shares shall have been qualified or registered for sale, or
subject to an available exemption from such qualification or registration, under
the Blue Sky Laws of such jurisdictions as shall have been reasonably specified
by the Underwriter and the offering shall have been cleared by the NASD.
(j) The Lock-Up Agreements shall have been delivered to the Underwriter
on or before the date of this Agreement and shall be in full force and effect on
each Closing Date.
All of the agreements, opinions, certificates, letters, and documents
mentioned above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions of this Agreement only if they are satisfactory
in form and substance to the Underwriter and to Carlton Fields, counsel for the
Underwriter. The Company shall furnish the Underwriter with such manually signed
or conformed copies of such opinions, certificates, letters, and other documents
as the Underwriter shall reasonably request. If any condition to the
21
<PAGE>
Underwriter's obligations hereunder which are to be satisfied prior to or at
either Closing Date and is not so satisfied when and as required by this
Agreement, this Agreement at the election of the Underwriter will terminate upon
notification to the Company without liability on the part of the Underwriter,
except to the extent provided in Section 8 of this Agreement, and the Company
shall pay those expenses required under Section 6 hereof in connection with any
such termination.
SECTION 8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless the Underwriter and each person, if any, who
controls the Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, expenses, liabilities, or actions in respect thereof
("Claims") to which such Underwriter or each such controlling person may become
subject under the Securities Act, the Exchange Act, the Rules and Regulations,
Blue Sky Laws, or other federal or state statutory laws or regulations, at
common law or otherwise (including payments made in settlement of any
litigation, if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld), insofar as such
Claims arise out of or are based upon the inaccuracy or breach of any
representation, warranty, or covenant of the Company contained in this
Agreement, any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or in any application filed
under any Blue Sky Law or other document executed by the Company for that
purpose or based upon written information furnished by the Company and filed in
any state or other jurisdiction to qualify or register any or all of the Shares
under the securities laws thereof (any such document, application, or
information being hereinafter called a "Blue Sky Application"), or arise out of
or are based upon the omission or alleged omission to state in any of the
foregoing a material fact required to be stated therein or necessary to make the
statements therein not misleading. The Company agrees to reimburse the
Underwriter and each such controlling person for any legal fees or other
expenses incurred by the Underwriter or any such controlling person in
connection with investigating or defending any such Claim or appearing as a
third-party witness in connection with any such Claim; provided, however, that
the Company will not be liable in any such case to the extent that:
(i) Any such Claim arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto or in any Blue Sky Application in reliance upon
and in conformity with the written information furnished by or on behalf of the
Underwriter to the Company expressly for use therein pursuant to Section 13 of
this Agreement; or
(ii) Such statement or omission was contained or made in any
Preliminary Prospectus and corrected in the Prospectus and (1) any such Claim
suffered or incurred by the Underwriter (or any person who controls the
Underwriter) resulted from an action, claim, or suit by any person who purchased
Shares that are the subject thereof from such Underwriter in the offering, and
(2) such Underwriter failed to deliver a copy of the Prospectus (as then amended
if the Company shall have amended the Prospectus) to such person at or prior to
the confirmation of the sale of such Shares, in any case where such delivery is
required by the Securities Act, unless such failure was due to failure by the
Company to provide copies of the Prospectus (as so amended) to the Underwriter
as required by this Agreement.
(b) The Underwriter agrees to indemnify and hold harmless the Company,
each of its directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all Claims to which the Company, or any such director, officer,
or controlling person, may become subject under the Securities Act, the Exchange
Act, the Rules and Regulations, Blue Sky Laws, or other federal or state
statutory laws or regulations, at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Underwriter and such consent shall not be unreasonably
22
<PAGE>
withheld), insofar as such Claim arises out of or is based upon any untrue or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or in any Blue Sky Application, or arises out of or is based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or in any Blue Sky Application, in reliance
upon and in conformity with the written information furnished by the Underwriter
to the Company pursuant to Section 13 of this Agreement. The Underwriter will
reimburse any legal fees or other expenses reasonably incurred by the Company,
or any such director, officer, or controlling person in connection with
investigating or defending any such claim, and from any and all Claims resulting
from failure of the Underwriter to deliver a copy of the Prospectus, if the
person asserting such Claim purchased Shares from the Underwriter and a copy of
the Prospectus (as then amended if the Company shall have amended the
Prospectus) was not sent or given by or on behalf of the Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended) would have cured the defect giving rise to such Claim (unless such
failure was due to a failure by the Company to provide sufficient copies of the
Prospectuses (as so amended) to the Underwriter). The indemnification
obligations of the Underwriter as provided above are in addition to any
liabilities the Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under Section 8(a)
or 8(b) of this Agreement of notice of the commencement of any action in respect
of a Claim, such indemnified party will, if a Claim for indemnification under
this Section 8 in respect thereof is to be made against an indemnifying party
under such subsection, notify the indemnifying party in writing of the
commencement thereof. In case any such action is brought against any indemnified
party, and such indemnified party notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate in
and, to the extent that it may wish, jointly with all other indemnifying
parties, similarly notified, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to the indemnified party and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defense and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties.
(d) Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the defense of
such action and upon approval by the indemnified party of counsel selected by
the indemnifying party, the indemnifying party will not be liable to such
indemnified party under Section 8(a) or 8(b) of this Agreement for any legal
fees or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless:
(i) the indemnified party shall have employed separate counsel
in connection with the assumption of legal defenses in accordance with the
proviso to the last sentence of Section 8(c) of this Agreement (it being
understood, however, that the indemnifying party shall not be liable for the
legal fees and expenses of more than one separate counsel, approved by the
Underwriter, if the Underwriter or its controlling persons are the indemnified
parties);
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after the indemnified party's notice to the
indemnifying party of commencement of the action; or
23
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(iii) the indemnifying party has authorized the employment of
counsel at the expense of the indemnifying party.
(e) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding regarding any Claim in respect of which indemnity
could have been sought hereunder by such indemnified party unless such
settlement includes an unconditional release of such indemnified party from all
liability on Claims that are the subject matter of such action, suit or
proceeding.
(f) To the extent that the indemnification provided for in this Section
8 is unavailable to an indemnified party or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) of this Agreement in respect of any
Claim referred to therein, then each indemnifying party, in lieu of indemnifying
such indemnified party, shall, subject, to the limitations hereinafter set
forth, contribute to the amount paid or payable by such indemnified party as a
result of such Claim:
(i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other hand from the offering of the Shares; or
(ii) if the allocation provided by Section 8(f)(i) is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in Section 8 (f)(i), but also the
relative fault of the indemnifying party on the one hand and the indemnified
party on the other hand in connection with the statements or omissions that
resulted in such Claim, as well as any other relevant equitable considerations.
The respective relative benefits received by the Company on the one
hand and the Underwriter on the other hand in connection with the offering of
the Shares shall be deemed to be in such proportion so that the Underwriter is
responsible for that portion of a Claim represented by the percentage that the
amount of the underwriting discount per share as set forth in Section 4 hereof
bears to the initial public offering price per share appearing on the cover page
of the Prospectus, and the Company (including the Company's directors, officers,
and controlling persons) shall be responsible for the remaining portion of such
Claim.
The relative fault of the Company on the one hand and the Underwriter
on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Underwriter on the other hand and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such untrue statement or omission. The amount for
indemnification paid or payable by a party as a result of the Claims referred to
above shall be deemed to include, subject to the limitations set forth in
Sections 8(c) and 8(d) of this Agreement, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
(g) The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by PRO RATA
or per capita allocation or by any other method or allocation that does not take
into account the equitable considerations referred to in Section 8(f) of this
Agreement. Notwithstanding the other provisions of this Section 8, the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which the Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission
24
<PAGE>
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(h) The obligations of the Company and the Underwriter under this
Section 8 shall be in addition to any liability that the Company or the
Underwriter may otherwise have.
SECTION 9. EFFECTIVE DATE. This Agreement shall become effective
immediately upon the execution and delivery hereof by the parties hereto. Such
execution and delivery shall include delivery of an executed copy of this
Agreement by telecopier, facsimile transmission, or other means of transmitting
written documents.
SECTION 10. TERMINATION. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof, the Underwriter, in its
absolute discretion and without any liability on its part, may terminate this
Agreement prior to the First Closing Date, and may cancel the Option to the
Company referred to in Section 4 hereof at any time prior to the Second Closing
Date, if:
(a) The Company shall have failed, refused, or been unable, at or prior
to such Closing Date, to perform any agreement on its part to be performed
hereunder;
(b) Any condition to the obligations of the Underwriter hereunder is
not fulfilled or satisfied at or prior to the applicable Closing Date;
(c) Any event shall have occurred or shall exist that makes untrue or
incorrect in any material respect any statement or information contained in the
Registration Statement or that is not reflected in the Registration Statement
but should be reflected therein to make the statements or information contained
therein not misleading in any material respect; or
(d) There shall have occurred any of the following events: (i) trading
in securities generally on or by, as the case may be, any national stock
exchange, the Nasdaq Stock Market, the OTC Bulletin Board, or the
over-the-counter market, shall have been suspended or materially limited, (ii)
governmental restrictions shall have been imposed on trading in securities
generally or minimum or maximum prices shall have been established, (iii)
trading of any securities of the Company, including the Shares, on any national
stock exchange, the Nasdaq Stock Market, the OTC Bulletin Board, or the
over-the-counter market shall have been suspended or materially limited, whether
by reason of a stop order by the Commission or otherwise, (iv) a general banking
moratorium shall have been established by federal or state authorities, (v) an
outbreak or escalation of hostilities, declaration of war, national emergency,
or other national or international calamity or crisis, or any change in
political, financial, or economic conditions shall have occurred or shall have
accelerated to such extent, in the Underwriter's judgment, as to make it
impracticable or inadvisable to market the Shares or to enforce contracts for
the sale of Shares, or (vi) in the case of any of the events specified in
Section 10(d)(i) through Section 10(d)(v), such event, together with any other
event or events, makes it, in the Underwriter's judgment, impracticable to
market the Shares at the time and in the manner contemplated by the Prospectus.
SECTION 11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
expense reimbursement, indemnity, and contribution agreements contained in this
Agreement, and the representations, warranties, covenants, and other statements
of the Company set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
the Underwriter, the Company, or any of its or their partners, officers,
directors, or any controlling person, as the case may be, and will survive
delivery of and payment for the Shares sold hereunder or any termination or
cancellation of this Agreement.
25
<PAGE>
SECTION 12. NOTICES. All communications hereunder will be in writing
and, if sent to the Underwriter, will be mailed, delivered, or telecopied (with
receipt confirmed) to Ashtin Kelly & Co., 400 Fifth Avenue South, Naples, FL
34102, Attention: W. Jonathan Wride, President and Chief Executive Officer, (Fax
No. (914) 435-3850) with a copy to Richard A. Denmon, Esq., Carlton, Fields,
Ward, Emmanuel, Smith & Cutler, P.A., 777 South Harbour Island Boulevard, Tampa,
Florida 33602 (Fax No. (813) 229-4133); and if sent to the Company will be
mailed, delivered, or telecopied (with receipt confirmed) to the Company at 501
Goodlette Road North, Suite D-12, Naples, Florida 34102, Attention: Richard E.
Horne, President and Chief Executive Officer, (Fax No. (941) 434-8828) with a
copy to Robert C. Schwartz, Esquire, Smith, Gambrell & Russell LLP, Suite 3100,
Promenade II, 1230 Peachtree Street, N.E., Atlanta, Georgia 30309, (Fax No.
(404) 685-7058).
SECTION 13. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITER. The
Underwriter represents and warrants to the Company that the information set
forth (a) in the first paragraph on page 2 of the Prospectus relating to
stabilization, and (b) in the third and tenth paragraphs of the section in the
Prospectus entitled "Underwriting," constitutes the only written information
furnished to the Company by and on behalf of the Underwriter expressly for use
in connection with the preparation of the Registration Statement, and is correct
and complete in all material respects and does not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
SECTION 14. SUCCESSORS. This Agreement is made solely for the benefit
of the Underwriter, the Company, and their respective successors and assigns,
directors and officers (and their personal representatives), and controlling
persons referred to in Section 8, and no other person shall have any right or
obligation hereunder. The term "successors or assigns", as used in this
Agreement, shall not include any purchaser of the Shares from the Underwriter
merely by reason of such purchase.
SECTION 15. PARTIAL UNENFORCEABILITY. If any section, subsection,
clause, or provision of this Agreement is for any reason determined to be
invalid or unenforceable, such determination shall not affect the validity or
enforceability of any other section, subsection, clause, or provision hereof.
SECTION 16. MISCELLANEOUS AGREEMENT. Upon execution and delivery of
this Agreement by all parties hereto, the following agreements between the
parties shall be terminated without any further obligation or liability on the
part of either party, and such agreements shall henceforth be null and void in
all respects: (a) that certain document entitled Future Agreements, dated March
25, 1997, by and between the Company and the Underwriter, and (b) that certain
Restated Future Agreements, dated August 20, 1997, by and between the Company
and the Underwriter.
SECTION 17. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida without reference
to conflict of law principles thereunder.
SECTION 18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed counterparts hereof,
whereupon it will become a binding agreement among the Company, and the
Underwriter in accordance with its terms.
Very truly yours,
MARINE BANCSHARES, INC.
By: ____________________________
Title:__________________________
Accepted as of the date hereof:
ASHTIN KELLY & CO.
By: __________________________________
Title:________________________________
27
EXHIBIT 4.2
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
COMMON STOCK
SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
CUSIP 568139 10 9
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK
OF THE PAR VALUE OF ONE CENT ($.01) EACH OF
MARINE BANCSHARES, INC.
TRANSFERABLE ON THE BOOKS OF THE CORPORATION BY THE HOLDER HEREOF, IN PERSON OR
BY DULY AUTHORIZED ATTORNEY, UPON SURRENDER OF THIS CERTIFICATE PROPERLY
ENDORSED. THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE ISSUED AND
SHALL BE SUBJECT TO ALL OF THE PROVISIONS OF THE ARTICLES OF INCORPORATION AND
BY-LAWS OF THE CORPORATION AS NOW OR HEREAFTER AMENDED, TO ALL OF WHICH THE
HOLDER HEREOF BY ACCEPTANCE HEREBY ASSENTS.
THIS CERTIFICATE IS NOT VALID UNLESS COUNTERSIGNED BY THE TRANSFER AGENT
AND REGISTERED BY THE REGISTRAR.
WITNESS THE FACSIMILE SEAL OF THE CORPORATION AND THE FACSIMILE SIGNATURES
OF ITS DULY AUTHORIZED OFFICERS.
DATED:
[CORPORATE SEAL]
SECRETARY PRESIDENT
COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
NEW YORK, NEW YORK TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE>
MARINE BANCSHARES, INC.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO ANY SHAREHOLDER, UPON
REQUEST, A FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES, LIMITATIONS, AND
RELATIVE RIGHTS OF THE SHARES OF EACH CLASS OF SERIES OF STOCK AUTHORIZED TO
BE ISSUED BY THE CORPORATION. SUCH REQUEST MAY BE MADE TO THE SECRETARY OF THE
CORPORATION AT ITS PRINCIPAL OFFICE OR TO THE TRANSFER AGENT NAMED ON THE FACE
OF THIS CERTIFICATE.
THE FOLLOWING ABBREVIATIONS, WHEN USED IN THE INSCRIPTION ON THE FACE OF THIS
CERTIFICATE, SHALL BE CONSTRUED AS THOUGH THEY WERE WRITTEN OUT IN FULL
ACCORDING TO APPLICABLE LAWS OR REGULATIONS:
TEN COM - AS TENANTS IN COMMON
TEN ENT - AS TENANTS BY THE ENTIRETIES
JT TEN - AS JOINT TENANTS WITH RIGHTS OF
SURVIRORSHIP AND NOT AS TENANTS
IN COMMON
UNIF GIFT MIN ACT - _________ CUSTODIAN ______________
(CUST) (MINOR)
UNDER UNIFORM GIFTS TO MINORS
ACT ___________________
(TITLES)
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST.
FOR VALUE RECEIVED __________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________
_______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________________________________SHARES
OF THE CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
_____________________________________________________________________ATTORNEY
TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH
FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED _________________________
_______________________________________________________________________________
NOTICE: THE SIGNATURE(S) ON THIS ASSIGNMENT MUST CONFORM IN ALL RESPECTS WITH
THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE
SIGNATURE(S) GUARANTEED: ______________________________________________________
IMPORTANT; SIGNATURE(S) MUST BE GUARANTEED BY A PARTICIPANT IN A RECOGNIZED
SIGNATURE GUARANTEE PROGRAM.
EXHIBIT 5.1
[SMITH, GAMBRELL & RUSSELL, LLP LETTERHEAD]
ROBERT C. SCHWARTZ
(404) 815-3758
E-MAIL: [email protected]
December 18, 1998
Board of Directors
Marine Bancshares, Inc.
501 Goodlette Road North, Suite D-12
Naples, Florida 34102
Re: Marine Bancshares, Inc.
Registration Statement on Form SB-2
1,150,000 Shares of Common Stock
Registration No. 333-39203
Gentlemen:
We have acted as counsel for Marine Bancshares, Inc. (the "Company"), in
connection with the proposed public offering of the shares of its $.01 par value
Common Stock covered by the above-described Registration Statement.
In connection therewith, we have examined the following:
(1) The Amended and Restated Articles of Incorporation of the
Company, certified by the Secretary of State of the State of
Florida;
(2) The Amended and Restated Bylaws of the Company, certified as
complete and correct by the Secretary of the Company;
(3) The minute book of the Company, certified as correct and complete
by the Secretary of the Company;
(4) Certificate of Good Standing with respect to the Company, issued
by the Secretary of State of the State of Georgia; and
(5) The Registration Statement, including all exhibits thereto.
<PAGE>
Board of Directors
Marine Bancshares, Inc.
December 18, 1998
Page 2
Based upon such examination and upon examination of such other
instruments and records as we have deemed necessary, we are of the opinion that:
(A) The Company has been duly incorporated under the laws of the
State of Florida and is validly existing and in good standing
under the laws of that State.
(B) The 1,150,000 shares of Common Stock covered by the Registration
Statement have been legally authorized and, when issued in
accordance with the terms described in said Registration
Statement, will be validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus. In giving this consent, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, or the rules and regulations of
the Securities and Exchange Commission thereunder.
Sincerely,
SMITH, GAMBRELL & RUSSELL, LLP
/s/ Robert C. Schwartz
-----------------------------------
Robert C. Schwartz
RCS:jm
EXHIBIT 10.1
LEASE AGREEMENT
THIS LEASE, made as of this 9th day of July, 1998, by and between
WRIDELL DEVELOPMENT CORPORATION, INC., a Florida corporation, whose address is
400 5th Ave. S., Naples, Florida 34102 (hereinafter referred to as the
"LESSOR"), and MARINE BANCSHARES INCORPORATED, a Florida corporation whose
principal address is 400 5th Ave. S., Naples, FL 34102 (hereinafter referred to
as the "LESSEE"), .
In consideration of the exchange of mutual promises, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. PREMISES: LESSOR, contract purchaser of certain real property
described as Pelican Marsh Commercial Outparcel #2, being a part of Section 35,
Township 48 South, Range 25 East, Collier County, Florida, the legal description
of which is attached hereto as Exhibit "A" (the "Property"), hereby leases to
LESSEE and LESSEE leases from LESSOR the premises on the first and second floors
of the Building and the drive through lane(s) and automatic teller machine
("ATM") lane as depicted and more particularly described on the attached Exhibit
"B" (the "Premises"), and for purposes of this LEASE consisting of a total of
approximately SEVEN THOUSAND FIVE HUNDRED (7,500) leasable square feet of which
approximately 5,000 leasable square feet are located on the first floor of the
Building and approximately 2,500 leasable square feet are located on the second
floor of the Building, to be located within the office building to be
constructed upon the Property by LESSOR (the "Building" or "Office Building").
The Premises do not include any space above the interior surface of the ceiling,
below the interior surface of any floor, and outside the interior surface of any
window and wall (excluding the drive through and ATM lanes), nor any part of the
exterior walls of the building in which the Premises are located, nor the walks
or Common Areas as defined herein.
LESSOR and LESSEE each covenant, as a material part of the
consideration for this LEASE, to keep and perform each and all of the terms,
covenants and conditions herein set forth.
2. LEASE TERM AND COMMENCEMENT DATE: This LEASE shall be for a term of
TEN (10) years, which term shall begin upon the Commencement Date, as hereafter
defined. LESSEE shall not abandon the Premises during the Lease Term (for
purposes of this agreement, the term "Lease Term" shall mean the primary Lease
term of TEN (10) years plus any renewal term or terms from time to time
exercised by LESSEE as provided herein.) The Commencement Date shall be the
earlier of: (i) thirty days after LESSOR receives its Certificate of Occupancy
for the Building; or (ii) the date LESSEE "opens" for business to the general
public as a commercial bank facility. LESSOR and LESSEE acknowledge that certain
obligations under various articles of this LEASE may commence prior to the
Commencement Date of the Lease Term and agree that this is a binding and
enforceable agreement as of the date LESSEE and LESSOR execute this LEASE,
subject to the termination provisions contained herein.
(Page 1 of 19)
<PAGE>
3. RENEWAL OPTION(S): LESSEE shall have TWO (2) separate options to
renew this LEASE for a further term of FIVE (5) years each on giving written
notice to LESSEE not less than THREE (3) months nor more than SIX (6) months
before expiration of the LEASE Term, or any extension thereof, on the same terms
and conditions herein set forth including the annual CPI increase in the Base
Annual Rent as set forth in paragraph 10.a. hereof.
4. ACCEPTANCE OF PREMISES: LESSOR shall proceed in good faith and in a
prompt and workmanlike manner in delivering the Premises in the form as
described herein and making the Premises available to LESSEE for the
construction of its build-out improvements ("Leasehold Improvements"). In order
to complete its build-out prior to or simultaneous with LESSOR obtaining its
Certificate of Occupancy for the Building, LESSEE intends, but shall not be
obligated, to use the same contractor as will be hired by LESSOR for the
construction of the Building. Upon delivery of the Premises to LESSEE, the
Premises shall consist of those items as further described in Exhibit "C"
attached hereto and incorporated herein by reference. Once the Premises have
been made available to LESSEE, LESSEE shall then have full and complete access
to the Premises at all reasonable times for the construction of its build-out.
Notwithstanding the foregoing, LESSEE may not commence construction of its
build-out until such time as it has provided LESSOR with a final, complete set
of construction plans showing all improvements within the Premises, and such
plans have been approved by LESSOR in writing. Upon receipt of such construction
plans, LESSOR shall promptly provide LESSEE with its approval or disapproval of
the plans so as not to cause any unnecessary delay in the constriction of
LESSEE'S build-out. LESSEE shall receive a build-out allowance of $20.00 per
square feet ($150,000.00). LESSEE shall receive no other build-out or other
allowance, reduction in rent or other credit whatsoever for the construction of
its build-out. It is contemplated by LESSOR and LESSEE that in LESSEE'S
operation of the Premises as a banking facility, LESSEE may require "custom"
construction items or other items not customarily included in a commercial lease
space. LESSOR and LESSEE shall agree upon the nature and extent of such items
prior to their construction, and the costs thereof shall either be funded
separately by LESSEE, or shall be deducted from the above-referenced build-out
allowance. LESSEE shall defend, indemnify and hold LESSOR harmless from and
against any and all expenses, liens, claims or damages to either property or
person which may or might arise by reason of the construction of the Leasehold
Improvements.
5. LEASEHOLD IMPROVEMENTS: After the completion of the approved
Leasehold Improvements, LESSEE shall not make any interior alterations or
additions in, on or to the Premises or any part thereof without the prior
written consent of LESSOR; provided, however, if such work is merely decorative
in nature or if the cost is less than $10,000.00, the approval of LESSOR shall
not be required. Additions, fixtures and non-removable improvements, except
stock in trade, movable furniture and equipment, shall at once become part of
the realty and the property of the LESSOR and upon termination of this LEASE
shall remain upon the Premises. All additions, alterations and improvements
shall comply with all building codes, regulations and other applicable laws. All
contractors, subcontractors, mechanics, laborers, materialmen and others who
perform any work, labor or services or furnish any materials or otherwise
participate in the improvement of the Premises shall be and are hereby given
notice that
(Page 2 of 19)
<PAGE>
LESSEE is not authorized to subject LESSOR's interest in the Premises to any
claim for mechanics', laborers' and materialmen liens, and all persons dealing
directly or indirectly with LESSEE may not look to the Premises as security for
payment. Any mechanic's, laborer's or materialman's lien shall be promptly
discharged by LESSEE in accordance with Florida law, or LESSEE shall promptly
transfer such lien to a proper surety or cash bond as provided by Section 713.24
of the Florida Statutes, time being of the essence. The foregoing obligations of
LESSEE shall survive the Lease Term, and the failure of LESSEE to comply with
the foregoing shall be a material default hereunder. LESSEE shall defend,
indemnify and hold LESSOR harmless from and against any and all expenses, liens,
claims or damages to either property or person which may or might arise by
reason of the making by LESSEE or its agents of any such additions,
improvements, alterations and/or installations.
6. PARKING: LESSOR shall provide LESSEE with a reasonable number of
exclusive and designated parking space(s), based upon the total square footage
of space occupied by LESSEE in comparison with other lessees within the
Building.
7. QUIET ENJOYMENT: Subject to LESSEE observing and obeying all
applicable laws, ordinances and regulations and performing all of the covenants,
conditions and provisions required of LESSEE herein, LESSEE shall have quiet
possession of the Premises during the LEASE Term.
8. EFFECTIVE DATE: This LEASE shall become a binding and enforceable
agreement on the date upon which the LEASE has been executed by both parties
(the "Effective Date").
9. USE: LESSEE shall use and occupy the Premises only for general
office purposes including but not limited to, a commercial bank facility
operating in conformity with federal and state banking regulations, and shall
not use, nor occupy the Premises, for any other purposes without LESSOR's
consent. Furthermore, LESSEE shall not interfere with, nor violate the use
rights of, nor conduct any activity which may injure or annoy other lessees
within the Building, nor use or occupy the Premises in violation of any law,
ordinance, government regulation or directive.
As long as LESSEE shall occupy the Premises for the uses
hereinabove set forth, LESSOR agrees that it shall not allow or permit any other
bank, savings and loan association or credit union to occupy any other portion
of the Property, nor shall LESSOR allow any other tenant to provide banking
financial services, such as checking and savings deposit accounts and loan
services, without the prior written consent of LESSEE which may be withheld in
LESSEE's sole and absolute discretion.
10. RENT: All agreed rental shall be paid to LESSOR without any set
off, counterclaim or deduction whatsoever (except as otherwise provided herein)
and shall consist of the following in addition to all other charges set forth in
this LEASE agreement:
(Page 3 of 19)
<PAGE>
1. BASE RENTAL WITH ANNUAL CPI INCREASES. For the first year
of the term hereof, the annual Base Rent shall be the base sum of ONE HUNDRED
FIFTY-NINE THOUSAND AND 00/100 DOLLARS ($159,000.00) which the LESSEE hereby
agrees to pay in equal monthly installments over a twelve (12) month period of
THIRTEEN THOUSAND TWO HUNDRED FIFTY AND 00/100 DOLLARS ($13,250.00) per month
plus applicable sales taxes, payable without demand in advance on the first day
of each and every month during such term commencing on the Commencement Date. It
is understood and agreed that the rental, is at the rate of TWENTY AND NO/100
DOLLARS ($20.00) per leasable square foot per year for the first floor Building
space and TWENTY AND NO/100 DOLLARS ($20.00) per leasable square foot per year
for the second floor Building space, together with a lump sum rate of $9,000.00
per year for the drive-through facilities. The annual Base Rent for the first
year of the term, and for the second year of the term as described below, shall
be adjusted on the Commencement Date to reflect the actual square footage of the
Premises based upon the per square foot rates set forth herein. In the event
that the Commencement Date is other than the first day of the month, rental
shall be prorated for the month and paid in advance and the LEASE termination
date shall be extended for the same number of days so that the LEASE terminates
at the end of a calendar month. For the purpose of this LEASE, the end of the
first lease year shall be one year plus the number of days to the end of the
first month of the first lease year if the LEASE Commencement Date is other than
the first of the month.
For the second year of the term hereof, the annual
Base Rent shall be the base sum of ONE HUNDRED EIGHTY-NINE THOUSAND AND 00/100
DOLLARS ($189,000.00) which the LESSEE agrees to pay in equal monthly
installments over a twelve (12) month period of FIFTEEN THOUSAND SEVEN HUNDRED
FIFTY AND 00/100 DOLLARS ($15,750.00) per month plus applicable sales taxes,
payable without demand in advance on the first day of each and every month
during said second lease year. It is understood and agreed that the rental for
the second lease year, is at the rate of TWENTY-FIVE AND 25/100 DOLLARS ($25.25)
per leasable square foot per year for the first floor Building Space, and
TWENTY-ONE AND 50/100 DOLLARS ($21.50) per leasable square foot per year for the
second floor Building Space, together with a lump sum rate of $9,000.00 per year
for the drive-through facilities.
At the end of the second and each succeeding lease
year, during the initial term or any renewal hereof, the annual rent for the
third and each succeeding lease year shall be recalculated by increasing the
annual base rent shown above by the greater of 3% or the "Consumer Price Index
(Revised) - All Urban Consumers (U.S. City Average)" issued by the U.S.
Department of Labor (hereinafter referred to as "Index"). Notwithstanding the
foregoing, in no event shall the annual base rent be increased by more than 6%
over the previous lease year amount. If using the Index, the adjustment will be
made by multiplying the annual base rent by a fraction, whose numerator shall
consist of the most recent Index as of the last day of the lease year then
ending. The denominator used for each such adjustment shall always consist of
the most recent Index as of the Commencement Date. Stated as an algebraic
formula, rent will be adjusted as follows:
(Page 4 of 19)
<PAGE>
Adjusted Annual Rent equals (Annual Base Rent)
multiplied by (The Most Recent Index as of the last day of the lease year then
ending) divided by (The most recent Index as of the Commencement Date).
Any publication by either the U.S. Department of
Labor or the U.S. Department of Commerce in which the Index is published will be
admissible in any proceedings to determine the annual rent due, without any
further proof of authenticity. In the event the U.S. Department of Labor shall
cease to prepare and publish such a retail index, then and in such an event the
adjustment of rent shall be made according to the most closely comparable
commodity index as agreed upon by the Lessor and the Lessee; in the absence of
such an agreement, then by arbitration in accordance with the then existing
rules of the American Arbitration Association. In the event of delay in
determining the adjustment in rent, the Lessee shall continue paying the rent it
has been paying until such time as the required adjustment has been made, at
which time an accounting will be made, retroactive to the beginning of such
lease year, and the Lessee will then within fifteen (15) days after demand from
Lessor pay to Lessor any additional rent due it for such period. In addition to
the rent payable, the Lessee shall also pay the applicable sales and use taxes
attributable thereto.
The first scheduled monthly payment of Base Rent and
Additional Rent, (as defined below) shall be paid upon Commencement of the Lease
Term.
2. LATE CHARGE. In the event that any payment is not paid
within FIVE (5) days of the date when due, LESSEE agrees to pay to LESSOR a late
charge equal to five percent (5 %) of the unpaid amount to defray LESSOR's
administrative charges with respect to such late payment. In the event any
payment has not been received within FIFTEEN (15) days of the date when due,
LESSEE shall be in default hereof and LESSOR shall be entitled to immediately
terminate this LEASE by written notice to LESSEE.
3. FAIR REPRESENTATION OF EXPENSES. LESSEE acknowledges and
agrees that the above charges represent a fair and reasonable estimate and
liquidation of LESSOR's expense in the administration of the Office Building
resulting from such incidents, which expense is not contemplated nor included in
any other rental or charge provided to be paid by LESSEE.
4. DEPOSIT. Upon execution of this LEASE, LESSEE shall make a
non-refundable deposit in the sum of TWENTY-FIVE THOUSAND AND 00/100 DOLLARS
($25,000.00) with LESSOR to be applied toward payment of the first month's rent
due hereunder. After applying the first month's rent payment of $13,250.00, the
remaining sum of $11,750.00 shall be retained by LESSOR as a security deposit
against LESSEE's performance of its obligations hereunder. If LESSEE fully
performs each provision of this Lease, the security deposit, or any unused
balance thereof, shall be returned to LESSEE within thirty (30) days following
Lease expiration and LESSEE's vacating the Premises. In the event the
contingency set forth in paragraph 50 is not satisfied, LESSOR shall be entitled
to retain such deposit as liquidated damages.
(Page 5 of 19)
<PAGE>
11. ADDITIONAL RENT: The Base Rent and all sales or use taxes imposed
thereon payable to LESSOR are net of all expenses associated with the operation
of the Office Building. Therefore, in addition to Base Rent, LESSEE shall pay
its Pro Rata Share (as herein defined), plus any sales or use taxes assessed
thereon, of the following, all of which shall collectively be referred to as
"Additional Rent":
1. TAXES. Representing the amount of all real and personal
property taxes and assessments levied, imposed or assessed upon the Office
Building taking into account the maximum available discount each year. During
the Lease Term LESSEE shall have the right (at its sole cost and expense) to
protest and appeal any taxes or the values on which they are based, but LESSEE
will inform LESSOR of the institution of any action in connection therewith and
shall from time to time, upon request, update LESSOR on the progress thereof.
LESSOR agrees to assist and cooperate with LESSEE on any such appeal. In the
event LESSEE elects to appeal any taxes or the values on which they are based,
and LESSEE is successful in contesting such appeal, then LESSEE shall receive
its out of pocket costs and expenses in connection with such contest prior to
distribution of any tax savings to other tenants in the Building.
2. INSURANCE. Representing the cost of all fire, extended
coverage, liability, workmen's compensation and other insurance coverage carried
by LESSOR on the Office Building.
3. COMMON AREA MAINTENANCE (CAM). Representing the Office
Building's Operating Costs, as more fully described herein. The term "Operating
Costs" shall mean the total costs and expenses incurred in connection with the
normal administration, operation, preventative and corrective maintenance and
repair of the Office Building, the implementation and costs for which shall be
at the reasonable discretion of LESSOR, and whether paid to employees of LESSOR
or parties engaged by LESSOR, including but not limited to: landscaping,
Building repairs (including but not limited to all system repairs to be
performed by LESSOR pursuant to paragraph 18 hereof; provided same are either
obsolete or cannot be adequately repaired and only to the extent such
replacement item is comparable in kind and quality to the item being repaired,
if available, provided, further, if the item to be replaced is customarily
capitalized, LESSEE'S proportionate share of such cost shall be payable in equal
installments over the useful life of such replaced item or capital improvement
for depreciation purposes according to generally accepted accounting practices),
line painting, landscaping, window cleaning [minimum of TWO (2) times per year],
Building painting, property maintenance allocations, roof cleaning and routine
roof maintenance (including but not limited to the repair of any leaks that may
from time to time exist), bumpering and top coating; lighting fixtures;
electricity; sanitary control; pest control; removal of trash, rubbish, garbage
and other refuse (hereinafter "trash"); rental on machinery or equipment used in
such maintenance; building security, if provided; the cost of personnel to
implement such services (including social security, unemployment and disability
insurance); legal fees (only to the extent attributable to the general operation
and administration of the Building, e.g., legal expenses incurred by LESSOR with
respect to evicting another tenant would not be included in CAM charges); and a
management fee (excluding executive salaries and bonuses). LESSOR may direct
that trash intensive lessees within the Office Building arrange for the use
(Page 6 of 19)
<PAGE>
of their own trash receptacle and removal service at lessee's expense, or in the
alternative, LESSOR may assess a surcharge for such lessee's excess trash
collection and removal service. LESSOR may establish a common expense reserve to
accumulate funds to cover the cost of future painting of the Building,
resurfacing, seal coating and striping the parking area (at the end of the Lease
Term, to the extent that any funds contributed by LESSEE remain in such reserve
account, such funds shall be repaid to LESSEE). If any of the aforementioned
maintenance or repairs are made necessary by reason of LESSEE's use and
occupancy of the demised Premises in a manner inconsistent with the reasonable
use and occupancy thereof are permitted hereunder, or the negligence of the
LESSEE, its agents, servants, employees and invitees, or by reason of
alterations made by the LESSEE, then and in any of such events such repairs
shall be made by the LESSEE at LESSEE's own cost and expense. Such costs and
common expense reserve will be paid monthly as indicated, unless LESSOR elects
to bill LESSEE every other month or on a quarterly basis. In the event LESSOR's
estimated common expenses are less than the actual common expenses, LESSOR may
demand from LESSEE LESSEE's pro rata share of such difference and LESSEE shall
reimburse LESSOR for such pro rata share charges within thirty (30) days from
receipt of a bill and accounting therefore from LESSOR.
Operating Costs shall NOT include any of the
following items: (1) any expenses for which LESSOR receives reimbursement or
should have received reimbursement from any other source such as, but not
limited to, insurance proceeds and payments required to be made by other
tenants, to the extent such reimbursement is received or should have been
received, (2) any ground rents or interest or amortization on mortgages, (3) any
leasing and advertising expenses, (4) costs due to the wrongful acts or
omissions of LESSOR, and (5) depreciation of the Office Building.
Common Areas as used herein shall refer to all areas
designated by LESSOR as the areas, spaces and improvements in the Office
Building which LESSOR makes available from time to time for the common use and
benefit of the tenants and occupants of the Office Building, including without
limitation on-site parking areas, roads, walkways, promenades, sidewalks, open
and covered courts and malls, if any, landscaped and planted areas, if any, and
public restrooms, if any.
4. OTHER ADDITIONAL RENT. Representing all other sums of money
or charges required to be paid by LESSEE under "other additional rent", which
shall include but not be limited to: administrative fees, late submission fees,
service charges, attorney's fees incurred by LESSOR to enforce the provisions of
this LEASE, or interest charges on past due payments, all of which shall be
payable as Additional Rent within the next installment of Base Rent.
5. LESSEE'S PRO RATA SHARE. LESSEE'S Pro Rata Share is
FIFTY-FIVE AND SIX TENTHS PERCENT (55.6%) determined by dividing the leasable
square footage of the Premises by the total leasable area of the Office
Building.
6. DRIVE-THROUGH LANES AND ATM. Notwithstanding anything to
the contrary set forth herein, LESSEE shall pay 100% of all CAM and additional
rent associated with the ATM and drive-through facilities.
(Page 7 of 19)
<PAGE>
12. PAYMENT OF ADDITIONAL RENT: LESSEE shall pay LESSOR, on a monthly
basis, in addition to Base Rent, the monthly installment of estimated Additional
Rent as set forth by LESSOR. By March I of each LEASE year, LESSOR shall deliver
to LESSEE a statement of the actual Additional Rent payable by LESSEE for the
prior year. Any further Additional Rent amount due to LESSOR shall be paid by
LESSEE, without prejudice to any written exception, within thirty (30) days
following LESSOR's delivery of said statement. If the total Additional Rent
payment received by LESSOR is greater than the actual Additional Rent due for
the same period, LESSEE shall receive a credit in the amount of the overpayment
against the next required payment of Additional Rent. Should a credit be due
LESSEE at the termination of this LEASE, LESSOR shall remit payment to LESSEE
within THIRTY (30) days of the LEASE termination date. It is estimated that the
initial monthly contribution to be paid by LESSEE for the payment of Additional
Rent shall be TWO THOUSAND ONE HUNDRED EIGHTY-SEVEN AND 50/100 DOLLARS
($2,187.50) (plus any applicable sales tax) per month based on $3.50 per square
foot and 7,500 square feet of leasable area. This sum shall be adjusted on the
Commencement Date based upon LESSEE'S Pro Rata Share and the actual square
footage of the Premises.
LESSEE shall have the right to examine LESSOR's books and
records relating to the operation and maintenance of the Building during normal
business hours to verify LESSOR'S annual statement of actual Additional Rent
payable by LESSEE. The annual statement shall be certified as accurate by an
officer of LESSOR and shall be prepared in accordance with good and sound
accounting practices as consistently applied in the industry. In the event
LESSEE elects to examine LESSOR's books and records and LESSEE discovers an
error resulting in a decrease of at least three percent (3.0%) of the amount of
Additional Rent charged to LESSEE during the annual period covered by LESSOR's
statement, then LESSOR shall reimburse the reasonable out of pocket costs and
expenses incurred by LESSEE in connection with LESSEE's review plus
reimbursement of the overcharges with interest at the then existing prime rate
plus one percent (1.0%). Similarly, in the event LESSEE's review of LESSOR'S
books and records reveals less than a three percent (3.0%) error, LESSEE shall
reimburse LESSOR for LESSOR'S reasonable out-of-pocket expenses incurred as a
result of LESSEE'S review.
13. PRORATION: If the first day of the LEASE commences on any day other
than the first day of a month, or if this LEASE ends on any day other than the
last day of a month, any payment due LESSOR by reason of any Base Rent or
Additional Rent shall be justly and fairly prorated.
14. USE OF COMMON AREAS: The use and occupancy by LESSEE of the
Premises shall include the use in common with others entitled to the use of the
common areas, employee parking areas, service roads, loading facilities,
sidewalks and visitor parking areas within the Office Building (collectively
referred to as the "Common Areas").
15. SIGNS: Subject to LESSOR'S prior approval, which shall not be
unreasonably withheld or delayed, LESSEE shall be permitted to install
appropriate signs, logos, etc., on LESSEE'S entrance doors, in the elevator
lobby of LESSEE's floor, in the ground floor lobby
(Page 8 of 19)
<PAGE>
and entrance foyer area, and will also have the right to install its signage
upon the exterior of the Building throughout the Lease Term. All such signs of
LESSEE shall be maintained in a good and safe condition and appearance at
LESSEE's expense and LESSEE shall repair any damage to the Premises or Building
resulting from the erection, maintenance or removal of said signs by LESSEE.
Subject to LESSOR'S reasonable prior written approval, LESSEE may erect a
"Marquee" sign on Vanderbilt Beach Road for LESSEE's sole and exclusive use. The
cost of erecting such sign, including the cost of obtaining all necessary
approvals, permits or consents, shall be the sole responsibility of LESSEE. The
cost of maintaining such Marquee sign, including the cost of placing LESSEE's
name thereon, shall be borne by LESSEE.
16. IMPROVEMENTS AND ALTERATIONS OF OFFICE BUILDING AND COMMON AREAS:
Except for the drive through teller and ATM lanes, the Common Areas are the
private property of LESSOR and are at all times subject to the control of
LESSOR. LESSOR may increase, reduce or change the number, dimensions or location
of the walks and parking areas that LESSOR deems proper in its sole discretion,
and LESSOR shall have the right to make alterations to the Office Building as
long as such alterations are in full compliance with all applicable laws and
ordinances and do not materially and adversely affect LESSEE'S use and occupancy
of the Premises specifically including the LESSEE's drive through and ATM
facility. LESSOR shall provide notice to LESSEE prior to implementing any such
changes.
17. IMPROVEMENTS AND ALTERATIONS OF PREMISES BY LESSEE: LESSEE, upon
obtaining the prior written consent of LESSOR (other than as set forth in
paragraph 5 above), which consent shall not be unreasonable withheld or delayed
by LESSOR, may make improvements or alterations to the Premises as LESSEE may
from time to time deem necessary or desirable, provided however, LESSEE shall
not have the right to make any improvements or alterations that affect the
structure, or outward appearance of the Office Building. At least ten (10) days
prior to the commencement of such work, LESSEE shall submit to LESSOR complete
plans and specifications for such work. Any improvements or alterations made to
the Premises by LESSEE shall be in compliance with all insurance requirements,
and all laws, codes, rules, regulations and ordinances of governmental
authorities. All such improvements by LESSEE shall be deemed the property of
LESSEE during the Lease Term, but upon the expiration or sooner termination of
this LEASE, become the property of LESSOR unless agreed to be LESSEE'S property
at the time such plans and specifications were approved by LESSOR as elsewhere
provided for herein.
18. REPAIRS: LESSOR agrees to keep and maintain the Building as a first
class office building, in good order and repair. Without limiting the foregoing,
LESSOR will keep in good order and repair, and maintain and replace as needed
(the entire cost of which shall be included in CAM charges): all fixtures
serving, but not located within the perimeter of, the Premises, including but
not limited to, water, plumbing, sewer, HVAC, fire/life safety, electrical and
sprinkler systems. If any such maintenance and repairs are caused in part or in
whole by the act, neglect, fault or omission of duty by LESSEE, its agents,
servants, employees or invitees, LESSEE shall pay to LESSOR the actual cost of
such maintenance and repairs. LESSEE shall at once report in writing to LESSOR
any known defective or damaged condition of the Premises
(Page 9 of 19)
<PAGE>
which LESSOR is required to repair pursuant to this Paragraph and LESSEE's
failure to report to LESSOR any such condition or defect shall make LESSEE
responsible to LESSOR for any liabilities, costs, expenses, and attorneys' fees
incurred by LESSOR as a result of such defect or damage. LESSOR shall not be
obligated to commence non-emergency repairs or to perform routine maintenance of
the Premises for a period not to exceed ten (10) days following written notice
to LESSOR of the need for such repair or maintenance. Emergency repairs shall be
commenced as quickly as is reasonably practicable (for purposes of this LEASE,
repairs involving the air conditioning system shall be deemed to be emergency
repairs). There shall be an abatement of rent after five (5) days of non-use of
the Premises, but no other liability of any nature of LESSOR by reason of any
injury to or interference with LESSEE's business arising from the making of any
repairs, alterations or improvements in or to any portion of the Office Building
or the Premises, or in or to fixtures and equipment therein.
LESSEE will, at its own cost and expense, keep and maintain
the Premises and every part thereof in good order and repair except those
portions of the Premises to be repaired by LESSOR expressly hereunder. LESSEE
shall return the Premises to LESSOR at the expiration or sooner termination of
this LEASE in as good condition and repair as when first received, reasonable
wear and tear and casualty excepted. All damage or injury to the Office
Building, Premises, the Common Areas, or the equipment serving same, caused by
or resulting from LESSEE's misuse, or the act or negligence of LESSEE, its
agents, employees, licensees, invitees or visitors shall be promptly reported to
LESSOR and repaired by LESSOR at the sole cost and expense of LESSEE and LESSEE
hereby agrees to pay such amounts on demand as Additional Rent.
LESSEE shall keep in good order and repair at LESSEE'S sole
cost and expense, that portion of the water, plumbing, sewer, electrical and
sprinkler systems located within the perimeter of the Premises. LESSOR shall
assign to LESSEE any and all warranties applicable to such items.
19. UTILITIES/HVAC REPLACEMENT AND REPAIR: LESSEE agrees to
maintain interior lighting and air-conditioning equipment exclusively serving
LESSEE's Premises (including but not limited to the routine replacement of
filters and cleaning of drip pans) and to pay all costs of replacement of lamps,
tubes, ballasts, starters, transformers. The LESSEE shall be responsible for
maintaining compressors, condensers and air handlers relating to the air
conditioning equipment, but the cost of full replacement of such items shall be
paid by LESSOR. LESSEE will pay all utility expenses of the Premises which are
separately metered and any unmetered common area utilities will be included in
reimbursable costs of LESSOR for common expenses as elsewhere set forth herein.
If LESSEE'S use of the Premises shall require additional
utility facilities, the same shall be installed only after obtaining LESSOR's
written approval, and such costs shall be at LESSEE'S sole expense and in
accordance with plans and specifications approved in writing by LESSOR. If
LESSEE'S use or occupancy of the Premises results in an increase to LESSOR of
any utility expense, or connection or user fees, or charges for increased usage
or capacity, or
(Page 10 of 19)
<PAGE>
assessments of any kind whatsoever, LESSEE shall pay the entire amount thereof
within fifteen (15) days of LESSOR's written statement for same. Except for
LESSOR'S negligent acts, LESSOR shall not be liable for any interruption or
failure in the supply of utilities to the Premises. LESSOR and LESSEE shall
agree as to LESSEE'S specific electrical and other utility requirements in the
Plans and Specifications.
20. RUBBISH REMOVAL: LESSEE shall maintain the interior of the Premises
in a clean condition, shall routinely remove all trash and refuse therefrom, and
shall provide janitorial service for the interior of the Premises at LESSEE'S
sole cost and expense. Trash and refuse removal from the Building site shall be
arranged for by LESSOR and shall be paid for by LESSEE as part of the common
area maintenance charges as Additional Rent.
21. SIDEWALKS: Except with respect to the automated teller machine
("ATM") and drive-in teller facility set forth in the Plans and Specifications,
LESSEE shall neither encumber nor obstruct the sidewalks adjoining the Premises
nor allow the same to be obstructed or encumbered in any manner. LESSEE shall
not place, nor cause to be placed, any merchandise, signs, vending machines or
anything else on the sidewalk or exterior of the Premises without the prior
written consent of LESSOR, which may be withheld in its sole discretion.
22. INSURANCE: LESSEE shall carry at its own expense Comprehensive
General Public Liability (to include Bodily Injury) and Property Damage
insurance with combined single limits of not less than $1,000,000.00 with
insurance companies authorized to do business in Florida and satisfactory to
LESSOR (an insurance company with BEST'S KEY RATING GUIDE: PROPERTY - CASUALTY
of not less than "A" shall be deemed satisfactory to LESSOR), insuring LESSOR
and LESSEE against any liability arising out of the use, occupancy or
maintenance of the Premises. The insurance policy or policies shall contain
provisions prohibiting the modification or cancellation of insurance without at
least FIFTEEN (15) days prior written notice to LESSOR. LESSEE shall deliver
said policies or certificates thereof to LESSOR prior to LESSEE'S occupancy of
the Premises, and thereafter, renewal policies or certificates shall be
delivered to LESSOR not less than FIFTEEN (15) days prior to expiration. The
limit of any such insurance shall not limit the liability of LESSEE hereunder.
LESSEE may provide this insurance under a blanket policy provided said insurance
shall have a LESSOR's protective liability endorsement attached thereto. The
failure of LESSEE to effect said insurance in the names herein called for, or to
pay the premiums required, or to deliver said policies or certificates to LESSOR
shall be a material Default under this LEASE.
LESSOR shall maintain Building replacement insurance;
comprehensive and hazard insurance to include windstorm coverage; flood
insurance to the extent available and applicable; and public liability insurance
in an amount of not less than $10,000,000.00. The cost of such insurance shall
be an item of Additional Rent as set forth in Paragraph
23. PERSONAL PROPERTY INSURANCE: LESSEE shall be solely responsible for
securing and maintaining any insurance on LESSEE'S stock, trade fixtures,
equipment or other personal property located in the Premises, and LESSOR shall
not have any obligation to
(Page 11 of 19)
<PAGE>
repair or replace same unless such damage is caused by the negligence of LESSOR,
its employees, agents or servants.
24. DAMAGE OR DESTRUCTION: If the Premises are damaged by insured
casualty and insurance proceeds have been made available to LESSOR, said damage
shall be repaired by LESSOR, to the extent of such available insurance proceeds,
provided such repairs can be made in total from said insurance proceeds within
one hundred eighty (180) days after the occurrence of the casualty, and without
the payment of overtime or other premiums. Until such repairs are completed,
Base Rent and Additional Rent shall be abated in proportion to that part of the
Premises unusable by LESSEE. If the damage is due to the fault or neglect of
LESSEE, or its employees, contractors, agents or invitees, there shall be no
abatement of Base Rent, Additional Rent or any other financial obligations of
LESSEE hereunder. Should the Premises be damaged as a result of any cause not
covered by insurance, or if repairs cannot be completed within one hundred
eighty (180) days following the casualty date, LESSOR and LESSEE shall each have
the option to terminate this LEASE as of the casualty date, such notice of
election to be made within sixty (60) days of the casualty date. In the event
neither LESSOR nor LESSEE elects to terminate the LEASE, Base Rent and
Additional Rent shall be abated from the date of such casualty until such
Building repairs are completed, unless the casualty was due to the fault or
neglect of LESSEE, its employees, contractors, agents or invitees.
Notwithstanding the foregoing, in the event of a disaster or
other event rendering the Premises temporarily unusable, LESSOR shall fully
cooperate with LESSEE in implementing any "business recovery plan" imposed on
LESSEE under federal banking regulations. By way of example and not of
limitation, LESSOR will reasonably cooperate with LESSEE (although all shall be
at LESSEE'S sole expense): (i) in the placement of any temporary banking
facility to be located elsewhere in any available useable vacant space within
the Building or to be located external to the Building on a portion of the
parking lot or other Building common area; and (ii) to coordinate the supply of
electrical power to such temporary banking facility including allowing the
placement of any necessary auxiliary power unit(s) and the modification of
Building electrical connectors to allow electrical service to be supplied to
such temporary banking facility.
25. CONDEMNATION: If the entire Premises shall be taken under power of
eminent domain, this LEASE shall automatically terminate as of the date of such
taking. LESSEE hereby assigns to LESSOR any award which may be made in such
taking provided however, nothing contained herein shall be deemed to give LESSOR
any interest in nor require LESSEE to assign to LESSOR any award made for the
taking of LESSEE's personal property nor for the interruption of, or damage to,
LESSEE's business including LESSEE'S relocation expenses.
26. ASSIGNMENT AND SUBLETTING: Unless LESSEE receives prior approval in
writing from LESSOR, which consent may be withheld in LESSOR'S reasonable
discretion, LESSEE shall not sell or assign this LEASE or sublet the Premises,
and such an event contrary to the provisions of this Paragraph shall constitute
a Default under this LEASE; provided, LESSOR'S prior written approval shall not
be required if such purchaser, assignee or subtenant continues to use the
Premises in a manner permitted by and consistent with uses permitted under
(Page 12 of 19)
<PAGE>
Paragraph 9 hereinabove and such purchaser, assignee or sub-tenant is an
affiliate of LESSEE or a related corporation or entity formed by LESSEE for the
purpose of conducting banking operations. Any assignment approval of this LEASE
by LESSOR shall be conditioned on the ASSIGNEE'S assumption of payment
responsibility for Base Rent, Additional Rent, and other charges as defined in
this LEASE. Further, as long as the use of the Premises remains unchanged,
LESSOR'S consent shall not be required for LESSEE to assign (or sublease, in
whole or in part) the LEASE to a corporate affiliate or related entity of LESSEE
or successor in interest by sale of the assets of LESSEE or due to a corporate
or other merger. Notwithstanding anything above to the contrary, any permitted
sublease (in whole or in part) shall not relieve LESSEE of its monetary and
other obligations hereunder. LESSOR shall be free to assign this Lease.
27. DEFAULT:
1. MONETARY DEFAULT. If LESSEE does not timely pay any or all
of the Base Rent, Additional Rent or any of the other monetary obligations
required by this LEASE within fifteen (15) days of the date when due hereunder,
then LESSEE shall be in default hereunder.
2. NON-MONETARY DEFAULTS. If LESSEE fails to perform any of
the other, non-monetary covenants, duties, agreements, undertakings or terms of
this LEASE, LESSOR shall give LESSEE thirty (30) days written notice to cure the
same or to commence to cure the same and diligently prosecute to completion if
the same cannot be cured within a thirty (30) day period. If LESSEE does not
cure the breach or begin to take such steps and institute and diligently
prosecute to completion such proceedings as will cure such breach (if same
cannot be cured) within thirty (30) days after LESSOR gives notice, then LESSEE
shall be in default hereunder.
28. LESSOR'S DEFAULT REMEDIES:
If LESSEE is in default hereunder beyond the expiration of any
applicable grace period and fails to cure said default as provided above, LESSOR
may do one or more of the following at its sole option and without limiting any
other right or remedy to which LESSOR may be entitled:
1. continue to hold LESSEE liable for all rent and any other
monies due LESSOR under the LEASE, without taking possession of the Premises, in
which event, LESSOR has the option to periodically sue LESSEE for past rent due
without waiving any right to sue for future rent;
2. cancel and terminate the LEASE, as well as all of the
right, title, possession and interest of LESSEE hereunder, and evict LESSEE by
Court order as provided by Florida law, without waiving LESSOR's right to
payment of any amounts due LESSOR hereunder. In the event of such eviction,
LESSEE shall immediately relinquish possession of the Premises to LESSOR.
(Page 13 of 19)
<PAGE>
3. reenter and repossess the Premises with LESSEE remaining
liable to LESSOR for all sums and charges provided herein for the remainder of
the Lease Term. LESSOR, at its sole option, may relet the Premises and reduce
the amounts due to LESSOR from LESSEE hereunder after first receiving credit for
all costs incurred by LESSOR in connection with such reletting of the Premises;
and/or
4. pursue any other action at law or equity available to
LESSOR.
29. BANKRUPTCY: Neither this LEASE, nor any interest herein, nor any
estate hereby created shall pass to any trustees or receiver or assignee for the
benefit of creditors or otherwise by operation of law. If the estate created
hereby shall be taken or attempted to be taken in execution or by other process
of law, or if LESSEE shall be adjudicated insolvent or bankrupt pursuant to the
provisions of any state or federal insolvency or bankruptcy act, or if a
receiver or trustee of the property of LESSEE shall be appointed by reason of
LESSEE'S insolvency or inability to pay its debts, or if any assignment shall be
made or attempted to be made by LESSEE'S property for the benefit of creditors,
then and in any such event, at the sole discretion of LESSOR, LESSEE shall be in
immediate default under this LEASE. The allowance of any petition under the
bankruptcy law, or the appointment of a trustee or receiver of LESSEE or its
assets shall be conclusive evidence that LESSEE caused, or gave cause therefore,
in violation of this LEASE, unless such allowance of the petition, or the
appointment of a trustee or receiver, is vacated within sixty (60) days after
such allowance or appointment. Any act described in this section shall be deemed
a material breach of LESSEE'S obligations hereunder, and at any time when such a
breach exists, LESSOR may, at its sole option, and in addition to and
independent of, any remedy available to LESSOR, immediately terminate this LEASE
and all rights of LESSEE hereunder by giving to LESSEE notice in writing of the
election of LESSOR so to terminate, and re-enter and repossess the Premises with
or without prior notice. Should LESSOR elect not to terminate this LEASE in
accordance herein, LESSOR shall be entitled to recover the maximum award
permitted for any damages or losses which are suffered from such an event.
30. RIGHTS AND REMEDIES: The various rights and remedies herein granted
may be exercised concurrently, and shall be cumulative and in addition to any
others the parties hereto may be entitled to by law, and the exercise of one or
more rights or remedies shall not impair such party's right to exercise any
other right or remedy. The failure or forbearance of either party to enforce any
right or remedy in connection with any Default shall not be deemed a waiver of
such Default nor a consent to a continuation thereof, nor waiver of the same
Default at any subsequent date. Any waiver of rights by either party must be in
writing and shall apply only to that written waiver and shall not have general
or prospective application.
31. ACCESS BY LESSOR: Upon prior notice given to LESSEE, LESSOR and its
agents shall have the right to enter the Premises during LESSEE'S normal
business hours for the purpose of showing the Premises to prospective purchasers
or to other lessees; provided, however, showings to prospective lessees shall
only be authorized during the last twelve months of the Lease Term only. LESSOR
may enter the Premises whenever necessary, and without notice, in
(Page 14 of 19)
<PAGE>
the event of an emergency. Notwithstanding the foregoing, LESSOR shall not be
permitted to enter into any part of the Premises where monies, securities,
confidential data or valuables are kept at any time, unless accompanied by a
representative of LESSEE, and LESSEE hereby agrees to furnish such
representative promptly upon request.
32. SURRENDER OF PREMISES: At the expiration or termination of this
LEASE, LESSEE shall surrender the Premises to LESSOR in as good a condition and
repair as reasonable and proper, ordinary wear and tear excepted. Except in the
case of termination of the LEASE and eviction of LESSEE by court order, LESSEE
shall have the right at the end of this LEASE to remove any readily moveable
equipment, furniture, trade fixtures or other personal property placed in the
Premises by LESSEE provided, LESSEE promptly repairs any damage to the Premises,
or the Office Building, caused by such removal. Any liability of LESSEE
hereunder shall survive the expiration or termination of this LEASE. If LESSEE
fails to remove any property belonging to it which LESSEE is required to remove
pursuant to the terms of paragraph 5 hereof within ten (10) business days of
LESSOR's written notice to remove such property, or by any date established by a
court order directing such removal, all such property shall be deemed abandoned
by LESSEE and shall become the property of LESSOR. However, LESSEE shall remain
liable to LESSOR for any costs and expenses associated with LESSOR's
transportation and removal of said personal property from the Premises.
33. NOTICES: Any Notice required to be given hereunder, including
copies thereof which are to be concurrently transmitted to such parties as
LESSOR or LESSEE may designate from time to time, shall be in writing, and may
be given by personal delivery, facsimile transmission, or by United States
certified mail, and if given by mail and properly addressed, shall be deemed
sufficiently given three (3) days following the date transmitted by registered
or certified mail, postage prepaid, return receipt requested. Until notified to
the contrary, LESSOR shall send all Notices to LESSEE at the address set forth
on page 1 hereof, and LESSEE shall send all Notices to LESSOR at the address set
forth on page 1 hereof.
34. ATTORNEY'S FEES: If any legal matter, dispute, action or proceeding
exists or is commenced to enforce this LEASE, the non-prevailing party shall be
liable for and shall pay the expense of the prevailing party's attorney's fees
and court costs as established by court order. If either party hereto without
fault is made a party to any litigation instituted by or against any other party
to this LEASE, such other parties shall indemnify and hold harmless the other
party, as the case may be, against all costs and expenses, including reasonable
attorney's fees incurred in connection therewith. "Attorney's fees" as referred
to in this LEASE, shall include, but not be limited to, fees incurred by LESSOR
after an occurrence of a monetary or nonmonetary Default, or after the
recognition of an issue by LESSOR deemed significant enough, in the exclusive
judgment of LESSOR, to be the basis of any legal action, whether or not such
action is commenced, that seeks any type of relief or declaratory judgment,
which shall include fees and expenses of its attorneys for all legal services,
negotiation services and collection services through trial and appeal, and such
fees shall be payable by LESSEE as Additional Rent.
(Page 15 of 19)
<PAGE>
35. TIME OF ESSENCE: Time is of the essence with respect to the
performance of each of LESSEE'S covenants of this LEASE.
36. HOLDING OVER: Should LESSEE continue in occupancy of the Premises
after expiration of this LEASE, LESSEE shall become a tenant from month to month
upon each and all of the terms herein provided, and any such holding over shall
not constitute a renewal or extension of this LEASE. During such holding over,
LESSEE shall pay, at LESSOR'S sole discretion, Base Rent at one hundred fifty
percent (150%) of the monthly amount which was payable by LESSEE immediately
prior to the hold over occurrence.
37. PARTIAL INVALIDITY: Any provision of this LEASE which shall be held
to be invalid, void or illegal shall in no way affect, impair or invalidate any
other provision hereof, and such other provisions shall remain in full force and
effect.
38. BROKERS: LESSEE warrants and represents that it has negotiated this
LEASE directly with LESSOR and has not authorized or employed or acted by
implication to authorize or to employ any other real estate broker or salesman
to act for LESSEE in connection with this LEASE. LESSEE shall hold LESSOR
harmless from and indemnify and defend LESSOR against any and all claims by any
real estate broker or salesman, other than brokers dealt with by LESSOR, if any,
and LESSOR shall indemnify and hold LESSEE harmless against any and all claims
by any real estate broker or salesman, other than brokers dealt with by LESSEE,
for a commission or finder's fee as a result of LESSEE entering into this LEASE.
LESSOR shall be responsible for payment of all brokerage commissions incurred as
a result of brokers retained by LESSOR in connection with the negotiation of
this LEASE.
39. WAIVER: LESSOR's failure to insist upon a strict performance of any
of the agreements, terms, covenants or conditions hereof shall not be deemed a
waiver of any rights or remedies that LESSOR may have and shall not be deemed a
waiver of any subsequent breach or default of any agreements, terms, covenants
and conditions of this LEASE.
40. SUCCESSORS AND ASSIGNS: Except as otherwise provided in this LEASE,
all of the covenants, conditions and provisions of this LEASE shall be binding
upon and shall inure to the parties' representatives, successors, and assigns.
41. HEADINGS OF LESSOR AND LESSEE: The article and paragraph captions
contained in this LEASE are for convenience only and do not in any way limit or
amplify any term or provision hereof. The terms "LESSOR" and "LESSEE" as used
herein shall include the plural as well as the singular, and the neuter shall
include the masculine and feminine genders.
42. NO ESTATE BY LESSEE: This LEASE shall only create a relationship of
landlord and tenant between LESSOR and LESSEE. LESSEE has only a right of use
for the Premises, not subject to levy or sale, and not assignable by LESSEE
except as expressly provided herein.
(Page 16 of 19)
<PAGE>
43. ENTIRE AGREEMENT: LESSEE and LESSOR each acknowledge that it has
read this entire LEASE, evidencing same by the initialing all LEASE pages, and
each party hereto understands and agrees to all of the terms and conditions
contained herein. LESSOR and LESSEE further acknowledge that the preparation of
this LEASE has been a joint effort of each party, and the resulting document
shall not, solely as a matter of judicial construction, be construed more
severely against one party over the other. This LEASE, and any attached exhibits
and/or addendums hereto, shall constitute the entire agreement between LESSOR
and LESSEE, and no prior agreement or understanding shall be effective. No
provision of this LEASE may be amended except by written agreement signed by
LESSOR and LESSEE or their respective successors in interest.
44. GOVERNING LAW: This LEASE shall be construed, interpreted and
governed by and in accordance with the laws of the State of Florida. Any legal
proceedings with respect to this LEASE shall be instituted in the Circuit Court
of Collier County, and LESSEE submits itself to the jurisdiction and venue of
this court.
45. RADON GAS: Radon is a naturally occurring radioactive gas that when
it has accumulated in a building in sufficient quantities, may present health
risk to persons who are exposed to it over time. Levels of radon that exceed
Federal and State guidelines have been found in buildings in Florida. Additional
information regarding radon and radon testing may be obtained from the county
public health unit. This notice is given pursuant to 404.056(8) of the Florida
Statutes.
46. LIMITED LIABILITY: LESSOR, its officers, directors, partners,
employees, principals and agents, shall not be liable for injury to LESSEE'S
business or any loss of income therefrom or from damage to LESSEE'S inventory,
equipment or any other property of LESSEE, or LESSEE'S officers, directors,
employees, invitees, customers, patrons or any other persons in or about the
Premises from any cause whatsoever, whether said damage or injury results from
conditions arising upon the Premises or upon other portions of the Building, or
from other sources or places, and regardless of the cause of such damage or
injury, except where such injury or damage is caused by or due to LESSOR'S
intentional misconduct or negligence, or that of its officers, directors,
partners, employees, principals or agents. All property of LESSEE kept or stored
on the Premises shall be so kept or stored at the sole risk of LESSEE and LESSEE
shall hold LESSOR harmless from any claims arising out of damage to the same.
LESSOR shall not be liable for any damages arising from any act or neglect of
any other lessee within the Building.
47. INDEMNIFICATION: LESSEE shall defend, indemnify and hold LESSOR,
its officers, directors, partners, employees, principals and agents harmless
against and from any and all claims, expenses or other liabilities arising from
LESSEE'S use of the Premises, Building and Common Areas, or from the conduct of
its business, or from any activity or work done, permitted or suffered in or
about the Premises, Building, or Common Areas unless the same shall be caused by
or due to LESSOR's intentional misconduct or negligence, or that of its
officers, directors, partners, employees, principals or agents, and LESSEE shall
further indemnify and hold said parties harmless against and from any and all
claims arising from any default in the performance
(Page 17 of 19)
<PAGE>
of the LEASE by LESSEE or from any act of LESSEE, its officers, agents,
employees, guests, customers or invitees. If any action or proceeding is brought
against LESSOR by reason of any of the foregoing, LESSEE, upon notice from
LESSOR, shall defend the same at LESSEE'S expense by counsel satisfactory to
LESSOR. LESSEE shall also give prompt notice to LESSOR in case of casualty or
accidents in or about the Premises.
48. CONSENTS AND/OR APPROVALS: Unless otherwise specified herein, to
the extent either party hereto is required to give its consent or approval, such
consent or approval shall not be unreasonably withheld. In the event no time is
specified for the giving of such consent or approval, such consent or approval
shall be given within a reasonable period of time.
49. CONTINGENCY FOR REGULATORY APPROVAL(S): The obligations of LESSEE
hereunder are expressly contingent upon LESSEE obtaining all required regulatory
and administrative approvals, and required capitalization, including but not
limited to approval from the Federal Deposit Insurance Corporation for insurance
of customer deposits, necessary for the commencement of banking operations at
the Premises. In the event the foregoing approvals are not received by December
31, 1998, LESSEE shall have the right to terminate this LEASE and LESSEE shall
not be liable to LESSOR for any sums otherwise due hereunder (other than the
Deposit described in paragraph 10d. above).
50. RIGHT OF FIRST REFUSAL: LESSEE shall have the right of first
refusal to lease any additional space which may subsequently become available
within the Building. This right shall be exercisable in writing by LESSEE within
fifteen (15) days of LESSOR's notice that LESSOR has a bona fide tenant for the
space. With respect to any additional space leased by LESSEE in accordance with
this paragraph, the rent payable shall be the greater of the rent that would be
paid under the proposed lease with the bona fide tenant, or the same terms as
the rent then payable by LESSEE for the Premises, and in any event shall
commence THIRTY (30) days after the date LESSEE gives notice hereunder. Any such
additional space leased under the provisions of this paragraph shall be on an
"AS-IS" basis and with no tenant allowance except as may otherwise be agreed to
by LESSOR and LESSEE. The foregoing right of first refusal shall automatically
expire and be of no further force and effect upon LESSOR entering into a lease
with such bona fide tenant on terms and conditions substantially the same as
offered to LESSEE. In the event the proposed tenant fails to enter into such a
lease arrangement with LESSOR, or upon expiration of such tenant's lease term,
the foregoing right of first refusal shall again be in effect.
51. FDIC REQUIREMENTS. Notwithstanding any other provisions contained
in this LEASE, in the event (a) LESSEE or its successors or assignees shall
become insolvent or bankrupt, or if it or their interests under this LEASE shall
be levied on or sold under execution or by other legal process, or (b) the
depository supervisory authority ("Authority"), LESSOR may, in either such
event, terminate this LEASE only with the concurrence of any Receiver or
Liquidator appointed by such authority; provided, that in the event this LEASE
is terminated by the Receiver or Liquidator, the maximum claim of LESSOR for
rent, damages, or indemnity for injury resulting from the termination,
rejection, or abandonment of the unexpired LEASE shall
(Page 18 of 19)
<PAGE>
by law in no event be in an amount equal to all accrued and unpaid rent to the
date of termination.
52. ESTOPPEL CERTIFICATE. At any time, and from time to time, upon the
written request of LESSOR or any mortgagee, LESSEE, within ten (10) days of the
date of such written request, agrees to execute and deliver to LESSOR and/or
such mortgagee, without charge and in a form reasonably satisfactory to LESSOR
and/or said mortgagee, a written statement: (a) ratifying this Lease; (b)
confirming the commencement and expiration dates of the term of this Lease; (c)
certifying the LESSEE is in occupancy of the Premises, and that this Lease is in
full force and effect and has not been modified, assigned, supplemented or
amended, except by such writings as shall be stated; (d) certifying that all
conditions and agreements under this Lease to be satisfied and performed have
been satisfied and performed, except as shall be stated; (e) certifying that
LESSOR is not in default under this Lease by LESSOR, or stating the defaults
and/or defenses claimed by LESSEE, except as shall be stated; (f) reciting the
amount of advance Rent or other charges, if any, paid by LESSEE and the date to
which rental has been paid; (g) reciting the amount of security deposited with
LESSOR, if any, and (h) any other information which LESSOR or the mortgagees
shall reasonably require.
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
LEASE as of the day and year first above written.
Witnesses as to LESSOR LESSOR:
(2 REQUIRED) WRIDELL DEVELOPMENT CORPORATION,
INC., a Florida corporation
By:
- ----------------------------- ------------------------------
Witness #1 W. Jonathan Wride
Its: President
- -----------------------------
Witness #2
Witnesses as to LESSEE LESSEE:
(2 REQUIRED) MARINE BANCSHARES INCORPORATED, a
Florida corporation
By:
- ----------------------------- -------------------------------
Witness #1 Richard Horne
Its: President
- -----------------------------
Witness #2
(Page 19 of 19)
<PAGE>
ASSIGNMENT OF LEASES
THIS ASSIGNMENT OF LEASES is made as this 14th day of July, 1998, by
WRIDELL DEVELOPMENT CORPORATION, INC., a Florida corporation (the "Assignor"),
to GULF COAST COMMERCIAL CORPORATION, a Florida corporation (the "Assignee");
W I T N E S S E T H:
WHEREAS, pursuant to that certain Assignment of Contract between
Assignor and Assignee dated July 7, 1998, the Assignor has assigned to Assignee
that certain Agreement for Sale and Purchase of Property, dated April 24, 1998,
by and between Assignor, as Buyer, and Pelican Bay Developments III, Inc., a
Florida corporation, as Seller; and
WHEREAS, in conjunction with the Assignment of Contract, Assignor is to
assign to Assignee two fully executed leases between Assignor, as Lessor, and
Ashtin Kelly & Co. and Marine Bancshares Incorporated, as Lessees (the
"Leases"); and
WHEREAS, the Leases have been fully executed, with the exception that AK
Holding Corporation, a Florida corporation, has replaced Ashtin Kelly & Co. as
the applicable lessee, as the reference to Ashtin Kelly & Co. was in error in
both the prior Lease drafts and the Assignment of Contract; and
WHEREAS, Assignor wishes to assign the Leases to Assignee, and Assignee
wishes to accept the assignment thereof.
NOW, THEREFORE, for the sum of Ten and 00/100 Dollars ($10.00) and other
good and valuable considerations, the receipt of which is hereby acknowledged by
the Assignor, the Assignor does hereby transfer, assign and deliver unto the
Assignee, all of the right, title and interest of the Assignor in and to (i) the
Leases, together with any renewals or extensions thereof; and (ii) all rents and
other payments of every kind due or payable and to become due or payable to the
Assignor by virtue of the Leases. By acceptance of the Assignment and the terms
contained therein, Assignee assumes and agrees to perform all of the obligations
of the Lessor under the Leases.
IN WITNESS WHEREOF, Assignor has caused these presents to be executed on
the day and year first above written.
Witnesses: Assignor:
WRIDELL DEVELOPMENT CORPORATION, INC.
/S/ NORA AMBROSE By: /S/ W. JONATHAN WRIDE
- -------------------------------- --------------------------------
Name: Nora Ambrose W. Jonathan Wride, its President
/S/ BRIAN YOUNGS
- --------------------------------
Name: Brian Youngs
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
2
<PAGE>
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.
3
<PAGE>
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
4
<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.
6
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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. FORFEITURE
If at any time while an Option is outstanding, the Board of Governors
of the Federal Reserve System makes a formal capital call upon the Company or
the Comptroller of the Currency makes a formal capital call upon the Bank, the
Optionee will exercise the Option in whole or in part as may be needed for
additional required capital, or the Option shall be forfeited. The number of
Shares as to which the Option shall be exercised by each Optionee to meet the
capital call will be calculated pro rata on the basis of the number of Shares
subject to an Option held by each Optionee. The purchase price for Shares
purchased upon exercise will be equal to the greater of the purchase price
otherwise determined pursuant to Section 8 or Section 9 hereof (whichever is
applicable) and the then-current book value per Share of the Company. Any
portion of an Option not required to be exercised under the terms of any such
capital call may be exercised under the original terms of the Option.
12. 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.
13. 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.
2
<PAGE>
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. FORFEITURE. If at any time while this Warrant is
outstanding, the Board of Governors of the Federal Reserve System makes a formal
capital call upon the Company or the Comptroller of the Currency makes a formal
capital call upon the Bank, the Holder will exercise this Warrant in whole or in
part as may be needed for additional required capital, or the Warrant shall be
forfeited. The number of shares of Common Stock as to which the Warrant shall be
exercised by each Holder to meet the capital call will be calculated pro rata on
the basis of the number of shares of Common Stock subject to a Warrant held by
each Holder. The exercise price for shares of Common Stock purchased upon such
exercise will be equal to the greater of the Exercise Price determined pursuant
to Section 2 hereof and the then-current book value per share of Common Stock of
the Company. Any portion of this Warrant not required to be exercised under the
terms of any such capital call may be exercised under the original terms of this
Warrant.
Section 13. 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 14. 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 15. APPLICABLE LAW. The validity, interpretation, and
performance of this Warrant shall be governed by the laws of the State of
Florida.
Section 16. 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 17. 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 23.2
CONSENT OF HILL, BARTH & KING, INC., INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Amendment No. 2 to Form SB-2 and related
Prospectus of Marine Bancshares, 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
December 16, 1998
