As filed with the Securities and Exchange Commission on July 31, 1998.
Registration Statement No. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------
ADMIRALTY BANCORP, INC.
----------------------------------------------
(Name of Small Business Issuer in its Charter)
DELAWARE 6712 22-3543338
- ----------------------------- ------------------------- ------------------
(State or Other (Primary Standard (IRS Employer
Jurisdiction of Incorporation Industrial Classification Identification No.)
or Organization) Code Number)
4400 PGA BOULEVARD, SUITE 200
PALM BEACH GARDENS, FLORIDA 33410
(561) 624-4100
-------------------------------------------------------------
(Address and Telephone Number of Principal Executive Offices)
4400 PGA BOULEVARD, SUITE 200
PALM BEACH GARDENS, FLORIDA 33410
(561) 624-4100
- --------------------------------------------------------------------------------
(Address of Principal Place of Business or Intended Principal Place of Business)
ADMIRALTY BANCORP, INC.
4400 PGA BOULEVARD, SUITE 200
PALM BEACH GARDENS, FLORIDA 33410
ATTN: BRUCE MAHON
(561) 624-4100
----------------------------------------------------------
(Name, Address, and Telephone Number of Agent for Service)
----------
With copies of communication to:
JAMIESON, MOORE, PESKIN & SPICER GREENBERG, TRAURIG, P.A.
177 Madison Avenue 777 South Flager Drive
Morristown, NJ 07960 Suite 300 -- East
Attn: Robert A. Schwartz, Esq. West Palm Beach, FL 33401
(973) 984-1616 Attn: Morris C. Brown
(561) 650-7900
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
----------
CALCULATION OF REGISTRATION FEE
================================================================================
| | | Proposed |
| | Proposed | Maximum |
Title of Each Class | Amount | Maximum | Aggregate | Amount of
of Securities | to be | Offering | Offering | Registration
to be Registered | Registered | Price (1) | Price | Fee
- ---------------------------|-------------|-----------|------------|-------------
Class B Common Stock | | $10.50 | |
no par value .......... | 1,265,000 | Per Share | $13,282,500| $3,919.00
- ---------------------------|-------------|-----------|------------|-------------
Total ............ | | | | $3,919.00
================================================================================
(1) Estimated solely for the purpose of calculating the registration fee.
----------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
<TABLE>
ADMIRALTY BANCORP, INC.
Cross Reference Sheet Form SB-2
<CAPTION>
Items of Form SB-2 Prospectus Caption or Location
- ------------------ ------------------------------
<C> <S> <S>
1. Front of Registration Statement and Outside
Front Cover Page of Prospectus ..................... Facing Page of Registration Statement;
Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus ......................................... Inside Front Cover Page;
AVAILABLE INFORMATION;
TABLE OF CONTENTS
3. Summary Information and Risk Factors ............... PROSPECTUS SUMMARY;
RISK FACTORS
4. Use of Proceeds .................................... USE OF PROCEEDS
5. Determination of Offering Price .................... UNDERWRITING
6. Dilution ........................................... DILUTION
7. Selling Security Holders ........................... Not Applicable
8. Plan of Distribution ............................... UNDERWRITING
9. Legal Proceedings .................................. THE BANK -- Legal Proceedings
10. Directors, Executive Officers, Promoters and
Control Persons .................................... MANAGEMENT -- Board of Directors
11. Security Ownership of Certain Beneficial
Owners and Management .............................. MANAGEMENT -- Stock Ownership of Directors
12. Description of Securities .......................... DESCRIPTION OF THE COMPANY'S
SECURITIES
13. Interest of Named Experts and Counsel .............. Not Applicable
14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities ..... Not Applicable
15. Organization Within Last Five Years ................ MANAGEMENT -- Certain Transactions with
Management
16. Description of Business ............................ THE BANK
17. Management's Discussion and Analysis or
Plan of Operation .................................. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
18. Description of Property ............................ THE BANK -- Physical Facilities
19. Certain Relationships and Related Transactions ..... MANAGEMENT -- Certain Transactions
with Management
20. Market for Common Equity and
Related Stockholder Matters ........................ PROSPECTUS SUMMARY; DESCRIPTION
OF THE COMPANY'S SECURITIES
21. Executive Compensation ............................. MANAGEMENT -- Compensation of
Board of Directors; Compensation of Executive
Officers; Management Stock Option Plan
22. Financial Statements ............................... CONSOLIDATED FINANCIAL STATEMENTS
23. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure ......................................... Not Applicable
</TABLE>
<PAGE>
================================================================================
SUBJECT TO COMPLETION, DATED __________ __, 1998
PROSPECTUS
- ----------
ADMIRALTY BANCORP, INC.
1,100,000 SHARES
of
Class B Common Stock
[RED HERRING LANGUAGE: 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 this 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 laws of any such state.]
Admiralty Bancorp, Inc. a Delaware corporation and registered Bank Holding
Company (the "Company" or "Admiralty") is hereby offering (the "Offering") for
sale 1,100,000 shares of Class B common stock, no par value per share (the
"Class B Stock"). Prior to the Offering, there has been no public market for the
Class B Stock or any of the other Company's securities. Although the Company has
received approval to have the Class B Stock quoted on the NASDAQ National Market
under the symbol "____________". The proposed offering range for the Class B
common stock is $10.00 to $11.00. The offering price of the Class B Stock
offered by this Prospectus was determined by negotiations between the Company
and First Colonial Securities Group, Inc. (the "Underwriter"), and does not
necessarily relate to the Company's book value or other established criteria of
value. See "Underwriting" for a description of factors considered in determining
the initial Price to the Public of the Class B Stock and "Risk Factors --
Absence of a Public Market; Arbitrary Pricing of Securities."
THE PURCHASE OF THE CLASS B STOCK INVOLVES VARIOUS INVESTMENT RISKS WHICH
SHOULD BE CONSIDERED CAREFULLY BY PROSPECTIVE INVESTORS. SEE "RISK FACTORS" ON
PAGE ___ OF THIS PROSPECTUS.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE 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.
UNDERWRITERS DISCOUNTS
PRICE TO PUBLIC AND COMMISSIONS (1) PROCEEDS TO COMPANY (2)
--------------- ---------------------- ----------------------
Per Share ....... $____________ $____________ $_____________
Total (3) ....... $____________ $____________ $_____________
- ---------------
(1) For information regarding indemnification of the Underwriter, see
"Underwriting".
(2) Before deduction of expenses of the Offering payable by the Company
estimated at $400,000.
(3) The Company has granted the Underwriters an option, exercisable within 45
days of the date hereof, to purchase up to an additional 165,000 shares of
Class B Stock solely to cover over-allotments, if any, on the same terms
and conditions as the shares of Class B Stock offered hereby (the
"Over-Allotment Option"). If such option is exercised in full, the total
"Price to Public," "Underwriting Discounts and Commissions" and "Proceeds
to Company" will be $_______, $__________, and $________, respectively.
See "Underwriting."
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 laws of any State.
-----------------
The shares are offered by the Underwriter, when, as and if delivered to and
accepted by the Underwriter, subject to prior sale, withdrawals or cancellation
of the offer without notice. It is expected that delivery of certificates
representing the shares of the Class B Stock will be made at the offices of
First Colonial Securities Group, Inc., Boca Raton, Florida on or about
_____________________, 1998.
FIRST COLONIAL SECURITIES GROUP, INC.
The date of this Prospectus is _______ __, 1998
<PAGE>
THE SECURITIES OFFERED HEREBY ARE NOT BANK ACCOUNTS, SAVINGS ACCOUNTS, OR
CERTIFICATES OF DEPOSIT, AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION ("FDIC").
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE MAY AFFECT THE PRICE OF THE COMPANY'S
CLASS B COMMON STOCK. FOR A DESCRIPTION OF THESE ACTIVITIES SEE "UNDERWRITING."
THE COMPANY INTENDS TO FURNISH ITS STOCKHOLDERS WITH ANNUAL REPORTS
CONTAINING AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND QUARTERLY REPORTS
CONTAINING UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
2
<PAGE>
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PROSPECTUS SUMMARY
------------------
The following summary does not contain or summarize all of the information
in this Prospectus and is qualified in its entirety by the more detailed
information found elsewhere in this Prospectus. Prospective investors should
read this Prospectus in its entirety. For a discussion of certain risks
associated with the purchase of the securities offered hereby, see "RISK
FACTORS." Unless otherwise indicated, the information in this Prospectus assumes
that the Over-Allotment Option is not exercised.
ADMIRALTY BANCORP, INC.
-----------------------
Admiralty Bancorp, Inc. is a holding company for Admiralty Bank, a Florida
state chartered commercial bank and member of the Federal Reserve System (the
"Bank"). Ownership of the Bank currently constitutes the only activity of the
Company.
The current management and shareholders of Admiralty acquired control of
the Company on January 22, 1998 (the "Change In Control"). Prior to the Change
In Control, the Company, then known as White Eagle Financial Group, Inc.
("WEFG"), was a closely held corporation. Pursuant to the terms of an Agreement
and Plan of Merger, all then existing shareholders of WEFG had their interests
in WEFG canceled in exchange for a cash payment equal to 1.85 times the
shareholders' equity of WEFG, calculated in accordance with generally accepted
accounting principles. The consideration paid to WEFG shareholders upon
consummation of the acquisition was $7,007,725. Since the transaction was
consummated on January 22, 1998, the WEFG book value was calculated as of
December 31, 1997, using unaudited financial statements. In order to ensure that
the WEFG shareholders' equity was calculated in accordance with generally
accepted accounting principles, certain adjustments which increased the WEFG
shareholders' equity were required. Under the terms of the Merger, Admiralty is
required to pay the former WEFG shareholders additional consideration of
$483,602, subject to certain adjustments for post closing fees owed to WEFG's
counsel, which will be paid out of the proceeds of the Offering. In addition,
the organizers of Admiralty recapitalized the Company through $8,000,000 in new
capital raised through a private placement of the Company's Class A Units,
consisting of one share of Class A Common Stock, no par value (the "Class A
Stock") and one Class B Common Stock Purchase Warrant (the "Warrants"). Each
Warrant entitles the holder to purchase one share of the Class B Stock, at a
purchase price of $11.00 per share, for a period of four (4) years. Each Class A
Unit had a purchase price of $10.00. The Class A Stock can be converted into
Class B Stock on a share for share basis at the option of the holder, and in
certain circumstances at the option of the Company. The Bank formerly had a
number of minority shareholders who combined owned approximately 4% of the
Bank's capital stock. Effective ______, 1998, these minority shareholders were
bought out for an aggregate purchase price of $ _________.
Certain members of the Board of Directors of the Company have extensive
backgrounds in the banking industry. Messrs. Bruce A. Mahon, Thomas L. Gray,
Jr., Michael E. Golden and Mark A. Wolters were all members of the Board of
Directors of Carnegie Bancorp, a New Jersey based bank holding company which was
recently acquired by Sovereign Bancorp. In addition, Mr. Richard P. Rosa, a
Director and the Chief Financial Officer of the Company, was the Chief Financial
Officer of Carnegie Bancorp. Mr. Leslie E. Goodman was a Senior Executive
Officer with First Union National Bank, First Fidelity Bank and its predecessor
organizations and previously served as President and Chief Executive Officer of
several financial institutions. He has over 20 years experience in the banking
industry. Mr. George R. Zoffinger was formerly the President, Chief Executive
Officer and Chairman of the Board of Directors of Constellation Bancorp and
CoreStates, N.J. National Bank. Mr. Sidney Hofing is a director of Yardville
National Bank, Yardville, New Jersey. The other members of the Board of
Directors of the Company have extensive business experience which the Company
believes will assist the Company in developing new business and expanding its
operations.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
Management Strategy
The Company has traditionally sought to serve as a source of credit and
other banking products for small to mid-size businesses located in its Palm
Beach County, Florida trade area. The Company has not, and has not sought to,
engage in high volume retail banking, although the Company has traditionally
offered retail type products, such as home mortgages, to meet the needs of its
business customer base. The Company intends to continue its focus on small to
mid-size businesses, and to expand its target customer base to include high net
worth individuals and professionals. Admiralty will seek to serve the needs of
this target customer base by providing superior, personalized service. While
management believes that the Company's emphasis on personalized service may
cause the Company to recognize higher non-interest expense, through personnel
and other administrative expenses, than its peers, management also believes the
Company's business strategy will appeal to less cost sensitive customers,
allowing the Company to compete for loans and deposits on factors other than
price. Further, it is management's intention to increase the Company's tangible
capital through the Offering and invest the additional capital in the short term
in investment securities and mortgage backed securities. Going forward,
Admiralty will seek to develop new loan demand to more profitably deploy this
additional capital. Although the Company intends to remain an active participant
in the SBA's Guaranteed Loan Program, management intends to de-emphasize the
origination of these loans through third-party brokers and focus on originating
more traditional commercial loans. Admiralty has established business
development boards for each of its offices, composed of local business leaders.
In addition, its officers will review and pursue new branch locations in areas
where management believes the local business community is being undeserved by
existing larger institutions.
During the past several years, the Bank's operations have been restricted
due to the Bank's need to bolster its capital base and because the Bank was
subject to a Cease and Desist Order imposed by the Florida Department of Banking
and Finance and the Federal Reserve Bank of Atlanta (the "C&D"). The C&D was
lifted in early 1998. The C&D required the Bank to maintain a designated level
of allowance for loan losses, and to expense provisions necessary to maintain
the allowance at the required levels. Commencing with the first quarter of 1998,
management began to set the Company's expense for provision for loan losses at a
level management believed appropriate based upon management's view of the risks
inherent in the Company's lending functions. Although the actual dollar value of
provisions in future periods may vary based upon, among other things, the
increase in size of the Bank's loan portfolio, economic conditions and
management's view of the creditworthiness of individual borrowers, management
believes that the provision, as a percentage of income, will remain lower than
it was while the C&D was in effect.
The Bank is a full service commercial bank, providing a wide range of
business and consumer financial services through its main office in Palm Beach
Gardens, Florida and its two branch offices located in Juno Beach and Jupiter,
Florida. In addition, the Bank has received regulatory approval to open a fourth
office in Boca Raton, and has applied for regulatory approval to relocate its
Jupiter office to more spacious quarters. The Bank is an active participant in
the Small Business Administration's Guaranteed Loan Program, and provides other
commercial, consumer and personal banking products similar to those offered by
other financial institutions of comparable size.
The Bank was founded in 1987 as a Florida chartered commercial bank and
member of the Federal Reserve System. The deposits of the Bank are insured up to
applicable amounts under the Bank Insurance Fund (the "BIF") of the Federal
Deposit Insurance Corporation (the "FDIC"). At March 31, 1998, the Company had
total assets of $51.0 million, net loans (including loans held for sale) of
$25.3 million and total deposits of $41.2 million. For the year ended December
31, 1997, the Company had net income of $1.3 million.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
RISK FACTORS
An investment in the securities offered hereby involves a high degree of
risk. Recipients of this Prospectus are urged to read the "RISK FACTORS" section
herein for certain considerations and risk factors associated with investment in
the Class B Stock.
THE OFFERING
- -------------------------------------------------------------------------------
Securities Offered ........ 1,100,000 shares of Class B Stock
- -------------------------------------------------------------------------------
Common Stock Outstanding .. 1,116,640 shares (1), including 888,881
Prior to the Offering of Class A Stock and 227,759 shares of Class B
shares Stock.
- -------------------------------------------------------------------------------
Common Stock Outstanding .. 2,216,640 shares (1) including 888,881 shares
After the Offering of Class A Stock and 1,327,759 shares of Class
B Stock.
- -------------------------------------------------------------------------------
Use of Proceeds ........... The net proceeds of this Offering will be used
to provide working capital to Admiralty and the
Bank to permit the Bank to diversify its
product lines and grow its assets. In
addition, proceeds may be used by Admiralty to
acquire other financial institutions or
otherwise expand its business. Other than in
connection with its new Boca Raton office,
Admiralty has not entered into any agreements
with any parties for acquisitions of financial
institutions or other businesses.
- -------------------------------------------------------------------------------
Market For Securities ..... Prior to this Offering, there has been no
public market for any securities of
Admiralty. Although the Company has received
approval to have the Class B Stock included for
quotation on the NASDAQ National Market under
the symbol "___________________________", no
assurance can be given that a public market
will ever develop for any of Admiralty's
securities.
- -------------------------------------------------------------------------------
(1) Does not include 935,000 Shares of Class B Stock reserved for issuance upon
the exercise of Warrants or 330,000 Shares of Class B Stock reserved for
issuance pursuant to the Company's 1998 management Stock Option Plan.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
The selected financial and other data of the Company set forth below is
derived in part from, and should be read in conjunction with, the financial
statements of the Company and notes thereto presented elsewhere in this
Prospectus.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
As of and for the As of and for the
Three Months Ended Years Ended
March 31, December 31,
- -------------------------------------------------------------------------------
1998(1) 1997(1) 1997(1) 1996(1)
- -------------------------------------------------------------------------------
(Unaudited)
(Dollars In Thousands)
- -------------------------------------------------------------------------------
Net Income $ 89,193 $ 234,421 $1,263,929 $672,900
- -------------------------------------------------------------------------------
Net Income per share--Basic
and Diluted $ 0.08(2) $ 0.72 $ 3.91 $ 2.08
- -------------------------------------------------------------------------------
Total Assets $ 51,627 $ 45,748 $ 48,206 $ 43,435
- -------------------------------------------------------------------------------
Total Loans, Net 24,553 20,070 22,854 18,229
- -------------------------------------------------------------------------------
Investment Securities 15,646 16,313 20,181 17,461
- -------------------------------------------------------------------------------
Goodwill, Net 3,676 -- -- --
- -------------------------------------------------------------------------------
Deposits 41,236 41,493 42,776 39,820
- -------------------------------------------------------------------------------
Shareholders' Equity 8,301 3,122 4,246 2,977
- -------------------------------------------------------------------------------
Return on Average Assets 0.76% 2.15% 2.85% 1.67%
- -------------------------------------------------------------------------------
Return on Average Stockholders'
Equity 8.16% 28.04% 35.56% 25.61%
- -------------------------------------------------------------------------------
Net Interest Margin 6.12% 4.86% 4.92% 4.93%
- -------------------------------------------------------------------------------
(1) Summary consolidated financial information as of and for the three months
ended March 31, 1997 and as of and for the years ended December 31, 1997
and 1996 were prepared from historical financial data of WEFG, without
giving effect to the Change In Control. Summary consolidated financial
information as of and for the three months ended March 31, 1998 were
prepared from historical financial data of Admiralty Bancorp, Inc. after
giving effect to the Change In Control on January 22, 1998.
(2) Per share amount for the three months ended March 31, 1998 have been
adjusted to retroactively reflect the semi-annual Class A dividend, paid in
stock, declared on June 26, 1998 and payable on July 21, 1998. Per share
amounts for WEFG have not been adjusted for this stock dividend.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
RECENT DEVELOPMENTS
Effective July 1, 1998, Mr. Ward Kellogg was hired as President and Chief
Executive Officer of Admiralty Bank. Mr. Kellogg was formerly Executive Vice
President of 1st United Bank of Boca Raton, Florida. Mr. Kellogg also served as
Chief Credit Officer of 1st United Bank, and oversaw the administration of a
$550 million loan portfolio. Mr. Kellogg has also substantially reassembled at
Admiralty Bank his 1st United Bank lending, administration and business
development team. This team includes Mr. William Burke, who will serve as
Executive Vice President and Chief Operating Officer of the Bank, Mr. Dennis
Gavin, who will serve as Senior Vice President and Senior Lending Officer for
the Bank, Ms. Anne Paddock, who will serve as Senior Vice President -- Loan
Administration, Mr. John Kapsis, who will serve as Senior Vice President of
Finance, and Messrs. John Oliver and Dave Englert, who will serve as Regional
Managers for the Bank. 1st United was acquired in 1997 by Wachovia Corporation.
Mr. James Semrad, formerly President of Admiralty Bank, has resigned to pursue
other business opportunities. Mr. Semrad, however, will continue to serve as a
consultant to the Company and the Bank until December 31, 2001.
For the quarter ended March 31, 1998, the Company experienced a significant
increase in non-accrual loans to $718,000 at March 31, 1998 from $96,000 at
December 31, 1997. This increase is substantially attributable to placement of a
single loan with a balance of $516,000 on non-accrual status. This loan is
currently the subject of a workout agreement. The borrower is performing under
the workout agreement, and management believes that the loan is adequately
secured and does not anticipate that the Company will incur a material loss on
this credit.
- --------------------------------------------------------------------------------
7
<PAGE>
RISK FACTORS
The following risk factors should be considered by a prospective investor
in deciding whether to purchase the Class B Stock offered hereby. The
information should be considered together with and in addition to the
information discussed elsewhere herein.
SUBSTANTIAL BOOK VALUE DILUTION
Purchasers of the Class B Stock offered hereby will suffer immediate and
substantial dilution in the net tangible book value per share of the Class B
Stock from the Price to Public provided for herein. Upon consummation of this
Offering, it is anticipated that the book value per share of Class B Stock will
be $6.83 per share (assuming $10,520,000 in net proceeds are raised in this
Offering), representing dilution of $3.17 per share, or 31.70%.
DEPENDENCE UPON KEY PERSONNEL
The future performance of the Company is highly dependent upon the services
of Mr. Ward Kellogg, President and Chief Executive Officer of the Bank, and the
Bank's new management team. If the services of this management team, and in
particular Mr. Kellogg, were to become unavailable for any reason, the
operations and future performance of the Company would likely be adversely
affected in a material manner. Although the Bank has entered into to an
employment agreement with Mr. Kellogg, none of the other members of the new
management team have contracts with the Bank or the Company. The Company has
purchased a key-man insurance policy on Mr. Kellogg's life in the amount of
$2,000,000 payable to the Company. The future successful development of the
Company's business will depend, in large measure, upon its ability to retain
this management team.
ABSENCE OF A PUBLIC MARKET
There is currently no public market for any of Admiralty's securities. None
of the Company's Class A Common Stock, the Class B Stock or the Class B Common
Stock Warrants are traded on any recognized exchange or trading market. Although
the Company has received approval for quotation of the Class B Stock on the
NASDAQ National Market under the symbol "_______________________ ", there can be
no assurance that an active trading market for the Class B Stock will develop
or, if one develops, be sustained. Although under no obligation to do so, First
Colonial Securities Group, Inc. has stated its intention to make a market in the
Class B Stock.
DEPENDENCE OF NON-INTEREST INCOME
Over the past two years, the Company has been highly dependent upon
non-interest income, some of which may be non-recurring income. For the year
ended December 31, 1996, the Company recognized $437,138 in income from gains on
the sale of securities, out of total net income of $672,900. In addition, during
1996, the Company recognized income of $572,276 from the gain on sale of loans
through its participation in the Small Business Administration's ("SBA")
guaranteed loan program. For the year ended December 31, 1997, the Company
recognized income of $974,571 from the gain on sale of SBA loans. The Company
had total net income of $1,263,929 for the year ended December 31, 1997. No
assurances can be given that the Company will continue to recognize a high level
of income from the gain on sale of SBA loans, and the Company does not
anticipate recognizing material amounts of income from the gain on sale of
securities in future periods. Although the Company intends to continue
originating SBA guaranteed loans, management intends to de-emphasize SBA lending
in favor of more traditional
8
<PAGE>
commercial lending. In addition, SBA lending is a highly competitive business,
which is dependent upon Congressional appropriations to the United States Small
Business Administration. No assurances can be given regarding the level of
future appropriations by Congress to the SBA for the guaranteed loan program.
Reductions in appropriations to the SBA program could reduce both participation
in the program and the amount of loans eligible to be originated under the
program. A reduction in future SBA guaranteed loans originated by the Company,
whether due to the management strategy of de-emphasizing this product or because
of increased competition or because of other causes, could adversely affect the
Company's results of operations in future periods.
FUTURE ISSUANCE OF SECURITIES
In order to have sufficient capital to facilitate future growth, Admiralty
may be required to raise additional capital. In the event Admiralty is unable to
raise such capital, it may not be able to undertake its future expansion and
management will be required to reorient its long term strategy for the Company
and the Bank. There can be no assurance that Admiralty will be able to generate
or attract additional capital in the future on favorable terms. In addition, the
issuance of additional securities to raise additional capital will result in
dilution to the then current stockholders of Admiralty.
In connection with the recapitalization of the Company, the Company issued
800,000 Class A Units. Each Class A Unit contained a share of Class A Stock and
one Warrant, entitling the holder thereof to purchase one share of Class B Stock
at a purchase price of $11.00 per share, for a period of 4 years. In addition,
each share of Class A Stock may be converted into Class B Stock, either at the
option of the holder of the Class A Stock or, in certain circumstances, at the
option of the Company. Finally, to compensate Directors of the Company for their
time and efforts in organizing the Company and consummating the Change in
Control, the Board of Directors of the Company awarded warrants to purchase
120,000 shares of Class B Stock in the aggregate to members of the Board of
Directors of the Company and, as part of the consideration for the Change in
Control, the Company issued warrants to purchase 15,000 shares of Class B Stock
to the former majority shareholder of WEFG. All of these warrants also have a
four-year term, and are also exercisable at $11.00 per share. Finally, the
Company has also adopted the 1998 Management Stock Option Plan pursuant to which
options to purchase 330,000 Shares of Class B Stock may be issued to members of
management of the Company. The exercise price for these options will be at least
the fair market value of the date of grant. Exercise of these Warrants and
options at a time when the Company's book value per share is in excess of the
respective exercise prices for the Warrants and Options would cause book value
dilution to holders of the Company's Class B Stock, and exercise of these
Warrants and options will dilute the ownership percentage of owners of the Class
B Stock.
9
<PAGE>
ARBITRARY PRICING OF SECURITIES
There is no established market for the Class B Stock and there can be no
assurance that a liquid trading market for Admiralty's securities will develop
after the Offering. The price per share of the Class B Stock is entirely
arbitrary, unrelated to any intrinsic or market value and bears no relationship
to established criteria of value such as assets, earnings or book value.
COMPETITION
The banking and financial services field in which the Bank is engaged is
highly competitive and most competitors have substantially greater financial
resources than that of the Bank. The Bank's principal market area is served by
branch offices of large commercial banks and thrift institutions. Such
institutions have substantially greater resources than the Bank to expend upon
advertising and marketing, and their substantially greater capitalization
enables those competitors to make much larger loans. The Bank's success depends
a great deal upon its judgment that large and mid-size financial institutions do
not adequately serve small businesses and consumers in its principal market area
and the Bank's ability to compete favorably for such customers.
LENDING RISKS
The risk of non-payment (or deferred or delayed payment) of loans is
inherent in commercial banking. Such non-payment, or delayed or deferred payment
of loans to the Bank, if they occur, may have a material adverse effect on the
Bank's earnings and overall financial condition. Additionally, in compliance
with applicable banking laws and regulations and in light of sound judgment, the
Bank maintains an allowance for credit losses created through charges against
earnings. As of March 31, 1998, the Bank's allowance for loan losses was
$429,000, or 1.67% of total loans and 60% of non-performing loans. The Bank's
marketing focus on small to medium-size businesses may result in the assumption
by the Bank of certain lending risks that are different from or greater than
those which would apply to loans made to larger companies. Management of the
Bank seeks to minimize the Bank's credit risk exposure through credit controls
which include evaluation of potential borrowers, collateral available, liquidity
and cash flow. However, there can be no assurance that such procedures will
actually reduce loan losses.
DIVIDEND LIMITATIONS
The ability of the Company to pay dividends on the Class B Stock in future
periods may be restricted. Under the terms of the Company's outstanding Class A
Common Stock, dividends may not be paid on the Class B Stock unless the Company
has made its most recently required dividend payment on the shares of Class A
Common Stock. Therefore, if the Company fails to make a dividend payment on the
Class A Common Stock, dividends may not be paid for that period on the Class B
Stock. Management has not yet established a dividend policy, but the Company's
strategic plan focuses on growth. Therefore, to the extent additional capital is
10
<PAGE>
required to support the Company's growth, the Board could elect to retain all
available earnings as capital rather than to use the earnings to pay dividends
on the Class B Stock. Finally, the only current source of income to the Company
is earnings from the Bank. The Bank's ability to pay dividends is subject to
various regulatory restrictions imposed by Florida and Federal law. See
"Regulation and Supervision -- Bank Regulation -- Dividends Rights."
POTENTIAL IMPACT OF CHANGES IN MONETARY POLICY AND INTEREST RATES
The operating results of Admiralty may be significantly affected (favorably
or unfavorably) by market rates of interest which, in turn, are affected by
prevailing economic conditions, by the fiscal and monetary policies of the
United States Government and by the policies of various regulatory agencies. The
earnings of Admiralty will depend primarily upon its interest rate spread (i.e.,
the difference between income earned on its loans and investments and the
interest paid on its deposits). Like many financial institutions, Admiralty may
be subject to the risk of fluctuations in interest rates, which, if significant,
may have a material adverse affect on its operations.
USE OF PROCEEDS
The net proceeds of this Offering are estimated to be approximately
$10,520,000 ($11,238,000 if the Underwriters' over-allotment option is exercised
in full) after deducting underwriting discounts and offering expenses, assuming
a price to the public of $10.00 per share. Of these proceeds, approximately
$485,000 will be used to satisfy the contingent payment owed to the former WEFG
shareholders and the remainder will be used to support the continuing expansion
of the Bank's business through increased lending and investment activities and
the opening or purchasing of additional branches. In addition, proceeds may be
used by Admiralty to acquire other financial institutions or lines of business.
Admiralty has recently received regulatory approval to open a new office in Boca
Raton, Florida. This facility is being leased from a limited liability company
consisting of certain members of the Company's Board of Directors, and provides
for a 20 year term with a base rent of $143,000 per year. Other than this Boca
Raton branch, Admiralty has not entered into any agreements with parties for the
opening or purchasing of additional branches, and Admiralty has not entered into
any agreements calling for the acquisitions of any other institutions.
DILUTION
The difference between the public offering price per share of Class B Stock
and the Company's net tangible book value per share after the Offering
constitutes the dilution to new investors in the Offering. Net tangible book
value per share is determined by dividing the net tangible book value of the
Company (total tangible assets less total liabilities) by the number of
11
<PAGE>
outstanding shares of Common Stock, both Class A and Class B.
At March 31, 1998, the net tangible book value of the Company was $4.14 per
share. After giving effect to the sale of the 1,100,000 shares of Class B Stock
being offered hereby and the receipt of the estimated net proceeds therefrom
(less underwriting discounts and commissions and estimated expenses of the
Offering), the pro forma net tangible book value of the Company at March 31,
1998 would be approximately $6.83 per share, representing an immediate increase
in net tangible book value of $2.69 per share to existing shareholders and an
immediate dilution of $3.17 per share to new investors. The following table
illustrates the foregoing information with respect to dilution to new investors
on a per share basis.
- --------------------------------------------------------------------------------
Initial public offering price ........................... $10.00
- --------------------------------------------------------------------------------
Net tangible book value before the Offering ....... $4.14
- --------------------------------------------------------------------------------
Increase attributable to new investors in
the Offering ................................. $2.69
- --------------------------------------------------------------------------------
Adjusted pro forma net tangible book value after
the Offering $ 6.83
- --------------------------------------------------------------------------------
Dilution to new investors in the Offering $ 3.17
- --------------------------------------------------------------------------------
The following table sets forth, with respect to existing shareholders and
new investors in the Offering, a comparison of the number of shares of Common
Stock acquired from the Company, the percentage of ownership of such shares, the
total cash consideration paid, the percentage of total cash consideration paid
and the average price per share.
- -------------------------------------------------------------------------------
TOTAL CASH Average
SHARES PURCHASED CONSIDERATION Price
----------------- -------------- Per
Number Percent Amount Percent Shares
------ ------- ------ ------- -------
Existing Shareholders(1) 1,116,640 49.62 $ 8,160,000 42.59 $ 7.31
- -------------------------------------------------------------------------------
New Investors ........... 1,100,000 50.38 $ 11,000.00 57.41 $10.00
--------- ------ ----------- ------ -------
- -------------------------------------------------------------------------------
Total 2,216,640 100.00% $ 19,160,000 100.00% $8.64
========= ======= ============ ======= =====
- -------------------------------------------------------------------------------
- ----------
(1) Includes 888,881 shares of Class A and 227,759 shares of Class B Common
Stock.
The above table assumes no exercise of the Over Allotment Option, no
exercise of outstanding stock options and no purchase by existing shareholders
of shares offered hereby. The table excludes 330,000 shares of Class B Stock
reserved for issuance under the Company's 1998 Management Stock Option Plan and
935,000 Shares of Class B Stock reserved for issuance upon the exercise of
Warrants.
12
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company and the regulatory capital ratios of the Bank at March 31, 1998, and as
adjusted, at such date, to give effect to the issuance and sale of the shares of
Class B Common Stock offered hereby. The table should be read in conjunction
with the Company's Consolidated Financial Statements, including the Notes
thereto, appearing elsewhere in this Prospectus.
- -------------------------------------------------------------------------------
MARCH 31, 1998
- -------------------------------------------------------------------------------
ACTUAL AS ADJUSTED
- -------------------------------------------------------------------------------
(Unaudited)
(Dollars in Thousands)
- -------------------------------------------------------------------------------
Stockholders' equity -- --
- -------------------------------------------------------------------------------
Common Stock, Class A, no par value,
1,000,000 shares authorized actual and
as adjusted, 888,881 shares issued and
outstanding at March 31, 1998, actual
and as adjusted $ 7,566,659 $ 7,566,659
- -------------------------------------------------------------------------------
Common stock, Class B, no par value,
4,000,000 shares authorized actual and
as adjusted, 227,759 shares issued and
outstanding at March 31, 1998 actual
and 1,327,759 issued and outstanding,
as adjusted (1)(2)(3) 1,033,950 11,553,950
- -------------------------------------------------------------------------------
Accumulated Deficit (295,696) (295,696)
- -------------------------------------------------------------------------------
Net unrealized loss on securities
available for sale (4,458) (4,458)
----------- -----------
- -------------------------------------------------------------------------------
Total Capitalization $ 8,300,455 $ 18,820,455
=========== ============
- -------------------------------------------------------------------------------
13
<PAGE>
- -------------------------------------------------------------------------------
MARCH 31, 1998
- -------------------------------------------------------------------------------
MINIMUM
REGULATORY
ACTUAL AS ADJUSTED REQUIREMENT
- -------------------------------------------------------------------------------
(Unaudited)
- -------------------------------------------------------------------------------
Bank Capital Ratios(1):
- -------------------------------------------------------------------------------
Total Capital ................ 14.35% 44.27% 8%
- -------------------------------------------------------------------------------
Tier 1 Capital ............... 13.10% 43.10% 4%
- -------------------------------------------------------------------------------
Leverage Capital ............. 8.76% 25.18% 4%
- -------------------------------------------------------------------------------
- ----------
(1) Assumes the Company will contribute the net proceeds from the sale of the
shares of Common Stock offered hereby to the Bank. Also assumes that the
Over-Allotment Option is not exercised. The Bank's capital ratios, as
adjusted, are computed in a manner consistent with regulatory guidelines
and assume that the net proceeds from the Offering that are contributed to
the Bank are invested in assets that carry a 20% risk-weighting.
(2) Excludes 330,000 shares of Common Stock reserved for issuance under the
Company's Management Stock Option Plan. See "Management -- Remuneration of
Executive Officers -- Management Stock Option Plan."
(3) Adjusted retroactively to reflect a 5% Class B Common Stock dividend,
payable July 21, 1998.
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial data present a pro
forma condensed consolidated statement of income for the Company for the year
ended December 31, 1997 reflecting both the Change In Control as if such event
had occurred as of the beginning of each of the periods presented. The unaudited
financial statements at and for the three-months ended March 31, 1998 presented
elsewhere herein already reflect the Change In Control. Pro forma financial
information for the 22 days before the Change In Control is not presented
because they are not significant. The unaudited pro forma information is based
upon the historical financial statements of the Company after giving effect to
the Change In Control.
This unaudited pro forma information has been prepared by the Company's
management based upon historical financial statements. The unaudited pro forma
information should be read in conjunction with the Company's historical
financial statements and notes. The pro forma of financial data is not
necessarily indicative of the operating results which would have been achieved
had these transactions been consummated as of the beginning of such periods for
which such data are presented and should not be construed as being
representative of future performance.
14
<PAGE>
===============================================================================
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
HISTORICAL ADJUSTMENTS(1) PRO FORMA
- --------------------------------------------------------------------------------
(In thousands, except per share
data)
- --------------------------------------------------------------------------------
Interest income $ 3,630 $ -- $ 3,630
- --------------------------------------------------------------------------------
Interest expense 1,197 -- 1,197
------- ---- -------
- --------------------------------------------------------------------------------
Net interest income 2,433 -- 2,433
- --------------------------------------------------------------------------------
Provision for loan losses 435 -- 435
------- ---- -------
- --------------------------------------------------------------------------------
Net interest income after provision for 1,998 -- 1,998
loan losses
- --------------------------------------------------------------------------------
Non-interest income 1,728 -- 1,728
- --------------------------------------------------------------------------------
Non-interest expense 2,697 148(2) 2,845
------- ---- -------
- --------------------------------------------------------------------------------
Income before income tax (benefit) 1,029 (148) 881
expense and minority interest
- --------------------------------------------------------------------------------
Income tax (benefit) expense (288) (288)
------- ---- -------
- --------------------------------------------------------------------------------
Income before minority interest 1,317 (148) 1,169
- --------------------------------------------------------------------------------
Minority interest (53) (53)
------- ---- -------
- --------------------------------------------------------------------------------
Net income $ 1,264 $(148) $ 1,116
======= ===== =======
- --------------------------------------------------------------------------------
Per share data:
Net income per common share-basic and $ 3.91 $ 3.45
diluted
- --------------------------------------------------------------------------------
Average number of common shares-basic 323,533 323,533
and diluted
- --------------------------------------------------------------------------------
- ----------
(1) No pro forma adjustment was made for estimated merger expense.
(2) Amortization of goodwill over a 25 year life.
15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
The following selected information regarding the Company should be read in
conjunction with the Company's Consolidated Financial Statements, including the
Notes thereto, appearing elsewhere in this Prospectus. Consolidated historical
financial and other data regarding the Company at or for the three months ended
March 31, 1998 and 1997 have been prepared by the Company without audit and may
not be indicative of results on an annualized basis or any other period. In the
opinion of management, all adjustments (consisting only of normal recurring
accruals) that are necessary for a fair presentation for such periods or dates
have been made. The audited financial statements for the year ended December 31,
1997 and 1996 do not give effect to the Change In Control and recapitalization
of the Company described under the heading "Offering Summary -- Admiralty
Bancorp, Inc.", which were consummated on January 22, 1998. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
AS OF AND FOR THE THREE
MONTHS ENDED AS OF AND FOR THE YEARS ENDED
MARCH 31, DECEMBER 31,
- ------------------------------------------------------------------------------------------
1998 1997 1997 1996
- ------------------------------------------------------------------------------------------
INCOME STATEMENT DATA: (Unaudited)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $787,583 $ 882,203 $ 3,630,067 $ 3,297,146
- ------------------------------------------------------------------------------------------
Interest expense 221,058 296,782 1,196,734 1,134,193
- ------------------------------------------------------------------------------------------
Net interest income 566,525 585,421 2,433,333 2,162,953
- ------------------------------------------------------------------------------------------
Provision for loan losses 55,000 141,500 435,000 297,000
- ------------------------------------------------------------------------------------------
Net interest income
after provision for
loan losses 511,525 443,921 1,998,333 1,865,953
-------- --------- ----------- -----------
- ------------------------------------------------------------------------------------------
Non-interest income 272,125 386,023 1,728,109 1,789,920
- ------------------------------------------------------------------------------------------
Non-interest expense 602,429 655,167 2,697,849 2,939,936
- ------------------------------------------------------------------------------------------
Income before income
taxes 181,221 174,777 1,028,593 715,937
-------- --------- ----------- -----------
- ------------------------------------------------------------------------------------------
Income tax (benefit)
expense 88,000 (67,000) (288,000) 15,000
- ------------------------------------------------------------------------------------------
Income before minority
interest 93,221 241,777 1,316,593 700,937
-------- --------- ----------- -----------
- ------------------------------------------------------------------------------------------
Minority interest in net
income of
subsidiaries 4,028 7,356 52,664 28,037
-------- --------- ----------- -----------
- ------------------------------------------------------------------------------------------
Net income $ 89,193 $ 234,421 1,263,929 672,900
======== ========= =========== ===========
- ------------------------------------------------------------------------------------------
PER COMMON SHARE DATA:
- ------------------------------------------------------------------------------------------
Net income--basic
and diluted $0.08 $0.72 $ 3.91 $ 2.08
- ------------------------------------------------------------------------------------------
Book value $7.43 $9.65 $13.12 $9.20
- ------------------------------------------------------------------------------------------
BALANCE SHEET DATA:
- ------------------------------------------------------------------------------------------
Total assets 50,976,988 $45,748,115 $48,205,781 $43,435,224
- ------------------------------------------------------------------------------------------
Total loans 24,981,971 19,430,967 23,231,584 18,593,243
- ------------------------------------------------------------------------------------------
Allowance for loan
losses (428,869) (363,982) (377,807) (364,745)
- ------------------------------------------------------------------------------------------
Investment Securities 15,645,504 16,313,098 20,180,506 17,461,180
- -----------------------------------------------------------------------------------------
Goodwill, net 3,675,957 -- -- --
- ------------------------------------------------------------------------------------------
Deposits 41,236,145 41,492,901 42,776,197 39,820,159
- ------------------------------------------------------------------------------------------
Minority interest 381,655 -- 376,049 323,385
- ------------------------------------------------------------------------------------------
Shareholders' equity 8,300,455 3,121,668 4,245,484 2,976,505
- ------------------------------------------------------------------------------------------
SELECTED OPERATING RATIOS:
- ------------------------------------------------------------------------------------------
Return on average assets 0.76% 2.15% 2.85% 1.67%
- ------------------------------------------------------------------------------------------
Return on average common
equity 8.16% 28.04% 35.56% 25.61%
- ------------------------------------------------------------------------------------------
Net interest margin 6.12% 4.86% 4.92% 4.93%
- ------------------------------------------------------------------------------------------
SELECTED CAPITAL AND ASSET
QUALITY RATIOS:
- ------------------------------------------------------------------------------------------
Equity/assets 9.29% 7.68% 8.01% 6.5%
- ------------------------------------------------------------------------------------------
Non-accrual loans/total 2.86% 0.41% 1.33%
loans
- ------------------------------------------------------------------------------------------
Non-performing
assets/total loans and
other real estate owned 2.96% 0.79% 0.52% 1.33%
- ------------------------------------------------------------------------------------------
Allowance for loan
losses/total loans 1.71% 1.81% 1.62% 1.95%
- ------------------------------------------------------------------------------------------
Allowance for loan
losses/non-
performing assets 57.8% 200.3% 300.15% 100.47%
- ------------------------------------------------------------------------------------------
Net charge-offs/average
loans 0.1% 2.93% 2.02% 1.41%
- ------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the Company's financial statements
and the notes relating thereto included herein. When necessary,
reclassifications have been made to prior years' data throughout the following
discussion and analysis for purposes of comparability with prior periods. All
income statement data for the first quarter of 1998 reflect the Company's
operations from January 22, 1998, the effective date of the Change In Control,
through March 31, 1998. This data, therefore, does not reflect a full quarter's
operations, which may affect its comparability to prior periods.
OVERVIEW AND STRATEGY
The Company has traditionally sought to serve as a source of credit and
other banking products for small to mid-size businesses located in its Palm
Beach County, Florida trade area. The Company has not, and has not sought to,
engage in high volume retail banking, although the Company has traditionally
offered retail type products, such as home mortgages, to meet the needs of its
business customer base. The Company intends to continue its focus on small to
mid-size businesses, and to expand its target customer base to include high net
worth individuals and professionals. Admiralty will seek to serve the needs of
this target customer base by providing superior, personalized service. While
management believes that the Company's emphasis on personalized service may
cause the Company to recognize higher non-interest expense, through personnel
and other administrative expenses, than its peers, management also believes the
Company's business strategy will appeal to less cost sensitive customers,
allowing the Company to compete for loans and deposits on factors other than
price. Further, it is management's intention to increase the Company's tangible
capital through the Offering and invest the additional capital in the short term
in investment securities and mortgage-backed securities. Going forward,
Admiralty will seek to develop new loan demand to more profitably deploy this
additional capital. Although the Company intends to remain an active participant
in the SBA's Guaranteed Loan Program, management intends to de-emphasize the
origination of these loans through third-party brokers and focus on originating
more traditional commercial loans. Admiralty has established business
development boards for each of its offices, composed of local business leaders.
In addition, its officers will review and pursue new branch locations in areas
where management believes the local business community is being undeserved by
existing larger institutions.
During the past several years, the Bank's operations have been restricted
due to the Bank's need to bolster its capital base and because the Bank was
subject to the C&D. The C&D was lifted in early 1998. The C&D required the Bank
to maintain a designated level of allowance for loan losses, and to expense
provisions necessary to maintain the allowance at the
17
<PAGE>
required levels. Commencing with the first quarter of 1998, management began to
set the Company's expense for provision to loan losses at a level management
believed appropriate based upon management's view of the risks inherent in the
Company's lending functions. Although the actual dollar value of provisions in
future periods may vary based upon, among other things, the increase in size of
the Bank's loan portfolio, economic conditions and management's view of the
creditworthiness of individual borrowers, management believes that the
provision, as a percentage of income, will remain lower than it was while the
C&D was in effect.
RESULTS OF OPERATIONS
The Company's results of operations depend primarily on its net interest
income, which is the difference between the interest earned on its
interest-earning assets and fees earned servicing loans which the Bank has sold
and the interest paid on funds borrowed to support those assets, such as
deposits. In addition, the Company earns commission income in connection with
sales of the guaranteed portion of loans originated under the SBA loan program.
Net interest margin is a function of the difference between the weighted average
rate received on interest-earning assets and the weighted average rate paid on
interest-bearing liabilities, as well as the average level of interest-bearing
assets as compared with that of interest-bearing liabilities. Net income is also
affected by the amount of non-interest income and operating expenses.
NET INCOME
For the three months ended March 31, 1998, the Company had net income of
$89,193, a decrease of $145,228, or 62.0%, from net income of $234,421 for the
first quarter of 1997. The period to period decrease in reported net income is
primarily attributable to the extinguishment of net operating losses available
during 1997 to reduce the Company's tax expense. In the first quarter of 1997,
the Company recognized a tax benefit from the application of net operating
losses of $67,000, while in the quarter ended March 31, 1998, the Company
recognized income tax expense of $88,000. This $155,000 change in tax expense is
the primary factor affecting reported net income, as the Company's income before
income tax for the three months ended March 31, 1998 increased by $6,444 over
the comparable period of 1997, partially reflecting a decrease in the expense
recognized for provision for loan losses of $86,500 during the first quarter of
1998 compared to the first quarter of 1997. See "Provision for Loan Losses"
below. Also affecting reported net income for the first quarter of 1998 is the
decreased number of days of operation for the period due to consummation of the
Change In Control on January 22, 1998. For the first quarter of 1998, decreases
in total interest income and non-interest income were off-set by decreases in
interest expense and non-interest expense. Interest income declined to $787,583
from $882,203, while non-interest income declined to $272,125 from $386,023.
Interest expense declined to $221,058 from $296,728 for the comparable period of
1997, while
18
<PAGE>
non-interest expense declined to $602,429 from $655,167.
For the year ended December 31, 1997, net income increased by $591,029, or
87.8%, to $1,263,929 from $672,900 for 1996. This increase is attributable to
increased net interest income from loans, investments and Federal funds sold,
reflecting higher average balances and, with regard to the loan portfolio,
higher average rates. The Company's net interest income for the year ended
December 31, 1997 was $2,433,333, an increase of $270,380, or 12.5%, over the
comparable period of 1996. The increase in net interest income for 1997 over
1996 was partially offset by an increase of $138,000 in the provision for loan
losses and a decrease of $61,811 in non-interest income. In addition, the
Company's total non-interest expense for the year ended December 31, 1997
decreased by $242,087 over the comparable period of 1996, reflecting, among
other things, management's decision during 1996 to charge-off certain
non-earning assets.
COMPARATIVE AVERAGE BALANCE SHEETS
The following table reflects the components of the Company's net interest
income, setting forth for the periods presented herein, (1) average assets,
liabilities and stockholders' equity, (2) interest income earned on
interest-earning assets and interest expenses paid on interest-bearing
liabilities, (3) average yields earned on interest-earning assets and average
rates paid on interest-bearing liabilities, (4) the Company's net interest
spread (i.e., the average yield on interest-earnings assets less the average
rate on interest-bearing liabilities) and (5) the Company's net yield on
interest-earning assets. Rates are computed on a taxable equivalent basis.
19
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================================
THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31,
===============================================================================================================================
1998 1997 1997 1996
---- ---- ---- ----
- -------------------------------------------------------------------------------------------------------------------------------
Average Average Average Average
Interest Rates Interest Rates Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/ Average Income/ Earned/ Average Income Earned
Balance Expense Paid Balance Expense Paid Balance Expense Paid Balance Expense Paid
- -------------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------------------------------------
Interest-Earning
assets:
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Taxable loans
(net of unearned
income)............. 24,411 687 11.26% 19,940 555 11.13% 20,907 2,329 11.14% 19,568 2,040 10.42%
- -------------------------------------------------------------------------------------------------------------------------------
Taxable investment
securities.......... 18,310 369 8.07% 17,812 294 6.67% 17,899 1,179 6.59% 16,632 1,226 7.37%
- -------------------------------------------------------------------------------------------------------------------------------
Federal funds sold.... 136 2 5.44% 2,634 34 5.16% 2,234 122 5.45% 531 31 5.81%
- -------------------------------------------------------------------------------------------------------------------------------
Total
interest-earning
assets.............. 42,857 1,058 9.88% 40,386 883 8.75% 41,040 3,630 8.85% 36,731 3,297 8.98%
- -------------------------------------------------------------------------------------------------------------------------------
Non-interest earning
assets............. 4,642 -- -- 3,537 -- -- 3,687 -- -- 4,000 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Allowance for
possible loan
losses ............ (404) -- -- (363) -- -- (372) -- -- (362) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total Assets.... 47,095 -- -- 43,560 -- -- 44,355 -- -- 40,369 -- --
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND
SHAREHOLDERS'
EQUITY
- -------------------------------------------------------------------------------------------------------------------------------
Interest-bearing
liabilities:
- -------------------------------------------------------------------------------------------------------------------------------
Federal funds
purchased 967 14 5.79% -- -- -- 72 5 6.6% 437 29 6.6%
- -------------------------------------------------------------------------------------------------------------------------------
NOW deposits......... 5,537 17 1.22% 5,327 20 1.5% 5,149 74 1.43% 4,126 61 1.47%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================================
THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31,
===============================================================================================================================
1998 1997 1997 1996
---- ---- ---- ----
- -------------------------------------------------------------------------------------------------------------------------------
Average Average Average Average
Interest Rates Interest Rates Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/ Average Income/ Earned/ Average Income Earned
Balance Expense Paid Balance Expense Paid Balance Expense Paid Balance Expense Paid
- -------------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Savings deposits...... 2,503 11 1.73% 2,421 11 1.82% 2,271 42 1.88% 2,243 42 1.89%
- -------------------------------------------------------------------------------------------------------------------------------
Money market
deposits............ 7,918 61 3.07% 5,359 36 2.69% 6,082 166 2.73% 5,951 152 2.56%
- -------------------------------------------------------------------------------------------------------------------------------
Time deposits......... 14,554 193 5.31% 17,396 230 5.29% 16,859 910 5.40% 15,652 850 5.43%
- -------------------------------------------------------------------------------------------------------------------------------
Total
interest-bearing
liabilities......... 31,479 296 3.76% 30,503 297 3.89% 30,433 1,197 3.93% 28,409 1,134 4.05%
- -------------------------------------------------------------------------------------------------------------------------------
Non-interest bearing
liabilities:
- -------------------------------------------------------------------------------------------------------------------------------
Demand deposits....... 10,899 -- -- 9,455 -- -- 10,091 -- -- 8,807 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Other liabilities 343 -- -- 258 -- -- 275 -- -- 963 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total non-interest
bearing
liabilities......... 11,242 -- -- 9,713 -- -- 10,366 -- -- 9,770 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Shareholders'
equity.............. 4,373 -- -- 3,344 -- -- 3,554 -- -- 2,627 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities
and shareholders'
equity.............. 47,094 -- -- 43,560 -- -- 44,353 -- -- 40,806 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net interest
differential........ 6.12% 4.86% -- -- 4.92% -- -- 4.93%
- -------------------------------------------------------------------------------------------------------------------------------
Net yield on
interest bearing
assets.............. 1.78% 1.45% -- -- 5.94% -- -- 5.89%
===============================================================================================================================
</TABLE>
21
<PAGE>
The following table presents by category the major factors that contributed
to the changes in net interest income for each of the periods presented as
compared to each respective previous period. Amounts have been computed on a
fully tax-equivalent basis.
- --------------------------------------------------------------------------------
Three Months Ended Year Ended December
March 31, 1998 31, 1997
versus 1997 versus 1996
---------------- ----------------
- --------------------------------------------------------------------------------
Increase (Decrease) Increase(Decrease)
Due to Change in: Due to Change in:
- --------------------------------------------------------------------------------
Average Average Net Average Average Net
Volume Rate Volume Rate
- --------------------------------------------------------------------------------
(In Thousands)
- --------------------------------------------------------------------------------
Interest income:
- --------------------------------------------------------------------------------
Taxable loans (net of
unearned income) $ 126 $ 6 $ 132 $ 144 $ 145 $ 289
- --------------------------------------------------------------------------------
Taxable investment
securities 8 67 75 89 (135) (46)
- --------------------------------------------------------------------------------
Federal funds sold (35) 3 (32) 92 (2) 90
- --------------------------------------------------------------------------------
Total interest income 99 76 175 325 8 333
- --------------------------------------------------------------------------------
Interest expense:
- --------------------------------------------------------------------------------
Federal funds
purchased 7 7 14 (24) -- (24)
- --------------------------------------------------------------------------------
NOW deposits 1 (4) (3) 15 (2) 13
- --------------------------------------------------------------------------------
Savings deposits -- -- -- -- -- --
- --------------------------------------------------------------------------------
Time deposits (38) 1 (37) 65 (5) 60
- --------------------------------------------------------------------------------
Money Market 19 6 25 4 10 14
- --------------------------------------------------------------------------------
Total interest expense (11) 10 (1) 60 3 63
- --------------------------------------------------------------------------------
Net interest income $ 110 $ 66 $ 176 $ 265 $ 5 $ 270
================================================================================
22
<PAGE>
PROVISION FOR LOAN LOSSES
For the three months ended March 31, 1998, the Company recognized a
provision for loan losses of $55,000, a decline of $86,500, or 61.1%, over the
provision of $141,500 recognized for the first quarter of 1997. During the first
quarter of 1997, the Bank was subject to the C&D requiring a certain allowance
for loan losses and quarterly provisions to maintain the allowance. The C&D was
lifted in the first quarter of 1998, and the Company established a provision
based upon management's view of the risks inherent in the Company's loan
portfolio. For the year ended December 31, 1997, the Company's provision for
loan losses was $435,000, an increase of $138,000, or 46.5%, over the provision
of $297,000 for the year ended December 31, 1996. This increase in the provision
for loan losses reflects management's view of the potential losses inherent in
the Bank's remaining problem loans as well as the reserve necessary in light of
the Bank's ongoing and increasing lending activities.
NON-INTEREST EXPENSES
Total non-interest expense for the quarter ended March 31, 1998, was
$602,429, a reduction of $52,738 from total non-interest expense of $655,167
incurred for the quarter ended March 31, 1997. Reductions in line items of
non-interest expense were primarily attributable to the shortened reporting
period for the first quarter of 1998. These reductions were partially offset by
a non-interest expense of $29,862 in amortization of the goodwill recognized in
the Change of Control. In connection with the Change In Control, the Company
recognized $3,205,819 in goodwill, which will be amortized over 20 years.
Non-interest expenses for the year ended December 31, 1997 amounted to
$2,697,849, a decrease of $242,087, or 8.2% from the comparable period of 1996.
The decline in non-interest expenses for the year ended December 31, 1997 over
the comparable period of 1996 reflects, among other things, the Company's
decision during 1996 to write off certain non-performing assets, including
$119,000 in real estate owned, as management sought to restructure the Company's
balance sheet. There were no similar real estate owned write downs in 1997. In
addition, the Company's legal expenses declined by approximately $50,000 during
1997 compared to 1996, as the Company settled certain litigation during 1996. In
addition, salaries and employee benefits expense declined by $16,547 in 1997
from 1996.
NON-INTEREST INCOME
Non-interest income for the quarter ended March 31, 1998 totaled $272,125,
a reduction of $113,898, or 29.50%, from total non-interest income of $386,023
recognized for the first quarter of 1997. This reduction in non-interest income
is primarily attributable to reductions in gain on sale of securities and
service charges and fees, offset by an increase in income on gain of sale of
loans. Services charges and fees assessed during the first quarter of 1998
declined by $115,200 over the comparable period of 1997. This decline is
attributable to a reduction in
23
<PAGE>
overdraft fees on deposit accounts as the Company's deposit customers overdrew
their accounts less frequently. In addition, during the first quarter of 1997,
the Company recognized $86,712 in net gain on the sale of securities, while the
Company did not recognize any net gain on the sale of securities during the
first quarter of 1998. These declines in non-interest income were partially
offset by an increase of $84,549 in gain on sale of loans. These gains are
attributable to the Company's sale of the guaranteed portion of small business
administration of loans and reflect an increased volume of SBA lending.
Non-interest income amounted to $1,728,109 for the year ended December 31,
1997, a decrease of $61,811, or 3.5%, from the comparable period of 1996. The
Company's non-interest income consists primarily of service charges and fees on
deposit accounts, gain on the sale of loans through the Company's participation
in the SBA Guaranteed Loan program and gain on the sale of securities. For the
years of 1997 and 1996, the decrease in non-interest income reflects a decrease
of $350,426 in the gain on sale of securities during 1997. This gain on sale of
securities during 1996 represents management's decision to recognize gains in
the securities portfolio by selling higher rate mortgage backed securities into
a lower rate market. In addition, service charges and fees declined $12,168 and
other income declined $101,512. These declines were partially off-set by an
increase of $402,295, in the gain on sale of loans as the Company continued to
increase its SBA lending.
INCOME TAX EXPENSES
For the quarter ended March 31, 1998, the Company recognized income tax
expense of $88,000, compared to a tax benefit of $67,000 for the quarter ended
March 31, 1997. This $155,000 change is attributable to the Company's use of
unrestricted net operating loss carry forwards during 1997 to offset income tax
expense. These net operating loss carry forwards were exhausted in 1997 and for
the first quarter of 1998 the Company was required to pay taxes on its income.
The Company continues to have available restricted net operating loss carry
forwards available to offset a portion of its taxable income in future periods.
The amount of this restricted net operating loss which may be applied annually
is $117,000.
The income tax provision, which includes both federal and state taxes, was
$15,000 for the year ended December 31, 1996 reflecting amounts due under the
alternative minimum tax provisions of the Internal Revenue Code of 1986.
Although the Company earned taxable income during 1996, the Company's tax
liability was substantially reduced by the use of net operating loss carry
forwards. Due to the Company's use of net operating loss carry forwards during
1997, the Company recognized a tax benefit of $288,000 for Federal or State
taxes for 1997.
24
<PAGE>
FINANCIAL CONDITION
At March 31, 1998, the Company's total assets were $51.0 million, compared
to $48.2 million and $43.4 million at December 31, 1997 and 1996, respectively.
Total loans, net increased to$24.6 million at March 31, 1998 from $22.9 million
at December 31, 1997. Total deposits were $41.2 million at March 31, 1998
compared to $42.8 million at December 31, 1997.
LOAN PORTFOLIO
At March 31, 1998, the Company's total loans, net were $24.6 million, an
increase of $1.7 million over total loans, net of $22.9 million at December 31,
1997. The increase in loans was primarily in loans secured by real estate and
commercial loans, and reflects the Company's continued efforts to achieve
greater penetration in its market areas and new customer activity following the
Change In Control in January, 1998. The Company's loans held for sale declined
to $739,664 at March 31, 1998 from $994,182 at December 31, 1997.
At December 31, 1997, the Company's total loans, net were $22.9 million, an
increase of $4.6 million, or 25.4%, over total loans, net at December 31, 1996.
These increases in the loan portfolio reflect increased commercial and SBA
lending. As a participant in the SBA Guaranteed Loan Program, the Company
originates loans for resale, while retaining both the servicing rights for the
loans and the non-guaranteed portion of the loan. The Company then receives a
fee for servicing the loan. As a result of the increases in SBA lending, the
Company's loans held for sale increased to $994,182 at December 31, 1997 from
$825,998 at December 31, 1996.
The Company's loan portfolio consists primarily of loans secured by real
estate, and, to a lesser extent, commercial and consumer loans. Real estate
loans consist of loans secured by commercial or residential real property and
loans for the construction of commercial or residential property. Consumer loans
are made for the purpose of financing the purchase of consumer goods, home
improvements, and other personal needs, and are generally secured by the
personal property being purchased.
The Company's loans are primarily to businesses and individuals located in
northern Palm Beach and Broward Counties, Florida. The Company has not made
loans to borrowers outside of the United States. Commercial lending activities
are focused primarily on lending to small business borrowers. The Company
believes that its strategy of customer service, competitive rate structures and
selective marketing have enabled the Company to gain market entry to local
loans. Bank mergers by larger banks competing with the Company have also
contributed to the Company's efforts to attract borrowers.
The following table sets forth the classification of the Company's loans by
major category for the periods presented.
25
<PAGE>
================================================================================
March 31, 1998 December 31,
- --------------------------------------------------------------------------------
1997 1996
- --------------------------------------------------------------------------------
(Dollars in Thousands)
- --------------------------------------------------------------------------------
Amount Percent Amount Percent Amount Percent
- --------------------------------------------------------------------------------
Commercial and
Industrial $6,914 28% $6,074 26% $5,419 29%
- --------------------------------------------------------------------------------
Real Estate
Non-Residential
Properties 15,320 61% 14,301 61% 11,291 60%
- --------------------------------------------------------------------------------
Residential
Properties 1,873 8% 1,613 7% 1,357 8%
- --------------------------------------------------------------------------------
Construction 63 -- 375 2% 31 --
- --------------------------------------------------------------------------------
Consumer 848 3 910 4% 575 3%
--- - --- -- --- --
- --------------------------------------------------------------------------------
Total Loans $25,018 100% $23,273 100% $18,673 100%
======= === ======= === ======= ===
================================================================================
The following table sets forth fixed and adjustable rate loans as of March
31, 1998 in terms of interest rate sensitivity.
================================================================================
Within 1 After 5
Year 1 to 5 Years years Total
-------- ------------ ------- -----
- --------------------------------------------------------------------------------
(In Thousands)
- --------------------------------------------------------------------------------
Loans with fixed rate $ 1,501 $ 2,008 $ 518 $ 4,027
- --------------------------------------------------------------------------------
Loans with
adjustable rate 19,964 1,027 0 20,991
-------- ------- ----- -------
- --------------------------------------------------------------------------------
$ 21,465 $ 3,035 $ 518 $25,018
======== ======= ===== =======
================================================================================
ASSET QUALITY
The Company's principal earning assets are its loans. Inherent in the
lending function is the risk of the borrower's inability to repay their loan
under its existing terms. Risk elements include non-accrual loans, past due and
restructured loans, potential problem loans, loan concentrations and other real
estate.
Non-performing assets include loans that are not accruing interest
(non-accrual loans) as a result of principal or interest being in default for a
period of 90 days or more. When a loan is classified as non-accrual, interest
accruals discontinue and all past due interest, including interest
26
<PAGE>
applicable to prior years, is reversed and charged against current income. Until
the loan becomes current, any payments received from the borrower are applied to
outstanding principal until such time as management determines that the
financial condition of the borrower and other factors merit recognition of such
payments as interest.
The Company attempts to minimize overall credit risk through loan
diversification and its loan approval procedures. The Company's due diligence
begins at the time a borrower and the Company begin to discuss the origination
of a loan. Documentation, including a borrower's credit history, materials
establishing the value and liquidity of potential collateral, the purpose of the
loan, the source and timing of the repayment of the loan, and other factors are
analyzed before a loan is submitted for approval. Loans made are also subject to
periodic review.
During the quarter ended March 31, 1998, the Company's non-accrual loans
increased by $622,000 to $718,000 at March 31, 1998 from $96,000 at December 31,
1997. This increase is substantially attributable to the placement of a single
loan with a balance of $516,000 on non-accrual status. This loan is subject to a
workout agreement, and management believes that the loan is adequately secured
and does not anticipate that the Company will incur a material loss on this
credit.
The following table sets forth information concerning The Company's
non-performing assets as of the dates indicated:
NON-PERFORMING LOANS
================================================================================
March 31 December 31
- --------------------------------------------------------------------------------
1998 1997 1997 1996
---- ---- ---- ----
- --------------------------------------------------------------------------------
(In Thousands)
- --------------------------------------------------------------------------------
Non-accrual loans ............. $718 $158 $ 96 $248
- --------------------------------------------------------------------------------
Other real estate owned ....... 24 -- 24 --
- --------------------------------------------------------------------------------
Total non-performing
assets(1) ................... 742 158 120 248
- --------------------------------------------------------------------------------
Non-accrual loans to
total loans ................. 2.86% .63% .49% 1.33%
- --------------------------------------------------------------------------------
Non-performing assets
to total assets ............. 1.46% 0.35% 0.41% 0.57%
- --------------------------------------------------------------------------------
Allowance for possible
loan loses as a
percentage of
non-performing assets ....... 57.8% 200.3% 300.15% 100.47%
================================================================================
27
<PAGE>
(1) Excludes loans past due 90 days or more and still accruing interest of
approximately $94,000, $34,000, $213,000, and $48,000 at March 31, 1998,
and 1997 and December 31, 1997 and 1996, respectively.
If the above-described non-accruing loans had been current, the Company's
interest income would have increased by $19,675, and $4,425 for the three month
periods ended March 31, 1998 and 1997, respectively, and $10,694 and $25,945,
for the years ended December 31, 1997 and 1996, respectively.
At the dates indicated in the above table, there were no concentration of
loans exceeding 10% of the Company's total loans and the Company had no foreign
loans.
ALLOWANCE FOR LOAN LOSSES
The Company attempts to maintain an allowance for loan losses at a
sufficient level to provide for potential losses in the loan portfolio. Loan
losses are charged directly to the allowance when they occur and any recovery is
credited to the allowance. Risks within the loan portfolio are analyzed on a
continuous basis by the Company's officers, by outside, independent loan review
auditors and by the Company's Loan Committee. A risk system, consisting of
multiple grading categories, is utilized as an analytical tool to assess risk
and appropriate reserves. Along with the risk system, management further
evaluates risk characteristics of the loan portfolio under current and
anticipated economic conditions and considers such factors as the financial
condition of the borrower, past and expected loss experience, and other factors
management feels deserve recognition in establishing an appropriate reserve.
These estimates are reviewed at least quarterly, and, as adjustments become
necessary, they are realized in the periods in which they become known.
Additions to the allowance are made by provisions charged to expense and the
allowance is reduced by net charge-offs (i.e. - loans judged to be uncollectible
and charged against the reserve, less any recoveries on such loans). Although
management attempts to maintain the allowance at a level deemed adequate, future
additions to the allowance may be necessary based upon changes in market
conditions. In addition, various regulatory agencies periodically review the
Company's allowance for loan losses. These agencies may require the Company to
take additional provisions based on their judgments about information available
to them at the time of their examination. See "Prospectus Summary - Admiralty
Bancorp, Inc. - Management Strategy" for a description of the effect of lifting
the C & D in the first quarter of 1998 on the Company's provision of its
allowance for loan losses.
The Company's allowance for possible loan losses totaled $428,809,
$363,982, $377,807 and $364,475 at March 31, 1998 and 1997, December 31, 1997
and 1996, respectively.
The following is a summary of the reconciliation of the allowance for loan
losses for the periods presented.
28
<PAGE>
================================================================================
Three Months
Ended Year Ended
March 31, December 31
- --------------------------------------------------------------------------------
1998 1997 1997 1996
---- ---- ---- ----
- --------------------------------------------------------------------------------
(Dollars In Thousands)
- --------------------------------------------------------------------------------
Balance at Beginning of
Period ................. $ 378 $365 $ 365 $ 344
- --------------------------------------------------------------------------------
Charge-Offs: .............
- --------------------------------------------------------------------------------
Commercial and
industrial.............. 5 119 340 283
Real estate............... -- 24 104 3
Consumer.................. -- -- 3 --
---- ---- ---- ----
5 143 447 286
- --------------------------------------------------------------------------------
Recoveries................ 1 -- 25 10
- --------------------------------------------------------------------------------
Net Charge Offs: ......... $ 4 $143 $422 $ 276
- --------------------------------------------------------------------------------
Provision Charged to
Expense................. $ 55 $142 $435 $297
- --------------------------------------------------------------------------------
Balance of Allowance at
End of Period........... 429 364 $378 $365
==== ==== ==== ====
- --------------------------------------------------------------------------------
Ratio of Net Charge-Offs
to Average Loans
Outstanding............. 0.1% 2.93% 2.02% 1.41%
- --------------------------------------------------------------------------------
Balance of Allowance at
Period-End as a % of
Loans at Period End..... 1.71% 1.81% 1.62% 1.95%
================================================================================
The following table sets forth, for each of the Company's major lending
areas, the amount and percentage of the Company's allowance for loan losses
attributable to such category, and the percentage of total loans represented by
such category, as of the periods indicated:
29
<PAGE>
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES BY CATEGORY
================================================================================
December 31
- --------------------------------------------------------------------------------
March 31, 1998 1997 1996
- --------------------------------------------------------------------------------
(Dollars in Thousands)
- --------------------------------------------------------------------------------
% of all % of all % of all
Amount Loans Amount Loans Amount Loans
- --------------------------------------------------------------------------------
Balance Applicable to:
- --------------------------------------------------------------------------------
Commercial and
Industrial 96 28% $105 26% $118 29%
- --------------------------------------------------------------------------------
Real Estate:
- --------------------------------------------------------------------------------
Non-Residential
Properties 293 61% 175 61% 140 60%
- --------------------------------------------------------------------------------
Residential Properties 35 8% 35 7% 35 8%
- --------------------------------------------------------------------------------
Construction 1 -- 4 2% 5 --%
- --------------------------------------------------------------------------------
Consumer 4 3% 5 4% 4 3.0%
- --------------------------------------------------------------------------------
Subtotal 429 100% 324 100% 302 100%
--- ---- --- ---- --- ----
- --------------------------------------------------------------------------------
Unallocated Reserves -- -- 54 -- 63 --
- --------------------------------------------------------------------------------
Total 429 100% $378 100% $365 100%
=== ==== ==== ==== ==== ====
================================================================================
30
<PAGE>
INVESTMENT SECURITIES
The Company maintains an investment portfolio to fund increased loan demand
or decreased deposits and other liquidity needs and to provide an additional
source of interest income. The portfolio is composed primarily of U.S. Treasury
Securities and obligations of U.S. Government agencies and government sponsored
entities, including collateralized mortgage obligations issued by such agencies
and entities, and to a lesser extent collateralized mortgage obligations issued
by non-public entities. As a Federal Reserve Member Bank, the Bank also holds
stock in the Federal Reserve Bank of Atlanta.
The Company adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," (SFAS 115),
effective January 1, 1994. Under SFAS 115, securities are classified as
securities held to maturity based on management's intent and the Company's
ability to hold them to maturity. Such securities are stated at cost, adjusted
for unamortized purchase premiums and discounts. Securities that are bought and
held principally for the purpose of selling them in the near term are classified
as trading securities, which are carried at market value. Realized gains and
losses and gains and losses from marking the portfolio to market value are
included in trading revenue. Securities not classified as securities held to
maturity or trading securities are classified as securities available for sale,
and are stated at fair value. Unrealized gains and losses on securities
available for sale are excluded from results of operations, and are reported as
a separate component of stockholders' equity, net of taxes. Securities
classified as available for sale include securities that may be sold in response
to changes in interest rates, changes in prepayment risks, the need to increase
regulatory capital or other similar requirement.
Management determines the appropriate classification of securities at the
time of purchase. At March 31, 1998, the Company's entire investment securities
portfolio of $15.7 million was classified as available for sale.
Investment securities at March 31, 1998 represent a decrease of $4.5
million, or 22.5%, over total investment securities of $20.2 million at December
31, 1997. This decrease in investment securities represents proceeds of maturing
and called securities being invested in new loan originations and used to fund a
reduction in deposits.
At December 31, 1997, the majority of the Company's investment securities
were held to maturity. Pursuant to the Change In Control, and as part of the
purchase accounting adjustments made in connection with the transaction,
securities were reclassified as available for sale.
The following table sets forth the carrying value of the Company's
securities portfolio as of the dates indicated.
31
<PAGE>
A comparative summary of securities available for sale for the periods
presented is as follows (in thousands):
================================================================================
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
- --------------------------------------------------------------------------------
March 31, 1998:
U.S. Government and
Agency Obligations .. $ 500 $ -- $ -- $ 500
- --------------------------------------------------------------------------------
Mortgage Backed
Securities .......... 15,153 -- (7) 15,146
- --------------------------------------------------------------------------------
$ 15,653 $ -- $ (7) $15,646
======== ==== ====== =======
- --------------------------------------------------------------------------------
December 31, 1997:
U.S. Government and
Agency Obligations... $ 3,608 $ 16 $ (4) $ 3,620
- --------------------------------------------------------------------------------
December 31, 1996:
U.S. Government and
Agency Obligations... $ 8,979 $ 57 $(53) $ 8,983
================================================================================
A comparative summary of investment securities held to maturity for the
periods presented is as follows (in thousands):
================================================================================
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
- --------------------------------------------------------------------------------
December 31, 1997:
U.S. Government
and Agency
Obligations... $ 16,561 $ 73 $(28) $16,606
- --------------------------------------------------------------------------------
December 31, 1996:
U.S. Government
and Agency
Obligations... $ 8,478 $ 55 $(61) $ 8,472
================================================================================
The following table sets forth as of March 31, 1998 and December 31, 1997
the maturity distribution of the Company's investment portfolio.
32
<PAGE>
<TABLE>
<CAPTION>
MATURITY SCHEDULE OF INVESTMENT SECURITIES
- -----------------------------------------------------------------------------------------------------------------------------------
One Year or Less One to Five Years Five to Ten Years More than Ten Years Total
- -----------------------------------------------------------------------------------------------------------------------------------
Carrying Average Carrying Average Carrying Average Carrying Average Carrying Average
Value Yield Value Yield Value Yield Value Yield Value Yield
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S.
Government
and Agency
Obligations -- -- $ 500 5.01% -- -- -- -- $ 500 5.01%
- -----------------------------------------------------------------------------------------------------------------------------------
Mortgaged
Backed
Securities 9,543 6.50% 5,348 6.55% 262 7.65% -- -- $ 15,153 6.54%
- -----------------------------------------------------------------------------------------------------------------------------------
Federal
Reserve Bank -- -- -- - -- -- $127,300 6.00% $127,300 $ 6.00%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Federal Reserve Bank Stock has no stated maturity, it must be owned as long
as the Bank remains a member of the FRB system. The Bank does not
anticipate that it will discontinue its membership and, therefore, the
investments is classified as more then ten years.
Proceeds from the sales of securities available for sale during the years
ended December 31, 1997 and 1996 were $87,000 and $437,000, respectively. Gross
gains of $87,000 and gross losses of $0 were realized on those sales in 1997.
Securities with a carrying value of $4.3 million, $5.3 million and $5.0 million
at March 31, 1998, December 31, 1997 and 1996 were pledged to secure public
funds on deposit.
DEPOSITS
Deposits are the Company's primary source of funds. During the first
quarter of 1998, the Company's deposits declined by $1,540,052, or 3.6%, to
$41,236,145 at March 31, 1998 from $42,776,197 at December 31, 1997. During the
first quarter of 1998, the Company allowed higher rate certificates of deposit
to run off since the funds were not needed to fund loan demand. Time deposits
declined from $16.2 million at December 31, 1997 to $13.9 million at March 31,
1998, and the average rate paid on these deposits declined from 5.40% for the
year ended December 31, 1997 to 5.31% for the three months ended March 31, 1998.
The Company's cost of funds for the three months ended March 31, 1998 was 2.79%,
compared to 2.95% for the year ended December 31, 1997. The Company experienced
an increase in average deposit balances of $3,674,185, or 10.0%, to $40,452,274
for the year ended December 31, 1997 from
33
<PAGE>
average deposits or $36,778,039 for the year ended December 31, 1996. The
year-to-year growth was accomplished through increased marketing of the Bank and
its products. Among the increase in deposits, average savings, N.O.W. and money
market accounts grew to $13,501,688, an increase of $1,182,032, or 9.6%, over
the average for the year ended December 31, 1996. The aggregate amount of
average non-interest-bearing deposits was 25%, 24% and 20% during 1997, 1996 and
1995, respectively, of average total deposits. The Company has no foreign
deposits, nor are there any material concentrations of deposits.
The following table sets forth the average amounts of various types of deposits
for each of the periods indicated:
================================================================================
March 31, December 31,
- --------------------------------------------------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------
(Dollars in Thousands)
- --------------------------------------------------------------------------------
Average Average Average
Amount Yield Amount Yield Amount Yield
- --------------------------------------------------------------------------------
Non-Interest Bearing
Demand $10,899 -- $10,091 -- $ 8,807 --
- --------------------------------------------------------------------------------
Interest-Bearing Demand 5,537 1.22% 5,149 1.43% 4,126 1.47%
- --------------------------------------------------------------------------------
Savings Deposit 10,421 2.75% 8,353 2.50% 8,194 2.37%
- --------------------------------------------------------------------------------
Time Deposits 14,554 5.31% 16,859 5.40% 15,652 5.43%
------ ------ ------
- --------------------------------------------------------------------------------
Total $41,411 $40,452 $36,779
======= ======= =======
================================================================================
The Company does not actively solicit short-term deposits of $100,000 or
more because of the liquidity risks posed by such deposits. The following table
summarizes the maturity distribution of certificates of deposits of
denominations of $100,000 or more as of March 31, 1998.
Time Deposits ($100,000 and over)
(In Thousands)
Three months or less .......................................... $ 411
Over three months through nine months ......................... 584
Over nine months through twelve months ........................ 1,158
Over twelve months ............................................ 972
Total ................................................. $3,135
34
<PAGE>
INTEREST RATE RISK MANAGEMENT
Interest rate risk management involves managing the extent to which
interest-sensitive assets and interest-sensitive liabilities are matched.
Interest rate sensitivity is the relationship between market interest rates and
earnings volatility due to the repricing characteristics of assets and
liabilities. The Company's net interest income is affected by changes in the
level of market interest rates. In order to maintain consistent earnings
performance, the Company seeks to manage, to the extent possible, the repricing
characteristics of its assets and liabilities.
The ratio between assets and liabilities repricing in specific time
intervals is referred to as an interest rate sensitivity gap. Interest rate
sensitivity gaps can be managed to take advantage of the slope of the yield
curve as well as forecasted changes in the level of interest rate changes.
One major objective of the Company when managing the rate sensitivity of
its assets and liabilities is to stabilize net interest income. The management
of and authority to assume interest rate risk is the responsibility of the
Company's Asset/Liability Committee ("ALCO"), which is comprised of senior
management and Board members. The process to review interest rate risk
management is a regular part of management of the Company. Consistent policies
and practices of measuring and reporting interest rate risk exposure,
particularly regarding the treatment of noncontractual assets and liabilities,
are in effect. In addition, there is an annual process to review the interest
rate risk policy with the Board of Directors which includes limits on the impact
to earnings from shifts in interest rates.
To manage the interest sensitivity position, an asset/liability model
called "gap analysis" is used to monitor the difference in the volume of the
Company's interest sensitive assets and liabilities that mature or reprice
within given periods. A positive gap (asset sensitive) indicates that more
assets reprice during a given period compared to liabilities, while a negative
gap (liability sensitive) has the opposite effect. The Company employs
computerized net interest income simulation modeling to assist in quantifying
interest rate risk exposure. This process measures and quantifies the impact on
net interest income through varying interest rate changes and balance sheet
compositions. The use of this model assists the ALCO to gauge the effects of the
interest rate changes on interest sensitive assets and liabilities in order to
determine what impact these rates changes will have upon the net interest
spread.
35
<PAGE>
At March 31, 1998, the Company maintained a one year cumulative gap of $3.4
million or 6.5% of total assets.
<TABLE>
<CAPTION>
Interest Sensitivity Gap at March 31, 1998
------------------------------------------------------
3 months 3 through 1 through Over
or less 12 months 3 years 3 years Total
-------- --------- --------- ------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents.................. $ 4,472 $ -- $ -- $ -- $ 4,472
Investment securities(1)(2)................ 3,449 6,095 5,609 627 15,780
Loans(2)................................... 21,549 455 3,014 -- 25,018
Fixed and other assets..................... -- -- -- 6,829 6,829
-------- ------- ------ ------ -------
Total assets........................... $129,470 $ 6,550 $8,623 $7,456 $52,099
======== ======= ====== ====== =======
Non interest-bearing transaction deposits.. $ 11,089 $ -- $ -- $ -- $11,089
Interest-bearing transaction deposits...... 16,268 -- -- -- 16,268
Time....................................... 2,888 7,377 3,614 -- 13,879
Other liabilities.......................... -- -- -- 2,091 2,091
-------- ------- ------ ------ -------
Total.................................. $ 30,245 $ 7,377 $3,614 $2,091 $43,327
======== ======= ====== ====== =======
Interest sensitivity gap................... $ (775) $ (827) $5,009 $5,365
======== ======= ====== ======
Cumulative gap............................. $ (775) $(1,602) $3,407 $8,772
======== ======= ====== ======
Cumulative gap to total assets............. (1.5%) (3.1%) 6.50% 16.8%
==== ==== ==== ====
</TABLE>
- ----------
(1) Gross of unrealized gains/losses on available for sale securities.
(2) Investments and loans are included in the earlier of the period in which
interest rates were next scheduled to adjust or the period in which they
are due. In addition, loans were included in the periods in which they are
scheduled to be repaid based on scheduled amortization. For amortizing
loans and mortgage-backed securities, annual prepayment rates are assumed
reflecting historical experience as well as management's knowledge and
experience of its loan products.
36
<PAGE>
LIQUIDITY
The Company's liquidity is a measure of its ability to fund loans,
withdrawals or maturities of deposits and other cash outflows in a
cost-effective manner. The Company's principal sources of funds are deposits,
scheduled amortization and prepayments of loan principal, sales and maturities
of investment securities and funds provided by operations. While scheduled loan
payments and maturing investments are relatively predictable sources of funds,
deposit flows and loan prepayments are greatly influenced by general interest
rates, economic conditions and competition.
The Company's total deposits equaled $41.2 million, $42.8 million and $39.8
million as of March 31, 1998 and December 31, 1997 and 1996, respectively. The
funds provided by deposits during these years has been more than sufficient to
provide for the Company's lending demand.
Through the Company's investment portfolio the Company has generally sought
to obtain a safe yet slightly higher yield than would have been available to the
Company as a net seller of overnight Federal Funds while still maintaining
liquidity. Through its investment portfolio, the Company also attempts to manage
its maturity gap by seeking maturities of investments which coincide as closely
as possible with maturities of deposits. The Company's investment portfolio also
includes securities held for sale to provide liquidity for anticipated loan
demand and other liquidity needs.
Management believes that the Company's current sources of funds provide
adequate liquidity for the current cash flow needs of the Company.
CAPITAL
A significant measure of the strength of a financial institution is its
capital base. The Bank's federal regulators have classified and defined capital
into the following components: (1) Tier I capital, which includes tangible
shareholders' equity for common stock and qualifying preferred stock, and (2)
Tier II capital, which includes a portion of the allowance for possible loan
losses, certain qualifying long-term debt and preferred stock which does not
qualify for Tier I capital. Minimum capital levels are regulated by risk-based
capital adequacy guidelines which require a financial institution to maintain
certain capital as a percent of its assets and certain off-balance sheet items
adjusted for predefined credit risk factors (risk-adjusted assets.) A financial
institution is required to maintain, at a minimum, Tier I capital as a
percentage of risk-adjusted assets of 4.0% and combined Tier I and Tier II
capital as a percentage of risk-adjusted assets of 8.0%.
In addition to the risk-based guidelines, the federal regulators require
that a financial institution which meets the regulators' highest performance and
operation standards maintain a
37
<PAGE>
minimum leverage ratio (Tier I capital as a percentage of tangible assets) of
3%. For those institutions with higher levels of risk or that are experiencing
or anticipating significant growth, the minimum leverage ratio will be
proportionately increased. Minimum leverage ratios for each bank are evaluated
through the ongoing regulatory examination process.
The Company's federal regulators impose capital standards on bank holding
companies which are substantially similar to those imposed upon the Bank.
However, provided the Company's total assets are less than $150 million, these
standards are applied on a bank only basis.
The following table summarizes the Bank's risk-based and leverage capital
ratios at March 31, 1998, as well as the required minimum regulatory capital
ratios:
===============================================================================
CAPITAL ADEQUACY
- --------------------------------------------------------------------------------
To Be Well
For Capital Capitalized Under
Adequacy Prompt Corrective
Actual Purposes Action Provisions
- --------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
- --------------------------------------------------------------------------------
Total Capital
(to risk-weighted
assets) $4,599,237 14.35% $2,563,520 8.00% $3,204,400 10.0%
- --------------------------------------------------------------------------------
Tier I Capital
(to risk-weighted
assets) 4,198,687 13.10% 1,281,760 4.00% 1,922,640 6.00%
- --------------------------------------------------------------------------------
Tier I Capital
(to average assets) 4,198,687 8.76% 1,917,120 4.00% 2,396,400 5.00%
===============================================================================
IMPACT OF INFLATION AND CHANGING PRICES
The condolidated financial statements of the Company and notes thereto,
presented elsewhere herein, have been prepared in accordance with generally
accepted accounting principles, which require the measurement of financial
position and operating results in terms of historical dollars without
considering the change in the relative purchasing power of money over time and
due to inflation. The impact of inflation is reflected in the increased cost of
the Company's operations. Unlike most industrial companies, nearly all the
assets and liabilities of the Company are monetary. As a result, interest rates
have a greater impact on the Company's performance than do the effects of
general levels of inflation. Interest rates do not necessarily move in the same
direction or to the same extent as the prices of goods and services.
38
<PAGE>
RECENTLY ISSUED ACCOUNTING STANDARDS
Accounting For Earnings Per Share. In February 1997, the Financial
Accounting Standards Board(FASB) issued Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" (SFAS 128). SFAS 128 establishes
standards for computing and presenting Earnings Per Share (EPS) and applies to
entities with publicly held common stock or potential common stock. This
statement simplifies the standards for computing earnings per share previously
found in APB Opinion No. 15, "Earnings Per Share," and makes them comparable to
international EPS standards. It replaces the presentation of primary EPS with a
presentation of basic EPS and requires dual presentation of basic and diluted
EPS on the face of the income statement for all entities with complex capital
structures. It also requires a reconciliation of the numerator and denominator
of the basic EPS computation to the numerator and denominator of the diluted EPS
computation.
SFAS 128 is effective for financial statements issued for periods ending
after December 15, 1997, including interim periods; earlier application is not
permitted. This statement requires restatement of all prior-period EPS data
presented. The Company adopted the statement effective period end December 31,
1997.
Reporting of Comprehensive Income. In June 1997, the FASB issued Statement
of Financial Accounting Standards No. 130, "Reporting of Comprehensive Income"
("SFAS 130"), which establishes standards for the reporting and display of
comprehensive income and its components (revenues, expenses, gains, and losses)
in a full set of financial statements. This statement also requires that all
items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements.
This statement is effective for fiscal years beginning after December 15,
1997. Earlier application is permitted. Reclassification of financial statements
for earlier periods provided for comparative purposes is required. The Company
does not anticipate that preparation of disclosure to comply with SFAS 130 will
have material effect on the Company's financial statements.
Disclosure About Segments and Related Information. In June 1997, the FASB
issued Statement of Financial Accounting Standards No. 131, "Disclosures About
Segments of an Enterprise and Related Information" ("SFAS 131"), which
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that such enterprises report selected information about operating segments in
interim financial reports issued to shareholders.
This statement also establishes standards for related disclosures about
products and services, geographical areas, and major customers. This statement
requires the reporting of
39
<PAGE>
financial and descriptive information about an enterprise's reportable operating
segments. This statement is effective for financial statements for periods
beginning after December 15, 1997. In the initial year of application,
comparative information for earlier years is to be restated. The Company does
not anticipate that the preparation of disclosure to comply with SFAS 131 will
have a material effect on the Company's financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activity." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments imbedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. If
certain conditions are met, a derivative may be specifically designated as a
hedge. The accounting for changes in the fair value of a derivative (gains and
losses) depends on the intended use of the derivative and resulting designation.
SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. Earlier application is permitted only as of the beginning
of any fiscal quarter. The Company is currently reviewing the provisions of SFAS
No. 133. But does not anticipate the new provisions will have material effect
on the Company's financial statements.
YEAR 2000 COMPLIANCE
Management of the Company has reviewed the Company's status regarding "Year
2000" computer issues. Failure of the Company to address adequately any Year
2000 deficiencies in the Company's computer operations could have a material
adverse effect on the Company's results of operations in future periods. The
Company's data processing applications are undertaken offsite by a third-party
vendor. Management has reviewed this vendor's Year 2000 readiness and believes
that this vendor is in substantial compliance with all required regulatory
procedures. In addition, with regard to the Company's internal computer
functions, management believes that the Company is taking all steps necessary to
assure Year 2000 compliance. All new computer hardware purchased by the Company
is Year 2000 compliant, and, based upon the age of the Company's current
systems, management anticipates placing substantially all of the Company's
current hardware with new, compliant hardware. Management believes the costs to
be incurred for Year 2000 compliance, both with regard to the Company's internal
and out-sourced data processing operations, will not be material. In addition,
management believes the Company to be in compliance with all bank regulatory
requirements regarding Year 2000.
THE BANK
GENERAL
The Bank is a Florida state chartered bank which opened for business in
1987. The Bank operates through its main office located in Palm Beach Gardens
and two branch offices located in
40
<PAGE>
Juno Beach and Jupiter, Florida. Recently, the Bank applied for regulatory
approval to open its fourth office in Boca Raton.
The Bank is a community-oriented, full service commercial bank providing
commercial and consumer financial services to businesses and individuals in its
northern Palm Beach County trade area. See "Primary Trade Area" below.
Due to losses incurred on the Bank's loan portfolio and investment
securities portfolio, as well as certain other regulatory concerns, the Bank
entered into the C&D with the Florida Department of Banking and Finance and the
Federal Reserve Bank of Atlanta in January, 1992.
DEPOSITS
The Bank offers a full range of depository products and is competitive in
structuring the terms (e.g., interest rates, minimum balances, etc.) of the
deposit accounts as part of its strategy to gain deposits in its primary trade
area. In spite of this effort, the Bank believes that its cost of funds is lower
than the average costs experienced by its competitors.
LOANS
The Bank lends funds to individuals and businesses for personal and
commercial purposes. Most of the Bank's commercial loans, i.e., those for
business purposes, have floating rates tied to the Bank's prime rate. Typically,
the Bank's commercial loans are secured by business assets, personal guarantees
of the principals of closely-held businesses and often by the personal assets of
such principals. The loans are primarily made to small and mid-sized businesses
in the Bank's trade area. The Bank believes that it can attract commercial
borrowers by providing competitive rates, superior service, local
decision-making and flexibility in loan structure. The Bank's Board of Directors
believes that small and mid-sized businesses are not always of primary
importance to larger banking institutions for commercial lending purposes,
whereas such businesses represent the main portion of the commercial loan
business for the Bank.
In addition, the Bank has been very active in providing loans to small
businesses through the United States Small Business Administration ("SBA")
guaranteed loan program. Under the SBA program, loans are available to small
businesses which meet certain criteria. Generally, 75% of the principal of the
loan to a qualified business may be guaranteed by the United States government.
The Bank sells the guaranteed portion of its SBA loans into the secondary market
and derives premium income from such sales. The Bank's ability to offer SBA
loans on an ongoing basis is dependent upon, among other factors, appropriation
of funds by the Federal government to the SBA program. Historically, the Bank
has originated SBA guaranteed loans through a network of third-party brokers.
Under its arrangements with these brokers, the Bank would pay a commission fee
on closed loans. Management of the Company intends to de-
41
<PAGE>
emphasize the origination of SBA guaranteed loans, and particularly the use of
third-party brokers, and focus the Bank's lending activities on more traditional
commercial loans.
The Bank grants both secured and unsecured consumer loans to finance the
purchase of automobiles, durable goods or for any worthwhile purpose. The Board
of Directors believes that the Bank's competitive interest rates and superior
service (which includes, among other things, convenience, personal attention and
prompt local decision-making) are important competitive factors in attracting
personal loans from credit-worthy consumers.
The Bank also makes residential and commercial mortgage loans. Commercial
real estate transactions have generally been limited to owner-occupied
commercial properties.
OTHER ACTIVITIES
The Bank also derives income from investments in securities, typically
obligations of the United States Government and government agencies. The Bank
also provides a variety of financial services to its customers including wire
transfers, issuing money orders and travelers checks, accepting direct deposit
of payroll and of federal recurring payments, and issuing both standby and
commercial letters of credit.
LEGAL PROCEEDINGS
From time to time, the Bank may be a plaintiff or defendant in various
legal proceedings in the normal course of its business. The Bank is not
presently a defendant in any legal proceeding and, to the knowledge of the Board
of Directors, there are no threatened actions or proceedings which would have a
material adverse effect on the financial position or results of operations of
the Bank.
PRIMARY TRADE AREA
The Bank's primary trade area at present encompasses northern Palm Beach
County, Florida. Through the mid-1990s, Palm Beach County has experienced rapid
growth, showing a rate of population growth of nearly 50% from 1980 through
1990, with the population growing from 576,863 to an estimated 1996 population
of 980,000. The County's primary employers include service providers and retail
trade companies along with some light manufacturing. Major employers within Palm
Beach County include Pratt & Whitney, Marquette Medical Systems, Philips
Components, Siemens, Motorola, Sony USA and W.R. Grace & Co. Palm Beach County's
unemployment rate has declined since the early 1990s, and average annual
earnings in the West Palm Beach - Boca Raton area have grown at an annual rate
of 8.4% from 1984 through 1994.
42
<PAGE>
COMPETITION
The Bank is located in an extremely competitive environment. The Bank's
trade area is already serviced by major regional banks, large thrift
institutions and by a variety of credit unions. Most of the Bank's competitors
have substantially more capital and therefore greater lending limits than the
Bank. The Bank's competitors generally have established positions in the trade
area and have greater resources than the Bank with which to pay for advertising,
physical facilities, personnel and interest on deposited funds.
PHYSICAL FACILITIES
The Bank leases its main office in Palm Beach Gardens and its two branch
offices in Juno Beach and Jupiter, Florida. The following table sets forth
certain information regarding these leases:
- --------------------- ------------------ ------------------- ------------------
LOCATION SQUARE FEET MONTHLY RENTAL TERM
- --------------------- ------------------ ------------------- ------------------
Palm Beach Gardens 7,930 $ 13,204 October 31, 2003
- --------------------- ------------------ ------------------- ------------------
Juno Beach 2,508 4,719 December 31, 2000
- --------------------- ------------------ ------------------- ------------------
Jupiter 1,500 2,054 June 15, 1999
- --------------------- ------------------ ------------------- ------------------
In addition, the Bank has received regulatory approval to open a new office
in Boca Raton, Florida, and is currently finalizing the terms of the lease
agreement for this facility. As proposed, the lease will be for a term of 20
years, with four renewal options of five years each. The base rent will be
$143,000 per year. See "Management -- Transactions with Management."
PERSONNEL
The Bank currently employs 34 full time employees, and anticipates hiring
approximately seven additional employees as it continues to implement its
business strategy. Other than the employment agreement with Mr. Kellogg, the
Bank has no written employment agreements with its officers and employees.
Obtaining and retaining well-trained and qualified personnel may require the
Bank to pay salaries at or above those currently paid by competitors.
43
<PAGE>
MANAGEMENT
BOARD OF DIRECTORS
The direction and control of Admiralty is vested in its Board of Directors,
which pursuant to its bylaws must consist of not less than 3 nor more than 25
persons with the exact number to be determined by the Board from time to time.
Admiralty currently has ten (10) Directors. The term of each director is three
years, and the Board is divided into three classes, with one class standing for
election at each Annual Meeting. See, "Anti-Takeover Provisions -- Classified
Board of Directors."
The following sets forth certain information regarding Admiralty's
Directors:
BRUCE A. MAHON, 67 - CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER. Mr.
Mahon was formerly the Chairman of the Board of Carnegie Bancorp and had been
Chairman of the Board of Carnegie Bank, NA since its inception in 1988. Carnegie
Bank, NA is a commercial bank headquartered in Princeton, New Jersey. In July,
1998, Carnegie Bancorp was acquired by Sovereign Bancorp of Wyomissing,
Pennsylvania. Mr. Mahon is also the past President of the McCay Corporation as
well as the past President of Trenton Wine & Spirits. He has an extensive
background in public service, including service as the former Director of
Finance for Burlington County, New Jersey, former Burlington County Freeholder,
and a former Member of the Delaware Valley Regional Planning Board.
MICHAEL E. GOLDEN, 54 - VICE CHAIRMAN OF THE BOARD. Mr. Golden is the
Chairman of the Board and CEO of First Colonial Securities Group, Inc., a full
service investment brokerage and the managing Underwriter. Mr. Golden was also
the Vice Chairman of the Board of Carnegie Bancorp since its inception in 1988.
Prior to 1990, Mr. Golden was Senior Vice President of Smith Barney Harris Upham
& Company, Inc. Mr. Golden is a Director of the Cooper Hospital of Camden, New
Jersey, a Director of the Palm Beach Jewish Federation, Director of the Donna
Klein Jewish Academy of Boca Raton, Florida and Chairman of KidAcademy Learning
Centers.
LESLIE E. GOODMAN, 55, DIRECTOR. Mr. Goodman is currently an executive
officer with the Eagle Group, Inc., a New Jersey based real estate development
firm. Prior to his retirement, Mr. Goodman was a senior executive officer with
First Union National Bank, and, prior to its acquisition by First Union, First
Fidelity Bank and its predecessors, for more than 30 years. Mr. Goodman has
served for over 20 years as President and Chief Executive Officer of various
financial institutions in New Jersey, including the First National State Bank of
Central New Jersey, Fidelcor, Inc., Fidelity Bank, N.A., New Jersey, and First
Fidelity Bank, N.A., New
44
<PAGE>
Jersey. In addition, after the acquisition of First Fidelity Bank by First Union
National Bank, Mr. Goodman served as the President for First Union National
Bank's North Jersey area. Mr. Goodman is also a licensed attorney in the State
of New Jersey and the Commonwealth of Pennsylvania.
THOMAS L. GRAY, JR., 53, DIRECTOR. Mr. Gray was formerly the President,
Chief Executive Officer and member of the Board of Carnegie Bancorp. Prior to
forming Carnegie in 1988, Mr. Gray served for five years as President and CEO of
Peoples National Bank of Denville, New Jersey. He served in that same capacity
at Lafayette Bank & Trust Company of Bridgeport Connecticut for ten years, and
was a National Bank Examiner for the OCC for six years. Mr. Gray has over 30
years of experience in the banking industry.
SIDNEY L. HOFING, 63, DIRECTOR. Mr. Hofing is the President of the Eagle
Group, a New Jersey based real estate development company, and is also the
Chairman of the Board of New General Packaging Service, Inc., a pharmaceutical
packaging company. Mr. Hofing also serves on the Board of Yardville National
Bank, a national bank headquartered in Yardville, New Jersey. Mr. Hofing is a
licensed attorney in both Pennsylvania and New Jersey.
PETER L.A. PANTAGES, 43, DIRECTOR. Mr. Pantages is the President of McCay
Real Estate Group, a real estate sales, management and development company. Mr.
Pantages is a licensed real estate broker and financial consultant, and has
extensive experience in real estate financing. He is also an active investor in
banks.
RICHARD P. ROSA, 46, DIRECTOR AND CHIEF FINANCIAL OFFICER. Mr. Rosa was
formerly the Chief Financial Officer of Carnegie Bancorp since April, 1995.
Prior joining Carnegie Bancorp, Mr. Rosa was the Chief Financial Officer of
Lakeland First Financial Group, Inc., the parent company of Lakeland Savings
Bank, Succasunna, New Jersey, for four years. Prior to his service at Lakeland,
Mr. Rosa served for seven years as Senior Vice President and Treasurer of United
Jersey Bank/Northwest, Randolph, New Jersey and also has seven years of bank
auditing experience, and is a Certified Bank Auditor. Mr. Rosa has an MBA from
Rutgers University Graduate School of Business Administration in accounting.
CRAIG A. SPENCER, 37, DIRECTOR. Mr. Spencer is the President and Chief
Executive Officer of The Arden Group, Inc., a real estate development company.
Mr. Spencer is also a licensed attorney and real estate broker in the
Commonwealth of Pennsylvania. Mr. Spencer has extensive experience in the real
estate industry, having previously served as a Vice President for Acquisitions
for National Property Analysts of Philadelphia, Pennsylvania. Mr. Spencer also
serves on the advisory board of XNDO, Inc.
MARK A. WOLTERS, 37, DIRECTOR. Mr. Wolters was formerly a Director and the
Executive Vice President of Carnegie Bancorp and served as an Executive Vice
President of Carnegie Bank, NA since 1988. Mr. Wolters has been involved in the
banking industry since 1978. Prior
45
<PAGE>
to joining Carnegie, Mr. Wolters served as the Senior Lending Officer of the
Yardville National Bank where he was employed for six years. Prior to his
service, Mr. Wolters was affiliated with the Central Jersey Bank and Trust.
GEORGE R. ZOFFINGER, 50, DIRECTOR. Mr. Zoffinger is President and Chief
Executive Officer of Constellation Capital Corp. Previously, Mr. Zoffinger was
President and Chief Executive Officer of Value Property Trust, a New Jersey
based real estate investment trust. Value Property Trust was merged with
Wellford Properties, Inc. in February 1998. Previously, Mr. Zoffinger was
Chairman of CoreStates New Jersey National Bank and President and Chief
Executive Officer of Constellation Bancorp. Mr. Zoffinger has over 25 years
experience in the banking industry and also served as Commissioner of the New
Jersey State Department of Commerce and Chairman of the New Jersey Economic
Development Authority.
No Director of Admiralty is also a director of any company registered as an
investment company under the Investment Company Act of 1940.
The following sets forth certain information regarding members of the
Bank's management who are not Directors of Admiralty:
WARD KELLOGG, 39. Mr. Kellogg is the President and Chief Executive Officer
of the Bank. Prior to joining the Bank, Mr. Kellogg served as Executive Vice
President and Chief Credit Officer for 1st United Bank of Boca Raton, Florida
from 1987 through 1998, when 1st United Bank was acquired by Wachovia
Corporation. Mr. Kellogg received degrees in business administration and
marketing from Florida International University. Mr. Kellogg has over 16 years
of experience in the banking industry in the South Florida market.
WILLIAM J. BURKE, 38. Mr. Burke is the Executive Vice President and Chief
Operating Officer of the Bank. From 1994 through 1998, Mr. Burke was the Senior
Vice President and Regional Senior Lending Officer of 1st United Bank of Boca
Raton, Florida, until it was acquired by Wachovia Corporation. Previously, from
1989 through 1994, Mr. Burke was the Vice President for Commercial Lending for
SouthEast Bank, which was acquired by First Union Corporation. Mr. Burke is a
graduate of Florida International University. Mr. Burke has over 16 years of
banking experience in the South Florida market.
DENNIS GAVIN, 33. Mr. Gavin is the Senior Vice President and the Senior
Lending Officer of the Bank. From 1994 through 1998, Mr. Gavin served as a Vice
President of Commercial Lending for 1st United Bank of Boca Raton, Florida,
until it was acquired by Wachovia Corporation. Prior to 1994, Mr. Gavin served
as a Credit Administration Officer for Barnett Bank of Palm Beach County. Mr.
Gavin has over 10 years of banking experience in the South Florida market.
ANNE PADDOCK, 37. Ms. Paddock is the Senior Vice President -- Loan
Administration
46
<PAGE>
of the Bank. From 1994 to 1998, Ms. Paddock as the Vice President of Commercial
Lending for 1st United Bank, which was acquired by Wachovia Corporation.
Previously, Mr. Paddock was ______________. Ms. Paddock received an MBA from
Duke University.
JOHN KAPSIS, 50. Mr. Kapsis is the Senior Vice President -- Finance of the
Bank. From 1991 through 1997, Mr. Kapsis was the Senior Vice President --
Accounting at 1st United Bank, which was acquired by Wachovia Corporation. He
previously served as Chief Financial Officer and Vice President -- Corporate
Accounting, respectively, at two other financial institutions. Mr. Kapsis is a
graduate of the University of Illinois.
SYLVIA R. WEBER, 36. Ms. Weber is the Senior Vice President in charge of
operations of the Bank, and joined the Bank in November, 1993. Ms. Weber, an MBA
from Southern Methodist University, Dallas, Texas, has an extensive background
in operations and management in a variety of bank and bank related positions
over 13 years.
47
<PAGE>
STOCK OWNERSHIP OF DIRECTORS
The following table sets forth certain information regarding beneficial
ownership of the Admiralty's Class A Common Stock on (the "Class A Stock") and
Class B Stock as of June 30, 1998 and, after giving effect to the Offering
(assuming 1,100,000 shares of Class B Stock are sold), by (i) each person who is
known to the Admiralty to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each director, and (iii) all officers and directors
as a group. All persons listed have sole voting and investment power with
respective to their shares unless otherwise indicated. As of June 30, 1998, the
Company had 888,881 shares of its Class A Stock outstanding and 183,320 shares
of its Class B Stock outstanding. Since the Class A Stock and the Class B Stock
vote together as a single class, the following table does not present the
classes separately.
- -------------------------------------------------------------
SHARES BENEFICIALLY OWNED
- -------------------------------------------------------------
NAME(1) NUMBER PERCENTAGE PERCENTAGE
OWNERSHIP AFTER
OFFERING
- -------------------------------------------------------------
CLASS A STOCK
- -------------------------------------------------------------
Bruce A. Mahon 104,832(2)(3) 9.5% 4.7%
- -------------------------------------------------------------
Michael E. Golden 88,957(2)(4) 8.1% 4.1%
- -------------------------------------------------------------
Leslie E. Goodman 38,875(2)(5) 3.6% 1.8%
- -------------------------------------------------------------
Thomas L. Gray, Jr. 78,832(2)(5) 7.3% 3.6%
- -------------------------------------------------------------
Sidney L. Hofing 63,875(2)(5)(6) 5.9% 2.9%
- -------------------------------------------------------------
Peter L.A. Pantages 28,250(2)(5)(7) 2.6% 1.3%
- -------------------------------------------------------------
Richard P. Rosa 24,985(2)(5) 2.3% 1.1%
- -------------------------------------------------------------
Craig A. Spencer 48,875(2)(5) 4.5% 2.2%
- -------------------------------------------------------------
Mark A. Wolters 24,985(2)(5) 2.3% 1.1%
- -------------------------------------------------------------
George R. Zoffinger 18,875(2)(5)(8) 1.7% 0.9%
- -------------------------------------------------------------
Ward Kellogg -- -- --
- -------------------------------------------------------------
All Directors and
Executive Officers
as a group (___
persons) 521,341 48.6% 19.2%
- -------------------------------------------------------------
(1) The address of all persons is c/o Admiralty Bancorp, Inc., Inc., 2275
Highway 33, Suite 305, Hamilton Square, New Jersey 08690.
48
<PAGE>
(2) Does not include 15,000 shares of Class B Stock purchasable upon the
exercise of Warrants. These Warrants are not exercisable until January,
1999.
(3) Includes 30,000 shares of Class B Stock purchasable upon the exercise of
stock options.
(4) Includes 24,000 shares of Class B Stock purchasable upon the exercise of
stock options.
(5) Includes 13,875 shares of Class B Stock purchasable upon the exercise of
stock options.
(6) Includes 20,000 shares hereby held by a limited partnership of which Mr.
Hofing is a member.
(7) Includes 2000 shares held in trust.
(8) These shares are held by a limited partnership of which Mr. Zoffinger is a
member.
COMPENSATION OF THE BOARD OF DIRECTORS
Members of the Board of Directors of the Company do not currently receive
board fees for their services. However, members of the Board of Directors of the
Bank who are not also employees of the Bank do receive $500 per board of
director meeting. See "--Certain Transaction with Management."
COMPENSATION OF EXECUTIVE OFFICERS
Mr. Bruce A. Mahon, Chairman of the Board of the Company, began receiving
an annual salary of $50,000 in August, 1998.
Effective July 1, 1998, Mr. Ward Kellogg was retained as President and
Chief Executive Officer of the Bank. Pursuant to his employment agreement, Mr.
Kellogg is to receive an annual salary of $125,000, subject to annual increases.
In addition, Mr. Kellogg may receive a cash bonus based upon the Company's
return on average assets. Mr. Kellogg's employment agreement has a term of three
and one-half years. If Mr. Kellogg is terminated other than for cause he is to
receive his then current base compensation for the remaining term of the
agreement, or twenty-four months, which is longer. If Mr. Kellogg's employment
is terminated following a change in control (as defined in the agreement) or if
he voluntarily terminates his employment following a change in control under
certain circumstances, Mr. Kellogg will be entitled to receive his then current
base compensation for a period of twenty-four (24) months. Mr. Kellogg is also
to receive options to purchase 25,000 shares of Class B Stock.
In addition, Mr. William Burke has been retained to serve as a Vice
President and the Chief Operating Officer of the Bank at an annual salary of
$100,000. Mr. Burke is also to receive options to purchase 10,000 shares of
Class B Stock.
Effective July 1, 1998, Mr. James A. Semrad resigned as President of the
Bank to pursue
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other professional opportunities. Mr. Semrad will remain as a consultant to the
Bank and the Company, and he will continue to receive a consulting fee of $8,333
per month for the next thirty (30) months.
MANAGEMENT STOCK OPTION PLAN
The Board of Directors of the Company has adopted the 1998 Management Stock
Option Plan (the "Management Plan"), which provides for options to purchase up
to 330,000 shares of Class B Stock to be issued to employees and members of the
Board of Directors of the Company, the Bank and any other subsidiaries which the
Company may acquire or incorporate in the future. The purpose of the Management
Plan is to assist both the Company and its subsidiaries in attracting and
retaining highly qualified persons to serve both as employees and members of the
Board of Directors of the Company and its subsidiaries and to help ensure that
management of the Company and its subsidiaries have shared economic interests
with the shareholders of the Company. The Management Plan will be administered
by the Board of Directors of the Company. The Board will have the authority to
determine the terms and conditions of options granted under the Management Plan,
the exercise price for such options, subject to the terms of the Plan, and
whether the Options are incentive or non-statutory options, subject to the terms
of the Internal Revenue Code of 1998, as amended (the "Code"). Options granted
under the Management Plan may not be exercised more than 10 years after the date
such Option is granted.
The Management Plan provides for the granting of both incentive options
under Section 422 of the Code and non-statutory options. Incentive stock options
may be granted at an exercise price of not less than 100% of the fair market
value of the Class B Stock on the date of grant. The Option price for
non-statutory options may not be less than 100% of the fair market value of the
Class B Stock on the date of grant. The Board of Directors has discretion to set
the actual exercise price of any option within the foregoing parameters.
The grant of a non-statutory option, which has no readily ascertainable
fair market value at the time it is granted, is not taxable to the recipient of
the option for federal income tax purposes at the time the option is granted.
The recipient of a non-statutory option realizes compensation taxable as
ordinary income at the time the option is exercised. The amount of such
compensation is equal to the amount by which the fair market value of the stock
acquired upon exercise of the option exceeds the amount required to be paid for
such stock.
Incentive stock options may, in many instances, be more beneficial for
employees than non-statutory options. The exercise of an incentive stock option
generally will have not federal income tax consequences and, if certain
conditions are met, any excess of fair market value over the option price will
be reportable as capital gain in the year the common stock purchased upon
exercise of the option is sold.
The Board has approved the following stock option grants under the
Management Plan:
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Name Shares Under Option
---- -------------------
Bruce A. Mahon 30,000
Michael E. Golden 24,000
Leslie E. Goodman 13,875
Thomas L. Gray, Jr. 13,875
Sydney L. Hofing 13,875
Peter L.A. Pantages 13,875
Richard P. Rosa 13,875
Craig A. Spencer 13,875
Mark A. Wolters 13,875
George R. Zoffinger 13,875
Ward Kellogg 25,000(1)
William Burke 10,000(1)
Dennis Gavin 8,000(1)
Anne Paddock 6,000(1)
Others 3,000(1)
------
TOTAL GRANTS 217,000
- ----------
(1) Subject to a four-year vesting schedule.
Exercise price for these options will be the purchase price for the Class B
Stock sold in this Offering.
CERTAIN TRANSACTIONS WITH MANAGEMENT
The Bank has made in the past and, assuming continued satisfaction of
generally applicable credit standards, expects to continue to make loans to
directors, executive officers and their associates (i.e. corporations or
organizations for which they serve as officers or directors or in which they
have beneficial ownership interests of ten percent or more). These loans have
all been made in the ordinary course of the Bank's business on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and do not involve more than
the normal risk of collectibility or present other unfavorable features. In
addition, Bank Directors and Officers keep depository balances with the Bank.
The Bank has received regulatory approval to open a new branch in Boca
Raton, Florida. This branch will be leased from an entity owned by certain
members of the Company's Board of Directors. In addition, the Bank has applied
for regulatory approval to relocate its Jupiter branch to more spacious
quarters. This facility will also be leased from an entity owned by members of
the Company's Board of Directors. The aggregate rental payment due under these
two leases will be $238,000 per year. The Company believes that these leases
represent fair market value, and
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are comparable to terms which the Bank could have obtained from unaffiliated
parties.
Mr. Michael E. Golden, member of the Board of Directors of the Company, is
a principal of First Colonial Securities Group, Inc., the managing Underwriter
of this Offering. As a founder of the Company, Mr. Golden received 25,183 shares
of Class A Stock and 37,774 shares of Class B Stock for a purchase price of
$0.68 per share. In addition, First Colonial Securities Group, Inc. acted as
placement Agent in connection with the Company's private placement of its Class
A Units. First Colonial Securities Group, Inc. received a placement agent fee of
$400,000 for its efforts in the private placement. As the managing Underwriter
of this Offering, First Colonial Securities Group, Inc. will receive certain
compensation. See "Underwriting".
DESCRIPTION OF THE COMPANY'S SECURITIES
CAPITAL STOCK
General. Admiralty is incorporated under the laws of the State of Delaware.
Therefore, the rights of holders of Admiralty's stock will be governed by the
Delaware General Corporation Law and the Company's Certificate of Incorporation.
Admiralty's Certificate of Incorporation provides for an authorized
capitalization of 7,000,000 shares of capital stock, consisting of 5,000,000
shares of Common Stock, in two classes, and 2,000,000 shares of preferred stock,
to be issued in series as determined by the Board of Directors.
CLASS B STOCK
As of June 30, 1998, there were 227,759 shares of Class B Stock
outstanding, after giving effect to the recent dividend declared on the Class A
common stock paid in shares of Class B common stock.
Dividend Rights. The holders of Admiralty's Class B Stock will be entitled
to dividends, when, as, and if declared by the Company's Board of Directors,
subject to any restrictions imposed by Delaware law, and subject to the
restriction that holders of the Class B Stock may not receive dividends if
Admiralty has not made the most recently required dividend payment on its Class
A Stock. The only statutory limitation applicable to Admiralty under Delaware
law is that dividends must be paid out of surplus or, if there is no surplus,
out of net profits for the fiscal year in which the dividend is declared or out
of the preceding year's net profit. However, as a practical matter, unless
Admiralty expands its activities, its only source of income will be the Bank.
Therefore, the dividend restrictions applicable to the Bank described under the
heading "Supervision and Regulation" will continue to impact Admiralty's ability
to pay dividends.
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Voting Rights. Except as discussed under "Anti-Takeover Provisions", each
share of Admiralty's Class B Stock is entitled to one vote per share. Cumulative
voting is not permitted. The Class B Stock will vote with the Class A Stock as a
single class on all matters on which a vote is required or permitted. Under the
Company's Certificate of Incorporation, certain matters require an 80%
stockholder vote. See "Anti-Takeover Provisions".
Preemptive Rights. Under Delaware law, shareholders may have preemptive
rights if these rights are provided in the certificate of incorporation.
Admiralty's Certificate of Incorporation does not provide for preemptive rights.
Appraisal Rights. Under Delaware law, dissenting shareholders of Admiralty
have appraisal rights (subject to the broad exception set forth in the next
sentence) upon certain mergers or consolidations. Appraisal rights are not
available in any such transaction if shares of the corporation are listed for
trading on a national securities exchange or designated as a national market
system security on the NASDAQ system or held of record by more than 2,000
holders.
Directors. Under Delaware law and Admiralty's Certificate of Incorporation,
Admiralty is to have a minimum of 3 directors and a maximum of 25, with the
number of directors at any given time to be fixed by the Board of Directors.
Admiralty has ten (10) members of its Board of Directors.
CLASS A STOCK
Admiralty's Class A Stock has the same basic rights as the Class B Stock,
with the exceptions listed below. Therefore, the voting rights, preemptive
rights, and appraisal rights of the Class A Stock are the same as for the Class
B Stock. As of June 30, 1998, there were 888,881 shares of the Company's Class A
Stock outstanding. The following is a discussion of the additional rights of the
Class A Stock:
Dividends
The holders of the Class A Stock are entitled to receive annual Class A
Stock dividends equal to 10% of the stated value of a share of Class A Stock,
$10.00 per share. The dividend may be paid either in cash or in market value of
Class B Stock, at the discretion of Admiralty's Board of Directors. Dividends
may be paid semi-annually or otherwise as the Board may determine, and the form
of the dividend will be determined before each payment period. No dividends may
be paid on the Class B Stock if Admiralty has failed to pay the most recently
required dividend payment on the Class A Stock, in cash or in shares of Class B
Stock. After receipt of the required 10% dividend, the Class A Stock is not
legally entitled to share in any dividends paid upon the Class B Stock, although
the Board of Directors may permit such participation.
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Conversion Rights
Each share of Class A Stock is convertible, at the option of the holder,
into one share of Admiralty Class B Stock.
The conversion rate is subject to adjustment in the manner provided in
Admiralty's Certificate of Incorporation in the event of payment of certain
stock dividends, stock split-ups or combinations or other similar
recapitalizations. No adjustment in the conversion rate is required unless it
would result in at least a 1% increase or decrease in that rate; however, any
adjustment not made is carried forward.
In addition to the foregoing voluntary conversion rights, Admiralty will
have the right to require a holder of Class A Stock to convert the Class A Stock
into Class B Stock, at the rate of one share of Class B Stock for each share of
Class A Stock held, in the event that Admiralty Class B Stock trades at $15.00
or higher and does not trade below $15.00 for the next 20 consecutive trading
days. Upon the end of such 20 consecutive trading day period, Admiralty may
issue a notice of mandatory conversion requiring the conversion of shares of the
Class A Stock to Class B Stock within 20 days.
Voting Rights
The holders of Class A Stock have the same voting rights as the Class B
Stock. Both the Class A Stock and the Class B Stock will vote together as a
single class on all matters.
Liquidation Rights
The holders of Class A Stock are entitled to share rateably with the
holders of the Class B Stock in the available proceeds of any liquidation or
dissolution of Admiralty. The Class A Stock has no preference upon a liquidation
of the Company.
PREFERRED STOCK
Admiralty is authorized to issue up to 2,000,000 shares of preferred stock,
in one or more series, with such designations and such relative voting,
dividend, liquidation, conversion and other rights, preferences and limitations
as shall be set forth in resolutions providing for the issuance thereof adopted
by the Board of Directors.
WARRANTS
In connection with the recapitalization of the Company described under the
heading "Offering Summary -- Admiralty Bancorp, Inc.", the Company has issued
stock purchase warrants entitling the holders thereof to purchase 800,000 shares
of Class B Stock. In addition,
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to compensate directors of the Company for their time and efforts in organizing
the Company and consummating the Change in Control, the Board of Directors of
the Company awarded warrants to purchase 120,000 shares of Class B Common Stock
in the aggregate to members of the Board of Directors of the Company and, as
part of the consideration in the Change in Control, the Company issued warrants
to purchase 15,000 shares of Class B stock to the former majority shareholder of
WEFG. Therefore, there are currently outstanding warrants to purchase 965,000
shares of Class B Common Stock. Each warrant entitles the holder thereof to
purchase one share of Admiralty Class B Stock at a purchase price of $11.00 for
a period commencing on January 22, 1999 and ending on January 21, 2002 (the
"Expiration Date"), although the Expiration Date of the warrants is subject to
acceleration as provided below. Any warrant not exercised on or before the
Expiration Date shall expire and will not thereafter be exercisable. Warrant
holders do not have the rights and privileges of holders of Common Stock.
The Company has the right to accelerate the Expiration Date in the event
that (i) the Class B Stock is traded on a nationally recognized securities
exchange or the NASDAQ National or SmallCap Market, and (ii) the Class B Stock
has traded at $15.00 per share or above and has not traded below $15.00 per
share for 20 consecutive trading days. In the event these conditions are met,
the Company may, but is not obligated, to issue a notice of acceleration to each
warrant holder. Upon issuance of the notice, the warrants will expire 30 days
after the date of the notice. To the extent the Company issues the Notice of
Acceleration, it will be required to redeem each outstanding but unexercised
warrant for a price of $0.10 per warrant upon the expiration of the warrants.
TRANSFER AGENT AND WARRANT AGENT
Admiralty's transfer agent for its Common Stock and the Warrant Agent for
the warrants is Stocktrans, Inc. with offices at 7 East Lancaster Avenue,
Ardmore, Pennsylvania.
ANTI-TAKEOVER PROVISIONS
BANK REGULATORY REQUIREMENTS
Under the Federal Change in Bank Control Act (the "Control Act"), a 60 day
prior written notice must be submitted to the FRB if any person, or any group
acting in concert, seeks to acquire 10% or more of any class of outstanding
voting securities of a bank holding company, unless the FRB determines that the
acquisition will not result in a change of control. Under the Control Act, the
FRB has 60 days within which to act on such notice taking into consideration
certain factors, including the financial and managerial resources of the
acquirer, the convenience and needs of the community served by the bank holding
company and its subsidiary banks and the antitrust effects of the acquisition.
Under the BHCA, a company is generally required to obtain prior approval of the
FRB before it may obtain control of a bank holding company. Under the BHCA,
control is generally described to mean the beneficial ownership of 25% or more
of
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the outstanding voting securities of a company, although a presumption of
control may exist if a party beneficially owns 10% or more of the outstanding
voting securities of a company and certain other circumstances are present.
DELAWARE LAW
Certain provisions of Delaware law are designed to provide Delaware
corporations with additional protection against hostile takeovers. The takeover
statute, which is codified in Section 203 of the Delaware General Corporate Law
("Section 203"), is intended to discourage certain takeover practices by
impeding the ability of a hostile acquirer to engage in certain transactions
with the target company.
In general, Section 203 provides that a "Person" (as defined therein) who
owns 15% or more of the outstanding voting stock of a Delaware corporation (an
"Interested Stockholder") may not consummate a merger or other business
combination transaction with such corporation at any time during the three-year
period following the date such "Person" became an Interested Stockholder. The
term "business combination" is defined broadly to cover a wide range of
corporate transactions including mergers, sales of assets, issuances of stock,
transactions with subsidiaries and the receipt of disproportionate financial
benefits.
The statute exempts the following transactions from the requirements of
Section 203: (i) any business combination if, prior to the date a person became
an Interested Stockholder, the Board of Directors approved either the business
combination or the transaction which resulted in the stockholder becoming an
Interested Stockholder; (ii) any business combination involving a person who
acquired at least 85% of the outstanding voting stock in the transaction in
which he became an Interested Stockholder, with the number of shares outstanding
for this purpose calculated without regard to those shares owned by the
corporation's directors who are also officers and by certain employee stock
plans; (iii) any business combination with an Interested Stockholder that is
approved by the Board of Directors and by a two-thirds vote of the outstanding
voting stock not owned by the Interested Stockholder; and (iv) certain business
combinations that are proposed after the corporation had received other
acquisition proposals and which are approved or not opposed by a majority of
certain continuing members of the Board of Directors. A corporation may exempt
itself from the requirements of the statute by adopting an amendment to its
Certificate of Incorporation or Bylaws electing not to be governed by Section
203. At the present time, the Board of Directors does not intend to propose any
such amendment.
CLASSIFIED BOARD OF DIRECTORS
Pursuant to the Company's Certificate of Incorporation, the Board of
Directors of the Company is divided into three classes, each of which shall
contain approximately one-third of the whole number of the members of the board.
Each class shall serve a staggered term, with
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approximately one-third of the total number of directors being elected each
year. The Company's Certificate of Incorporation and Bylaws provide that the
size of the board shall be determined by a majority of the directors. The
Certificate of Incorporation and the Bylaws provide that any vacancy occurring
in the Board, including a vacancy created by an increase in the number of
directors or resulting from death, resignation, retirement, disqualification,
removal from office or other cause, shall be filled for the remainder of the
unexpired term exclusively by a majority vote of the directors then in office.
The classified Board is intended to provide for continuity of the Board of
Directors and to make it more difficult and time consuming for a stockholder
group to use its voting power to gain control of the Board of Directors without
the consent of the incumbent Board of Directors of the Company.
STOCKHOLDER VOTE REQUIRED TO APPROVE BUSINESS COMBINATIONS
The Certificate of Incorporation requires the approval of the holders of at
least 80% of the Company's outstanding shares of voting stock to approve certain
"Business Combinations," as defined therein, and related transactions. Under
Delaware law, absent this provision, Business Combinations, including mergers,
consolidations and sales of all or substantially all of the assets of a
corporation must, subject to certain exceptions, be approved by the vote of the
holders of only a majority of the outstanding shares of Common Stock of the
Company and any other affected class of stock. Under the Certificate of
Incorporation, at least 80% approval of stockholders is required in connection
with any Business Combination except in cases where the proposed transaction has
been approved in advance by a majority of the Company's Board of Directors. This
provisions of the Certificate of Incorporation applies to any "Business
Combination," which is defined to include (i) any merger or consolidation of the
Company or any of its subsidiaries with or into any other person; (ii) any sale,
lease, exchange, mortgage, pledge, transfer, or other disposition to or with any
other person of substantially all of the assets of the Company or combined
assets of the Company and its subsidiary, or (iii) any offer for the exchange of
securities of another entry for the securities of the Company.
EVALUATION OF OFFERS
The Certificate of Incorporation of the Company further provides that the
Board of Directors of the Company, when evaluating any offer of another "Person"
(as defined therein), to (i) make a tender or exchange offer for any equity
security of the Company, (ii) merge or consolidate the Company with another
corporation or entity, or (iii) purchase or otherwise acquire all or
substantially all of the properties and assets of the Company, may, in
connection with the exercise of its judgment in determining what is in the best
interest of the Company, the Bank and the stockholders of the Company, give due
consideration (to the extent permitted by law) to all relevant factors,
including, without limitation, the social and economic effects of acceptance of
such offer on the Company's customers and the Bank's present and future account
holders, borrowers and employees; on the communities in which the Company and
the Bank operate or are located; and on the ability of the Company to fulfill
its corporate objectives as a
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bank holding company and on the ability of the Bank to fulfill the objectives of
a state chartered stock bank under applicable statutes and regulations. By
having these standards in the Certificate of Incorporation of the Company, the
Board of Directors may be in a stronger position to oppose such a transaction if
the board concludes that the transaction would not be in the best interest of
the Company, even if the price offered is significantly greater than the then
market price of any equity security of the Company.
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BYLAWS
Amendments to the Company's Certificate of Incorporation must be approved
by a majority vote of its Board of Directors and also by a majority of the
outstanding shares of its voting stock, provided, however, that an affirmative
vote of at least 80% of the outstanding voting stock entitled to vote (after
giving effect to the provision limiting voting rights) is required to amend or
repeal certain provisions of the Certificate of Incorporation, including the
provision limiting voting rights and the provisions relating to approval of
certain Business Combinations.
CERTAIN BYLAW PROVISIONS
The Bylaws of the Company also require a stockholder who intends to
nominate a candidate for election to the Board of Directors to give at least 90
days advance notice in writing to the Secretary of the Company. The notice
provision requires a stockholder wishing to nominate any person or election as a
director provide the Company with certain information concerning the nominee and
the proposing stockholder.
REGULATION AND SUPERVISION
GENERAL
Bank holding companies and banks are extensively regulated under both
federal and state law. These laws and regulations are intended to protect
depositors, not stockholders. To the extent that the following information
describes statutory and regulatory provisions, it is qualified in its entirety
by reference to the particular statutory and regulatory provisions. Any change
in the applicable law or regulation may have a material effect on the business
and prospects of Admiralty and the Bank. See "Risk Factors--Supervision and
Regulation."
BANK HOLDING COMPANY REGULATION
General. As a bank holding company registered under the BHCA, Admiralty is
subject to the regulation and supervision of the FRB. Admiralty is required to
file with the FRB annual
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reports and other information regarding its business operations and those of its
subsidiaries. Under the BHCA, Admiralty's activities and those of its
subsidiaries are limited to banking, managing or controlling banks, furnishing
services to or performing services for its subsidiaries or engaging in any other
activity which the FRB determines to be so closely related to banking or
managing or controlling banks as to be properly incident thereto.
The BHCA requires, among other things, the prior approval of the FRB in any
case where a bank holding company proposes to (i) acquire all or substantially
all of the assets of any other bank, (ii) acquire direct or indirect ownership
or control of more than 5% of the outstanding voting stock of any bank (unless
it owns a majority of such bank's voting shares) or (iii) merge or consolidate
with any other bank holding company. The FRB will not approve any acquisition,
merger, or consolidation that would have a substantially anti-competitive
effect, unless the anti- competitive impact of the proposed transaction is
clearly outweighed by a greater public interest in meeting the convenience and
needs of the community to be served. The FRB also considers capital adequacy and
other financial and managerial resources and future prospects of the companies
and the banks concerned, together with the convenience and needs of the
community to be served, when reviewing acquisitions or mergers.
Additionally, the BHCA prohibits a bank holding company, with certain
limited exceptions, from (i) acquiring or retaining direct or indirect ownership
or control of more than 5% of the outstanding voting stock of any company which
is not a bank or bank holding company, or (ii) engaging directly or indirectly
in activities other than those of banking, managing or controlling banks, or
performing services for its subsidiaries, unless such non-banking business is
determined by the FRB to be so closely related to banking or managing or
controlling banks as to be properly incident thereto. In making such
determinations, the FRB is required to weigh the expected benefits to the
public, such as greater convenience, increased competition or gains in
efficiency, against the possible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices.
There are a number of obligations and restrictions imposed on bank holding
companies and their depository institution subsidiaries by law and regulatory
policy that are designed to minimize potential loss to the depositors of such
depository institutions and the FDIC insurance funds in the event the depository
institution becomes in danger of default. Under a policy of the FRB with respect
to bank holding company operations, a bank holding company is required to serve
as a source of financial strength to its subsidiary depository institutions and
to commit resources to support such institutions in circumstances where it might
not do so absent such policy. The FRB also has the authority under the BHCA to
require a bank holding company to terminate any activity or to relinquish
control of a non-bank subsidiary upon the FRB's determination that such activity
or control constitutes a serious risk to the financial soundness and stability
of any bank subsidiary of the bank holding company.
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Capital Adequacy Guidelines for Bank Holding Companies. In January 1989,
the FRB adopted risk-based capital guidelines for bank holding companies. The
risk-based capital guidelines are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance sheet exposure, and to minimize
disincentives for holding liquid assets. Under these guidelines, assets and
off-balance sheet items are assigned to broad risk categories each with
appropriate weights. The resulting capital ratios represent capital as a
percentage of total risk-weighted assets and off-balance sheet items.
The risk-based guidelines apply on a consolidated basis to bank holding
companies with consolidated assets of $150 million or more. For bank holding
companies with less than $150 million in consolidated assets, the guidelines
will be applied on a bank-only basis unless: (a) the parent bank holding company
is engaged in nonbank activity involving significant leverage; or (b) the parent
company has a significant amount of outstanding debt that is held by the general
public.
The minimum ratio of total capital to risk-weighted assets (including
certain off-balance sheet activities, such as standby letters of credit) is 8%.
At least 4% of the total capital is required to be "Tier I Capital," consisting
of common stockholders' equity and qualifying preferred stock, less certain
goodwill items and other intangible assets. The remainder ("Tier II Capital")
may consist of (a) the allowance for loan losses of up to 1.25% of risk-weighted
assets, (b) non-qualifying preferred stock, (c) hybrid capital instruments, (d)
perpetual debt, (e) mandatory convertible securities, and (f) qualifying
subordinated debt and intermediate-term preferred stock up to 50% of Tier I
capital. Total capital is the sum of Tier I and Tier II capital less reciprocal
holdings of other banking organizations' capital instruments, investments in
unconsolidated subsidiaries and any other deductions as determined by the FRB
(determined on a case by case basis or as a matter of policy after formal
rule-making).
Bank holding company assets are given risk-weights of 0%, 20%, 50% and
100%. In addition, certain off-balance sheet items are given similar credit
conversion factors to convert them to asset equivalent amounts to which an
appropriate risk-weight will apply. These computations result in the total
risk-weighted assets. Most loans are assigned to the 100% risk category, except
for performing first mortgage loans fully secured by residential property which
carry a 50% risk-weighing. Most investment securities (including, primarily,
general obligation claims of states or other political subdivisions of the
United States) are assigned to the 20% category, except for municipal or state
revenue bonds, which have a 50% risk-weight, and direct obligations of the U.S.
Treasury or obligations backed by the full faith and credit of the U.S.
Government, which have a 0% risk-weight. In converting off-balance sheet items,
direct credit substitutes including general guarantees and standby letters of
credit backing financial obligations are given a 100% risk-weighing. Transaction
related contingencies such as bid bonds, standby letters of credit backing
nonfinancial obligations, and undrawn commitments
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(including commercial credit lines with an initial maturity or more than one
year) have a 50% risk-weighing. Short term commercial letters of credit have a
20% risk-weighing and certain short-term unconditionally cancelable commitments
have a 0% risk-weighing.
In addition to the risk-based capital guidelines, the FRB has adopted a
minimum Tier I capital (leverage) ratio, under which a bank holding company must
maintain a minimum level of Tier I capital to average total consolidated assets
of at least 3% in the case of a bank holding company that has the highest
regulatory examination rating and is not contemplating significant growth or
expansion. All other bank holding companies are expected to maintain a leverage
ratio of at least 100 to 200 basis points above the stated minimum.
BANK REGULATION
As a Florida chartered commercial bank, the Bank is subject to the
regulation, supervision, and control of the Department. As a member of the
Federal Reserve System, the Bank is subject to regulation, supervision and
control of the Board of Governors of the Federal Reserve System. As an
FDIC-insured institution, the Bank is subject to regulation, supervision and
control of the FDIC, an agency of the federal government. The regulations of the
Federal Reserve, the FDIC and the Department impact virtually all activities of
the Bank, including the minimum level of capital the Bank must maintain, the
ability of the Bank to pay dividends, the ability of the Bank to expand through
new branches or acquisitions and various other matters.
Insurance of Deposits. The deposits of the Bank are insured up to
applicable limits by the Bank Insurance Fund ("BIF") of the FDIC. Accordingly,
the Bank is subject to deposit insurance assessments to maintain the BIF. Under
the FDIC's insurance premium assessment system, each institution is assigned to
one of nine assessment risk classifications based on its capital ratios and
supervisory evaluations. The lowest risk institutions do not pay any insurance
premium, while the highest risk institutions pay a premium assessed at the rate
of .27% of domestic deposits. Each institution's classification under the system
is re-examined semiannually. In addition, the FDIC is authorized to increase or
decrease such rates on a semiannual basis. In addition to insurance premium
assessments, under the Deposit Insurance Funds Act of 1996 (the "Deposit Act"),
commercial banks like the Bank are required for the first time to pay a portion
of the interest and principal owed on bonds issued by the Federal Financing
Corporation ("FICO") to assist the thrift bailout in the mid-1980's. BIF insured
commercial banks like the Bank are assessed 1.3 basis points of their assessed
deposits in satisfaction of this FICO payment, in addition to deposit insurance
premiums. The Deposit Act also calls for the federal banking agencies to study
the various financial institution charters and propose a single standard federal
charter, thereby doing away with the separate bank and thrift charters. If a
single charter is adopted, the BIF and the Savings Association Insurance Fund
("SAIF") will be merged on January 1, 1999, and both BIF and SAIF insured
institutions will share the FICO payment obligations on a pro rata basis.
Management of the Bank is not able to predict at this time whether the federal
regulators will adopt a unified charter nor to predict the impact of any
proposed change upon the Bank.
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Dividend Rights. Pursuant to the provisions of the Florida Banking Code, a
Florida state chartered bank may quarterly, semi-annually or annually declare a
dividend out of the bank's net profits for the dividend period and retained net
profits from the preceding two years. In addition, with the approval of the
Florida Department of Banking and Finance, a bank may declare a dividend from
retained profits which have accrued in periods prior to the preceding two years,
provided that in this circumstance the bank must make an addition to its surplus
fund equal to at least 20% of its net profits from the preceding period. No
Florida state chartered bank may declare a dividend if it has incurred a loss
for its current period plus the two preceding years, or which would cause the
capital account of the bank to fall below the minimum amount required by law or
regulation.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement") between the Company and the Underwriter, the
Company has agreed to sell to the Underwriter named below (the "Underwriter")
and the Underwriter has agreed to purchase from the Company, the number of
shares of Class B Stock set forth below opposite their respective names. The
Underwriter is committed to purchase all of such shares if any are purchased.
Under certain circumstances, the Underwriting Agreement provides that the
purchase commitments of a non-defaulting Underwriter may be increased to include
the purchase commitment of a defaulting Underwriter.
Number
Underwriters of Shares
------------ ---------
First Colonial Securities Group, Inc. ............
---------
Total ................................ 1,100,000
=========
The Underwriter has advised the Company that it proposed to initially offer
the shares of Class B Stock to the public at the Price to Public set forth on
the cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of $_______ per share of Class B Stock. The Underwriter
may allow, and such dealers may re-allow, a discount not in excess of
$____________ per share of Class B Stock on sales to certain other dealers.
After the initial public offering, the Price to Public, concession and discount
may be changed. All purchasers of the shares of Class B Stock in this Offering
will pay the same initial Price of Public as set forth on the cover page of this
Prospectus.
62
<PAGE>
The Company has granted the Underwriter an option, exercisable for 45 days
after the effective date of the Registration Statement of which the Prospectus
forms a part, to purchase up to an additional 165,000 shares of Class B Stock to
cover over-allotments, if any, at the initial Price to Public, less the
underwriting discount, shown on the cover page of this Prospectus. To the extent
the Underwriter exercises such option, the Underwriter will have a firm
commitment, subject to certain conditions, to purchase approximately the same
percentage thereof as the number of shares of Class B Stock to be purchased by
it as shown in the foregoing table bears to 1,100,000 shares of Class B Stock.
The Company and the Underwriter have agreed in the Underwriting Agreement
to indemnify each other against certain liabilities, including certain
liabilities under the Securities Act, and to contribute to payments that each
may be required to make in respect thereof.
Prior to this Offering, there has been no public market for any securities
of the Company. Consequently, the Price to Public set forth on the cover page of
this Prospectus have been determined by negotiations between the Company and the
Underwriter. The factors considered in such negotiations included prevailing
market conditions, the future prospects of the Company, the banking industry in
general, the Bank's recent financial performance and its position in the banking
industry, the market valuation of publicly traded companies believed to be
comparable to the Company, the demand for similar securities and other factors
deemed relevant.
Michael E. Golden, a Director of the Company, is the principal stockholder
and Chief Executive Officer of First Colonial Securities Group, Inc. First
Colonial Securities Group, Inc., is acting as the Underwriter.
LEGAL MATTERS
The validity of the shares of Class B Stock offered hereby will be passed
upon for the Company by Jamieson, Moore, Peskin & Spicer, P.C., Morristown, New
Jersey. Certain legal matters will be passed upon the Underwriters by Greenberg
Traurig, P.A., West Palm Beach, Florida.
EXPERTS
The financial statements for Admiralty Bancorp, Inc. as of December 31,
1997 and for the period August 11, 1997 (the date of inception) through December
31, 1997 have been included herein in reliance upon the report of Grant Thornton
LLP, Philadelphia, Pennsylvania, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
63
<PAGE>
The consolidated financial statements of White Eagle Financial Group, Inc.
(predecessor company) as of and for the years ended December 31, 1997 and 1996,
have been included herein in reliance upon the report of Grant Thornton LLP,
West Palm Beach, Florida, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
SB-2 under the Securities Act with respect to the shares of Class B Stock
offered hereby. This Prospectus, which constitutes a part of the Registration
Statement, omits certain of the information contained in the Registration
Statement and the exhibits and schedules thereto on file with the Commission
pursuant to the Securities Act and the rules and regulations of the Commission
promulgated thereunder. For further information with respect to the Company and
the shares of Class B Stock, reference is made to the Registration Statement and
the exhibits and schedules attached thereto. The Registration Statement,
including exhibits thereto, may be inspected and copied at the public reference
facilities maintained by the Commission at room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and the Commission's Regional Offices at 7
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and copies may be
obtained at prescribed rates from the Public Reference Section of the Commission
at its principal office in Washington, D.C. The Commission also maintains a
Website that contains copies of such material. The address of the Commission's
Website is (http://www.sec.gov). Statements contained in this Prospectus as to
the contents of any contract or other document referred to are not necessarily
complete and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in its entirety by such reference.
In connection with the Offering, the Company will become subject to the
informational requirements of Section 12(g) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and in accordance therewith, will file
reports and other information with the Commission. Such reports and other
information can be inspected without charge and copied at prescribed rates at
the public reference facilities maintained by the SEC at Room 1024 Judiciary
Plaza, 450 Fifth Street, N.W., Washington, DC 20549 and at its regional offices
located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL
60661 and 7 World Trade Center, Suite 1300 New York, NY 10048. Copies of such
material can also be obtained at prescribed rates from the SEC's Public
Reference Section, 450 Fifth Street, N.W., Washington, DC 20549 and its public
reference facilities in Chicago, Illinois and New York, New York.
64
<PAGE>
C O N T E N T S
Page
----
REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-2
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS - ADMIRALTY BANCORP, INC.
AND SUBSIDIARY AND PREDECESSOR COMPANY F-4
CONSOLIDATED STATEMENTS OF INCOME - ADMIRALTY BANCORP, INC.
AND SUBSIDIARY AND PREDECESSOR COMPANY F-5
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
EQUITY - ADMIRALTY BANCORP, INC. AND SUBSIDIARY F-6
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
EQUITY - PREDECESSOR COMPANY F-7
CONSOLIDATED STATEMENTS OF CASH FLOWS - ADMIRALTY BANCORP,
INC. AND SUBSIDIARY AND PREDECESSOR COMPANY F-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ADMIRALTY
BANCORP, INC. AND SUBSIDIARY AND PREDECESSOR COMPANY F-9
F-1
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors and Stockholders
Admiralty Bancorp, Inc.
We have audited the accompanying balance sheet of Admiralty Bancorp, Inc.
as of December 31, 1997, and the related statements of income, changes in
stockholders' equity and cash flows for the period August 11, 1997 (date of
inception) through December 31, 1997. These financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits 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 audits provide 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 Admiralty Bancorp, Inc. as
of December 31, 1997, and the consolidated results of their operations and their
consolidated cash flows for the period August 11, 1997 (date of inception)
through December 31, 1997, in conformity with generally accepted accounting
principles.
GRANT THORNTON LLP
Philadelphia, Pennsylvania
July 21, 1998
F-2
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors and Stockholders
White Eagle Financial Group, Inc.
We have audited the accompanying consolidated balance sheet of White Eagle
Financial Group, Inc. and Subsidiary (Predecessor Company) as of December 31,
1997 and 1996, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly,
in all material respects, the consolidated financial position of White Eagle
Financial Group, Inc. and Subsidiary as of December 31, 1997 and 1996, and the
consolidated results of their operations and their consolidated cash flows for
the years then ended in conformity with generally accepted accounting
principles.
GRANT THORNTON LLP
West Palm Beach, Florida
March 13, 1998
F-3
<PAGE>
<TABLE>
<CAPTION>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
CONSOLIDATED BALANCE SHEETS
Admiralty Bancorp, Inc. Predecessor Company
and Subsidiary --------------------------
------------------------ December 31,
March 31, December 31, --------------------------
ASSETS 1998 1997 1997 1996
----------- ----------- ----------- -----------
(unaudited)
<S> <C> <C> <C> <C>
Cash and cash equivalents
Cash and due from banks $ 3,968,208 $ 7,845,550 $ 1,974,169 $ 3,490,056
Federal funds sold 504,000 -- 100,000 1,187,000
----------- ----------- ----------- -----------
Total cash and cash equivalents 4,472,208 7,845,550 2,074,169 4,677,056
Investment securities available for sale, at fair
market value 15,645,504 -- 3,619,550 8,983,268
Investment securities held to maturity, at cost
(fair market value of $-0- $16,606,373 and
$8,471,798 at March 31, 1998, December 31, 1997
and 1996, respectively) -- -- 16,560,956 8,477,912
Loans held for sale 739,664 -- 994,182 825,998
Loans, net 24,553,102 -- 22,853,777 18,228,498
Accrued interest receivable 251,376 36,781 308,210 252,119
Federal Reserve Bank stock 127,300 -- 127,300 100,850
Premises and equipment, net 616,232 -- 631,208 801,804
Deferred tax asset 438,600 -- 438,600 --
Goodwill 3,675,957 -- -- --
Other assets 1,107,045 162,526 597,829 1,087,769
----------- ----------- ----------- -----------
Total assets $51,626,988 $ 8,044,857 $48,205,781 $43,435,274
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits $41,236,145 $ -- $42,776,197 $39,820,158
Accrued interest payable 59,900 -- 57,405 55,358
Income taxes payable 103,356 15,356 159,588 --
Due under purchase contract 1,275,233 -- -- --
Other liabilities 270,244 25,000 591,058 259,868
----------- ----------- ----------- -----------
Total liabilities 42,944,878 40,356 43,584,248 40,135,384
----------- ----------- ----------- -----------
Minority interest 381,655 -- 376,049 323,385
----------- ----------- ----------- -----------
Stockholders' equity
Preferred stock, no par value, 2,000,000 shares
authorized, no shares issued or outstanding -- -- -- --
Common stock, $0.01 par value, 325,000 shares
authorized, 323,533 shares issued and outstanding
in 1997 and 1996 -- -- 3,235 3,235
Common stock, Class A, no par value, 1,000,000 shares
authorized, 888,881 shares issued and outstanding at
March 31, 1998 7,566,659 8,060,440 -- --
Common stock, Class B, no par value, 4,000,000 shares
authorized, 227,759 shares issued and outstanding at
March 31, 1998 1,033,950 89,560 -- --
Subscriptions receivable -- (205,000)
Additional paid-in capital -- -- 3,138,345 3,138,345
Retained earnings (accumulated deficit) (295,696) 59,501 1,096,280 (167,649)
Net unrealized (loss) gain on securities available
for sale (4,458) -- 7,624 2,574
----------- ----------- ----------- -----------
Total stockholders' equity 8,300,455 8,004,501 4,245,484 2,976,505
----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $51,626,988 $ 8,044,857 $48,205,781 $43,435,274
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
CONSOLIDATED STATEMENTS OF INCOME
Admiralty Bancorp, Inc.
and Subsidiary Predecessor Company
------------------------------ --------------------------------------
For the period
August 11, 1997
Three months (date of inception) Three months
ended through ended Years ended December 31,
March 31, December 31, March 31, -------------------------
1998 1997 1997 1997 1996
-------- --------- -------- ---------- ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Interest income
Loans $521,725 $ -- $554,745 $2,328,764 $2,039,918
Securities 264,399 84,445 293,666 1,179,503 1,226,398
Federal funds sold 1,459 -- 33,792 121,800 30,830
Other -- -- -- -- --
-------- --------- -------- ---------- ----------
Total interest income 787,583 84,445 882,203 3,630,067 3,297,146
-------- --------- -------- ---------- ----------
Interest expense
Deposits 210,790 -- 296,782 1,191,951 1,105,375
Borrowings 10,268 7,938 -- 4,783 28,818
-------- --------- -------- ---------- ----------
Total interest expense 221,058 7,938 296,782 1,196,734 1,134,193
-------- --------- -------- ---------- ----------
Net interest income 566,525 76,507 585,421 2,433,333 2,162,953
Provision for loan losses 55,000 -- 141,500 435,000 297,000
-------- --------- -------- ---------- ----------
Net interest income after
Provision for loan losses 511,525 76,507 443,921 1,998,333 1,865,953
-------- --------- -------- ---------- ----------
Non-interest income
Service charges and fees 64,366 -- 179,566 621,579 633,747
Net gain on sale of securities - -- 86,712 86,712 437,138
Gain on sale of loans 204,294 -- 119,745 974,571 572,276
Other income 3,465 -- -- 45,247 146,759
-------- --------- -------- ---------- ----------
Total non-interest income 272,125 -- 386,023 1,728,109 1,789,920
-------- --------- -------- ---------- ----------
Non-interest expense
Salaries and employee benefits 190,330 -- 224,482 903,625 920,172
Occupancy 71,495 -- 101,385 403,260 381,953
Furniture and equipment 43,319 -- 54,323 215,228 218,719
Amortization of goodwill 29,862 -- -- -- --
Other expense 267,423 1,650 274,977 1,175,736 1,419,092
-------- --------- -------- ---------- ----------
Total non-interest expense 602,429 1,650 655,167 2,697,849 2,939,936
-------- --------- -------- ---------- ----------
Income before income tax (benefit)
expense and minority interest 181,221 74,857 174,777 1,028,593 715,937
Income tax (benefit) expense 88,000 15,356 (67,000) (288,000) 15,000
-------- --------- -------- ---------- ----------
Income before minority interest 93,221 59,501 241,777 1,316,593 700,937
Minority interest (4,028) -- (7,356) (52,664) (28,037)
-------- --------- -------- ---------- ----------
Net income $ 89,193 $ 59,501 $234,421 $1,263,929 $ 672,900
======== ========= ======== ========== ==========
Per share data
Net income per share - basic
and diluted $ 0.08 $ 0.20
-------- ---------
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY\
Net
Stock unrealized gain Total
Preferred subscription Common stock Retained on securities stockholders'
stock receivable Class A Class B earnings available for sale equity
------ ---------- ---------- ---------- -------- ------------------ -------------
<S> <C> <C> <C> <C> <C> <C> <S>
Balance, August 11, 1997 $ -- $ -- $ -- $ -- $ -- $ -- $ --
Issuance of common
stock -- (205,000) 8,060,440 89,560 -- -- 7,945,000
Net income for the period -- -- -- 59,501 -- 59,501
------ --------- ---------- ---------- --------- -------- ----------
Balance, December 31, 1997 -- (205,000) 8,060,440 89,560 59,501 -- 8,004,501
Issuance of common stock -- -- -- 500,000 -- -- 500,000
Cost of issuance of common
stock -- -- (493,781) -- -- -- (493,781)
Collection of subscription
receivable -- 205,000 -- -- -- -- 205,000
Net income for the three
months ended March 31, 1997 -- -- -- -- 89,193 -- 89,193
Change in net unrealized
gain on securities
available for sale -- -- -- -- -- (4,458) (4,458)
Class A common stock
dividend -- -- -- 444,390 (444,390) -- --
------ --------- ---------- ---------- --------- -------- ----------
Balance, March 31, 1998
(unaudited) $ -- $ -- $7,566,659 $1,033,950 $(295,696) $ (4,458) $8,300,455
====== ========= ========== ========== ========= ======== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
F-6
<PAGE>
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Retained Net
Additional earnings unrealized gain Total
Common paid-in (accumulated on securities stockholders'
stock capital deficit) available for sale equity
------- ----------- ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 $ 3,235 $ 3,138,345 $ (840,549) $38,908 $2,339,939
Net income -- -- 672,900 -- 672,900
Change in net unrealized loss on
securities available for sale -- -- -- (36,334) (36,334)
------- ----------- ----------- ------- ----------
Balance, December 31, 1996 3,235 3,138,345 (167,649) 2,574 2,976,505
Net income -- -- 1,263,929 -- 1,263,929
Change in net unrealized gain on
securities available for sale -- -- -- 5,050 5,050
------- ----------- ----------- ------- ----------
Balance, December 31, 1997 $ 3,235 $ 3,138,345 $ 1,096,280 $ 7,624 $4,245,484
======= =========== =========== ======= ==========
</TABLE>
The accompanying notes are an integral part of this statement.
F-7
<PAGE>
<TABLE>
<CAPTION>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Admiralty Bancorp, Inc.
and Subsidiary Predecessor Company
------------------------------ -----------------------------------------
For the period
August 11, 1997
Three months (date of inception) Three months
ended through ended Years ended December 31,
March 31, December 31, March 31, ---------------------------
1998 1997 1997 1997 1996
----------- ------------ ----------- ----------- ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Operating activities
Net income $ 89,193 $ 59,501 $ 234,421 $ 1,285,329 $ 672,900
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Minority interest in net income 4,028 -- 7,356 54,488 28,037
Provision for loan losses 55,000 -- 141,500 435,000 297,000
Depreciation and amortization 70,360 -- 43,196 243,806 202,105
Gain on sale of securities -- -- (86,712) (86,712) (437,138)
Gains on sales of mortgage loans (204,294) -- (119,745) (1,011,795) (572,276)
Decrease (increase) in other assets (792,745) (199,307) 743,386 368,047 (593,588)
Increase in deferred tax asset -- -- -- (438,600) --
Increase in income taxes payable 88,000 15,356 -- 159,588 --
Increase in other liabilities 602,235 25,000 424,332 347,237 12,645
----------- ------------ ----------- ----------- ----------
Net cash provided by (used in)
operating activities 611,777 (99,450) 1,387,734 1,356,388 (390,315)
----------- ------------ ----------- ----------- ----------
Investing activities
Proceeds from maturities of investment
securities available for sale 3,809,343 -- -- -- --
Purchases of investment securities available for sale -- -- (2,947,159) (12,159,399) (15,577,737)
Proceeds from sales of investment securities
available for sale -- -- 1,800,000 9,531,835 9,474,406
Purchase of Federal Reserve Bank stock -- -- (10,950) (26,450) (6,700)
Net loan originations and principal collections
on loans (9,763,391) -- (4,854,521) (10,945,330) (15,276)
Proceeds from mortgage loan sales 7,960,230 -- 6,728,662 6,728,662 6,026,196
Proceeds from sale of other real estate owned -- -- -- -- 232,432
Purchase of premises and equipment 37,227 -- -- (44,632) (60,431)
Payment for purchase of Company, net of
cash acquired (2,881,831) -- -- -- --
----------- ------------ ----------- ----------- ----------
Net cash (used in) provided by
investing activities (838,422) -- 716,032 (6,915,314) 72,890
----------- ------------ ----------- ----------- ----------
Financing activities
Net increase in deposits 1,724,084 -- 1,672,742 2,956,039 3,648,363
Net decrease in securities sold under agreements
to repurchase and other borrowings (4,582,000) -- -- -- (570,000)
Collection of subscription receivable 205,000 -- -- -- --
Proceeds from issuance of common stock,
Net of costs (493,781) 7,945,000 -- -- --
----------- ------------ ----------- ----------- ----------
Net cash (used in) provided by
financing activities (3,146,697) 7,945,000 1,672,742 2,956,039 3,078,363
----------- ------------ ----------- ----------- ----------
Net (decrease) increase in cash and cash
equivalents (3,373,342) 7,845,550 3,776,508 (2,602,887) 2,760,938
Cash and cash equivalents, beginning of period 7,845,550 -- 4,677,056 4,677,056 1,916,118
----------- ------------ ----------- ----------- ----------
Cash and cash equivalents, end of period $ 4,472,208 $7,845,550 $ 8,453,564 $ 2,074,169 $ 4,677,056
=========== ========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-8
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998, December 31, 1997 and 1996
NOTE A - SUMMARY OF ACCOUNTING POLICIES
Admiralty Bancorp, Inc. (formerly White Eagle Financial Group, Inc.) is a
bank holding company incorporated in the state of Delaware. The
consolidated financial statements include the accounts of Admiralty
Bancorp, Inc. "the Parent" and its 96% owned subsidiary, Admiralty Bank
"the Bank", collectively referred to as "the Company". The Bank is a
state-chartered independent community bank with its main office in Palm
Beach Gardens, Florida, and branches in Juno Beach and Jupiter.
The Bank operates as a commercial bank offering a wide variety of
commercial loans and, to a lesser degree, consumer credits. The Bank
originates small business loans which are partially guaranteed by the Small
Business Administration. The Bank sells the guaranteed portion to unrelated
third parties at a premium. The Bank continues to service these loans. Its
primary future strategic aim is to establish a reputation and market
presence as the "small and middle market business bank" in its principal
market. The Bank funds its loans primarily by offering time, savings and
money market, and demand deposit accounts to both commercial enterprises
and individuals. Additionally, the Bank originates residential mortgage
loans. Principal markets include South Florida.
The Bank competes with other banking and financial institutions in its
primary markets. Commercial banks, savings banks, savings and loan
associations, mortgage bankers and brokers, credit unions and money market
funds actively compete for deposits and loans. Such institutions, as well
as consumer finance, mutual funds, insurance companies, and brokerage and
investment banking firms, may be considered competitors of the Bank with
respect to one or more of the services it renders.
The Bank is subject to regulations of certain state and federal agencies
and, accordingly, it is periodically examined by those regulatory
authorities. As a consequence of the extensive regulation of commercial
banking activities, the Bank's business is particularly susceptible to
being affected by state and federal legislation and regulations.
Basis of financial statement presentation
The accounting policies of the Parent and the Bank conform with generally
accepted accounting principles and predominant practices within the banking
industry. All significant intercompany balances and transactions have been
eliminated in consolidation.
The preparation of financial statements 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. These estimates and assumptions also affect
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Significant estimates
implicit in these financial statements are as follows.
(Continued)
F-9
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued
The consolidated financial statements as of March 31, 1998, and for the
three months ended March 31, 1998 and 1997, are unaudited. In the opinion
of management, all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the financial position and
results of operations have been included. The results of operations for the
three months ended March 31, 1998 and 1997, are not necessarily indicative
of the results that may be attained for an entire year.
The principal estimate that is particularly susceptible to significant
change in the near term relates to the allowance for loan losses. The
evaluation of the adequacy of the allowance for loan losses includes, among
other factors, an analysis of historical loss rates, by category, applied
to current loan totals. However, actual losses may be higher or lower than
historical trends, which vary. Actual losses on specified problem loans,
which also are provided for in the evaluation, may vary from estimated loss
percentages, which are established based upon a limited number of potential
loss classifications.
The Company adopted the Financial Accounting Standards Board's (FASB)
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," which is effective for periods beginning after
December 15, 1997. This new standard requires entities presenting a
complete set of financial statements to include details of comprehensive
income. Comprehensive income consists of net income or loss for the current
period and income, expenses, gains and losses that bypass the income
statement and are reported directly in a separate component of equity. The
adoption of SFAS No. 130 did not have a material effect on the presentation
of the Bank's financial position or results of operations.
The FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," which is effective for all periods beginning
after December 15, 1997. SFAS No. 131 requires that public business
enterprises report certain information about operating segments in complete
sets of financial statements of the enterprise and in condensed financial
statements of interim periods issued to shareholders. It also requires that
public business enterprises report certain information about their products
and services, the geographic areas in which they operate, and their major
customers. The adoption of SFAS No. 131 will not have a material effect on
the presentation of the Bank's financial position or results of operations.
(Continued)
F-10
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued
Investment securities
The Bank accounts for its investment securities in accordance with SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities."
This standard requires investments in securities to be classified in one of
three categories: held to maturity, trading or available for sale.
Investments in debt securities, for which management has both the ability
and intent to hold to maturity, are carried at cost, adjusted for the
amortization of premiums and accretion of discounts computed by the
interest method. Investments in debt securities, which management believes
may be sold prior to maturity due to changes in interest rates, prepayment
risk and equity, liquidity requirements or other factors, are classified as
available for sale. Net unrealized gains and losses for such securities,
net of tax effect, are required to be recognized as a separate component of
shareholders' equity and excluded from the determination of net income. The
Bank does not engage in security trading. Security transactions are
accounted for on a trade date basis. Gains or losses on disposition of
investment securities are based on the net proceeds and the adjusted
carrying amount of the securities sold using the specific identification
method.
Loans and allowance for loan losses
Loans that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are stated at the amount of
unpaid principal and are net of unearned discount, unearned loan fees and
an allowance for loan losses. The allowance for loan losses is established
through a provision for loan losses charged to expense. Loan principal
considered to be uncollectible by management is charged against the
allowance for loan losses. The allowance is an amount that management
believes will be adequate to absorb possible losses on existing loans that
may become uncollectible based upon an evaluation of known and inherent
risks in the loan portfolio. The evaluation takes into consideration such
factors as changes in the nature and size of the loan portfolio, overall
portfolio quality, specific problem loans, and current and future economic
conditions which may affect the borrowers' ability to pay. The evaluation
details historical losses by loan category, the resulting loss rates for
which are projected at current loan total amounts. Loss estimates for
specified problem loans are also detailed.
Interest income is accrued as earned on a simple interest basis. Accrual of
interest is discontinued on a loan when management believes, after
considering economic and business conditions and collection efforts, that
the borrower's financial condition is such that collection of interest is
doubtful. When a loan is placed on such non-accrual status, all accumulated
accrued interest receivable, applicable to periods prior to the current
year, is charged off to the allowance for loan losses. Interest which had
accrued in the current year is reversed out of current period income. Loans
90 days or more past due and still accruing interest must have both
principal and accruing interest adequately secured and must be in the
process of collection.
(Continued)
F-11
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued
The Bank accounts for its impaired loans in accordance with SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," as amended by SFAS No.
118, "Accounting by Creditors for Impairment of a Loan - Income Recognition
and Disclosures." This standard requires that a creditor measure impairment
based on the present value of expected future cash flows discounted at the
loan's effective interest rate, except that as a practical expedient, a
creditor may measure impairment based on a loan's observable market price,
or the fair value of the collateral if the loan is collateral-dependent.
Regardless of the measurement method, a creditor must measure impairment
based on the fair value of the collateral when the creditor determines that
foreclosure is probable.
Bank premises and equipment
Bank premises and equipment, including leasehold improvements, are stated at
cost less accumulated depreciation. Depreciation expense is computed on the
straight-line method over the estimated useful lives of the assets.
Leasehold improvements are depreciated over the shorter of the estimated
useful lives of the improvements or the terms of the related leases.
Other real estate owned
Other real estate owned, included in other assets, representing property
acquired through foreclosure, is carried at the lower of the principal
balance of the secured loan or fair value less estimated disposal costs of
the acquired property. Costs relating to holding the assets are charged to
expense.
Mortgage servicing
The Bank performs various servicing functions on loans owned by others. A
fee, usually based on a percentage of the outstanding principal balance of
the loan, is received for these services. At March 31, 1998, December 31,
1997 and 1996, the Bank was servicing approximately $16,500,000, $17,900,000
and $12,500,000, respectively, of loans for others.
The FASB issued SFAS No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," as amended by SFAS No.
127, "Deferral of the Effective Date of Certain Provision of SFAS No. 125,"
which provides accounting guidance on transfers of financial assets,
servicing of financial assets and extinguishments of liabilities. This
statement is effective for transfers of financial assets, servicing of
financial assets and extinguishments of liabilities occurring after December
31, 1996. The Bank originates mortgages under a definitive plan to sell or
securitize those loans and allocates the cost of the loans to originated
mortgage servicing rights and the loans based on relative fair values at the
date of origination. Adoption of this new statement did not have a material
impact on the Bank's financial position or results of operations.
(Continued)
F-12
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued
Long-lived assets
The Bank adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," for the year ended
December 31, 1996, which provides guidance on when to recognize and how to
measure impairment losses of long-lived assets and certain identifiable
intangibles and how to value long-lived assets to be disposed of. The
adoption of this new statement did not have a material impact on the Bank's
financial position or results of operations.
Mortgages held for sale
Mortgages held for sale are recorded at cost, which approximates market.
These mortgages are typically sold within three months of origination
without recourse to the Bank. Gain on the sales of residential mortgages is
recognized at the time of sale, and substantially all such gains result
from the recognition of previously deferred fees collected upon the
origination of such loans.
Restrictions on cash and due from banks
The Bank is required to maintain reserves against customer demand deposits
by keeping cash on hand or balances with the Federal Reserve Bank in a
non-interest bearing account. The amounts of those reserves and cash
balances at March 31, 1998, December 31, 1997 and 1996, were approximately
$297,000, $291,000 and $192,000, respectively.
Earnings per common share
The Company adopted the provisions of SFAS No. 128, "Earnings Per Share,"
which eliminates primary and fully diluted earnings per share (EPS) and
requires presentation of basic and diluted EPS in conjunction with the
disclosure of the methodology used in computing such EPS. Basic EPS excludes
dilution and is computed by dividing income available to common shareholders
by the weighted average common shares outstanding during the period. Diluted
EPS takes into account the potential dilution that could occur if securities
or other contracts to issue common stock were exercised and converted into
common stock. Prior period EPS calculations for the three months ended March
31, 1998 and the period August 11, 1997 (date of inception) through December
31, 1997 have been restated to reflect the adoption of SFAS No. 128. EPS for
the predecessor company has not been presented because the presentation is
not meaningful.
Advertising costs
The Bank expenses advertising costs as incurred.
(Continued)
F-13
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued
Income Taxes
Deferred tax assets and liabilities are reflected at currently enacted
income tax rates applicable to the period in which the deferred tax assets
or liabilities are expected to be realized or settled. As changes in tax
laws or rates are enacted, deferred tax assets and liabilities are adjusted
through the provision for income taxes.
Statement of cash flows
Cash and cash equivalents are defined as cash on hand, cash items in the
process of collection, amounts due from banks and federal funds sold with an
original maturity of three months or less. No cash was paid for income taxes
for the three months ended March 31, 1998 and 1997, and for the years ended
December 31, 1997 and 1996. Cash paid for interest was approximately
$279,000 and $289,000 for the three months ended March 31, 1998 and 1997,
respectively, and $1,195,000 and $1,176,000 for the years ended December 31,
1997 and 1996, respectively.
Reclassifications
Certain reclassifications have been made to the 1997 and 1996 financial
statements to conform to the 1998 presentation.
NOTE B - INVESTMENT SECURITIES
The amortized cost, gross unrealized gains and losses, and estimated fair
value of the Bank's available for sale and held to maturity securities are
summarized as follows:
<TABLE>
<CAPTION>
March 31, 1998
----------------------------------------------------------------
(unaudited)
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains value losses
----------- ------- -------- -----------
<S> <C> <C> <C> <C>
Available for sale
U.S. Government securities $ 500,000 $ -- $ -- $ 500,000
Mortgage-backed securities 15,152,636 -- (7,132) 15,145,504
----------- ------- -------- -----------
Total available for sale
securities $15,652,636 $ -- $ (7,132) $15,645,504
=========== ======= ======== ===========
</TABLE>
(Continued)
F-14
<PAGE>
<TABLE>
<CAPTION>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE B - INVESTMENT SECURITIES - Continued
December 31, 1997
---------------------------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
----------- -------- --------- -----------
<S> <C> <C> <C> <C>
Available for sale
Mortgage-backed securities $ 3,607,351 $ 16,394 $ (4,195) $ 3,619,550
=========== ======== ========= ===========
Held to maturity
Mortgage-backed securities $16,059,516 $ 73,285 $ (27,834) $16,104,967
U.S. Government securities 501,440 -- (34) 501,406
----------- -------- --------- -----------
Total held to maturity
securities $16,560,956 $ 73,285 $ (27,868) $16,606,373
=========== ======== ========= ===========
December 31, 1997
---------------------------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
----------- -------- --------- -----------
<S> <C> <C> <C> <C>
Available for sale
Mortgage-backed securities $ 8,979,148 $ 57,274 $ (53,154) $ 8,983,268
=========== ======== ========= ===========
Held to maturity
Mortgage-backed securities $ 7,977,912 $ 54,476 $ (40,590) $ 7,991,798
U.S. Government securities 500,000 -- (20,000) 480,000
----------- -------- --------- -----------
Total held to maturity
securities $ 8,477,912 $ 54,476 $ (60,590) $ 8,471,798
=========== ======== ========= ===========
</TABLE>
The following table lists maturities of investment securities at March 31,
1998 classified as available for sale:
<TABLE>
<CAPTION>
Available for sale
-----------------------------
Estimated
Amortized fair
cost value
----------- -----------
<S> <C> <C>
Due from one year to five years $ 500,000 $ 500,000
Mortgage-backed securities 15,152,636 15,145,504
----------- -----------
$15,652,636 $15,645,504
=========== ===========
</TABLE>
(Continued)
F-15
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE B - INVESTMENT SECURITIES - Continued
Proceeds on sales of securities classified as available for sale were
approximately $-0- and $1,800,000 for the three months ended March 31, 1998
and 1997, respectively, and $9,500,000 for the years ended December 31, 1997
and 1996. The Bank had gross realized gains of approximately $-0- and
$87,000 for the three months ended March 31, 1998 and 1997, respectively,
and $87,000 and $444,000 for the years ended December 31, 1997 and 1996,
respectively, and gross realized losses of approximately $-0- and $-0- for
the three months ended March 31, 1998 and 1997, respectively, and $-0- and
$7,000 on sales of available for sale securities in 1997 and 1996,
respectively.
The carrying value of securities pledged to secure deposits and for other
purposes required or permitted by law amounted to approximately $4,313,000,
$5,395,000 and $5,003,000 at March 31, 1998, December 31, 1997 and 1996,
respectively.
NOTE C - LOANS
Major classification of loans are as follows:
<TABLE>
<CAPTION>
December 31,
March 31, ------------------------------
1998 1997 1996
------------ ------------ ------------
(unaudited)
<S> <C> <C> <C>
Commercial $ 6,914,527 $ 6,074,099 $ 5,418,589
Real estate 17,246,366 16,288,446 12,679,300
Installment 615,268 688,652 504,297
Home equity 221,955 195,759 --
Overdrafts 20,315 25,912 70,339
------------ ------------ ------------
25,018,431 23,272,868 18,672,525
Less
Allowance for loan losses (428,869) (377,807) (364,745)
Unearned discount -- -- (36,832)
Deferred loan origination fees (36,460) (41,284) (42,450)
------------ ------------ ------------
Loans, net $ 24,553,102 $ 22,853,777 $ 18,228,498
============ ============ ============
</TABLE>
(Continued)
F-16
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE C - LOANS - Continued
Changes in the allowance for loan losses are as follows:
<TABLE>
<CAPTION>
Three months ended March 31, Years ended December 31,
--------------------------- ------------------------------
1998 1997 1997 1996
---------- ----------- ------------ ------------
(unaudited)
<S> <C> <C> <C> <C>
Balance at beginning of year $ 377,807 $ 364,745 $ 364,745 $ 343,548
Loans charged off (5,000) (142,822) (447,356) (286,186)
Recoveries 1,062 559 25,418 10,383
Provision for loan losses 55,000 141,500 435,000 297,000
----------- ----------- ------------ ------------
Balance at end of year $ 428,869 $ 363,982 $ 377,807 $ 364,745
=========== =========== ============ ============
</TABLE>
The balance of impaired loans was approximately $81,000, $95,000 and
$221,000 at March 31, 1998, December 31, 1997 and 1996, respectively. The
Bank has identified a loan as impaired when it is probable that interest and
principal will not be collected according to the contractual terms of the
loan agreements. The allowance for loan loss associated with impaired loans
was approximately $12,000, $11,000 and $94,000 at March 31, 1998, December
31, 1997 and 1996, respectively. The average recorded investment on impaired
loans was approximately $11,000 and $14,000, and $12,000 and $35,000 for the
three months ended March 31, 1998 and 1997, and for the years ended December
31, 1997 and 1996, respectively. The income recognized on impaired loans for
the three months ended March 31, 1998 and 1997, and for the years ended
December 31, 1997 and 1996, was approximately $-0- and $-0-, and $14,000 and
$-0-, respectively. Total cash collected on impaired loans for the three
months ended March 31, 1998 and 1997, and for the years ended December 31,
1997 and 1996, was approximately $1,000 and $149,000, and $30,000 and
$45,000, respectively, all of which was credited to the principal balance
outstanding on such loans. Interest which would have been accrued on
impaired loans for the three months ended March 31, 1998 and 1997, and for
the years ended December 31, 1997 and 1996, was approximately $2,000,
$2,000, $11,000 and $5,000, respectively. The Bank recognizes income on
non-accrual loans under the cash basis when the loans are both current and
the collateral on the loan is sufficient to cover the outstanding obligation
to the Bank; if these factors do not exist, the Bank will not recognize
income.
As of March 31, 1998, December 31, 1997 and 1996, the Bank had no loans past
due 90 days or more as to interest or principal payments that were still
accruing interest. At March 31, 1998, December 31, 1997 and 1996, there were
no commitments to lend additional funds to borrowers whose loans are
classified as non-accrual.
F-17
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANy
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE D - PREMISES AND EQUIPMENT
Premises and equipment are as follows:
<TABLE>
<CAPTION>
December 31,
Estimated March 31, ---------------------------
useful lives 1998 1997 1996
------------ ------------ ----------- -----------
(unaudited)
<S> <C> <C> <C> <C>
Furniture and equipment 5 to 7 years $ 1,215,666 $ 1,195,471 $ 1,381,059
Leasehold improvements 15 to 17 years 600,260 580,819 567,181
----------- ----------- -----------
1,815,926 1,776,290 1,948,240
Accumulated depreciation and amortization (1,199,694) (1,145,082) (1,146,436)
----------- ----------- -----------
$ 616,232 $ 631,208 $ 801,804
=========== ========== ==========
</TABLE>
NOTE E - DEPOSITS
Deposits are as follows:
<TABLE>
<CAPTION>
December 31,
March 31, ---------------------------
1998 1997 1996
----------- ----------- ------------
(unaudited)
<S> <C> <C> <C>
Non-interest bearing demand $11,088,955 $11,690,213 $ 9,232,315
Savings, NOW and money market 16,268,283 14,933,464 14,249,652
Time deposits, under $100,000 10,744,372 11,888,066 11,489,390
Time deposits, $100,000 and over 3,134,535 4,268,111 4,853,354
----------- ----------- -----------
$41,236,145 $42,779,854 $39,824,711
=========== =========== ===========
</TABLE>
At March 31, 1998, the scheduled maturities of time deposits are as follows
(unaudited):
1999 $ 6,541,705
2000 6,020,897
2001 977,992
2002 115,156
2003 191,408
Thereafter 31,749
------------
$ 13,878,907
(Continued)
F-18
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE E - DEPOSITS - Continued
Interest expense on deposits is as follows:
<TABLE>
<CAPTION>
Three months ended March 31, Years ended December 31,
---------------------------- ------------------------------
1998 1997 1997 1996
---------- ---------- ---------- ----------
(unaudited)
<S> <C> <C> <C> <C>
NOW and money market $ 59,951 $ 55,656 $ 255,341 $ 229,334
Savings 8,025 11,445 26,537 25,527
Time deposits 142,814 229,681 910,073 850,514
---------- ---------- ---------- ----------
$ 210,790 $ 296,782 $1,191,951 $1,105,375
========== ========== ========== ==========
</TABLE>
NOTE F - INCOME TAXES
Income tax (benefit) expense is comprised of the following:
<TABLE>
<CAPTION>
Three months ended March 31, Years ended December 31,
------------------------- ----------------------------
1998 1997 1997 1996
--------- --------- --------- ---------
(unaudited)
<S> <C> <C> <C> <C>
Federal
Current $ 78,000 $ 34,000 $ 139,028 $ 15,000
Deferred -- (96,000) (400,482) --
--------- --------- --------- ---------
78,000 (62,000) (261,454) 15,000
--------- --------- --------- ---------
State
Current 10,000 5,000 16,211 --
Deferred -- (10,000) (42,757) --
--------- --------- --------- ---------
10,000 (5,000) (26,546) --
--------- --------- --------- ---------
$ 88,000 $ (67,000) $(288,000) $ 15,000
========= ========= ========= =========
</TABLE>
(Continued)
F-19
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE F - INCOME TAXES - Continued
The income tax provision reconciled to the tax computed at the statutory
federal rate was as follows:
<TABLE>
<CAPTION>
Three months ended March 31, Years ended December 31,
--------------------------- ------------------------------
1998 1997 1997 1996
------- --------- --------- ---------
(unaudited)
<S> <C> <C> <C> <C>
Tax at statutory rate $62,000 $ 59,000 $ 365,642 $ 243,419
Adjustment of deferred tax
valuation allowance -- (126,000) (663,197) (251,065)
Amortization of goodwill 10,000 -- -- --
Other, net 8,000 -- 23,555 22,646
------- --------- --------- ---------
Applicable income tax
(benefit) expense $80,000 $ (67,000) $(274,000) $ 15,000
======= ========= ========= =========
</TABLE>
The net deferred tax asset consisted of the following:
December 31,
March 31, ----------------------
1998 1997 1996
--------- --------- ---------
(unaudited)
Deferred tax assets (liabilities)
Net operating loss $ 474,000 $ 484,800 $ 804,500
Fixed assets (17,300) (17,300) 19,000
Alternative minimum tax credit -- -- 15,000
Other 1,400 (2,800) 7,500
SBA loans (34,500) (20,500) --
Allowance for loan losses 15,000 (5,600) (114,500)
--------- --------- ---------
438,600 438,600 731,500
Valuation allowance -- -- (731,500)
--------- --------- ---------
Net deferred tax asset $ 438,600 $ 438,600 $ --
========= ========= =========
At March 31, 1998, the Bank had unused net operating loss carryforwards of
approximately $1,288,000 for federal and Florida income tax purposes
expiring in various amounts from 2006 to 2008. Although larger tax losses
have occurred over the past five years, the loss carryforward reflects the
maximum benefit that could be obtained from these net operating losses.
Future sales of common stock, if any, may result in a second ownership
change which could further limit the utilization of net operating loss
carryforwards of losses incurred since November 1993.
F-20
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE G - EARNINGS PER SHARE
The earnings per share computation assumes the conversion of Class A common
stock into shares of Class B common stock. There were warrants outstanding
to purchase 800,000 shares of Class B common stock at $11.00 per share which
were not included in the computation of diluted earnings per share because
to do so would have been antidilutive for the periods presented.
The following table illustrates the reconciliation of the numerators and
denominators of the basic and diluted earnings per share computations:
<TABLE>
<CAPTION>
Three months ended March 31, 1998
-----------------------------------------
Weighted
average Per share
Income shares amount
-------- --------- ---------
<S> <C> <C> <C>
Net income per share - basic and diluted $ 89.193 1,104,973 $ 0.08
======== ========= =======
<CAPTION>
Period from August 11, 1997 (date of
inception) through December 31, 1997
-----------------------------------------
Weighted
average Per share
Income shares amount
-------- --------- ---------
<S> <C> <C> <C>
Net income per share - basic and diluted $ 59.501 295,440 $ 0.20
======== ======== =======
</TABLE>
NOTE H - COMMITMENTS AND CONTINGENCIES
Operating leases
The Bank utilizes certain office space and equipment under operating leases
expiring through 1999. Total rent expense under such operating leases,
included in occupancy expense, was approximately $66,000 and $70,000 and
$282,000 and $274,000 for the three months ended March 31, 1998 and 1997,
and for the years ended December 31, 1997 and 1996, respectively.
(Continued)
F-21
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE H - COMMITMENTS AND CONTINGENCIES - Continued
Approximate minimum payments under non-cancellable operating leases for the
period ending March 31 are as follows (unaudited):
1999 $ 224,000
2000 242,000
2001 231,000
2002 204,000
2003 208,000
Thereafter 123,000
----------
$1,232,000
==========
Other
The Bank is involved in certain litigation arising in the ordinary course of
business. In the opinion of management, the outcome of this litigation will
not have a significant effect on the accompanying financial statements.
NOTE I - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATION OF
CREDIT RISKS
The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit and financial guarantees. Those instruments involve, to
varying degrees, elements of credit and interest rate risk in excess of the
amount recognized in the balance sheets. The contract or notional amounts of
those instruments reflect the extent of the Bank's involvement in particular
classes of financial instruments.
The Bank's exposure to credit loss in the event of non-performance by the
other party to the financial instrument for commitments to extend credit,
standby letters of credit and financial guarantees written is represented by
the contractual notional amount of those instruments. The Bank uses the same
credit policies in making commitments and conditional obligations as it does
for on-balance-sheet instruments.
(Continued)
F-22
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE I - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATION OF
CREDIT RISKS - Continued
The Bank does not require collateral or other security to support financial
instruments with credit risk. The approximate contract amounts are as
follows:
December 31,
March 31, -----------------------
1998 1997 1996
---------- ---------- ----------
(unaudited)
Unfunded line of credit $1,082,000 $ 986,000 $ 607,000
Standby letters of credit 174,000 161,000 173,000
Unfunded construction loans 453,000 599,000 3,867,000
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments are
expected to expire without being drawn upon, the total commitment amounts do
not necessarily represent future cash requirements. The Bank evaluates each
customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained, if it is deemed necessary by the Bank upon extension of
credit, is based on management's credit evaluation of the counterparty.
Collateral held varies but may include accounts receivable; inventory,
property, plant, and equipment; and income-producing commercial properties.
Standby letters of credit and financial guarantees written are conditional
commitments issued by the Bank to guarantee the performance of a customer to
a third party. Those guarantees are primarily issued to support public and
private borrowing arrangements.
The Bank has not been required to perform on any financial guarantees during
the past year. The Bank has not incurred any losses on its commitments in
1997 or 1996.
The Bank is an independent community commercial bank, with its main office
in Palm Beach Gardens, Florida, and branches in Juno Beach and Jupiter. The
Bank principally extends credit for commercial business and commercial real
estate loans, substantially all of which are located in South Florida.
Although the Bank maintains a diversified loan portfolio, a substantial
portion of its borrowers' abilities to repay loans is dependent upon the
economic condition of the South Florida region.
F-23
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE J - REGULATORY MATTERS
Based upon the results of the joint examination conducted by the State of
Florida Department of Banking and Finance (the Department) and the Federal
Reserve Bank of Atlanta (FRB) that concluded in September 1991, the Bank
entered into a Cease and Desist Order (C&D) in January 1992. Provisions of
this C&D required the Bank to, among other things, cease and desist from the
following: (1) operating the Bank with inadequate capital; (2) maintaining
unsatisfactory asset quality and excess past-due loans; (3) funding
operations with unstable deposits or other liabilities; and (4) maintaining
inadequate loss reserves.
Based upon the improvements in the Bank's condition as reflected in the
Report of Examination as of October 1997 by the FRB and based on the Bank's
overall compliance with the C&D, the FRB terminated its C&D on January 30,
1998, and the Department terminated its C&D on February 6, 1998.
The Bank, as a state-chartered Federal Reserve member bank, is subject to
regulatory dividend restrictions. Under such restrictions, the Bank may not,
without prior regulatory approval, declare dividends.
The Bank is subject to various regulatory and capital requirements
administered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory--and possibly additional
discretionary--actions by the regulators that, if undertaken, could have a
direct material effect on the Bank's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective
action, the Bank must meet specific capital guidelines that involve
quantitative measures of the Bank's assets, liabilities and certain
off-balance-sheet items as calculated under regulatory accounting practices.
The Bank's capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings
and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to
average assets (as defined). Management believes, as of March 31, 1998, that
the Bank meets all capital adequacy requirements to which it is subject.
(Continued)
F-24
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE J - REGULATORY MATTERS - Continued
As of October 1997, the most recent notification of the FRB categorized the
Bank as adequately capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized, the Bank must
maintain minimum total risk-based, Tier I risk-based and Tier I leverage as
set forth in the table. There are no conditions or events since that
notification that management believes have changed the institution's
category.
<TABLE>
<CAPTION>
To be well
capitalized under
For capital prompt corrective
Actual adequacy purposes action provisions
--------------------- ---------------------- ----------------------
Amount Ratio Amount Ratio Amount Ratio
----------- ----- ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C>
As of March 31, 1998
Total capital (to risk-
weighted assets) $ 4,599,237 14.35% $ 2,563,520 > 8.00% $ 3,204,400 >10.00%
- -
Tier I capital (to risk-
weighted assets) 4,198,687 13.10 1,281,760 > 4.00 1,922,640 > 6.00
- -
Tier I capital (to
average assets) 4,193,687 8.76 1,917,120 > 4.00 2,396,400 > 5.00
- -
As of December 31, 1997
Total capital (to risk-
weighted assets) $ 4,414,328 13.98% $ 3,525,578 > 8.00% $ 3,156,973 >10.00%
- -
Tier I capital (to risk-
weighted assets) 4,036,521 12.79 1,262,789 > 4.00 1,894,184 > 6.00
- -
Tier I capital (to
average assets) 4,036,521 8.59 1,879,624 > 4.00 2,819,436 > 5.00
- -
As of December 31, 1996
Total capital (to risk-
weighted assets) $ 3,574,384 14.57% $ 1,962,056 > 8.00% $ 2,452,570 > 10.00%
Tier I capital (to risk- - -
weighted assets) 3,267,812 13.32 981,028 > 4.00 1,471,542 > 6.00
Tier I capital (to average - -
assets) 3,267,812 8.18 1,597,554 > 4.00 2,396,331 > 5.00
- -
</TABLE>
F-25
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE K - PLAN OF MERGER AND RECAPITALIZATION
During September 1997, Admiralty Bancorp, Inc. (Admiralty) entered into an
Agreement and Plan of Merger (the Agreement) with White Eagle Financial
Group, Inc. (WEFG). Pursuant to the terms of the Agreement, all then
existing shareholders of WEFG had their interests in WEFG cancelled in
exchange for a cash payment equal to 1.85 times the shareholders' equity of
WEFG. The consideration paid to WEFG shareholders upon consummation of the
acquisition will be approximately $7,500,000. Additionally, Admiralty paid a
finder fee of $500,000, payable in 50,000 shares of Class B common stock to
the former Chairman of the Board of WEFG in conjunction with the sale of
WEFG to Admiralty. This fee was considered additional consideration in the
purchase WEFG. In connection with this transaction, Admiralty was merged
into WEFG and WEFG then changed its name to Admiralty Bancorp, Inc. This
transaction was accounted for under the purchase method of accounting and
accordingly, the results of operation for the three months ended March 31,
1998, include only the results of operations from the date of acquisition,
January 22, 1998.
The organizers of Admiralty recapitalized the Company through $8,000,000 in
new capital raised through a private placement of the Company's Class A
Units, consisting of one share of Class A Common Stock, no par value (the
Class A Stock) and one Class B Common Stock Purchase Warrant (the Class B
Stock). Holders of the warrants are entitled to purchase 800,000 shares of
the Class B Stock. Each of these warrants entitles the holder to purchase
one share of the Class B Stock, at a purchase price of $11.00 per share, for
a period commencing January 22, 1999, and ending January 21, 2002. Each
Class A Unit had a purchase price of $10.00. The Class A common stock can
also be convertible into shares of Class B common stock at the option of the
holders of the Class A common stock. Additionally, in connection with the
formation of Admiralty, the organizers received 88,881 shares of Class A
common stock and 133,320 shares of Class B common stock for $160,000 of
consideration.
NOTE L - SUBSEQUENT EVENTS
Proposed Public Offering (Unaudited)
The Company anticipates a public offering September 1998 of 1,100,000 shares
(the Shares) of Class B common stock at a price per share of between
$10.00-$11.00. The Shares may be purchased separately and will be separately
tradable immediately upon issuance. The Company has granted to the
underwriters of such offering a 30-day option to purchase up to an
additional 165,000 shares of common stock on the same terms and conditions
as set forth above solely to cover overallotments.
(Continued)
F-26
<PAGE>
ADMIRALTY BANCORP, INC. AND SUBSIDIARY
AND PREDECESSOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, December 31, 1997 and 1996
NOTE L - SUBSEQUENT EVENTS - Continued
Management Stock Option Plan
In May 1998, the Board of Directors of the Company approved the 1998
Management Stock Option Plan (the Management Plan), which provides for
options to purchase up to 330,000 shares of Class B stock to be issued to
members of the Board of Directors of the Company, the Bank and any other
subsidiaries which the Company acquire or incorporate in the future.
The Management Plan provides for the granting of both incentive options and
non-statutory options. Incentive stock options may be granted at an exercise
price of not less than 100% of the fair market value of the Class B stock on
the date of grant. The Option price for non-statutory options may not be
less than 100% of the fair market value of the Class B stock on the date of
grant. The Board of Directors has discretion to set the actual exercise
price of any option within the foregoing parameters.
Class A Stock Dividend
On June 26, 1998, the Company declared a 5% Class B common stock dividend,
payable July 21, 1998. Total Class B common shares issued was 44,390. Per
share amounts for the months ended March 31, 1998, have been adjusted to
retroactively reflect this dividend. Per share amounts for the predecessor
company have not been adjusted for this stock dividend.
F-27
<PAGE>
No dealer, salesperson or any other person has been authorized to give
information or make any representation not contained in this Prospectus in
connection with the offer made hereby. If given or made, such information or
representation must not be relied upon as having been authorized by the Company
or Underwriter. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company since the date hereof or that
information contained herein is current as of any time subsequent to such date.
TABLE OF CONTENTS
-----------------
PROSPECTUS SUMMARY ................................................... 3
ADMIRALTY BANCORP, INC. .............................................. 3
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA ........................ 6
RISK FACTORS ......................................................... 8
USE OF PROCEEDS ...................................................... 11
DILUTION ............................................................. 11
CAPITALIZATION ....................................................... 13
PRO FORMA FINANCIAL INFORMATION ...................................... 14
SELECTED CONSOLIDATED FINANCIAL DATA AND OTHER DATA .................. 16
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ................... 17
OVERVIEW OF STRATEGY ................................................. 17
RESULTS OF OPERATIONS ................................................ 18
NET INCOME ........................................................... 18
COMPARATIVE AVERAGE BALANCE SHEETS ................................... 19
FINANCIAL CONDITION .................................................. 25
MATURITY SCHEDULE OF INVESTMENT SECURITIES ........................... 33
THE BANK ............................................................. 40
MANAGEMENT ........................................................... 44
DESCRIPTION OF THE COMPANY'S SECURITIES .............................. 52
ANTI-TAKEOVER PROVISIONS ............................................. 55
REGULATION AND SUPERVISION ........................................... 58
UNDERWRITING ......................................................... 62
LEGAL MATTERS ........................................................ 63
EXPERTS .............................................................. 63
AVAILABLE INFORMATION ................................................ 64
Until __, 199_ (25 days after the date of the prospectus), all dealers
effecting transactions in the Common Stock, whether or not participating in this
distribution, may be required to deliver a Prospectus. This 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.
1,100,000 SHARES
ADMIRALTY BANCORP, INC.
------------
PROSPECTUS
------------
FIRST COLONIAL
SECURITIES GROUP, INC.
________________, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article EIGHT of the Restated Certificate of Incorporation of the Company
provides that the Company shall indemnify its present and former officers and
directors and may, by action of its Board of Directors, indemnify its present
and former employees and agents and persons serving at its request against
expenses, including attorneys' fees, judgments, fines or amounts paid in
settlement incurred in connection with any pending, threatened or completed
action (civil or criminal) 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
Company.
Under Section 145 of the Delaware General Corporation Law ("DGCL"), the
Company may indemnify a corporate agent in a specific case if a determination is
made by any of the following that the applicable standard of conduct was met:
(i) the Board of Directors, or a committee thereof, acting by a majority vote of
a quorum consisting of disinterested directors; (ii) by independent legal
counsel, if there is not a quorum of disinterested directors or if the
disinterested quorum empowers counsel to make the determination; or (iii) by the
shareholders.
Section 145 of the DGCL further provides that a corporate agent is entitled
to mandatory indemnification to the extent that the agent is successful on the
merits or otherwise in any proceeding, or in defense of any claim, issue or
matter in the proceeding. In advance of the final disposition of a proceeding,
the Company may pay an agent's expenses if the agent agrees to repay the
expenses unless it is ultimately determined he is entitled to indemnification.
<PAGE>
Article EIGHT also provides that such indemnification shall not exclude any
other rights to indemnification to which a person may otherwise be entitled, and
authorizes the Company to purchase insurance on behalf of any of the persons
enumerated against any liability whether or not the Company would have the power
to indemnify him under the provisions of Article EIGHT.
Article EIGHT of the Company's Certification of Incorporation provides that
a director of the Company shall not be personally liable to the Company or its
shareholders for monetary damages for a breach of any fiduciary duty as director
owned to the Company or its shareholders except to the extent such exemption
from liability or limitation thereof is not permitted under the DGCL.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses (other than underwriting
compensation expected to be incurred) in connection with the offering described
in this Registration Statement. All of such amounts (except the SEC Registration
Fee and the NASD Filing Fee) are estimated.
SEC Registration Fee $ 3,918
NASD Filing Fee $ 1,679
NASD Listing Fee $ 6,265
Blue Sky Fees and Expenses $ 25,000
Printing and Engraving Costs $ 25,000
Legal Fees and Expenses $150,000
Accounting Fees and Expenses $100,000
Transfer Agent and Registrar Fees and Expenses $ 5,000
Miscellaneous $ 83,138
--------
TOTAL $400,000
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The following information relates to securities of the Company issued or
sold within the past three years which were not registered under the Securities
Act of 1933, as amended (the "Securities Act"):
In September, 1997, the Company issued 88,881 shares of Class A stock and
133,320 shares of Class B stock to its founders pursuant to one exemption from
registration contained in Section 4(3) of the Securities Act. In January, 1998,
the Company consummated a private placement of units (the "Units"). Each Unit
consists of one (1) share of Class A Common Stock (the "Class A Stock") and one
(1) Class B Common Stock purchase warrant (the "Warrant"). Each Warrant permits
the holder thereof to purchase one (1) share of the Company's Class B Common
Stock for a purchase price of $11.00 per share. Each Warrant has a term of four
(4) years. The sale of the Units was undertaken in accordance with Rule 506 of
Regulation D. Approximately 800,000 units were sold to 71 purchasers, all of
whom the Company believes are "accredited investors" as defined in Rule 501 of
Regulation D, for gross proceeds of $8,000,000.
ITEM 27. EXHIBITS
EXHIBITS LIST
Number Description of Exhibits
- ------ -----------------------
1 Form of Underwriting Agreement(1)
3.1 Restated Certificate of Incorporation of Admiralty Bancorp, Inc.,
a Delaware corporation (1)
3.2 Certificate of Incorporation of Admiralty Bank (1)
3.3 Bylaws of Admiralty Bancorp, Inc., a Delaware corporation
3.4 Bylaws of Admiralty Bank
4.1 Form of Warrant Agreement to purchase Class B Common Stock
4.2 Form of Class A Common Stock Certificate and Section Fourth of
Certificate of Incorporation (see Exhibit 3.1)
4.3 Form of Class B Common Stock Certificate
<PAGE>
5 Opinion of Jamieson, Moore, Peskin & Spicer, P.C. (1)
10.1 Employment Agreement with Ward Kellogg
10.2 Admiralty Bancorp, Inc. 1998 Stock Option Plan
10.3 Lease Agreement between Loggerhead Associated LTD and Admiralty Bank
dated January 2, 1992, as amended
10.4 Lease Agreement between Karl D. Griffin, Trustee and Admiralty Bank,
as amended
10.5 Lease Agreement between RIMCO XII, Inc. and Admiralty Bank,
as amended
21 List of Subsidiaries
23.1 Consent of Jamieson, Moore, Peskin & Spicer (see Exhibit 5) (1)
23.2 Consent of Grant Thornton LLP, West Palm Beach, FL as auditor to
White Eagle Financial Group, Inc., predecessor to Admiralty
Bancorp, Inc.
23.3 Consent of Grant Thornton LLP, Philadelphia, PA as auditor to
Admiralty Bancorp, Inc.
24 Power of Attorney
27 Financial Data Schedule
- ----------
(1) To be filed by amendment
ITEM 28. UNDERTAKINGS
The Registrant will provide to the underwriters at the closing specified in
the underwriting agreement certificates in such dominations and registered in
such names as required by the underwriters to permit prompt delivery to each
purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions (as set forth in item 24),
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 Securities 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
<PAGE>
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 Securities
Act and will be governed by the final adjudication of such issue.
-- The undersigned registrant will:
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the small business issuer under Rule 44(b)(1) or (4) or
497(h) under the Securities Act as part of this registration statement as of the
time the Commission declared in effective; and
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and the offering of the securities at that time as the initial bona fide
offering of those securities.
-- The undersigned registrant will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act.
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or
decease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
<PAGE>
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Township of Princeton, State of
New Jersey, on the 29th day of July, 1998.
ADMIRALTY BANCORP, INC.
/s/ BRUCE A. MAHON
---------------------------------
BRUCE A. MAHON
Chairman of the Board and CEO
/s/ MICHAEL E. GOLDEN
---------------------------------
MICHAEL E. GOLDEN
Vice Chairman of the Board
/s/ LESLIE E. GOODMAN
---------------------------------
LESLIE E. GOODMAN
Director
/s/ THOMAS L. GRAY, JR.
---------------------------------
THOMAS L. GRAY, JR.
Director
/s/ SIDNEY L. HOFING
---------------------------------
SIDNEY L. HOFING
Director
/s/ PETER L. A. PANTAGES
---------------------------------
PETER L. A. PANTAGES
Director
/s/ RICHARD P. ROSA
---------------------------------
RICHARD P. ROSA
Director
/s/ CRAIG A. SPENCER
---------------------------------
CRAIG A. SPENCER
Director
/s/ MARK A. WOLTERS
---------------------------------
MARK A. WOLTERS
Director
/s/ GEORGE R. ZOFFINGER
---------------------------------
GEORGE R. ZOFFINGER
Director
<PAGE>
EXHIBITS LIST
-------------
Number Description of Exhibits
- ------ -----------------------
1 Form of Underwriting Agreement(1)
3.1 Restated Certificate of Incorporation of Admiralty Bancorp, Inc., a
Delaware corporation(1)
3.2 Certificate of Incorporation of Admiralty Bank(1)
3.3 Bylaws of Admiralty Bancorp, Inc., a Delaware corporation
3.4 Bylaws of Admiralty Bank
4.1 Form of Warrant Agreement to purchase Class B Common Stock
4.2 Form of Class A Common Stock Certificate and Section Fourth of
Certificate of Incorporation (see Exhibit 3.1)
4.3 Form of Class B Common Stock Certificate
5 Opinion of Jamieson, Moore, Peskin & Spicer, P.C.(1)
10.1 Employment Agreement with Ward Kellogg
10.2 Admiralty Bancorp, Inc. 1998 Stock Option Plan
10.3 Lease Agreement between Loggerhead Associated LTD and Admiralty Bank
dated January 2, 1992, as amended
10.4 Lease Agreement between Karl D. Griffin, Trustee and Admiralty Bank,
as amended
10.5 Lease Agreement between RIMCO XII, Inc. and Admiralty Bank, as
amended
21 List of Subsidiaries
23.1 Consent of Jamieson, Moore, Peskin & Spicer (see Exhibit 5)(1)
23.2 Consent of Grant Thornton, LLP, West Palm Beach, FL as auditor to
White Eagle Financial Group, Inc., predecessor to Admiralty Bancorp,
Inc.
23.3 Consent of Grant Thornton, LLP, Philadelphia, PA as auditor to
Admiralty Bancorp, Inc.
24 Power of Attorney
27 Financial Data Schedule
- ----------
(1) To be filed by amendment
BY-LAWS
OF
ADMIRALTY BANCORP, INC.
Section 1. LAW, CERTIFICATE OF INCORPORATION AND BY-LAWS
1.1. These by-laws are subject to the certificate of incorporation of the
corporation. In these by-laws, references to law, the certificate of
incorporation and by-laws mean the law, the provisions of the certificate of
incorporation and the by-laws as from time to time in effect.
Section 2. SHAREHOLDERS
2.1. Annual Meeting. The annual meeting of shareholders shall be held at
such date and time as shall be designated from time to time by the board of
directors and stated in the notice of the meeting, at which time the
shareholders shall elect a board of directors and transact such other business
as may be required by law or these by-laws or as may properly come before the
meeting.
2.2. Special Meetings. A special meeting of the shareholders may be called
at any time by the chairman of the board, if any, the president or the board of
directors. A special meeting of the shareholders shall be called by the
secretary, or in the case of the death, absence, incapacity or refusal of the
secretary, by an assistant secretary or some other officer, upon application of
a majority of the directors. Any such application shall state the purpose or
purposes of the proposed meeting. Any such call shall state the place, date,
hour, and purposes of the meeting.
2.3. Place of Meeting. All meetings of the shareholders for the election of
directors or for any other purpose shall be held at such place within or without
the State of New Jersey as may be determined from time to time by the board of
directors. Any adjourned session of any meeting of the shareholders shall be
held at the place designated in the vote of adjournment.
2.4. Notice of Meetings. Except as otherwise provided by law, a written
notice of each meeting of shareholders stating the place, day and hour thereof
and, in the case of a special meeting, the purposes for which the meeting is
called, shall be given not less then ten nor more than sixty days before
<PAGE>
the meeting, to each shareholder entitled to vote thereat, and to each
shareholder who, by law, by the certificate of incorporation or by these
by-laws, is entitled to notice, by leaving such notice with him or at his
residence or usual place of business, or by depositing it in the United States
mail, postage prepaid, and addressed to such shareholder at his address as it
appears in the records of the corporation. Such notice shall be given by the
secretary, or by an officer or person designated by the board of directors, or
in the case of a special meeting by the officer calling the meeting. As to any
adjourned session of any meeting of shareholders, notice of the adjourned
meeting need not be given if the time and place thereof are announced at the
meeting at which the adjournment was taken except that if after the adjournment
a new record date is set for the adjourned session, notice of any such adjourned
session of the meeting shall be given in the manner heretofore described. No
notice of any meeting of shareholders or any adjourned session thereof need be
given to a shareholder if a written waiver of notice, executed before or after
the meeting or such adjourned session by such shareholder, in person or by
proxy, is filed with the records of the meeting or if the shareholder attends
such meeting, in person or by proxy, without objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any meeting of the shareholders or any adjourned session thereof need be
specified in any written waiver of notice.
2.5. Quorum of Shareholders. At any meeting of the shareholders a quorum
shall consist of a majority of the votes entitled to be cast at the meeting,
except where a larger quorum is required by law, by the certificate of
incorporation or by these by-laws. Any meeting may be adjourned from time to
time by a majority of the votes properly cast upon the question, whether or not
a quorum is present. If a quorum is present at an original meeting, a quorum
need not be present at an adjourned session of that meeting. Shares of its own
stock belonging to the corporation or to another corporation, if a majority of
the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of any corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
2.6. Action by Vote. When a quorum is present at any meeting, a plurality
of the votes properly cast for election to any office shall elect to such office
and a majority of the votes properly cast upon any question other than an
election to an office shall decide the question, except when a larger vote is
-2-
<PAGE>
required by law, by the certificate of incorporation or by these by-laws. No
ballot shall be required for any election unless requested by a shareholder
present or represented at the meeting and entitled to vote in the election.
2.7. Action without Meetings. Unless otherwise provided in the certificate
of incorporation or by applicable law, any action required or permitted to be
taken by shareholders for or in connection with any corporate action may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by all of the
holders of outstanding stock entitled to vote thereon. The writing or writings
comprising such unanimous consent shall be filed with the records of the
meetings of shareholders.
Unless otherwise provided in the certificate of incorporation or by
applicable law, any action required or permitted to be taken by shareholders for
or in connection with any corporate action may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of that number of shares of
outstanding stock which would have been entitled to cast the minimum number of
votes necessary to approve the action taken at a meeting of shareholders at
which all of the shareholders entitled to vote on the action were present and
voting, and the provisions of N.J.S.A. ss.14A:5-6(2) are complied with.
2.8. Proxy Representation. Every shareholder may authorize another person
or persons to act for him by proxy in all matters in which a shareholder is
entitled to participate, whether by waiving notice of any meeting, objecting to
or voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the shareholder or by his
attorney-in-fact. No proxy shall be voted or acted upon after eleven months from
its date unless such proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and, if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. The authorization of a proxy may but need
not be limited to specified action, provided, however, that if a proxy limits
its authorization to a meeting or meetings of shareholders, unless otherwise
specifically provided such proxy shall entitle the holder thereof to vote at any
adjourned session but shall not be valid after the final adjournment thereof.
-3-
<PAGE>
2.9. Inspectors. The directors or the person presiding at the meeting may,
but need not, appoint one or more inspectors of election and any substitute
inspectors to act at the meeting or any adjournment thereof. Each inspector,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all shareholders. On request of the person presiding at
the meeting, the inspectors shall make a report in writing of any challenge,
question or matter determined by them and execute a certificate of any fact
found by them.
2.10. List of Shareholders. The secretary shall prepare and make, at least
ten days before every meeting of shareholders, a complete list of the
shareholders entitled to vote at such meeting, arranged in alphabetical order
and showing the address of each shareholder and the number of shares registered
in his name. The stock ledger shall be the only evidence as to who are
shareholders entitled to examine such list or to vote in person or by proxy at
such meeting.
Section 3. BOARD OF DIRECTORS
3.1. Number. The number of directors which shall constitute the whole board
shall not be less than one nor more than twenty-five in number. Thereafter,
within the foregoing limits, the Board of Directors shall determine the number
of directors and the shareholders at the annual meeting shall elect the number
of directors as determined. Within the foregoing limits, the number of directors
may be increased at any time or from time to time by the shareholders or by the
directors by vote of a majority of the directors then in office. The number of
directors may be decreased to any number permitted by the foregoing at any time
either by the shareholders or by the directors by vote of a majority of the
directors then in office, but only to eliminate vacancies existing by reason of
the death, resignation or removal of one or more directors. Directors need not
be shareholders.
3.2. Tenure. Except as otherwise provided by law, by the certificate of
incorporation or by these by-laws, each director shall hold office until the
next annual meeting and
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until his successor is elected and qualified, or until he sooner dies, resigns,
is removed or becomes disqualified.
3.3. Powers. The business and affairs of the corporation shall be managed
by or under the direction of the board of directors who shall have and may
exercise all the powers of the corporation and do all such lawful acts and
things as are not by law, the certificate of incorporation or these by-laws
directed or required to be exercised or done by the shareholders.
3.4. Vacancies. Vacancies and any newly created directorships resulting
from any increase in the number of directors may be filled by vote of the
shareholders at a meeting called for the purpose, or by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. When one or more directors shall resign from the board, effective at a
future date, a majority of the directors then in office, including those who
have resigned, shall have power to fill such vacancy or vacancies, the vote or
action by writing thereon to take effect when such resignation or resignations
shall become effective. The directors shall have and may exercise all their
powers notwithstanding the existence of one or more vacancies in their number,
subject to any requirements of law or of the certificate of incorporation or of
these by-laws as to the number of directors required for a quorum or for any
vote or other actions.
3.5. Committees. The board of directors may, by vote of a majority of the
whole board, (a) designate, change the membership of or terminate the existence
of any committee or committees, each committee to consist of one or more of the
directors; (b) designate one or more directors as alternate members of any such
committee who may replace any absent or disqualified member at any meeting of
the committee; and (c) determine the extent to which each such committee shall
have and may exercise the powers of the board of directors in the management of
the business and affairs of the corporation, including the power to authorize
the seal of the corporation to be affixed to all papers which require it and the
power and authority to declare dividends or to authorize the issuance of stock;
excepting, however, such powers which by law, by the certificate of
incorporation or by these by-laws they are prohibited from so delegating. In the
absence or disqualification of any member of such committee and his alternate,
if any, the member or members thereof present at any meeting and not
disqualified from voting, whether or not constituting a quorum, may unanimously
appoint another member of the board of directors to act at the meeting in the
place of any such absent or disqualified member. Except as the board of
directors may otherwise determine, any committee may make rules
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for the conduct of its business, but unless otherwise provided by the board or
such rules, its business shall be conducted as nearly as may be in the same
manner as is provided by these by-laws for the conduct of business by the board
of directors. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors upon request.
3.6. Regular Meetings. Regular meetings of the board of directors may be
held without call or notice at such places within or without the State of New
Jersey and at such times as the board may from time to time determine, provided
that notice of the first regular meeting following any such determination shall
be given to absent directors. A regular meeting of the directors may be held
without call or notice immediately after and at the same place as the annual
meeting of shareholders.
3.7. Special Meetings. Special meetings of the board of directors may be
held at any time and at any place within or without the State of New Jersey
designated in the notice of the meeting, when called by the chairman of the
board, if any, the president, or by one-third or more in number of the
directors, reasonable notice thereof being given to each director by the
secretary or by the chairman of the board, if any, the president or any one of
the directors calling the meeting.
3.8. Notice. It shall be reasonable and sufficient notice to a director to
send notice by mail at least forty-eight hours or by telegram at least
twenty-four hours before the meeting addressed to him at his usual or last known
business or residence address or to give notice to him in person or by telephone
at least twenty-four hours before the meeting. Notice of a meeting need not be
given to any director if a written waiver of notice, executed by him before or
after the meeting, is filed with the records of the meeting, or to any director
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him. Neither notice of a meeting nor a waiver of a notice
need specify the purposes of the meeting.
3.9. Quorum. Except as may be otherwise provided by law, by the certificate
of incorporation or by these by-laws, at any meeting of the directors a majority
of the directors then in office shall constitute a quorum; a quorum shall not in
any case be less than one-third of the total number of directors constituting
the whole board. Any meeting may be adjourned from time to time by a majority of
the votes cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice.
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3.10. Action by Vote. Except as may be otherwise provided by law, by the
certificate of incorporation or by these by-laws, when a quorum is present at
any meeting the vote of a majority of the directors present shall be the act of
the board of directors.
3.11. Action Without a Meeting. Any action required or permitted to be
taken at any meeting of the board of directors or a committee thereof may be
taken without a meeting if all the members of the board or of such committee, as
the case may be, consent thereto in writing, and such writing or writings are
filed with the records of the meetings of the board or of such committee. Such
consent shall be treated for all purposes as the act of the board or of such
committee, as the case may be.
3.12. Participation in Meetings by Conference Telephone. Members of the
board of directors, or any committee designated by such board, may participate
in a meeting of such board or committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other or by any other means permitted by law. Such
participation shall constitute presence in person at such meeting.
3.13. Compensation. In the discretion of the board of directors, each
director may be paid such fees for his services as director and be reimbursed
for his reasonable expenses incurred in the performance of his duties as
director as the board of directors from time to time may determine. Nothing
contained in this section shall be construed to preclude any director from
serving the corporation in any other capacity and receiving reasonable
compensation therefor.
3.14. Interested Directors and Officers.
(a) No contract or transaction between the corporation and one or more of
its directors or officers, or between the corporation and any other corporation,
partnership, association, or other organization in which one or more of the
corporation's directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee thereof which authorizes the contract or transaction, or
solely because his or their votes are counted for such purpose, if any one of
the following is true:
(1) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the board of
directors or the committee, and the
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board or committee in good faith authorizes the contract or transaction by
the affirmative votes of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; or
(2) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the shareholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the shareholders; or
(3) The contract or transaction is fair as to the corporation as of
the time it is authorized, approved or ratified, by the board of directors,
a committee thereof, or the shareholders.
(b) Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transaction.
Section 4. OFFICERS AND AGENTS
4.1. Enumeration; Qualification. The officers of the corporation shall be a
president, a treasurer, a secretary and such other officers, if any, as the
board of directors from time to time may in its discretion elect or appoint
including without limitation a chairman of the board, one or more vice
presidents and a controller. The corporation may also have such agents, if any,
as the board of directors from time to time may in its discretion choose. Any
officer may be but none need be a director or shareholder. Any two or more
offices may be held by the same person. Any officer may be required by the board
of directors to secure the faithful performance of his duties to the corporation
by giving bond in such amount and with sureties or otherwise as the board of
directors may determine.
4.2. Powers. Subject to law, to the certificate of incorporation and to the
other provisions of these by-laws, each officer shall have, in addition to the
duties and powers herein set forth, such duties and powers as are commonly
incident to his office and such additional duties and powers as the board of
directors may from time to time designate.
4.3. Election. The officers may be elected by the board of directors at
their first meeting following the annual meeting of the shareholders or at any
other time. At any time or from time to time the directors may delegate to any
officer their power to elect or appoint any other officer or any agents.
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4.4. Tenure. Each officer shall hold office until the first meeting of the
board of directors following the next annual meeting of the shareholders and
until his respective successor is chosen and qualified unless a shorter period
shall have been specified by the terms of his election or appointment, or in
each case until he sooner dies, resigns, is removed or becomes disqualified.
Each agent shall retain his authority at the pleasure of the directors, or the
officer by whom he was appointed or by the officer who then holds agent
appointive power.
4.5. Chairman of the Board of Directors, President and Vice President. The
chairman of the board, if any, shall have such duties and powers as shall be
designated from time to time by the board of directors. Unless the board of
directors otherwise specifies, the chairman of the board, or if there is none
the chief executive officer, shall preside, or designate the person who shall
preside, at all meetings of the shareholders and of the board of directors.
Unless the board of directors otherwise specifies, the president shall be
the chief executive officer and shall have direct charge of all business
operations of the corporation and, subject to the control of the directors,
shall have general charge and supervision of the business of the corporation.
Any vice presidents shall have such duties and powers as shall be set forth
in these by-laws or as shall be designated from time to time by the board of
directors or by the president.
4.6. Treasurer and Assistant Treasurers. The treasurer shall be the chief
financial officer of the corporation and shall be in charge of its funds and
valuable papers, and shall have such other duties and powers as may be
designated from time to time by the board of directors or by the president. If
no controller is elected, the treasurer shall also have the duties and powers of
the controller.
Any assistant treasurers shall have such duties and powers as shall be
designated from time to time by the board of directors, the president or the
treasurer.
4.7. Controller and Assistant Controllers. If a controller is elected, he
shall be the chief accounting officer of the corporation and shall be in charge
of its books of account and accounting records, and of its accounting
procedures. He shall have such other duties and powers as may be designated from
time to time by the board of directors, the president or the treasurer.
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Any assistant controller shall have such duties and powers as shall be
designated from time to time by the board of directors, the president, the
treasurer or the controller.
4.8. Secretary and Assistant Secretaries. The secretary shall record all
proceedings of the shareholders, of the board of directors and of committees of
the board of directors in a book or series of books to be kept therefor and
shall file therein all actions by written consent of shareholders or directors.
In the absence of the secretary from any meeting, an assistant secretary, or if
there be none or he is absent, a temporary secretary chosen at the meeting,
shall record the proceedings thereof. Unless a transfer agent has been appointed
the secretary shall keep or cause to be kept the stock and transfer records of
the corporation, which shall contain the names and record addresses of all
shareholders and the number of shares registered in the name of each
shareholder. He shall have such other duties and powers as may from time to time
be designated by the board of directors or the president.
Any assistant secretaries shall have such duties and powers as shall be
designated from time to time by the board of directors, the president or the
secretary.
Section 5. RESIGNATIONS AND REMOVALS
5.1. Any director or officer may resign at any time by delivering his
resignation in writing to the chairman of the board, if any, the president, or
the secretary or to a meeting of the board of directors. Such resignation shall
be effective upon receipt unless specified to be effective at some other time,
and without in either case the necessity of its being accepted unless the
resignation shall so state. A director (including persons elected by directors
to fill vacancies in the board) may be removed from office with or without cause
by the vote of the holders of a majority of the shares issued and outstanding
and entitled to vote in the election of directors. The board of directors may at
any time remove any officer either with or without cause. The board of directors
may at any time terminate or modify the authority of any agent. No director or
officer resigning and (except where a right to receive compensation shall be
expressly provided in a duly authorized written agreement with the corporation)
no director or officer removed shall have any right to any compensation as such
director or officer for any period following his resignation or removal, or any
right to damages on account of such removal, whether his compensation be by the
month or by the year or otherwise; unless, in the case of a resignation, the
directors, or, in the case of removal, the body acting on the removal, shall in
their or its discretion provide for compensation.
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Section 6. VACANCIES
6.1. If the office of the president or the treasurer or the secretary
becomes vacant, the directors may elect a successor by vote of a majority of the
directors then in office. If the office of any other officer becomes vacant, any
person or body empowered to elect or appoint that officer may choose a
successor. Each such successor shall hold office for the unexpired term, and in
the case of the president, the treasurer and the secretary until his successor
is chosen and qualified or in each case until he sooner dies, resigns, is
removed or becomes disqualified. Any vacancy of a directorship shall be filled
as specified in Section 3.4 of these by-laws.
Section 7. CAPITAL STOCK
7.1. Stock Certificates. Each shareholder shall be entitled to a
certificate stating the number and the class and the designation of the series,
if any, of the shares held by him, in such form as shall, in conformity to law,
the certificate of incorporation and the by-laws, be prescribed from time to
time by the board of directors. Such certificate shall be signed by the chairman
or vice chairman of the board, if any, or the president or a vice president and
may be countersigned by the treasurer or an assistant treasurer or by the
secretary or an assistant secretary. Any of or all the signatures on the
certificate may be a facsimile. In case an officer, transfer agent, or registrar
who has signed or whose facsimile signature has been placed on such certificate
shall have ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent, or registrar at the time of its
issue.
7.2. Loss of Certificates. In the case of the alleged theft, loss,
destruction or mutilation of a certificate of stock, a duplicate certificate may
be issued in place thereof, upon such terms, including receipt of a bond
sufficient to indemnify the corporation against any claim on account thereof, as
the board of directors may prescribe.
Section 8. TRANSFER OF SHARES OF STOCK
8.1. Transfer on Books. Subject to the restrictions, if any, stated or
noted on the stock certificate, shares of stock may be transferred on the books
of the corporation by the surrender to the corporation or its transfer agent of
the certificate therefor properly endorsed or accompanied by a written
assignment and power of attorney
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properly executed, with necessary transfer stamps affixed, and with such proof
of the authenticity of signature as the board of directors or the transfer agent
of the corporation may reasonably require. Except as may be otherwise required
by law, by the certificate of incorporation or by these by-laws, the corporation
shall be entitled to treat the record holder of stock as shown on its books as
the owner of such stock for all purposes, including the payment of dividends and
the right to receive notice and to vote or to give any consent with respect
thereto, regardless of any transfer, pledge or other disposition of such stock
until the shares have been properly transferred on the books of the corporation.
It shall be the duty of each shareholder to notify the corporation of his
post office address.
8.2. Record Date and Closing Transfer Books. In order that the corporation
may determine the shareholders entitled to notice of or to vote at any meeting
of shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the board of directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days (or such longer period as may be required by law) before the date of such
meeting, nor more than sixty days prior to any other action.
If no record date is fixed
(a) The record date for determining shareholders entitled to notice of or
to vote at a meeting of shareholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held.
(b) The record date for determining shareholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the board of directors is necessary, shall be the day on which the first
written consent is expressed.
(c) The record date for determining shareholders for any other purpose
shall be at the close of business on the day on which the board of directors
adopts the resolution relating thereto.
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A determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 9. CORPORATE SEAL
9.1. Subject to alteration by the directors, the seal of the corporation
shall consist of a flat-faced circular die with the word "New Jersey" and the
name of the corporation cut or engraved thereon, together with such other words,
dates or images as may be approved from time to time by the directors.
Section 10. EXECUTION OF PAPERS
10.1. Except as the board of directors may generally or in particular cases
authorize the execution thereof in some other manner, all deeds, leases,
transfers, contracts, bonds, notes, checks, drafts or other obligations made,
accepted or endorsed by the corporation shall be signed by the chairman of the
board, if any, the president, a vice president or the treasurer.
Section 11. FISCAL YEAR
11.1. The fiscal year of the corporation shall be determined from time to
time by the board of directors.
Section 12. INDEMNIFICATION
12.1. Indemnification of Directors and Officers. The corporation shall, to
the fullest extent permitted by applicable law, indemnify any person (and the
heirs, executors and administrators thereof) who was or is made, or threatened
to be made, a party to an action, suit or proceeding, whether civil, criminal,
administrative or investigative, whether involving any actual or alleged breach
of duty, neglect or error, any accountability, or any actual or alleged
misstatement, misleading statement or other act or omission and whether brought
or threatened in any court or administrative or legislative body or agency,
including an action by or in the right of the corporation to procure a judgment
in its favor and an action by or in the right of any other corporation of any
type or kind, domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise, which any director or officer of the
corporation is serving or has served in any capacity at the request of the
corporation, by reason of the fact that he, his testator or intestate is or was
a director or officer of the corporation, or is serving or has served such other
corporation, partnership, joint venture, trust, employee benefit plan or other
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enterprise in any capacity, against judgments, fines, amounts paid in
settlement, and costs, charges and expenses, including attorneys' fees, incurred
therein or in any appeal thereof.
12.2. Indemnification of Others. The Corporation shall indemnify other
persons and reimburse the expenses thereof, to the extent required by applicable
law, and may indemnify any other person to whom the Corporation is permitted to
provide indemnification or the advancement of expenses, whether pursuant to
rights granted pursuant to, or provided by, the New Jersey Business Corporation
Act or otherwise.
12.3. Advances or Reimbursement of Expenses. The corporation shall, from
time to time, reimburse or advance to any person referred to in Section 12.1 the
funds necessary for payment of expenses, including attorneys' fees, incurred in
connection with any action, suit or proceeding referred to in Section 12.1, upon
receipt of a written undertaking by or on behalf of such person to repay such
amount(s) if a judgment or other final adjudication adverse to the director or
officer establishes that his acts or omissions (i) constitute a breach of his
duty of loyalty to the corporation or its shareholders, (ii) were not in good
faith, (iii) involved a knowing violation of law, (iv) resulted in his receiving
an improper personal benefit, or (v) were otherwise of such a character that New
Jersey law would require that such amount(s) be repaid.
12.4. Service of Certain Entities Deemed Requested. Any director or officer
of the corporation serving (i) another corporation, of which a majority of the
shares entitled to vote in the election of its directors is held by the
corporation, or (ii) any employee benefit plan of the corporation or any
corporation referred in clause (i), in any capacity shall be deemed to be doing
so at the request of the Corporation.
12.5. Interpretation. Any person entitled to be indemnified or to the
reimbursement or advancement of expenses as a matter of right pursuant to this
Article may elect to have the right to indemnification (or advancement of
expense) interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the action, suit or
proceeding, to the extent permitted by applicable law, or on the basis of the
applicable law in effect at the time indemnification is sought.
12.6. Indemnification Right. The right to be indemnified or to the
reimbursement or advancement of expenses pursuant to this Article (i) is a
contract right pursuant to
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which the person entitled thereto may bring suit as if the provisions hereof
were set forth in a separate written contract between the corporation and the
director or officer, (ii) is intended to be retroactive and shall be available
with respect to events occurring prior to the adoption hereof, (iii) shall
continue to exist after any elimination of or amendment to this Article 12
hereof with respect to events occurring prior thereto, and (iv) and shall not be
deemed exclusive of any other rights to which any person claiming
indemnification hereunder may be entitled.
12.7. Indemnification Claims. If a request to be indemnified or for the
reimbursement or advancement of expenses pursuant hereto is not paid in full by
the corporation within thirty days after a written claim has been received by
the corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled also to be paid the expenses of
prosecuting such claim. Neither the failure of the corporation (including its
Board of Directors, independent legal counsel, or its shareholders) to have made
a determination prior to the commencement of such action that indemnification of
or reimbursement or advancement of expenses to the claimant is proper in the
circumstances, nor an actual determination by the corporation (including its
Board of Directors, independent legal counsel, or its shareholders) that the
claimant is not entitled to indemnification or to the reimbursement or
advancement of expenses, shall be a defense to the action or create a
presumption that the claimant is not so entitled.
Section 13. AMENDMENTS
13.1. These by-laws may be adopted, amended or repealed by vote of a
majority of the directors then in office or by vote of a majority of the stock
outstanding and entitled to vote. Any by-law, whether adopted, amended or
repealed by the shareholders or directors, may be amended or reinstated by the
shareholders or the directors.
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BYLAWS
OF
ADMIRALTY BANK
JUNO BEACH, FLORIDA
ARTICLE I
Meeting of Shareholders
Section 1. Annual Meeting. The annual meeting of the shareholders of the
corporation shall be held on the third Thursday in March of each year or at such
other time designated by the Board of Directors of the corporation. If the
designated day shall fall on a legal holiday, then the meting shall be held on
the first business day thereafter.
Section 2. Special Meetings. Special Meetings of the shareholders shall be held
when directed by the President or the Board of Directors, or when requested in
writing by the holders of not less than 20% of all the shares entitled to vote
at the meeting. A meeting requested by shareholders shall be called for a date
not less than 10 nor more than 60 days after the request is made, unless the
shareholders requesting the meeting designate a later date. The call for the
meeting shall be issued by the Secretary, unless the President, Board of
Directors or shareholders requesting the meeting shall designate another person
to do so.
Section 3. Place. Meetings of shareholders shall be held at the principal place
of business of the corporation or at such other place as may be designated by
the Board of Directors.
Section 4. Notice. Written notice stating the place, day and hour of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than 10 or more than 60 days
before the meeting, either personally or by first class mail, by or at the
direction of the President, the Secretary or the officer or persons calling the
meeting to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at this address as it appears on the
stock transfer books of the corporation, with postage thereon prepaid.
Section 5. Notice of Adjourned Meeting. When a meeting is adjourned to another
time or place, it shall not be necessary to give any notice of the adjourned
meeting if the time and place to which the meeting is adjourned are announced at
the meeting at which the adjournment is taken, and at the adjourned meeting any
business may be transacted that might have been transacted on the original date
of the meeting. If, however, after the adjournment the Board of Directors fixes
a new record date for the adjourned meeting, a notice of the adjourned meeting
shall be given as provided in this Article to each shareholder of record on the
new record date entitled to vote at such meeting.
<PAGE>
Section 6. Shareholder Quorum and Voting. A majority of the shares entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of shareholders. If a quorum is present, the affirmative vote of a majority of
the shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders unless otherwise provided by law, the
Articles of Incorporation of the corporation or these Bylaws.
Section 7. Inspectors of Election. The Board of Directors shall appoint at each
annual meeting two persons, who need not be shareholders, to act as Inspectors
of Election at all meetings of the shareholders, until the close of the next
annual meeting. No candidate for the office of Director shall act as Inspector
of Election. If there be a failure to appoint Inspectors, or if any Inspector
appointed be absent or refuse to act, or if his office becomes vacant, the Board
of Directors present at the meeting may choose temporary Inspectors of the
number required. The Inspectors appointed to act at any meeting of the
shareholders, before entering upon the discharge of their duties, shall be sworn
faithfully to execute the duties of Inspectors at such meeting with strict
impartiality, and according to the best of their ability.
Section 8. Voting of Shares. Each outstanding share shall be entitled to one
vote on each matter submitted to a vote at a meeting of shareholders.
Section 9. Proxies. A shareholder may vote either in person or by proxy executed
in writing by the shareholder or his duly authorized attorney-in-fact. No proxy
shall be valid after 11 months from the date thereof unless otherwise provided
in the proxy.
Section 10. List of Shareholders. The Directors shall cause the Secretary, or
other officer designated by them who has charge of the transfer books and the
stock books, to make at least ten days before each meeting of shareholders, a
complete list of all the shareholders entitled to vote at such meeting or any
adjournment thereof, with the address of, and the number of shares held by each.
The Board of Directors shall produce such books and list at the time and place
of the meeting, to remain there during the meeting.
Section 11. Action by Shareholders Without a Meeting. Any action required by
law, these Bylaws, or the Articles of Incorporation of the corporation to be
taken at any annual or special meeting of shareholders, or any action which may
be taken at any annual or special meeting of shareholders, may be taken without
a meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
shares having not less than the minimum number of votes than would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted, as provided by law.
Section 12. Waiver of Irregularities. All informalities and irregularities in
calls, notices of meeting and in the manner of voting, form of proxy,
credentials, and methods of ascertaining those present, shall be deemed waived
if no objection is made thereto at the meeting.
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ARTICLE II
Directors
Section 1. Function. All corporate powers shall be exercised by or under the
authority of, and the business and affairs of the corporation shall be managed
under the direction of, the Board of Directors.
Section 2. Qualification. Directors need not be resident of Florida or
shareholders of the corporation.
Section 3. Compensation. The Board of Directors shall authority to fix the
compensation of directors.
Section 4. Presumption of Assent. A director of the corporation who is present
at a meeting of the Board of Directors at which action on any corporate matter
is taken shall be presumed to have assented to the action taken unless he votes
against such action or abstains from voting in respect thereto because of an
asserted conflict of interest.
Section 5. Number of Directors. The corporation shall have not less than five
nor more than twelve directors as may be determined by the Board of Directors
from time to time.
Section 6. Election and Term. At each annual meeting of shareholders, the
directors shall be elected to hold office for a term of one year. Each director
shall hold office for the term for which he is elected and until his successor
shall have been elected and qualified or until his earlier resignation, removal
from office or death.
Section 7. Vacancies. Any vacancy occurring in the Board of Directors, including
any vacancy created by reason of an increase in the number of directors, shall
be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors. A director elected to fill
a vacancy shall hold office only until the next election of directors by the
shareholders.
Section 8. Removal of Directors. At a meeting of shareholders called expressly
for that purpose, any director or the entire Board of Directors may be removed,
but only with cause, by a vote of the holders of a majority of the shares then
entitled to vote at an election of directors.
Section 9. Quorum and Voting. Unless otherwise provided by the Articles of
Incorporation of the corporation or these Bylaws, a majority of the number of
directors fixed by these Bylaws shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
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Section 10. Executive and Other Committees. The Board of Directors, by
resolution adopted by a majority of the Board of Directors, may designate from
among its members an executive committee and one or more other committees each
of which, to the extent provided in such resolution, shall have and may exercise
all the authority of the Board of Directors, except as is provided by law.
Section 11. Time, Notice and Call of Meetings. Regular meetings of the Board of
Directors shall be held immediately following the annual meeting of the
shareholders and at such other times as the Board of Directors may determine.
Written notice of the time and place of meetings of the Board of Directors,
other than the regular annual meeting, shall be given to each director by either
personal delivery, telegram or cablegram, at least three days before the meeting
or by notice mailed to the director at least ten days before the meeting.
Notice of a meeting of the Board of Directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and waiver of any and all objections to the place of the meeting,
the time of the meeting or the manner in which it has been called or convened,
except when a director states, at the beginning of the meting, any objection to
the transaction of business because the meeting is not lawfully called or
convened.
Neither the business to be transacted at, nor the purpose of, any regular
or special meeting of the Board of Directors need by specified in the notice or
waiver of notice of such meeting.
A majority of the directors present, whether or not a quorum exists, may
adjourn any meeting of the Board of Directors to another time and place. Notice
of any such adjourned meeting shall be given to the directors who were not
present at the time of the adjournment and, unless the time and place of the
adjourned meeting are announced at the time of the adjournment, to the other
directors.
Meetings of the Board of Directors may be called by the President of the
corporation or by any one director.
Members of the Board of Directors may participate in a meeting of such
board by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time. Participation by such means shall constitute presence in person
at a meeting.
Section 12. Action Without a Meeting. Any action required to be taken at a
meeting of the Board of Directors, or any action which may be taken at a meeting
of the Board Directors of a committee thereof, may be taken without a meeting if
a consent in writing, setting forth the action so to be taken, signed by all the
directors, or all the members of the committee, as the
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case may be, is filed in the minutes of the proceedings of the board or of the
committee. Such consent shall have the same effect as a unanimous vote.
ARTICLE III
Officers
Section 1. Officers. The officers of the corporation shall consist of a Chairman
of the Board, a Vice Chairman of the Board, a President, one or more Vice
Presidents, one or more of whom may be designated as an Executive or Senior Vice
President, a Secretary and a Treasurer, each of whom shall be elected by the
Board of Directors. Such other officers and assistant officers and agents as may
be deemed necessary may be elected of appointed by the Board of Directors from
time to time. Any two or more offices may be held by the same person. The Board
of Directors shall have authority to fix the compensation of officers.
Section 2. Duties. The officers of this corporation shall have the following
duties:
The Chairman of the Board of Directors shall be the chief executive officer
of the corporation, shall preside at all meetings of the shareholders and the
Board of Directors, shall have general and active management of the business and
affairs of the corporation, subject to the directions of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors.
The Vice Chairman of the Board of Directors in the absence of the Chairman
of the Board, shall preside at all meetings of the shareholders and the Board of
Directors and shall perform such other duties as may be prescribed by the
Chairman of the Board and the Board of Directors.
The President shall be the chief operating officer of the corporation, in
absence of the Chairman of the Board shall have general and active management of
the business and affairs of the corporation, subject to the directions of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Chairman of the Board and the Board of Directors.
The Vice President(s), if any, shall perform such duties as may be
prescribed by the President or the Board of Directors.
The Secretary shall have custody of, and maintain, all of the corporate
records except the financial records: shall record the minutes of all meetings
of the shareholders and Board of Directors, send all notices of all meetings and
perform such other duties as may be prescribed by the Board of Directors or the
President.
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The Treasurer shall have custody of all corporate funds and financial
records, shall keep full and accurate accounts of receipts and disbursements and
render accounts thereof at the annual meetings of shareholders and whenever else
required by the Board of Directors or the President, and shall perform such
other duties as may be prescribed by the Board of Directors or the President.
Such other officers and assistant officers and agents who are elected or
appointed by the Board of Directors shall hold office for such period, have such
authority and perform such duties as the Board of Directors may from time to
time determine.
Section 3 Removal of Officers. An officer or agent elected or appointed by the
Board of Directors may be removed by the Board whenever in its judgment the best
interests of the corporation will be served thereby.
Any vacancy in any office may be filled by the Board of Directors.
ARTICLE IV
Stock Certificates
Section 1. Issuance. Every holder of shares in the corporation shall be entitled
to have a certificate representing all shares to which he is entitled. No
certificates shall be issued for any share until such share is full paid.
Section 2. Form. Certificates representing shares in the corporation shall be
signed by the President or a Vice President and the Secretary or Chairman of the
Board, and may be sealed with the seal of the corporation or a facsimile
thereof.
Section 3 Transfer of Stock. The corporation shall register a stock certificate
presented to it for transfer if the certificate is properly endorsed by the
holder of record or by his duly authorized attorney.
Section 4. Lost, Stolen or Destroyed Certificates. If the shareholder shall
claim to have lost or destroyed a certificate of shares issued by the
corporation, a new certificate shall be issued upon the making of any affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed and, at the discretion of the Board of Directors, upon the deposit
of a bond or other indemnity in such amount and with such sureties, if any, as
the Board may reasonably require.
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ARTICLE V
Books and Records
Section 1. Books and records. The corporation shall keep correct and complete
books and records of account and shall keep minutes of the proceedings of its
shareholders, Board of Directors and committees of directors.
The corporation shall keep at its registered office or principal place of
business a record of its shareholders, giving the names and addresses of all
shareholders and the number of shares held by each.
Any books, records and minutes may be in written form or in any
other form capable of being converted into written form with a reasonable time.
Section 2. Shareholders' Inspection Rights. Any person who shall have been a
holder of record of shares or of voting trust certificates therefor at least six
months immediately preceding his demand or shall be the holder of record of, or
the holder of record of voting trust certificates for at least five percent of
the outstanding shares of the corporation, upon written demand stating the
purpose thereof, shall have the right to examine, in person or by agent or
attorney, records of accounts, minutes and records of shareholders and to make
extracts therefrom.
Section 3. Financial Information. Not later than four months after the close of
each fiscal year, the corporation shall prepare a balance sheet showing in
reasonable detail the financial condition of the corporation as of the close of
its fiscal year, and a profit and loss statement showing the results of the
operations of the corporation during its fiscal year.
Upon the written request of any shareholder of holder of voting trust
certificates for shares of the corporation, the corporation shall mail to each
shareholder or holder of voting trust certificates a copy of the most recent
such balance sheet and profit and loss statement.
The balance sheets and profit and loss statements shall be filed in the
registered office of the corporation in Florida, shall be kept for at least five
years, and shall be subject to inspection during business hours by any
shareholders or holder of voting trust certificates, in person or by agent.
ARTICLE VI
Dividends
The Board of Directors of the corporation may, from time to time, declare
and the corporation may pay dividends on its shares in cash, property or its own
shares, except
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when the corporation is insolvent or when the payment thereof would render the
corporation insolvent, subject to the provisions of the Florida statutes.
ARTICLE VII
Corporate Seal
The Board of Directors shall provide a corporate seal which shall be in
circular form.
ARTICLE VIII
Fiscal Year
The fiscal year of the corporation shall end on December 31.
ARTICLE IX
Indemnification
Section 1. Legal Proceedings. The corporation shall indemnify any person who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by, or in the right of, the corporation),
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or 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. The termination of any action, suit or proceeding by
judgment, order, settlement or conviction, or upon a plea of nolo contendre or
its equivalent, shall not of itself create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in, or not
opposed to, the best interests of the corporation or, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful.
Section 2. Actions by the Corporation. The corporation shall indemnify any
person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed
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action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, 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, except that
no indemnification shall be made in respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless, and only to
the extent that, the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
Section 3. Expenses. To the extent that a director, officer, employee or agent
of the corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Section 1 or Section 2, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Section 4. Determination to Indemnify. Any indemnification under Section 1 or
Section 2, unless pursuant to determination by a court, shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 1 or Section 2. Such determination shall be made:
(a) By the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action suit or
proceeding;
(b) If such a quorum is not obtainable or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel
in a written opinion; or
(c) By the shareholders of a majority vote of a quorum consisting of
shareholders who were not parties to such action, suit or proceeding.
Section 5. Advance of Expenses. Expenses, including attorneys' fees, incurred in
defending a civil or criminal action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon a preliminary determination following one of the procedures set
forth in Section ___ that the director, officer, employee or agent met the
applicable standard of conduct set forth in Section 1 or Section 2 or as
authorized by the Board of Directors in the specific case and, in either event,
upon receipt of an undertaking by or on behalf of the director, officer,
employee or agent to repay such
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amount, unless it shall ultimately be determined that he is entitled to be
indemnified by the corporation as authorized in this Article.
Section 6. Other Indemnification. The corporation may make any other of further
indemnification of any of its directors, officers, employees or agents, under
any agreement, vote of shareholders or disinterested directors, or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office, except an indemnification against gross negligence or
willful misconduct.
Section 7. Continuation. Indemnification as provided in this Article shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
Section 8. Insurance. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provision of this Article.
Section 9. Notice to Shareholders. If any expenses or other amounts are paid by
way of indemnification otherwise than by court order or action by the
shareholders or by an insurance carrier pursuant to insurance maintained by the
corporation, the corporation shall, not later than the time of delivery to
shareholders of written notice of the next annual meeting of shareholders,
unless such meeting is held within three months from the date of such payment,
and in any event, within 15 months from the date of such payment, deliver either
personally or by mail to each shareholder of record at the time entitled to vote
for the election of directors a statement specifying the persons paid, the
amounts paid and the nature and status at the time of such payment of the
litigation or threatened litigation.
ARTICLE X
Amendments
These Bylaws may be altered, amended, repealed or added to by the affirmative
vote of at least 75% of the then members of the Board of Directors of this
corporation at any regular meeting of the Board, or at a special meeting of
directors called for that purpose. These Bylaws and any amendments thereto, and
new Bylaws added by the Board of Directors, may be amended, altered or replaced
by the shareholders at any annual or special meeting of the shareholders by the
affirmative vote or written consent of the holders of at least 75% of the issued
and outstanding shares of common stock of the corporation then entitled to vote.
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BYLAWS
OF
ADMIRALTY BANK
JUNO BEACH, FLORIDA
Board of Directors meeting Wednesday, January 15, 1992.
ARTICLE X
AMENDMENTS
"These Bylaws may be altered, amended, repealed or added to by the affirmative
vote of 75% of the then members of the Board of Directors of this corporation at
any regular meeting of the Board, or at a special meeting of directors called
for that purpose. These Bylaws and any amendments thereto, and new Bylaws added
by the Board of Directors, may be amended, altered or replaced by the
shareholders at any annual or special meeting of the shareholders by the
affirmative vote or written consent of the holders of at least 75% of the issued
and outstanding shares of common stock of the corporation then entitled to
vote."
Within the context of this authority, the Board of Directors hereby amend:
Article II - Directors.
Addition to:
Section 13. The Board of Directors shall elect one of its
members to be the Chairman of the Board. The duties of
the Chairman shall be to preside at all meetings of the
shareholders and the Board of Directors, and shall
perform such other duties as may be prescribed by the
Board of Directors.
It shall not be the responsibility of the Chairman of the Board
to be the Chief Executive Officer. If the Chairman of the Board
of Directors is absent from a meeting of the Board, the Board
shall select one of the Directors to serve as Chairman of such
meeting.
Article III - Officers
Section 1. Officers. The officers of the corporation shall consist of a
President, Secretary,
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Treasurer, one or more Vice Presidents, one or more of whom may be designated as
an Executive or Senior Vice President, each of whom shall be elected by the
Board of Directors. Such other officers and assistant officers and agents as may
be deemed necessary may be elected or appointed by the Board of Directors from
time to time. Any two or more offices may be held by the same person. The Board
of Directors shall have the authority to fix the compensation of officers.
Section 2. Duties. The officers of this corporation shall have the following
duties:
Delete the first two paragraphs referring to the Chairman of the
Board, and the Vice Chairman of the Board. Replace with the following
wording:
The President of the corporation, shall have general and active
management of the business and affairs of the corporation, subject to
the directions of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors.
The Vice President(s) - No change
The Secretary - No change
The Treasurer - No change
Section 3. Removal of Officers. No change.
WARRANT AGREEMENT
Agreement, dated as of this 22nd day of January, 1998, by and between
ADMIRALTY BANCORP, INC., a New Jersey corporation (the "Company") and
STOCKTRANS, (the "Warrant Agent").
W I T N E S S E T H
WHEREAS, the Company is offering for sale up to 965,000 Units (the
"Units"), each Unit consisting of one share of the Company's Class A Common
Stock (the "Class A Stock"), and one Warrant (the "Warrant") which entitles the
holder thereof to purchase one share of Class B Common Stock (the "Class B
Stock") at the purchase price of $11.00 per share at any time commencing one
year after the date hereof and ending on January 21, 2002.
WHEREAS, the Company desires to appoint the Warrant Agent to act on its
behalf in connection with the (i) issuance, transfer and exchange of the
certificates representing the Warrants (the "Warrant Certificates"), (ii) the
exercise of the Warrants by the holders thereof (together with any registered
successors or assigns, the "Holders") and (iii) the adjustment of the Warrants
in certain events as contained herein in accordance with the terms of the
Warrants and this Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1.0. Appointment of Warrant Agent. The Company hereby appoints the Warrant
Agent as its agent to issue the Warrant Certificates, as set forth herein,
subject to resignation or replacement of the Warrant Agent as provided herein.
The Warrant Agent agrees to accept such appointment, subject to the terms and
conditions as set forth herein and to issue, transfer and exchange the Warrant
Certificates pursuant to the terms provided for herein and to notify the
Company's transfer agent to issue the certificates representing the appropriate
number of shares of Class B Stock (or other consideration) upon exercise of the
Warrants. The Company agrees to issue and honor the Warrants on the terms and
conditions as herein set forth and to instruct its transfer agent to issue its
Class B Stock (or other securities) upon notice from the Warrant Agent of the
proper exercise of any Warrant. The Warrant Agent is hereby empowered to enforce
any rights of the Holders for the benefit of any Holders, subject to the terms
and conditions contained herein.
2.0. Issuance of Warrant Certificates.
2.1. Form of Warrant Certificate. All Warrants shall be issued
substantially in the form of the Warrant Certificate annexed hereto as Exhibit
A. The terms of any such Warrant Certificate are incorporated herein by
reference.
<PAGE>
2.2. Execution of Warrants. The Warrants shall be issued in registered
form only. No Warrants shall have been duly and validly issued until a Holder
has received a Warrant Certificate executed by the chairman or president of the
Company and the secretary or treasurer of the Company and such Certificate is
countersigned by an authorized officer of the Warrant Agent. All Warrant
Certificates shall bear the Company's corporate seal. Any Warrant Certificates
may be executed by the officers of the Company by means of a facsimile
signature. The Warrant Agent shall maintain the register of all Holders.
2.3. Maximum Number of Warrants. The Company hereby authorizes the Warrant
Agent to issue up to 965,000 Warrants pursuant to the terms hereof subject to
adjustment as hereafter provided in Section 4 hereof.
2.4. Initial Holders. The Company shall deliver to the Warrant Agent a
list of the names of the persons who shall be the initial Holders of the
Warrants and the number of Warrants to which each such person is entitled. The
Warrant Agent is hereby authorized by the Company to promptly issue Warrant
Certificates for up to 965,000 Warrants upon receipt of the written request of
the Company, which shall include the list referred to in the preceding sentence.
The Company shall deliver to the Warrant Agent, along with this Warrant
Agreement, a sufficient number of duly executed Warrant Certificates. The
Warrant Certificates requested by the Company shall be completed and
countersigned by the Warrant Agent and promptly delivered to the Company to be
mailed or delivered to the Holders pursuant to the terms hereof. When requested
by the Warrant Agent, from time to time hereafter, the Company will execute
additional Warrant Certificates in blank for the Warrant Agent to issue
hereunder.
2.5. Rights Of A Holder. Subject to adjustment as provided herein, each
Warrant shall evidence the right to purchase one share of the Company's Class B
Stock at the Warrant Price of $11.00. Following the Expiration Date, as defined
in Sections 3.1 and 3.2 below, any Warrant not previously exercised shall be
null and void.
3.0. Exercise of Warrant.
3.1. Exercise Period. The Warrants may be exercised, in whole or in part,
at any time commencing one (1) year after the date hereof and ending at 5:00
P.M., New Jersey time, on January 21, 2002 (the "Expiration Date"). If the
Expiration Date is not a Business Day, it shall automatically be extended to
5:00 P.M. on the next day which is a Business Day. Business Day means any day
other than a Saturday, Sunday, or holiday on which banks in New Jersey are
authorized by law to close.
3.2. Acceleration of Exercise Date. The Company shall have the right to
accelerate the Expiration Date in the event that (i) the Class B Stock is traded
on a national securities exchange, the NASDAQ National Market or the NASDAQ
SmallCap Market; and (ii) the Class B Stock trades at $15.00 per share and does
not trade below $15.00 for a period of 20 consecutive trading days. Upon the
satisfaction of such conditions, the Company shall have the right, but not the
obligation, to provide a written notice accelerating the Expiration Date to a
date not less than 30
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calendar days after the date of such notice. Upon the issuance of such notice,
and expiration of the exercise period, the Company shall redeem any outstanding
and unexercised Warrants for $0.10 per Warrant. The Expiration Date, as
accelerated hereunder, shall be considered to be the "Expiration Date".
3.3. Means of Exercise. In order to exercise a Warrant, the Holder must
present and surrender the Warrant Certificate to the Warrant Agent at its
office, with the Subscription Form on the back of the Warrant Certificate duly
executed and accompanied by payment in full, in the form of cash, by certified
or official bank check payable to the order of the Company or its successor, of
the aggregate Warrant Price for the number of shares of Class B Stock specified
in such Subscription Form. The Warrant Agent shall immediately pay over to the
Company any funds received upon such exercise of Warrants.
3.4. Issuance of Class B Stock. Upon the request of the Warrant Agent, the
Company shall promptly deliver or cause its transfer agent to deliver to the
Holder exercising a Warrant a certificate or certificates evidencing the shares
of Class B Stock purchased when any Warrant is validly exercised.
3.5. Certain Exercise Provisions. If any Warrant is exercised in part
only, a new Warrant Certificate, dated the date of such exercise, evidencing the
rights of the Holder thereof to purchase the balance of the shares of Class B
Stock purchasable under such original Warrant shall promptly be issued to such
Holder. Upon receipt of any Warrant Certificate by the Warrant Agent, at its
office, in proper form for exercise and accompanied by payments as herein
provided, the Holder shall be deemed to be the holder of record of the shares of
Class B Stock issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such shares of Class B Stock shall not then be actually delivered
to the Holder.
4.0. Adjustment of Warrant Price and Number of Shares Purchasable and
Other Items in Certain Events. The Warrant Price and the number of shares of
Class B Stock purchasable upon exercise of any Warrant and the other terms and
conditions of the Warrant shall be subject to adjustment and modification as
follows in the circumstances provided:
4.1. Declaration of Stock Dividend, Splits, Reverse Splits or
Reclassification or Reorganization.
(a) In case the Company shall declare any dividend or other distribution
upon its outstanding shares of Class B Stock payable in Class B Stock or shall
subdivide its outstanding shares of Class B Stock into a greater number of
shares, then the number of shares of Class B Stock which may thereafter be
purchased upon the exercise of any Warrant shall be increased in proportion to
the increase in the number of shares of Class B Stock outstanding through such
dividend or subdivision and the Warrant Price per share shall be decreased in
such proportion. In case the Company shall at any time combine the outstanding
shares of its Class B Stock into a smaller number of shares, the number of
shares of Class B Stock which may thereafter be
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<PAGE>
purchased upon the exercise of any Warrant shall be decreased in proportion to
the decrease in the number of shares of Class B Stock outstanding through such
combination and the Warrant Price per share shall be increased in such
proportion. The Company shall cause a notice to be mailed to each Holder at
least twenty (20) days prior to the applicable record date for the activity
covered by this Section 4.1(a). The Company's failure to give the notice
required by this Section 4.1(a) or any defect therein shall not affect the
validity of the activity covered by this Section 4.1(a).
(b) In case the Company shall at any time (i) distribute any rights,
options or warrants to all holders of shares of Class B Stock, (ii) issue other
securities to all holders of shares of Class B Stock by reclassification of its
shares of Class B Stock, or (iii) issue by means of a capital reorganization
other securities of the Company in lieu of the Class B Stock or in addition to
the Class B Stock, then the number of shares purchasable upon exercise of each
Warrant immediately prior thereto shall be adjusted so that the Holder of each
Warrant shall be entitled to receive the kind and number of shares or other
securities of the Company which the Holder would have owned or have been
entitled to receive after the happening of the event described above, had such
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. The Company shall cause a notice to be mailed
to each Holder at least 20 days prior to the applicable record date for the
activity covered by this Section 4.1(b). The Company's failure to give the
notice required by this Section 4.1(b) or any defect therein shall not affect
the validity of the activity covered by this Section 4.1(b).
(c) An adjustment made pursuant to this Section 4.1 shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
(d) For the purpose of this Section 4.1, the term "shares of Class B
Stock" shall mean (x) the class of stock designated as the Class B Stock at the
date of this Warrant Agreement, or (y) any other class of stock resulting from
successive changes or reclassifications of such shares consisting solely of
changes in par value, from no par value to par value or from par value to no par
value. In the event that at any time, as a result of an adjustment made pursuant
to this Section 4.1, the Holder shall become entitled to purchase any shares of
the Company other than shares of Class B Stock, thereafter the number of such
other shares so purchasable upon exercise of each Warrant and the Warrant Price
of such shares shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the shares of Class B Stock contained in this Section 4.1.
4.2. Liquidation, Dissolution or Winding Up. Notwithstanding any other
provisions hereof, in the event of the liquidation, dissolution, or winding up
of the affairs of the Company (other than in connection with a consolidation,
merger or sale or conveyance of all or substantially all of its assets outside
of the ordinary course of business), the right to exercise this Warrant shall
terminate and expire at the close of business on the last full business day
before the earliest date fixed for the payment of any distributable amount on
the Class B Stock. The Company shall cause a notice to be mailed to each Holder
at least 20 days prior to the applicable
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<PAGE>
record date for such payment stating the date on which such liquidation,
dissolution or winding up is expected to become effective, and the date on which
it is expected that holders of shares of Class B Stock of record shall be
entitled to exchange their shares of Class B Stock for securities or other
property or assets (including cash) deliverable upon such liquidation,
dissolution or winding up, and that each Holder may exercise outstanding
Warrants during such 20 day period and, thereby, receive consideration in the
liquidation on the same basis as other previously outstanding shares of the same
class as the shares acquired upon exercise. The Company's failure to give notice
required by this Section 4.2 or any defect therein shall not affect the validity
of such liquidation, dissolution or winding up.
4.3. Merger, Consolidation, etc.
(a) In case of any consolidation with or merger of the Company into
another corporation or sale or conveyance of all or substantially all of its
assets outside of the ordinary course of business (such consolidation, merger,
sale or conveyance, collectively referred to hereinafter as a "Change") then, as
a condition of such Change, lawful and adequate provisions shall be made whereby
the Holders shall thereafter have the right to receive upon payment of the
Warrant Price in effect immediately prior to such Change, upon the basis and
upon the terms and conditions specified in this Agreement (including but not
limited to all provisions contained in this Section 4.3), and in lieu of the
shares of the Company's Class B Stock purchasable upon the exercise of the
Warrants, such shares of stock, securities, cash or assets which such Holder
would have been entitled to receive after the happening of such Change had such
Warrant been exercised immediately prior to such Change. The provisions of this
Section 4.3 shall similarly apply to successive Changes. The Company shall cause
a notice to be mailed to each Holder at least 20 days prior to the applicable
record date for the Change covered by this Section 4.3(a) and shall provide
notice of the Change and shall set forth the first and last date on which the
Holder may exercise outstanding Warrants. The Company's failure to give the
notice required by this Section 4.3(a) or any defect therein shall not affect
the validity of the Change covered by this Section 4.3(a).
(b) Notwithstanding the foregoing, if as a result of such Change, holders
of the Company Class B Stock shall receive consideration other than solely in
shares of stock or other securities in exchange for their Company Class B Stock,
the Company may, at its option, fulfill its obligation hereunder by causing the
Notice required by Section 4.3(a) hereof to include notice to Holders of the
opportunity to exercise their Warrants before the applicable record date for the
Change, and thereby receive consideration in the Change, on the same basis as
other previously outstanding shares of the Company Class B Stock. If the notice
specified in the preceding sentence is provided to Holders, Warrants not
exercised in accordance with this Section 4.3(b) before consummation of the
Change shall be canceled and become null and void on the effective date of the
Change. The notice provided by the Warrant Agent pursuant to this Section 4.3(b)
shall include a description of the terms of this Agreement providing for
cancellation of the Warrants in the event that Warrants are not exercised by the
prescribed date. The Company's failure to give any notice required by this
Section 4.3(b) or any defect therein shall not affect the validity of any such
Change.
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4.4. Duty to Make Fair Adjustments in Certain Cases. If any event occurs
as to which in the opinion of the Board of Directors of the Company the other
provisions of this Section 4 are not strictly applicable or if strictly
applicable would not fairly protect the purchase rights of the Holders in
accordance with the essential intent and principles of this Agreement, then the
Board of Directors shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, as to
protect the purchase rights of the Holders. Notwithstanding the foregoing, the
issuance of Class B Stock or any securities convertible into Class B Stock by
the Company either for cash or in a merger, consolidation, exchange or
acquisition shall not, by itself, constitute a basis for requiring any
adjustment in the Warrants unless specifically enumerated herein.
4.5. Good Faith Determination. Any determination as to whether an
adjustment or limitation of exercise is required pursuant to this Section 4 (and
the amount of any adjustment), shall be binding upon the Holders and the Company
if made in good faith by the Board of Directors of the Company.
4.6. Notice of Adjustment. Whenever the number of shares of Class B Stock
purchasable upon the exercise of the Warrants or the Warrant Price is adjusted,
the Company shall promptly file in the custody of its Secretary or an Assistant
Secretary at its principal office and with the Warrant Agent, an officer's
certificate setting forth the number of shares of Class B Stock purchasable upon
the exercise of the Warrants, the Warrant Price after such adjustment, a
statement, in reasonable detail, of the facts requiring such adjustment and the
computation by which such adjustment was made. Each such officer's certificate
shall be made available at all reasonable times for inspection by the Warrant
Holders, and the Warrant Agent shall, forthwith after each such adjustment,
promptly mail a copy of such certificate to such Holders by first class mail,
postage prepaid.
4.7. No Change of Warrant Necessary. Irrespective of any adjustment in the
Warrant Price or in the number or kind of shares issuable upon exercise of the
Warrants, the Warrant Certificates may continue to express the same price and
number and kind of shares as are stated in the Warrant Certificates as initially
issued.
5.0. Shares to be Fully Paid; Reservation of Shares. The Company covenants
and agrees for the benefit of the Holders:
5.1. That all shares of Class B Stock which may be issued upon the
exercise of the rights represented by the Warrant Certificates will, upon issue
and payment of the aggregate Warrant Price therefor, be duly authorized, validly
issued, fully paid and non-assessable and free and clear of all liens and
encumbrances, with no personal liability attaching to the ownership thereof.
5.2. That during the period within which the rights represented by the
Warrant Certificates may be exercised, the Company will at all times have
authorized and reserved for the purpose of issue upon exercise of the rights
evidenced by the Warrant Certificates, a sufficient
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number of shares of Class B Stock to provide for the exercise of the rights
represented by the Warrant Certificates.
5.3. That the Company will take all such action as may be necessary to
ensure that the shares of Class B Stock issuable upon the exercise of the
Warrants may be so issued without violation of any applicable federal or state
law or regulation, or of any requirements of any securities exchange upon which
any capital stock of the Company may be listed, if any.
5.4. The Company will file a Registration Statement with the United States
Securities and Exchange Commission under the Securities Act of 1933, as amended
and all necessary blue sky filings with appropriate state securities
administrations prior to the time the Warrants become exercisable, and will use
its best efforts to keep such registration statement and blue sky filings or a
substitute registration statement and blue sky filings effective and current
with respect to the Class B Stock while any Warrants are outstanding.
Notwithstanding the foregoing or anything contained in Section 5.3, the Company
shall not be obligated to keep effective and current blue sky filings in any
state in which there are a small number of holders of Warrants in such state,
such holders own an immaterial number of Warrants, and keeping such filings
current and effective creates an unreasonable financial burden under the
circumstances.
5.5. That prior to the issue of any shares of Class B Stock, the Company
shall promptly secure the listing thereof upon all securities exchanges on which
the Class B Stock of the Company is then listed.
6.0. Exchange, Assignment or Loss of Warrant Certificate.
6.1. Exchange. The Warrants shall be exchangeable at the option of the
Holder, upon presentation and surrender of the Warrant Certificate at the office
of the Warrant Agent for other Warrant Certificates of different denominations.
Any Warrant Certificate may be divided or combined with other Warrant
Certificates into a Warrant Certificate evidencing the same aggregate number of
Warrants.
6.2. Transfer or Assignment. To the extent permitted under the Securities
Act of 1933, as amended (the "Securities Act"), the Warrants and all rights of
Holders thereof are assignable and transferable in whole or in part by the
Holders thereof, in person or by duly authorized attorney, by surrender of any
Warrant Certificate to the Warrant Agent at its office with the Assignment Form
annexed thereto duly executed and funds sufficient to pay any applicable
transfer tax. In such event, the Warrant Agent shall execute and deliver, in the
case of an assignment or transfer in whole, a new Warrant Certificate in the
name of the assignee or transferee, or, in the case of an assignment or transfer
in part, a new Warrant Certificate in the name of such assignee or transferee
representing the number of Warrants so assigned or transferred and a new Warrant
Certificate in the name of the assignor or transferor representing the number of
Warrants not so assigned or transferred.
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6.3. Legended Certificates. The Warrants being offered by the Company are
being offered pursuant to an exemption from registration under the Securities
Act. Therefore, the Warrant Certificates to be issued pursuant to Section 2.0
hereof shall bear the following legend
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED BY
ADMIRALTY BANCORP IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933 AS AMENDED. IN CONNECTION WITH SUCH
EXEMPTION, THE SECURITIES REPRESENTED BY THE CERTIFICATE MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED UNLESS COVERED BY AN EFFECTIVE
REGISTRATION STATEMENT UNDER SECTION 5 OF THE SECURITIES ACT OR IN A
TRANSACTION OTHERWISE EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE SECURITIES ACT.
6.4. Lost or Destroyed Warrant Certificates. Upon receipt by the Warrant
Agent of evidence satisfactory to it of the loss, theft, destruction or
mutilation of a Warrant Certificate and (i) in the case of such loss, theft or
destruction, of reasonably satisfactory indemnification and bonding, or (ii) if
mutilated, upon surrender and cancellation of such Warrant Certificate, the
Warrant Agent shall execute and deliver a new Warrant Certificate of like tenor.
Any such new Warrant Certificate executed and delivered shall constitute an
additional contractual obligation on the part of the Company, whether or not the
Warrant Certificate so lost, stolen, destroyed or mutilated shall be at any time
enforceable by anyone.
7.0. No Issuance of Fractional Interests in Class B Stock. The Company
shall not be required to issue fractional shares of Class B Stock on the
exercise of the Warrants. If any fraction of a share of Class B Stock would be
issuable upon the exercise of the Warrants (or any specified portion thereof),
the Company shall pay an amount in cash equal to the product of such fraction
and the fair market value of a share of the Class B Stock, as determined by the
Company in the good faith exercise of its discretion.
8.0. No Rights as Stockholders; Certain Notices and Reports to Holders.
Except as specifically provided in this Agreement, nothing contained in this
Agreement or in the Warrant Certificates shall be construed as conferring upon
the Holders or any transferees the right to vote or to receive dividends or to
receive notice as stockholders in respect of any meeting of stockholders for the
election of directors of the Company or any other matter, or any rights
whatsoever as stockholders of the Company. If, however, between the date hereof
and the Expiration Date (or if earlier the occurrence of any event specified in
Section 4.2 or 4.3(b) terminating the Warrants), any of the following events
shall occur:
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(a) the Company shall declare any cash dividend upon its shares of Class B
Stock payable at a rate more than 50% in excess of the rate of the last cash
dividend theretofore paid; or
(b) the Company shall declare any dividend payable in any securities other
than shares of Class B Stock upon its shares of Class B Stock or make any
distribution (other than a regular cash dividend out of undistributed net
income) to the holders of its shares of Class B Stock; or
(c) the Company shall distribute any rights, options or warrants to the
holders of shares of Class B Stock; or
(d) a capital reorganization or reclassification of the Company's capital
stock shall be proposed;
then in any one or more of said events, the Company shall give to the Holders at
least twenty (20) days' prior written notice of the date fixed as a record date
or the date of closing of the transfer books for the determination of the
stockholders entitled to receive such dividend or distribution. Any such notice
shall also specify, in the case of any such dividend or distribution, the date
on which holders of shares of Class B Stock are entitled thereto. Failure to
mail such notice or any defect therein or in the mailing thereof shall not
affect the validity of any action taken in connection with such dividend or
distribution.
8.1. Reports. The Company shall transmit by mail to all registered
Holders, all reports and other documents that the Company transmits to holders
of shares of Class B Stock generally, at the same time and in the same manner as
such reports and other documents are transmitted to holders of shares of Class B
Stock.
9.0. Agreement of Warrant Holders. Every Holder of a Warrant, by his
acceptance thereof, consents and agrees with the Company, the Warrant Agent and
every other Holder of a Warrant that:
(a) The Warrants are transferable only on the registry books of the
Company by the Holder thereof in person or by his attorney duly authorized
in writing and only if the Warrant Certificates representing such Warrants
are surrendered at the office of the Warrant Agent, duly endorsed or
accompanied by a proper instrument of transfer satisfactory to the Warrant
Agent and the Company in their sole discretion, together with payment o of
any applicable transfer taxes; and
(b) The Company and the Warrant Agent may deem and treat the person in
whose name the Warrant Certificate is registered as the Holder and as the
absolute, true and lawful owner of the Warrants represented thereby for all
purposes, and neither the Company nor the Warrant Agent shall be affected
by any notice or knowledge to the contrary.
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<PAGE>
10.0. Duties of Warrant Agent. The Warrant Agent acts hereunder as agent
and in a ministerial capacity for the Company, and its duties shall be
determined solely by the provisions hereof. The Warrant Agent shall not, by
issuing and delivering Warrant Certificates or by any other act hereunder be
deemed to make any representations as to the validity, value or authorization of
the Warrant Certificates or the Warrants represented thereby or of any
securities or other property delivered upon exercise of any Warrant or whether
any stock issued upon exercise of any Warrant is fully paid and non-assessable.
The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder of Warrant Certificates to make or cause to be made
any adjustment of the Warrant Price provided in this Agreement, or to determine
whether any fact exists which may require any such adjustment, or with respect
to the nature or extent of any such adjustment, when made, or with respect to
the method employed in making the same. It shall not (i) be liable for any
recital or statement of facts contained herein or for any action taken, suffered
or omitted by it in reliance on any Warrant Certificate or other document or
instrument believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties, (ii) be responsible for any failure on
the part of the Company to comply with any of its covenants and obligations
contained in this Agreement or in any Warrant Certificate, or (iii) be liable
for any act or omission in connection with this Agreement except for its own
gross negligence or willful misconduct.
The Warrant Agent may at any time consult with counsel satisfactory to it
(who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order or demand by
the Company shall be sufficiently evidenced if given orally by the Chairman of
the Board, President or Chief Financial Officer of the Company, provided that
such instructions shall be reaffirmed in a written instrument executed by the
officer giving such written instructions and delivered to the Warrant Agent
pursuant to Section 12.5 hereof. The Warrant Agent shall not be liable for any
action taken, suffered or omitted by it in accordance with such notice,
statement, instruction, request, direction, order or demand believed by it to be
genuine.
The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse it for its reasonable expenses hereunder
and further agrees to indemnify the Warrant Agent and save it harmless against
any and all losses, expenses and liabilities, including judgments, costs and
counsel fees, for anything done or omitted by the Warrant Agent in the execution
of its duties and powers hereunder except losses, expenses and liabilities
arising as a result of the Warrant Agent's gross negligence or willful
misconduct.
The Warrant Agent may resign its duties and be discharged from all further
duties and liabilities hereunder (except liabilities arising as a result of the
Warrant Agent's own gross negligence or willful misconduct), after giving thirty
days' prior written notice to the Company. At least fifteen days prior to the
date such resignation is to become effective, the Warrant Agent
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<PAGE>
shall cause a copy of such notice of resignation to be mailed to the Holder of
each Warrant Certificate at the Company's expense. Upon such resignation, or any
inability of the Warrant Agent to act as such hereunder, the Company shall
appoint a new warrant agent in writing. The Company shall have complete
discretion in the naming of a new warrant agent, who may be an affiliate,
subsidiary or department of the Company, or any person used by the Company as
transfer agent for the Class B Stock. If the Company shall fail to make such
appointment within a period of fifteen days after it has been notified in
writing of such resignation by the resigning Warrant Agent, then the Holder of
any Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new warrant agent.
The Company may, upon notice to the Holders, remove and replace the
Warrant Agent if the Warrant Agent is the transfer agent for the Company's Class
B Stock and the Warrant Agent ceases to be the transfer agent for the Company
Class B Stock for any reason.
After acceptance in writing of an appointment by a new warrant agent is
received by the Company, such new warrant agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
herein as the Warrant Agent, without any further assurance, conveyance, act or
deed. Any former warrant agent hereby agrees to cooperate with and deliver all
records and Warrant Certificates to the new warrant agent at the direction of
the new agent and the Company.
Not later than the effective date of an appointment of a new warrant agent
by the Company, the Company shall file notice with the resigning or terminated
warrant agent and shall forthwith cause a copy of such notice to be mailed to
each Holder.
Any corporation into which the Warrant Agent or any new warrant agent may
be converted or merged or any corporation resulting from any consolidation to
which the Warrant Agent or any new warrant agent shall be a party or any
corporation succeeding to the trust business of the Warrant Agent shall be a
successor warrant agent under this Agreement without any further act. Any such
successor warrant agent shall promptly cause notice of its succession as warrant
agent to be mailed to the Company and to each Holder.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company.
11.0. Modification of Agreement. The Warrant Agent and the Company may by
supplemental agreement make any changes or corrections in this Agreement: (i)
that they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or manifest mistake or error herein
contained; or (ii) that they may deem necessary or desirable and which shall not
adversely affect the purchase or other material rights of the Holders of Warrant
Certificates. This Agreement shall not otherwise be modified, supplemented or
amended in any respect except with the consent in writing of the Holders of
Warrant Certificates representing not less than 50% of the Warrants then
outstanding, but no such amendment, modification or supplement which changes the
number or nature of the securities purchasable upon the exercise
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<PAGE>
of any Warrant, the Warrant Price or accelerates the Expiration Date, shall be
made without the consent in writing of each and every Holder (but no consent
shall be required for such changes as are specifically contemplated by this
Agreement as originally executed).
12.0. Miscellaneous.
12.1. Entire Agreement. This Agreement and the form of Warrant Certificate
annexed hereto as Exhibit A contains the entire Agreement between the parties
hereto with respect to the transactions contemplated by this Agreement and
supersedes all prior negotiations, arrangements or understandings with respect
thereto.
12.2. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
12.3. Governing Law. This Agreement shall be governed by the laws of the
State of New Jersey, without giving effect to the principles of conflicts of
laws thereof.
12.4. Descriptive Headings. The descriptive headings of this Agreement are
for convenience only and shall not control or affect the meaning or construction
of any provision of this Agreement.
12.5. Notices. Any notice or other communications required hereunder to be
given to a Holder shall be in writing and shall be sufficiently given, if mailed
(first class, postage prepaid), or personally delivered, addressed in the name
and at the address of such Holder appearing from time to time on the records of
the Warrant Agent. Notices or other communications to the Company shall be
deemed to have been sufficiently given if delivered by hand or mailed to the
Company at its then principal office, Attention: President, or at such other
address as the Company shall have designated by written notice to the Warrant
Agent. Notices or other communications to the Warrant Agent shall be deemed to
have been sufficiently given if
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delivered by hand or mailed (first class, postage prepaid) to its then principal
office. Notice by mail shall be deemed given when deposited in the mail, postage
prepaid.
IN WITNESS WHEREOF, the Company and the Warrant Agent have executed this
Agreement by their duly authorized officers as of the date first set forth
above.
ADMIRALTY BANCORP, INC.
By:_______________________________
STOCKTRANS
By:_______________________________
_______________________________
_______________________________
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WARRANT CERTIFICATE
Certificate Number
_____________
Initial Issuance
Dated: ____________ ____________ Warrants
VOID AFTER ____________, 199_
WARRANT CERTIFICATE FOR
PURCHASE OF CLASS B STOCK
ADMIRALTY BANCORP
This certifies that FOR VALUE RECEIVED ______________________________ or
his registered assigns (the "Holder") is the registered owner of
__________________________ Warrants ("Warrants") issued by Admiralty Bancorp, a
Delaware corporation (the "Company"). The Warrants are subject to the terms and
conditions set forth in this certificate and the Warrant Agreement (as
hereinafter defined). Each Warrant entitles the Holder to purchase one share of
the Company's Class B Common Stock ("Class B Stock"), at any time after the
first anniversary of the Initial Issuance Date of the Warrants set forth above
until the Expiration Date (as hereinafter defined), upon the presentation and
surrender of this Warrant Certificate with the Subscription Form on the reverse
side hereof duly executed, at the corporate office of the Warrant Agent (as
hereafter defined), accompanied by payment of $11.00 per share (the "Warrant
Price") in cash, by official bank or certified check made payable to the Company
or its successor.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated ____________ ,
199_ by and between the Company and Stocktrans (the "Warrant Agent"), a copy of
which may be obtained from the Company at ___________________________ or the
Warrant Agent at ___________________, by a written request from the Holder
hereof or which may be inspected by any Holder or his agent at the principal
office of the Company or the Warrant Agent.
As provided in Section 4 of the Warrant Agreement, in certain
circumstances: (i) the Warrant Price and the number of shares of Class B Stock
the Holder is entitled to receive upon the exercise of any Warrants shall be
adjusted; (ii) the Warrants shall automatically represent the
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right to receive upon exercise consideration which is different from or in
addition to the consideration specified on the face of this Certificate; and
(iii) the Warrants, at the option of the Company under specifically defined
circumstances, may expire prior to the Expiration Date.
In addition, as provided under Section 3.2 and 4.3 of the Warrant
Agreement, the Expiration Date may be accelerated under certain circumstances
from the Expiration Date set forth in this Certificate.
No fractional shares of Class B Stock will be issued upon exercise of the
Warrant. In the case of the exercise of less than all the Warrants represented
hereby, the Company shall cancel this Warrant Certificate upon the surrender
hereof and shall execute and deliver a new Warrant Certificate or Warrant
Certificates of like tenor, which the Warrant Agent shall countersign, for the
balance of such Warrants.
The term "Expiration Date" shall mean 5:00 P.M. (New Jersey time) on
______________. If such date is not a Business Day as defined in the Warrant
Agreement, the Expiration Date shall mean 5:00 P.M. (New Jersey time) the next
following Business Day. The Expiration Date may be accelerated as provided in
the Warrant Agreement under certain specifically defined circumstances upon
notice to the registered holder hereof.
Pursuant to the Warrant Agreement, the Company has agreed that it will
file a registration statement with respect to the shares of Class B Stock
issuable upon exercisable of Warrants with the Securities and Exchange
Commission under the Securities Act of 1933, as amended on or prior to the time
the Warrants first become exercisable, and further that the Company will take
action under appropriate Blue Sky laws to permitted the issuance of the shares
of Class B Stock. However, the Company is not obligated to keep current state
blue sky filings in states where there are a small number of holders of
Warrants, the number of Warrants held by such persons are immaterial and the
cost to keep such filings current and effective creates an unreasonable
financial burden under the circumstances. This Warrant shall not be exercisable
by a Holder in any state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by the
Holder at the corporate office of the Warrant Agent, for a new Warrant
Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants. Upon due presentment of this Warrant Certificate
for registration or transfer at such office, upon payment of any tax or
governmental charge imposed in connection therewith, a new Warrant Certificate
or Warrant Certificates representing an equal or aggregate number of Warrants
will be issued to the transferee in exchange there for.
To the extent permitted under the Securities Act of 1933, as amended, the
Warrants and all rights of Holders thereof are assignable and transferable in
whole or in part by the Holders thereof, in person or by duly authorized
attorney, by surrender of any Warrant Certificate to the Warrant Agent at its
office with the Assignment Form annexed thereto duly executed and funds
sufficient to pay any applicable transfer tax.
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Prior to the exercise of any Warrant represented hereby, the Holder shall
not be entitled to any rights of a stockholder of the Company by reason of such
person being a Holder, including, without limitation, the right to vote or to
receive dividends or other distributions, and shall not be entitled to receive
any notice of any proceedings of the Company, except as provided in the Warrant
Agreement.
Prior to due presentment for registration of transfer hereof, the Company
and the Warrant Agent shall treat the Holder as the absolute owner hereof and of
each Warrant represented hereby for all purposes and shall not be affected by
any notice to the contrary.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of New Jersey.
This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted thereon.
(SEAL) ADMIRALTY BANCORP
Dated: _________________ By:__________________________
Chairman or President
By:__________________________
[___________________] Secretary or Treasurer
___________________
As Warrant Agent
By:____________________
Authorized Officer
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SUBSCRIPTION FORM
Dated:_______________ , 199_
The undersigned hereby irrevocably elects to exercise the within Warrant
to the extent of purchasing ______ shares of Class B Common Stock and hereby
makes payment of $_______ in satisfaction of the Warrant Price thereof.
----------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name_____________________________________________________________
(please typewrite or print in block letters)
Address__________________________________________________________
Signature________________________________________________________
Tax Identification Number________________________________________
-----------------
ASSIGNMENT FORM
FOR VALUE RECEIVED,______________________________________________
hereby sells, assigns and transfer unto
Name_____________________________________________________________
(please typewrite or print in block letters)
Address__________________________________________________________
______ Warrants and does hereby irrevocable
Constitute and appoint___________________________________________
Attorney, to transfer the same on the books of the Company with full power of
substitution in the premises.
Date________________, 199__
Signature______________________________
-17-
NUMBER INCORPORATED UNDER THE LAWS OF SHARES
A THE STATE OF
DELAWARE
ADMIRALTY BANCORP
1,000,000 SHARES CLASS "A" COMMON STOCK, NO PAR VALUE
4,000,000 SHARES CLASS "B" COMMON STOCK, NO PAR VALUE
This Certifies that ____________________________________________ is the owner of
CLASS "A" COMMON fully paid and non-assessable Shares of the Capital Stock of
the above named Corporation transferable only on the books of the Corporation by
the holder hereof in person or by duly authorized Attorney upon surrender of
this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this ___________ day of _____________ A. D. ______
- ----------------------- ------------------------- ------------------------
Treasurer/Secretary President
NUMBER INCORPORATED UNDER THE LAWS OF SHARES
B THE STATE OF
DELAWARE
ADMIRALTY BANCORP
1,000,000 SHARES CLASS "A" COMMON STOCK, NO PAR VALUE
4,000,000 SHARES CLASS "B" COMMON STOCK, NO PAR VALUE
This Certifies that ____________________________________________ is the owner of
CLASS "B" COMMON fully paid and non-assessable Shares of the Capital Stock of
the above named Corporation transferable only on the books of the Corporation by
the holder hereof in person or by duly authorized Attorney upon surrender of
this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this ___________ day of _____________ A. D. ______
- ----------------------- ------------------------- ------------------------
Treasurer/Secretary President
EMPLOYMENT AGREEMENT
This AGREEMENT made as of this _________ day of June 1998 by and among
ADMIRALTY BANK, a Florida state bank with its principal place of business
located at 4400 PGA Boulevard, Palm Beach Gardens, FL 33410 (the "Employer"),
and WARD KELLOGG, an individual residing at 2235 S.W. 11 Place, Boca Raton
Florida 33486 (the "Executive").
W I T N E S S E T H:
WHEREAS, Employer deems it to be in its best interests to secure and retain
the services of the Executive and the Executive desires to work for Employer
upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises and undertakings
herein contained, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Employment and Term.
(a) Employer hereby employs the Executive as President and Chief Executive
Officer of Employer (collectively, the "Position"), reporting only to the Board
of Directors of Employer and the Executive agrees to serve in the employ of
Employer in the Position.
(b) Employee's service in the Position shall commence on July 1, 1998 (the
"Effective Date"), and continue for a term of three and one-half (3-1/2) years
thereafter (the "Initial Term"), and which, subject to paragraphs 1(c) and (d)
hereof, shall upon the termination of the Initial Term be automatically extended
for a new one year period (the "Extension Term"), and each Extension Term shall,
upon its termination, likewise be extended for an additional one year period,
unless either party provides written notice to the other of its intention not to
renew at least sixty (60) days prior to the termination of the Initial Term or
any Extension Term.
(c) Employer shall have the right to terminate the Executive's employment
hereunder at any time, but if such termination is not for "cause", Executive
shall be entitled to receive the compensation and benefits provided for under
Section 3(e) hereof. If such termination is for "cause" as defined below,
Executive shall not be entitled to receive any compensation from and after the
date of such termination. For purposes of this Agreement, "cause" means (i) the
Executive's willful and continued failure substantially to perform the duties of
the Position, (ii) fraud, misappropriation or other intentional material damage
to the property or business of Employer, (iii) the Executive's admission or
conviction of, or plea of nolo contendere to, any felony that adversely affects
Employer's reputation or the Executive's ability to perform his duties
hereunder; (iv) Executive's willful and continued disregard of any law, rule
<PAGE>
or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order issued by or regulatory consent agreement with any
banking regulatory agency having jurisdiction over the Employer; or (v) the poor
financial performance of the Employer in relation to certain designated
financial results to be agreed upon annually by Employer and Employee, and which
shall include such measures as return on average assets ("ROAA"), return on
average equity, and the like, and which shall take into account the performance
of the Employer's peer group institutions.
(d) This Agreement shall terminate upon Executives' death or his
disability, as defined herein. Upon Executives' death or his disability, the
obligation of Employer hereunder to pay Executive the compensation called for
under Section 3 hereof shall terminate, and Employer's only obligation shall be
to pay Executive any and all benefits to which Executive was entitled at the
time of such death or disability under any benefits plans of Employer then in
place. For purposes of this provision, the term "disability" shall mean
permanent and total disability, physical or mental, which, in the reasonable
estimation of the Board of Directors, prohibits Executive from performing the
duties and services required by the Position. Employer acknowledges the
Americans with Disabilities Act and, to the extent legally required, will
provide a reasonable accommodation to the Executive as required under such
statute.
2. Duties.
(a) Subject to the ultimate control and discretion of the Board, the
Executive shall serve in the Position and perform all duties and services of an
executive nature commensurate to the Position which the Board may from time to
time reasonably assign to the Executive.
(b) The Executive shall devote all of the Executive's business time and
attention (whether or not during normal business hours) to the performance of
the Executive's duties hereunder and, during the term of the Executive's
employment hereunder, shall not engage in any other business enterprise
(excluding non-profit or charitable organizations) which requires more than five
hours per week of the Executive's personal time or attention, unless granted the
prior permission of the Board. The foregoing shall not prevent the Executive's
purchase, ownership or sale of investment securities or of any ownership
interest in any business, provided that such ownership or investment constitutes
not more than five percent of the outstanding shares of a corporation whose
stock is listed on a national securities exchange or on the National Association
of Securities Dealers Automated Quotation System, or the Executive's involvement
in charitable or community activities, provided that the time and attention
which the Executive devotes to such activities does not materially interfere
with the performance of the Executive's duties hereunder.
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<PAGE>
3. Compensation.
(a) For all services to be rendered by the Executive under this Agreement,
Employer agrees to pay the Executive a salary of not less than One Hundred
Twenty-Five Thousand and 00/100 Dollars ($125,000.00) per annum during the term
of this Agreement ("Base Compensation"), payable in accordance with Employer's
normal payroll practices as in effect from time to time. Executive's Base
Compensation will be reviewed by the Board in December of each year of this
Agreement to consider appropriate increases, if any based upon the Employer's
performance, inflation, compensation for executives at peer group institutions
and such other factors as the Board may deem appropriate. In addition to the
Base Compensation, Executive shall have the right to earn an additional cash
bonus in an amount determined annually by the Board of Directors of the Employer
based upon the Employer's financial performance. The percentage of bonus
actually earned by Executive shall be the percentage set forth in the table
below and based upon the Employer's return on average assets ("ROAA"):
==================================================
ROAA | Bonus Amount
----------------------------|---------------------
Less than 1.0% | No Bonus
----------------------------|---------------------
1.0% to less than 1.2% | 15%
----------------------------|---------------------
1.2% to less than 1.5% | 30%
----------------------------|---------------------
1.5% to less than 1.7% | 50%
----------------------------|---------------------
1.7% to less that 2.0% | 75%
----------------------------|---------------------
2.0% and above | 100%
==================================================
The total available bonus amount for the year ended December 31, 1998,
shall be $25,000 and will be payable to the Executive based upon achievement of
initial goals at the discretion of the Board of Directors. Future available
bonuses will be determined by the Board of Directors of the Employer at the
beginning of each year, based upon, among factors, the Employer's performance
for the prior year and budgeted performance for the current year. Nothing
contained herein shall prevent Employer from paying Executive any additional
bonus which the Board of Directors of Employer shall deem appropriate.
(c) In addition to the compensation provided for under subparagraph (a)
hereof, Executive shall be entitled to receive the following:
3
<PAGE>
(i) an automobile allowance of $600 per month. Executive agrees to
comply with all reporting and/or reimbursement obligations required by
Employer pursuant to the applicable tax laws and regulations.
(ii) hospital, health, medical, dental, accidental death and
disability, long term disability and life insurance of a type currently
provided to and enjoyed by other senior officers of Employer, and shall be
entitled to participate in any other employee benefit or retirement plans
offered by Employer to its employees generally or to its senior management.
(iii) membership in a country club of his reasonable choosing for use
in business development purposes with Employer to pay for the bond, if any,
required by such country club (and thereby becoming the record owner of the
membership in such country club) and Employer shall pay all fees associated
with such membership, including initiation and annual fees and all
business-related fees and expenses.
(d) In addition to the benefits set forth in paragraph (a)-(c) above,
Executive, upon the Effective Date, shall be entitled to receive a grant of
options to purchase 25,000 shares of the Class B Common Stock of Admiralty
Bancorp, Inc. parent company of the Employer ("Bancorp"). The Exercise Price of
such options shall be the price at which such shares are sold by Bancorp in its
pending initial public offering. Such options shall be subject to a vesting
requirement, with one-quarter of the options becoming exercisable on December
31, 1998, and one-quarter first becoming exercisable on each December 31
thereafter, assuming Executive is then employed with Employer. The Agreement
evidencing such grant shall also provide that the vesting of such options shall
be accelerated upon a change in control of Employer. The options shall have a
ten (10) year term, and, to the extent permissible under the Internal Revenue
Code of 1986, as amended, shall constitute "incentive stock options". Employer
shall consider granting Executive substantial additional options by July 1, 2000
based upon Employer's performance and Executive's contribution to such
performance.
(e) If Employer terminates the Executive's employment hereunder, other than
in accordance with paragraphs 1(c) for "cause" or 1(d) hereof, at any time
during the term of this Agreement, whether during the Initial Term or any
Extension Term, Employer shall continue to pay the Executive the Base
Compensation provided in paragraph 3(a) hereof, in accordance with Employer's
normal payroll practices in effect from time to time, for the remainder of the
Initial Term (but in no event for less than twenty-four (24) months), and
maintain in effect or pay the equivalent value of the medical and other
insurance benefits, if any, provided Executive hereunder for the remainder of
the Initial Term (but in no event for less than twenty-four (24) months).
Although Executive shall have no duty to mitigate any damages incurred in
connection with his termination by Employer other than in accordance with
paragraphs 1(c) or (d) hereunder, in the event Executive obtains new employment
and such new employment provides for hospital, health, medical and life
insurance, and other benefits in a manner substantially similar to the benefits
payable by Employer to Executive hereunder upon the date of his termination,
Employer may permanently terminate any duplicative benefit it is otherwise
obligated to provide.
4. Vacations. The Executive shall be entitled each year to four (4) weeks
of vacation
4
<PAGE>
time during which vacation the Executive shall continue to receive the
compensation provided in paragraph 3 hereof. Each vacation shall be taken by the
Executive at such time or times as the Executive reasonably determines, taking
into account Executive's duties as set forth in Section 2 hereof and Employer's
business needs at any particular time.
5. Expenses. Employer shall promptly reimburse the Executive for all
reasonable expenses paid or incurred by the Executive in connection with his
employment hereunder, upon presentation of expense vouchers or appropriate
documentation therefor reasonably requested by Employer. Employer shall provide
a cellular phone to Executive for business purposes and provide Executive with a
corporate credit card for use in paying business related expenses.
6. Change in Control.
(a) Upon the occurrence of a Change in Control (as herein defined) followed
at any time during the term of this Agreement by termination of the Executive's
employment, either voluntarily by Executive within six months of such Change in
Control in the event he has experienced any demotion, loss of title, office or
significant authority, reduction in annual compensation or benefits, or
relocation of his principal place of employment by more than 30 miles from its
location immediately prior to the Change in Control, or involuntarily by
Employer or its successor during the term of this Agreement, other than an
involuntary termination of Executive's employment for "cause" as defined in
paragraph 1(b) hereof, the Executive shall be entitled to the benefits provided
under paragraph (c).
(b) A "Change in Control" shall mean:
(i) a reorganization, merger, consolidation or sale of all or
substantially all of the assets of Bancorp or a similar transaction in
which Bancorp is not the resulting entity;
(ii) individuals who constitute the Incumbent Board (as herein
defined) of Bancorp cease for any reason to constitute a majority thereof;
(iii) an event of a nature that would be required to be reported in
response to Item I of the current report on Form 8-K, as in effect on the
date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 (the "Exchange Act");
(iv) Without limitation, a change in control shall be deemed to have
occurred at such time as any "person" (as the term is used in Section 13(d)
and 14(d) of the Exchange Act), excluding any employee benefit plan or the
trustee of any employee benefit plans established by Employer from time to
time, becomes after the date hereof a "beneficial owner" (as defined in
Rule 139(d) under the Exchange Act) directly or indirectly, of
5
<PAGE>
securities of Bancorp representing 25 percent or more of Bancorp's
outstanding securities ordinarily having the right to vote at the election
of directors;
(v) A tender offer is made for 25 percent or more of the voting
securities of Bancorp and the shareholders owning beneficially or of record
25 percent or more of the outstanding securities of Bancorp have tendered
or offered to sell their shares pursuant to such tender offer and such
tendered shares have been accepted by the tender offeror.
For these purposes, "Incumbent Board" means the Board of Directors of
Bancorp on the Effective Date, provided that any person becoming a director
subsequent to the Effective Date whose election was approved by a vote of at
least three-quarters of the directors comprising the Incumbent Board, or whose
nomination for election by members or stockholders was approved by the same
nominating committee serving under an Incumbent Board, shall be considered as
though he were a member of the Incumbent Board.
(c) In the event the conditions of paragraph (a) above are met, Executive
shall be entitled to receive his then current Base Compensation for a period of
twenty-four (24) months after the date of his termination of employment. Such
payments will be made in accordance with Employer's normal payroll practices in
effect at the time of Executive's termination. In addition, Employer shall
continue to provide Executive with hospital, health, medical and life insurance,
and any other benefits in effect at the time of such termination through the end
of such period. Executive shall have no duty to mitigate damages in connection
with his termination by Employer or its successor hereunder without cause.
However, in the event Executive obtains new employment and such new employment
provides for hospital, health, medical and life insurance, and other benefits,
in a manner substantially similar to the benefits payable by Employer to
Executive upon the date of such termination, Employer may permanently terminate
the duplicative benefits it is obligated to provide hereunder.
(d) Notwithstanding any other provision of this Section 6 of this
Agreement, in no event shall the aggregate payments or benefits to be made, paid
to or afforded to Executive under this Agreement or any other agreement between
Executive and Employer in the event of a change in control of the Employer (the
"Termination Benefits") constitute an "excess parachute payment" under Section
280G of the Internal Revenue Code of 1986, as amended (the "Code") or any
successor thereto, and in order to avoid such a result Termination Benefits will
be reduced, if necessary, to an amount (the "Non-Triggering Amount"), the value
of which is $1.00 less than an amount equal to three times Executive's "base
amount", as determined in accordance with Section 280G of the Code.
6
<PAGE>
7. Additional Covenants.
(a) Prohibition Against Competitive Activities. Executive hereby agrees
that during the term of this Agreement and, for a period of two (2) years
following the termination of his employment (the "Covenant Term"), he will not
work for any banking or thrift institution located in Palm Beach County and
Broward County, Florida, which is engaged in competition with Employer nor
himself engage during such Covenant Term, directly or indirectly, as principal,
agent, partner, shareholder, consultant, or employee, in any such business in
Palm Beach County and Broward County, Florida for any banking or thrift
institution in competition with Employer. Executive further agrees that during
the term of his employment and for a period of two (2) years thereafter he will
not directly or indirectly solicit, interfere, influence, hinder, hamper or
impede, or seek to interfere, influence, hinder, hamper or impede existing or
potential business relationships between Employer and any person, entity,
customer or client having a relationship with Employer prior to or during the
Covenant Term. The restrictions contained in the two foregoing sentences may be
waived by the Board of Directors of Employer prior to, upon or after Executive's
termination.
(b) Non-Disclosure of Certain Information. Executive agrees at all times
during the term of employment, and thereafter, to hold in strictest confidence,
and not to use, except for the benefit of Employer, or to disclose to any
person, firm or corporation, the Confidential Information of Employer. Executive
understands that "Confidential Information" means any proprietary information,
technical data, trade secrets or know-how, including, but not limited to,
research, product plans, products, services, customer lists and customers
(including, but not limited to, customers of Employer on whom Executive calls or
with whom Executive became acquainted during the term of his employment),
software, developments, inventions, processes, technology, designs, drawings,
hardware configuration information, marketing, financial or other business
information disclosed to Executive by Employer either directly or indirectly in
writing or orally. Confidential Information may also include proprietary
information, trade secrets or know-how received in confidence from third
parties.
Executive further agrees that all memoranda, notes, records, reports,
letters, and other documents made, compiled, received, held, or used by
Executive while employed by Employer concerning any phase of the business of
Employer shall be Employer's property and shall be delivered by Executive on the
termination of his employment with Employer, or at any earlier time on the
request of Employer's Board of Directors. Provided, however, that nothing in
this Section shall apply to information which Executive did not acquire from
Employer; information available in the public domain; and disclosure based on
the order of any court of competent jurisdiction.
(c) Solicitation of Officers. Executive agrees that for a period of two (2)
years following the termination of his employment, he will not directly or
indirectly solicit, cause any other person to solicit or assist any other person
in soliciting, the employment of any person
7
<PAGE>
who is, at the time of such solicitation, or who was within thirty (30) days of
such solicitation, an officer of Employer.
(d) Non-Solicitation of Customers. Executive agrees that for a period of
two (2) years following the termination of his employment, he will not directly
or indirectly solicit, cause any other person to solicit, or assist any other
person with soliciting any customer, depositor or borrower of Employer to become
a customer, depositor or borrower of another trust company, commercial bank,
savings bank, savings and loan association, or financial institution.
(e) Enforceability. The restrictions and obligations contained in this
Section 7 shall be enforceable both at law and in equity, by injunction and
otherwise; and the rights and remedies of Employer hereunder with respect
thereto shall be cumulative and not alternative and shall not be exhausted by
any one or more uses thereof.
(f) Limitation of Scope. If a court of competent jurisdiction determines
that the geographic scope or temporal limitations of any of the restrictive
covenants contained in this Section 7 is not reasonably necessary to protect the
legitimate business interests of Employer, then such geographic scope, time
duration or both will be deemed to become and thereafter will be the maximum
time period or geographic area which such court deems reasonable and
enforceable.
(g) For purposes of this Section 7, to act "directly or indirectly" means
to act personally or through an associate, affiliate, family member or
otherwise, as proprietor, partner, shareholder, director, officer, employee,
agent, consultant or in any other capacity or manner whatsoever.
8. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient, if in writing and if sent by registered or
certified mail to either party hereto at their respective addresses set forth
above. All notices shall be deemed given when mailed.
9. Assignability. The services of the Executive hereunder are personal in
nature, and neither this Agreement nor the rights or obligations of Executive
hereunder may be assigned , whether by operation of law or otherwise. This
Agreement shall be binding upon, and inure to the benefit of, Employer and its
successors and assigns. This Agreement shall inure to the benefit of the
Executive's heirs, executors, administrators and other legal representatives.
10. Waiver. The waiver by Employer or the Executive of a breach of any
provision of this Agreement by the other shall not operate or be construed as a
waiver of any subsequent or other breach hereof.
11. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without giving effect to
principles of conflict of laws.
8
<PAGE>
12. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto with respect to the subject matter hereof and may not be amended,
waived, changed, modified or discharged, except by an agreement in writing
signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
their respective hands and seals as of the day and year first above written.
ATTEST: ADMIRALTY BANK
By:
- ------------------------------- -------------------------------
Chairman of the Board
EXECUTIVE
WITNESS:
- ------------------------------- -------------------------------
Ward Kellogg
9
ADMIRALTY BANCORP, INC.
1998 STOCK OPTION PLAN
SECTION 1. PURPOSE
The Admiralty Bancorp, Inc. 1998 Stock Option Plan (the "Plan") is hereby
established to foster and promote the long-term success of Admiralty Bancorp,
Inc., its subsidiaries (collectively, the "Corporation") and its shareholders by
providing directors of the Corporation and its subsidiaries (including directors
who may be officers or employees) with an equity interest in the Corporation.
The Plan will assist the Corporation in attracting and retaining the highest
quality of experienced persons as directors and officers and in aligning the
interests of such persons more closely with the interests of the Corporation's
shareholders by encouraging such parties to maintain an equity interest in the
Corporation.
SECTION 2. DEFINITIONS
Capitalized terms not specifically defined elsewhere herein shall have the
following meaning:
"Act" means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations promulgated thereunder.
"Board" means the Board of Directors of the Corporation.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated thereunder.
"Common Stock" or "Stock" means the Class B Common Stock, no par
value, of the Corporation.
<PAGE>
"Corporation" means Admiralty Bancorp, Inc. and any present or future
subsidiary corporations of Admiralty Bancorp, Inc. (as defined in Section
424 of the Code) or any successor to such corporations.
"Disability" shall mean with respect to an Officer, a permanent
disability which qualifies as total disability under the terms of the
Corporation's long-term disability plans and, with respect to a Director,
permanent and total disability which if the Director were an employee of
the Corporation would be treated as a total disability under the terms of
the Corporation's long-term disability plan for employees as in effect from
time to time; provided, however, with respect to a Participant who has been
granted an Incentive Stock Option such term shall have the meaning set
forth in Section 422(c)(6) of the Code.
"Fair Market Value" means, with respect to shares of the Common Stock,
the fair market value as determined by the Board of Directors in good faith
and in a manner established by the Board from time to time, taking into
account such factors as the Board may deem relevant, including the book
value of the Common Stock and, to the extent that there is a trading market
for the Common Stock, the market price.
"Incentive Stock Option" means an option to purchase shares of Common
Stock granted to a Participant under the Plan which is intended to meet the
requirements of Section 422 of the Code.
"Non-Employee Director" shall have the meaning ascribed to such term
under Securities and Exchange Commission Rule 16b-3(b)(3).
"Non-Qualified Stock Option" means an option to purchase shares of
Common Stock granted to a Participant under the Plan which is not intended
to be an Incentive Stock Option.
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<PAGE>
"Option" means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" means a member of the Board of Directors of the
Corporation selected by the Board to receive an Option under the Plan.
"Plan" means the Admiralty Bancorp, Inc. 1998 Stock Option Plan.
"Retirement" shall mean with regard to an employee, termination of
employment in accordance with the retirement provisions of any retirement
or pension plan maintained by the Corporation or any of its subsidiaries.
With regard to a Director who is not also an employee, "Retirement" shall
mean cessation of service on the Corporation's Board of Directors after age
60 with at least 10 years of service as a member of the Corporation's Board
of Directors.
"Termination for Cause" means termination because of Participant's
intentional failure to perform stated duties, personal dishonesty, willful
violation of any law, rule regulation (other than traffic violations or
similar offenses) or final cease and desist order issued by any regulatory
agency having jurisdiction over the Participant or the Corporation.
SECTION 3. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors. Among other
things, the Board of Directors shall have authority, subject to the terms of the
Plan, to grant Options, to determine the individuals to whom and the time or
times at which Options may be granted, to determine whether such Options are to
be Incentive Options or Non-Qualified Options (subject to the requirements of
the Code), to determine the terms and conditions of any Option granted
hereunder, including whether to impose any vesting period, and the exercise
price thereof, subject to the requirements of this Plan.
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<PAGE>
(b) Subject to the other provisions of the Plan, the Board of Directors
shall have authority to adopt, amend, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it shall
from time to time consider advisable, to interpret the provisions of the Plan
and any Option and to decide all disputes arising in connection with the Plan.
The Board may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement in the manner and to the
extent it shall deem appropriate to carry the Plan into effect, in its sole and
absolute discretion. The Board's decision and interpretations shall be final and
binding. Any action of the Board with respect to the administration of the Plan
shall be taken pursuant to a majority vote or by the unanimous written consent
of its members.
(c) The Board of Directors may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may rely
upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent.
SECTION 4. ELIGIBILITY AND PARTICIPATION
Members of the Board of Directors of the Corporation shall be eligible to
participate in the Plan. The Participants under the Plan shall be selected from
time to time by the Board of Directors, in its sole discretion, from among those
eligible, and the Board shall determine in its sole discretion the numbers of
shares to be covered by the Option or Options granted to each Participant.
Options intended to quality as Incentive Stock Options shall be granted only to
persons eligible to receive Incentive Stock Options under the Code.
4
<PAGE>
SECTION 5. SHARES OF STOCK AVAILABLE FOR OPTIONS
(a) The maximum number of shares of Common Stock which may be issued and
purchased pursuant to Options granted under the Plan is 330,000, subject to the
adjustments as provided in this Section and Section 9, to the extent applicable.
If an Option granted under this Plan expires or terminates before exercise or is
forfeited for any reason, without a payment in the form of Common Stock being
granted to the Participant, the shares of Common Stock subject to such Option,
to the extent of such expiration, termination or forfeiture, shall again be
available for subsequent Option grant under Plan. Shares of Common Stock issued
under the Plan may consist in whole or in part of authorized but unissued shares
or treasury shares.
(b) In the event that the Board of Directors determines, in its sole
discretion, that any stock dividend, stock split, reverse stock split or
combination, extraordinary cash dividend, creation of a class of equity
securities, recapitalization, reclassification, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, warrants or
rights offering to purchase Common Stock at a price substantially below Fair
Market Value, or other similar transaction affects the Common Stock such that an
adjustment is required in order to preserve the benefits or potential benefits
intended to be granted or made available under the Plan to Participants, the
Board shall proportionately and appropriately adjust equitably any or all of (i)
the maximum number and kind of shares of Common Stock in respect of which
Options may be granted under the Plan to Participants, (ii) the number and kind
of shares of Common Stock subject to outstanding Options held by Participants,
and (iii) the exercise price with respect to any Options held by Participants,
without changing the aggregate purchase price as to which such Options remain
exercisable, and if considered appropriate, the Board may make provision for a
5
<PAGE>
cash payment with respect to any outstanding Options held by a Participant,
provided that no adjustment shall be made pursuant to this Section if such
adjustment would cause the Plan to fail to comply with Section 422 of the Code
with respect to any Incentive Stock Options granted hereunder. No fractional
Shares shall be issued on account of any such adjustment.
(c) Any adjustments under this Section will be made by the Board of
Directors, whose determination as to what adjustments, if any, will be made and
the extent thereof will be final, binding and conclusive.
SECTION 6. NON-QUALIFIED STOCK OPTIONS
6.1 Grant of Non-Qualified Stock Options.
The Board of Directors may, from time to time, grant Non-Qualified Stock
Options to Participants upon such terms and conditions as the Board of Directors
may determine, and may grant Non-Qualified Stock Options in exchange for and
upon surrender of previously granted Non-Qualified Stock Options under this
Plan. Non-Qualified Stock Options granted under this Plan are subject to the
following terms and conditions:
(a) Price. The purchase price per share of Common Stock deliverable
upon the exercise of each Non-Qualified Stock Option shall be determined by
the Board of Directors on the date the option is granted. Such purchase
price shall not be less than one hundred percent (100%) of the Fair Market
Value of the Common Stock on the date of grant. Shares may be purchased
only upon full payment of the purchase price. Payment of the purchase price
may be made, in whole or in part, through the surrender of shares of the
Common Stock at the Fair Market Value of such shares on the date of
surrender.
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(b) Terms of Options. The term during which each Non-Qualified Stock
Option may be exercised shall be determined by the Board of Directors, but
in no event shall an Non-Qualified Stock Option be exercisable in whole or
in part more than ten (10) years from the date of grant, except as provided
for below. Non-Qualified Stock Options granted hereunder are generally
non-transferable, provided, however, that any Non-Qualified Stock Option
granted hereunder may be transferred by a Participant to members of the
Participant's immediate family, or to any trust or benefit plan established
for the benefit of such Participant or immediate family member, or pursuant
to the laws of descent and distribution.
(c) Termination of Service. Except as provided in Sections 6.1(d) and
(e) hereof, unless otherwise determined by the Board of Directors, upon the
termination of a Participant's service as a member of the Board of
Directors for any reason other than Disability, death or Termination for
Cause, the Participant's Non-Qualified Stock Options shall be exercisable
only for a period of three months following termination. Notwithstanding
any provision set forth herein nor contained in any Agreement relating to
the award of an Option, in the event of Termination for Cause, all rights
under the Participant's Options shall expire upon termination. In the event
of death or termination of service as a result of Disability of any
Participant, all Non-Qualified Stock Options held by the Participant,
whether or not exercisable at such time, shall be exercisable by the
Participant or his legal representatives or beneficiaries for one year or
such longer period as determined by the Board following the date of the
Participant's death or termination of service due to Disability, provided
that in no event shall the period extend beyond the expiration of the
option term of the Non-Qualified Stock Option.
7
<PAGE>
(d) Exception for Retirement. Notwithstanding the general rule
contained in Section 6.1(c) above, all Non-Qualified Stock Options held by
a Participant whose service with the Corporation terminates due to
Retirement may be exercised for the greater of (i) the remaining term of
the option, or (ii) twelve (12) months.
(e) Termination of Service Upon a Change In Control
Upon the termination of a Participant's service as an employee or member of
the Board of Directors in connection with a change in control of the corporation
(as defined below), the Participant's Non-Qualified Stock Options shall be
exercisable, regardless of their then remaining term, for the greater of (i) a
period of 12-months after the change in control or (ii) their then remaining
term. For purposes of this provision, the term "change in control of the
Corporation" shall mean a reorganization, merger, consolidation or sale of all
or substantially all of the assets of the Corporation, the acquisition of more
than 50% of the voting power of the capital stock of the Corporation by any
person or group, or any similar transaction in which the Corporation is not the
surviving entity.
SECTION 7. INCENTIVE STOCK OPTIONS
7.1 Grant of Incentive Stock Options.
The Board of Directors may, from time to time, grant Incentive Stock
Options to eligible employees. Incentive Stock Options granted pursuant to the
Plan shall be subject to the following terms and conditions:
(a) Price. The purchase price per share of Common Stock deliverable
upon the exercise of each Incentive Stock Option shall be not less than one
hundred percent (100%) of the Fair Market Value of the Common Stock on the
date of grant. However, if a Participant owns
8
<PAGE>
stock possessing more than ten percent (10%) of the total combined voting
power of all classes of Common Stock, the purchase price per share of
Common Stock deliverable upon the exercise of each Incentive Stock Option
shall not be less than one hundred ten percent (110%) of the Fair Market
Value of the Common Stock on the date of grant. Shares may be purchased
only upon payment of the full purchase price. Payment of the purchase price
may be made, in whole or in part, through the surrender of shares of the
Common Stock at the Fair Market Value of such shares on the date of
surrender.
(b) Amounts of Options. Incentive Stock Options may be granted to any
eligible employee in such amounts as determined by the Board of Directors.
In the case of an option intended to qualify as an Incentive Stock Option,
the aggregate Fair Market Value (determined as of the time the option is
granted) of the Common Stock with respect to which Incentive Stock Options
granted are exercisable for the first time by the Participant during any
calendar year shall not exceed $100,000. The provisions of this Section
7.1(b) shall be construed and applied in accordance with Section 422(d) of
the Code and the regulations, if any, promulgated thereunder. To the extent
an award is in excess of such limit, it shall be deemed a Non-Qualified
Stock Option. The Board shall have discretion to redesignate options
granted as Incentive Stock Options as Non-Qualified Stock Options.
(c) Terms of Options. The term during which each Incentive Stock
Option may be exercised shall be determined by the Board of Directors, but
in no event shall an Incentive Stock Option be exercisable in whole or in
part more than ten (10) years from the date of grant. If at the time an
Incentive Stock Option is granted to an employee, the employee owns Common
Stock representing more than ten percent (10%) of the total combined voting
power of the
9
<PAGE>
Corporation (or, under Section 422(d) of the Code, is deemed to own Common
Stock representing more than ten percent (10%) of the total combined voting
power of all such classes of Common Stock, by reason of the ownership of
such classes of Common Stock, directly or indirectly, by or for any
brother, sister, spouse, ancestor or lineal descendent of such employee, or
by or for any corporation, partnership, estate or trust of which such
employee is a shareholder, partner or beneficiary), the Incentive Stock
Option granted to such employee shall not be exercisable after the
expiration of five years from the date of grant. Incentive Stock Options
granted hereunder are generally non-transferrable; provided, however, that
any Incentive Stock Option granted hereunder may be transferred by a
Participant only pursuant to the laws of descent and distribution.
(d) Termination of Employment. Except as provided in Section 7.1(e)
hereof, upon the termination of a Participant's service for any reason
other than Disability, death or Termination for Cause, the Participant's
Incentive Stock Options which are then exercisable at the date of
termination may only be exercised by the Participant for a period of three
months following termination. Notwithstanding any provisions set forth
herein nor contained in any Agreement relating to an award of an Option, in
the event of Termination for Cause, all rights under the Participant's
Incentive Stock Options shall expire immediately upon termination.
Unless otherwise determined by the Board of Directors, in the event of
death or termination of service as a result of Disability of any
Participant, all Incentive Stock Options held by such Participant, whether
or not exercisable at such time, shall be exercisable by the Participant or
the Participant's legal representatives or beneficiaries of the Participant
for one year following the date of the participant's death or termination
of employment as a result of
10
<PAGE>
Disability. In no event shall the exercise period extend beyond the
expiration of the Incentive Stock Option term.
(e) Exceptions. (i) Notwithstanding the general rule contained in
Section 7.1(d) above, all options held by a Participant whose employment
with the Corporation terminates due to Retirement may be exercised for the
greater of (a) the remaining term of the option or (b) twelve (12) months.
Any Incentive Stock Option exercised more than three (3) months after a
Participant's Retirement will be treated as a Non-Qualified Stock Option;
(ii) Notwithstanding the general rule contained in Section 7.1(d)
above, in the event a Participant's employment with the Corporation
terminates as a result of a Change in Control of the Corporation (as
defined in Section 6.1(e) hereunder), a Participant may continue to
exercise any Options then held, regardless of their remaining term, for the
greater of (i) a period of 12-months after the date of such Change in
Control or (ii) their then remaining term. To the extent that this
provision would permit any Incentive Stock Option to be exercised more than
three months after a Participant's cessation of employment, such Options
shall be treated as a Non-Qualified Stock Option hereunder.
(f) Compliance with Code. The Options granted under this Section 7 of
the Plan are intended to qualify as incentive stock options within the
meaning of Section 422 of the Code, but the Corporation makes no warranty
as to the qualification of any option as an incentive stock option within
the meaning of Section 422 of the Code. A Participant shall notify the
Board in writing in the event that he disposes of Common Stock acquired
upon exercise of an Incentive Stock Option within the two-year period
following the date the Incentive Stock Option was granted or within the
one-year period following the date he received Common Stock upon the
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<PAGE>
exercise of an Incentive Stock Option and shall comply with any other
requirements imposed by the Corporation in order to enable the Corporation
to secure the related income tax deduction to which it will be entitled in
such event under the Code.
SECTION 8. EXTENSION
The Board of Directors may, in its sole discretion, extend the dates during
which all or any particular Option or Options granted under the Plan may be
exercised.
SECTION 9. GENERAL PROVISIONS APPLICABLE TO OPTIONS
(a) Each Option under the Plan shall be evidenced by a writing delivered to
the Participant specifying the terms and conditions thereof and containing such
other terms and conditions not inconsistent with the provisions of the Plan as
the Board of Directors considers necessary or advisable to achieve the purposes
of the Plan or comply with applicable tax and regulatory laws and accounting
principles.
(b) Each Option may be granted alone, in addition to or in relation to any
other Option. The terms of each Option need not be identical, and the Board of
Directors need not treat Participants uniformly. Except as otherwise provided by
the Plan or a particular Option, any determination with respect to an Option may
be made by the Board at the time of grant or at any time thereafter.
(c) In the event of a consolidation, reorganization, merger or sale of all
or substantially all of the assets of the Corporation, in each case in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of any other corporation or business entity or in the event of a
liquidation of the Corporation, the Board of Directors shall provide for any one
or more of the following actions, as to outstanding Options: (i) provide that
12
<PAGE>
such Options shall be assumed, or equivalent options shall be substituted, by
the acquiring or succeeding corporation (or an affiliate thereof), provided that
such options substituted for Incentive Stock Options shall meet the requirements
of the Code for Incentive Stock Options, (ii) upon written notice to the
Participants, provide that all unexercised Options will terminate immediately
prior to the consummation of such transaction unless exercised (to the extent
then exercisable) by the Participant within a specified period following the
date of such notice, (iii) in the event of a merger under the terms of which
holders of the Common Stock of the Corporation will receive upon consummation
thereof a cash payment for each share surrendered in the merger (the "Merger
Price"), make or provide for a cash payment to the Participants equal to the
difference between (A) the Merger Price times the number of shares of Common
Stock subject to such outstanding Options (to the extent then exercisable at
prices not in excess of the Merger Price) and (B) the aggregate exercise price
of all such outstanding Options in exchange for the termination of such Options,
and (iv) provide that all or any outstanding Options shall become exercisable in
full immediately prior to such event.
(d) The Participant shall pay to the Corporation, or make provision
satisfactory to the Board of Directors for payment of, any taxes required by law
to be withheld in respect of Options under the Plan no later than the date of
the event creating the tax liability. In the Board's sole discretion, a
Participant (other than a Participant subject to Section 16 of the "Act" (a
"Section 16 Participant"), who shall be subject to the following sentence) may
elect to have such tax obligations paid, in whole or in part, in shares of
Common Stock, including shares retained from the Option creating the tax
obligation. With respect to Section 16 Participants, upon the issuance of shares
of Common Stock in respect of an Option, such number of shares issuable shall be
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<PAGE>
reduced by the number of shares necessary to satisfy such Section 16
Participant's federal, and where applicable, state withholding tax obligations.
For withholding tax purposes, the value of the shares of Common Stock shall be
the Fair Market Value on the date the withholding obligation is incurred. The
Corporation may, to the extent permitted by law, deduct any such tax obligations
from any payment of any kind otherwise due to the Participant.
(e) The Board of Directors may at any time, and from time to time, amend,
modify or terminate the Plan or any outstanding Option held by a Participant,
including substituting therefor another Option of the same or a different type
or changing the date of exercise or realization, provided that the Participant's
consent to each action shall be required unless the Board of Directors
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
(f) For purposes of the Plan, the following events shall not be deemed a
termination of employment of a Participant:
(i) a transfer to the employment of the Corporation from a subsidiary
or from the Corporation to a subsidiary, or from one subsidiary to another,
or
(ii) an approved leave of absence for military service or sickness, or
for any other purpose approved by the Corporation, if the Participant's
right to reemployment is guaranteed either by a statute or by contract or
under the policy pursuant to which the leave of absence was granted or if
the Board of Directors otherwise so provides in writing.
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<PAGE>
SECTION 10. MISCELLANEOUS
(a) No person shall have any claim or right to be granted an Option, and
the grant of an Option shall not be construed as giving a Participant the right
to continued employment with the Corporation or service on the Corporation's
Board of Directors. The Corporation expressly reserves the right at any time to
dismiss a Participant free from any liability or claim under the Plan, except as
expressly provided in the applicable Option.
(b) Nothing contained in the Plan shall prevent the Corporation from
adopting other or additional compensation arrangements.
(c) Subject to the provisions of the applicable Option, no Participant
shall have any rights as a shareholder (including, without limitation, any
rights to receive dividends, or non cash distributions with respect to such
shares) with respect to any shares of Common Stock to be distributed under the
Plan until he or she becomes the holder thereof.
(d) Notwithstanding anything to the contrary expressed in this Plan, any
provisions hereof that vary from or conflict with any applicable Federal or
State securities laws (including any regulations promulgated thereunder) shall
be deemed to be modified to conform to and comply with such laws.
(e) No member of the Board of Directors shall be liable for any action or
determination taken or granted in good faith with respect to this Plan nor shall
any member of the Board of Directors be liable for any agreement issued pursuant
to this Plan or any grants under it. Each member of the Board of Directors shall
be indemnified by the Corporation against any losses incurred in such
administration of the Plan, unless his action constitutes serious and willful
misconduct.
(f) The Plan shall be effective on _____________________ , 1998.
15
<PAGE>
(g) The Board may amend, suspend or terminate the Plan or any portion
thereof at any time, provided that no amendment shall be granted without
shareholder approval if such approval is necessary to comply with any applicable
tax laws or regulatory requirement.
(h) Options may not be granted under the Plan after ___________, 2008, but
then outstanding Options may extend beyond such date.
(i) To the extent that State laws shall not have been preempted by any laws
of the United States, the Plan shall be construed, regulated, interpreted and
administered according to the other laws of the State of Delaware.
16
MODIFICATION TO LEASE #2
July 15, 1997
Admiralty Bank
THIS MODIFICATION: Is a modification to that certain Commercial Lease dated
March 15, 1986, as modified January 2, 1992 (hereafter "Lease") where LOGGERHEAD
ASSOCIATES LTD., a Partnership is "Landlord," and ADMIRALTY BANK, a Florida
Corporation is "Tenant" covering property commonly known as 1205 U.S. Highway 1,
Juno Beach, FL 33408.
NOW THEREFORE: For good and valuable consideration, the parties hereby agree to
modify the subject Lease as follows.
I. ADDRESS CHANGE. The U.S. Highway 1 address is revised from "1205" to
"14235."
II. RENTABLE SQUARE FEET. Subject to other conditions herein, and commencing
November 1, 1997, the building "Rentable Square Feet" shall be reduced to
2,508 Rentable Square Feet (see cross hatched area on Exhibit "B-I"
attached).
III. EXTENSION OF TERM. The term of the Lease is extended to and through
December 31, 1998.
IV. MINIMUM RENT. Commencing November 1, 1997, Minimum Rent shall adjust as
follows.
PERIOD MONTHLY - MONTHLY - MONTHLY ANNUAL
PREMISES DRIVE-UP TOTALS TOTALS
NOV 97 - DEC 98 $3,448.50 $900.00 $4,348.50 $52.182.00
V. DIVISION OF LEASED PREMISES. The Leased Premises shall be divided according
to Exhibit "B-I" attached. The Tenant shall pay all costs related to
division of the Leased Premises, including repair and restoration work on
each side of such division, including but not limited to proper restoration
of electric service to the space being given up (remainder space) by the
Tenant. The Tenant shall pay all costs related to the addition of a new
bathroom (or bathrooms) in the remaining Leased Premises, and a kitchen if
desired. Existing bathrooms, and bathroom fixtures, shall remain in place
and unchanged. The Landlord grants the Tenant the right to relocate the
existing kitchen cabinets and related plumbing fixtures from the existing
kitchen of Tenant. The Tenant shall additionally be responsible for
decorating in the Leased Premises. The Tenant shall promptly commence
construction upon execution hereof, and shall complete the same on or
before September 30, 1997. Time is of the essence.
VI. RENEWAL OPTION. Provided that Tenant has not defaulted under any of the
terms, covenants or conditions of Lease, and further provided Tenant shall
give Landlord written notice not less than nine (9) months prior to the
expiration date of the initial term of this Lease (or any extension or
renewal thereto, Tenant shall have the option of renewing this Lease for
one (1) additional term of four (4) years ("first option"), and one (1)
additional term of five (5) years ("second option"), on the same covenants
and conditions as herein provided. Annual Minimum Rent during the first
option period shall be $41,382 for the Leased Premises and $10,800 for the
drive-up, totaling $4,348.50 per month. Annual Minimum Rent during the
second option period shall be $43,890 for the Leased Premises and $12,000
for the drive-up, totaling $4,657.50 per month.
Except as modified here, all other terms and conditions of the subject Lease
shall remain unchanged and in full force and effect.
WITNESSES: TENANT: ADMIRALTY BANK
/s/ - BY: /s/ James A. Semrad
- -------------------------- -------------------------------
JAMES A. SEMRAD As: PRESIDENT
/s/ -
- -------------------------
LANDLORD: LOGGERHEAD ASSOCIATES LTD
- ------------------------- BY:
----------------------------------
Loggerhead One Corporation,
- ------------------------- General Partner
Paul S. Ferber, President
<PAGE>
LEASE MODIFICATION #1
Admiralty Bank
THIS MODIFICATION: Is a modification to that certain Lease dated March 15, 1986
where Loggerhead Associates is "Landlord", and where Admiralty Bank is "Tenant"
covering property commonly known as 1205 U.S. Highway I, Juno Beach, FL 33408.
WHEREAS: Tenant wishes to extend the term of the subject Lease and reduce the
Minimum Rent, and whereas Landlord is willing to extend the term as hereafter
indicated;
NOW THEREFORE: For good and valuable consideration, the parties agree to modify
the subject Lease as follows.
1. The term of the subject Lease is hereby extended to and through December
31, 1997.
2. Commencing January 1, 1992, the "Minimum Rent" pertaining to the "Leased
Premises", and the additional rent pertaining to the "drive-up lanes" are
modified as follows.
Monthly- Monthly-
Period Months Premises Drive-Up Totals
------ ------ -------- -------- ------
1/92-12/92 12 $4,259.25 $ 695.00 $4,954.25
1/93-12/93 12 $4,653.63 $ 730.00 $5,383.63
1/94-12/94 12 $5,048.00 $ 765.00 $5,813.00
1/95-12-95 12 $5,363.50 $ 800.00 $6,163.50
1/96-12-96 12 $5,679.00 $ 835.00 $6,514.00
1/97-12/97 12 $5,836.75 $ 870.00 $6,706.75
3. Paragraph 38 with respect to an "Option For Additional Terms" is modified
to provide for three (3) additional terms of five (5) years each, pursuant
to the terms of Paragraph 10. The three renewal options as discussed here
are for the period(s) following the expiration per this Lease Modification
#1 (i.e. December 31, 1997).
Except as modified here, all other terms and conditions of the subject Lease
shall remain unchanged and in full force and effect.
DATED: January 2, 1992
WITNESSES:
/s/ - TENANT: ADMIRALTY BANK, a Florida Corporation
- ---------------------
/s/ Pam Lockwood BY: /s/ William E. Green, Chief Operating Officer
- --------------------- ---------------------------------------------
As:
/s/ - LANDLORD: LOGGERHEAD ASSOCIATES, A Partnership
-------------------
/s/ - BY: /s/ Paul S. Ferber
-------------------- ----------------------------------------------
Paul S. Ferber, General Partner
<PAGE>
EXHIBIT F-2
LEASE
THIS INDENTURE OF LEASE, made on the 15th day of March, 1986, by and
between LOGGERHEAD ASSOCIATES, whose mailing address is P.O. Drawer 1929, Delray
Beach, Florida 33447-1929, hereinafter called the "Landlord" or "Owner", which
term, shall include its successors and assigns wherever the context so requires
or admits, and ADMIRALTY BANK, a Florida corporation (in organization), whose
mailing address is 1225 U.S. Highway One, Suite 221, Juno Beach, Florida 33408,
herein designated as the "Tenant", which term shall include their successors or
assigns wherever the context so requires or admits.
W I T N E S S E T H:
1. LEASED PREMISES.
That for and in consideration of the payment from time to time of the rents
hereinafter stipulated and for and in consideration of the performance of the
covenants hereinafter contained by the Tenant to be kept and performed, the
Landlord has leased, let and demised and by these presents does lease, let and
demise unto the Tenant, and the Tenant accepts from the Landlord, those certain
premises, known as Suite 1205, located in LOGGERHEAD PLAZA (herein called the
"Building"), City of Juno Beach, in the County of Palm Beach, and the State of
Florida, legally described on Exhibit "A" attached hereto and made a part
hereof, which premises consist of an area of approximately 3,786 square feet,
herein called "the leased premises", and for purposes of paragraph 4-A includes
zero square feet of the common area facilities making a total of 3,786 square
feet, hereinafter called "Rentable Square Feet".
The use and occupation by the Tenant of the leased premises shall include
the use in common with others entitled thereto of the common areas, employees'
parking areas, service roads, sidewalks and customer car parking areas,
hallways, stairwells, elevators and other facilities as may be designated from
time to time by the Landlord, subject, however, to the terms and conditions of
this Lease and to reasonable rules and regulations for the use thereof, as
prescribed from time to time by the Owner.
2. COMMENCEMENT OF TERM
The term of this Lease shall commence on the 1st day of May, 1987, or upon
Bank Charter approval, whichever first occurs (as evidenced by a copy of such a
Bank Charter).
3. LENGTH OF TERM.
The term of this Lease shall be for five (5) years following the
commencement of the term as provided in the preceding paragraph unless sooner
terminated or extended as hereinafter provided.
4. RENT.
A. The Tenant hereby agrees to pay to the Landlord, without demand and
without any deduction or set-off whatsoever, for the term of this lease, the
annual rental of $56,790.00, in lawful money of the United States, in equal
monthly installments of $4,732.50, in advance on the first day of each month
during said term, at the office of the Landlord or at such other place or places
as the landlord may from time to time designate in writing. Said rent
hereinafter called "annual minimum rent". In addition, Tenant shall pay all
rental, use or sales tax on rent, levied by governmental agencies. Additional
rental for drive-up lanes are at a rate of twelve percent (12%) per year of the
actual costs. Such sums shall be added to the annual minimum rent and shall have
CPI Increases per the base rent schedule.
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B. In addition to rental, Tenant agrees to pay Landlord on the first day of
each month Tenant's prorata share of the amount expended by Landlord toward the
cost to Landlord of operating, managing (including management fees) and
maintaining: (a) the common areas and common facilities and portions of the
Building to be maintained by Landlord, including, but not limited to, structural
elements in any portion of the Building, including the roof, the cost of common
area and exterior repair, maintenance, janitorial service, trash removal,
elevator service and repair, window washing, utilities, security, landscaping,
painting, and the like; (b) the cost to Landlord of obtaining insurance for
comprehensive hazard and liability, fire and extended coverage, rents, and the
like; (c) the cost to Landlord of supplies, materials, service agreements, legal
and accounting fees, and personnel in the operation and maintenance of the
Building; (d) in addition to the proportionate share of Tenant's common area
charges as described in paragraphs 4 and 5, Tenant shall pay to Landlord an
administrative charge equal to fifteen percent (15%) of the Tenant's
proportionate share of the common area charges and expenses.
C. The Tenant's proportionate share of common area charges and expenses,
taxes, insurance, and the like, shall be the total amount of such common area
charges and expenses, taxes, insurance, and the like, multiplied by a fraction,
the numerator of which shall be the number of square feet of Rentable Square
Feet and the denominator of which shall be the number of total gross Rentable
Square Feet of the Building.
D. If the monthly rent is not paid by the fifth (5th) day of any month,
then there shall be an additional daily rent for each day until the monthly rent
and additional daily rent-is paid in full. The additional daily rent for each
day shall be calculated as follows: $10.00 per square foot times the Rentable
Square Feet of the leased premises as set forth in paragraph 1 divided by 365
equals additional daily rent.
5. TAXES.
A. The term "taxes" shall mean (a) the total of all real estate taxes,
taxes attributable to improvements within the Building or any part thereof made
by a tenant (including, but not limited to, the Tenant hereunder) or by
Landlord, or attributable to the installation in the Building or any part
thereof of fixtures, machinery or equipment by any tenant (including, but not
limited to, the Tenant hereunder) or by any federal, state, municipal or other
government or governmental or public authority, including, without limitation,
any school district, of every kind and nature whatsoever, extraordinary as well
as ordinary, foreseen and unforeseen, and each and every installment thereof,
which shall or may be levied, assessed, imposed, become due and payable, or
liens upon, or arise in connection with the use, occupancy or possession of, or
grow due or payable out of, or for, the Building or any part thereof, or any
land, buildings or other improvements therein, (b) any special or other
assessment or levy which is imposed upon the Building, (c) any taxes
attributable to or assessed by reason of any personal property located within
the Building, except that which is assessed or imposed directly against a tenant
and paid for by such tenant, and (d) any and all costs, fees and expenses paid
to attorneys, appraisers and consultants for the purpose of reviewing,
negotiating, or contesting the amount of the taxes, the valuation or assessment
of the Building or any portion thereof for tax purposes and any and all costs,
fees and expenses arising out of or by reason of any legal or administrative
processing related to taxes. If there shall be levied, assessed or imposed (x) a
tax, assessment, levy, imposition, excise or charge on account of the Annual
Minimum Rent and/or additional rent payable hereunder or in any other lease of
any part of the Building, or (y) any special or other assessment or levy which
is imposed upon the Building, then the same shall be deemed to be included
within the term "taxes" for the purposes hereof.
B. During the term of this Lease, Tenant shall pay to Landlord as
additional rent upon demand at the bill for each installment for each real
estate tax year issues, its proportionate share of the taxes (based on square
footage as set forth in paragraph 4-C above), in the following manner: Upon the
issuance of the actual bills (as distinguished from any estimated bill) for
taxes to be paid for the calendar year in which the Rent Commencement Date falls
and upon the issuance of such actual bills in each succeeding
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<PAGE>
calendar year during the term hereof, Tenant shall, upon Landlord's request,
commencing with the first day of the month next succeeding the date on which the
taxes covered by such bill are payable with maximum discount and on the first
day of each month of the next eleven (11) months, pay as additional rent, and
not as a deposit, one-twelfth (1/12) of the amount of Tenant's proportionate
share of the taxes paid in such calendar year. When the actual taxes are known,
the same shall be adjusted. Any balance due from Tenant shall be paid by Tenant
when the next installment of real estate taxes are due. Any balance due from
Landlord shall be credited against the next installment of real estate taxes due
from Tenant.
C. Tenant shall be responsible for payment before delinquency of all
franchise taxes, assessments, levies or charges measured by or based in whole or
in part upon the rents payable hereunder or gross receipts of Tenant and all
sales taxes and other taxes imposed upon or assessed by reason of the rents and
other charges payable hereunder. The Florida sales tax imposed on rent shall be
paid by Tenant to Landlord monthly with Tenant's rental payments.
6. UTILITY CHARGES.
Landlord shall not be liable in the event of any interruption in the supply
of any utilities. Tenant agrees that it will not install any equipment which
will exceed or overload the capacity of any utility facilities and that, if any
equipment installed by Tenant shall require additional utility facilities, the
same shall be installed at Tenant's expense in accordance with plans and
specifications to be approved in writing by Landlord. Tenant shall be solely
responsible for and shall promptly pay all charges for use of consumption of all
utilities and services, including, but not limited to, heat, gas, electricity,
heated or chilled water, sewer, water, or any other utility services. It is
anticipated that certain utility bills may be issued in common with other
portions of the Building, in which event Tenant shall pay his share (including
share of common area charges), based on the square footage of the leased
premises as compared to the square footage of all premises the bill. As to
utility and other charges which are separately metered or separately billed, the
same shall be paid directly by Tenant. Payment shall be due as billed by the
utility companies or as billed by landlord. Utility charges shall be paid by
Tenant within ten (10) days of billing or it shall be deemed a default
hereunder.
7. USE OF PREMISES.
Tenant shall use the leased premises solely for the purposes of banking and
related services. Tenant shall use, or permit to be used, the leased premises
for no other purpose and such use and occupancy shall at all times be in
compliance with all applicable laws, ordinances and governmental regulations.
The Tenant agrees to conduct continuously in the leased premises the business
above stated. Tenant shall keep the interior of the leased premises, together
with all electrical, plumbing, heating, air conditioning, other mechanical
installations therein (or in the floor slabs, walls and ceiling), store front
and all doors, in good order and repair at its own expense during the entire
term.
8. SECURITY DEPOSIT.
A. Tenant, contemporaneously with the execution of this Lease, shall
deposit with the landlord the sum of $ -0- , receipt of which is hereby
acknowledged by the Landlord of which $ -0- is first and last months' rental
deposit and $ -0- is security for the full and faithful performance by the
Tenant of all the terms, covenants, and conditions of this Lease upon the
Tenant's part to be performed, which said security deposit shall be returned by
the Tenant after the time fixed as the expiration of the term hereof, provided
the Tenant has fully and faithfully carried out all of said terms, covenants and
conditions on Tenant's part to be performed. Landlord shall have the right, but
not the obligation, to apply any part of said deposit to cure any default of the
Tenant, and without prejudice to any other remedy Landlord may have on account
thereof, and, if the Landlord does so, Tenant shall, upon demand, deposit with
Landlord the amount so applied so that the Landlord shall have the full deposit
on hand at all times
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during the term of this Lease. Tenant's failure to pay to Landlord a sufficient
amount to restore said security to the original sum deposit within five (5) days
after receipt of demand therefor shall constitute a breach of this Lease. No
interest shall be paid by the Landlord to the Tenant on such security deposit.
Should Tenant comply with all of said terms, covenants and conditions and
promptly pay all of the rental herein provided for as it falls due and all other
sums payable by the Tenant to the Landlord hereunder, the said deposit shall be
returned in full to the Tenant within fifteen (15) days after the end of the
term of this Lease or earlier termination of this Lease.
B. In the event of bankruptcy or other creditor or debtor proceedings
against the Tenant, all security shall be deemed to be applied first to the
payment of rent and other charges due Landlord for all periods prior to the
filing of such proceedings.
C. In the event of a sale of the Building or a lease of the land on which
it stands, subject to this Lease, the Landlord shall have the right to transfer
the security to the vendee or lessee and the Landlord shall be considered
released by the Tenant from all liability for the return of such security and
the Tenant shall look to the new landlord solely for the return of the said
security and it is agreed that this shall apply to every transfer or assignment
made of the security to a new landlord. The security deposited under this Lease
shall not be mortgaged, assigned, transferred, or encumbered by the Tenant
without the prior written consent of the Landlord and may be co-mingled with
other funds of Landlord.
9. PARKING AND COMMON USE AREAS AND FACILITIES.
Landlord grants to Tenant, in common, with other tenants and other
occupants in the Building, and their agents, employees, and customers and
persons doing work for or business in the Building the right to use the "common
areas" consisting of the parking areas, roadways, pathways, sidewalks, hallways,
stairwells, elevators, entrances and exits and other areas and facilities
designated for cerumen area use in the Building containing the leased premises.
The common areas shall be subject to the exclusive control and management
of Landlord and Landlord shall have the right to establish, modify, change, and
enforce rules and regulations with respect to the common areas and Tenant agrees
to abide by and conform with such rules and regulations. The right of customers
to use the parking facilities shall apply only while they are doing business in
the Building. Tenant agrees that it and its officers and Employees will park
their automobiles only in such areas as Landlord from time to time designates
for employee parking areas, which areas may be within or without the land and
Building. Tenant shall not park any trucks or delivery vehicles in the parking
areas, nor permit delivery of supplies or merchandise at any place other than
that designated by Landlord. Landlord shall have the right to close any part of
the common area for such time as may, in the opinion of counsel, be necessary to
prevent a dedication thereof, or the accrual of any rights in any person, and to
close any part of the parking area for such time as Landlord deems necessary in
order to discourage non-customer parking and to do other things in the parking
areas as Landlord in its discretion deems necessary for the benefit of the
Building.
10. COST-OF-LIVING ADJUSTMENT.
Commencing the first annual anniversary of the commencement of the term and
on every annual anniversary thereafter, Tenant agrees to pay to Landlord an
amount as additional rent (called "Cost-of-Living Increase"), in equal monthly
installments in advance on the first day of each month of the term of this
Lease, in order to reflect proportionate increases in the cost of living as
indicated by the U.S. Bureau of Labor Statistics Consumer Price Index - United
States Average - All Urban Consumers (CPI-U). Such Cost-of-Living Increase
adjustments shall be accomplished by multiplying the total of the annual minimum
rental set forth in paragraphs 4 and 5 by a fraction, the numerator of which
shall be such Index as of three (3) months prior to the date of adjustment and
the denominator of which shall be such Index as of three (3) months prior to the
month of execution of this Lease.
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If the Consumer Price Index is hereafter discontinued, the Landlord shall
designate an appropriate substitute index or formula provided such index or
formula shall have the same general acceptance as to use and reliability as the
Index above referred to. The cost-of-living adjustments shall reflect increases
only so that there will be no decreases in the Cost-of-Living Increase based on
decreases in said Index from prior year or years. In the event any governmental
law or regulation shall be enacted which prevents or limits the right of
Landlord to receive additional rental based on changes in the Consumer Price
Index or related to Cost-of-Living Increases, Landlord shall have the right and
option to cancel this Lease as of each and every upcoming annual anniversary
hereof. Notwithstanding the above, such CPI Increases shall have a floor of four
percent (4%) and a ceiling of eight percent (8%), or seventy-five percent (75%)
of the CPI, whichever is greater.
11. LICENSE.
All common areas and facilities not within the leased premises, which
Tenant may be permitted to use and occupy, are to be used and occupied under a
revocable license, and if and such license be revoked, or if the amount of such
areas be diminished, Landlord shall not be subject to any liability nor shall
Tenant be entitled to any compensation or diminution or abatement of rent, nor
shall such revocation or diminution of such areas be deemed constructive or
actual eviction.
12. LANDLORD'S WORK.
See Exhibit "B", Standard Work Letter Agreement. Landlord's total costs
shall not exceed $60,000.00
13. CHANGES AND ADDITIONS TO BUILDINGS.
Landlord hereby reserves the right at any time to make alterations or
additions to and to build additional units on the Building in which the premises
are contained and to build adjoining the same. Landlord also reserves the right
to construct other buildings or improvements in or on the land or Building from
time to time and to make alterations thereof or additions thereto and to build
additional stories on any such building or buildings and to build adjoining same
or on adjoining lands.
14. REPAIRS.
Landlord shall not be required to make any repairs or improvements of any
kind upon the leased premises except for necessary exterior structural repairs.
Tenant shall, at its own cost and expense, take good care of and make necessary
repairs, structural or otherwise, to the interior of the leased premises, and
the fixtures and equipment therein and appurtenances thereto, including but not
limited to the exterior and interior windows, doors and entrances, store fronts,
signs, showcases, floor coverings, interior walls, columns and partitions, and
lighting, heating and plumbing, and air conditioning.
15. SUBORDINATION, ESTOPPEL CERTIFICATE AND ATTORNMENT.
Tenant agrees that this Lease shall be subordinate to any mortgage or
mortgages or the lien resulting from any financing or refinancing now or
hereafter in force against the land and buildings of which the leased premises
are a part. This shall be self-operative and no further instrument of
subordination shall be required by any mortgagee. However, the Tenant, upon
request of any party-in-interest, shall execute promptly such instrument or
certificates to carry out the intent hereof as shall be required by the
landlord. Tenant hereby irrevocably appoints Landlord as Attorney-in-Fact for
the Tenant with full power and authority to execute and deliver in the name of
the Tenant, any such instrument or certificates. If, ten (10) days after the
date of a written request by Landlord to execute such instruments, Tenant shall
not have executed the same, the Landlord may at its option cancel this Lease
without incurring any liability on account thereof and the term hereby granted
is expressly limited accordingly. Within ten (10) days after request therefor by
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Landlord, or in the event that upon any sale, assignment or hypothecation of the
leased premises and/or the land thereunder by Landlord an estoppel certificate
shall be required from the Tenant, the Tenant agrees to deliver, in recordable
form, an estoppel certificate to any proposed mortgagee or purchaser or to the
owner certifying and stating as follows: (a) this Lease has not been modified or
amended (or if modified or amended, setting forth such modifications or
amendments); (b) this Lease as so modified or amended is in full force and
effect (or if not in full force and effect, the reasons therefor); (c) Tenant
has no offsets or defenses to its performance of the terms and provisions of
this Lease, including the payment of rent, or if there are any such defenses or
offsets, specifying the same; (d) Tenant is in possession of the premises, if
such be the case; (e) if an assignment of rents or leases has been served upon
Tenant by a mortgagee or prospective mortgagee, Tenant has received such
assignment and agrees to be bound by the provisions thereof; and (f) any other
accurate statements reasonably required by Landlord, any prospective landlord or
Landlord's mortgagee or prospective mortgagee. It is intended that any such
statement delivered pursuant to this subsection may be relied upon by any
prospective purchaser or mortgagee and their respective successors and assigns
and Tenant shall be liable for all loss, cost or expense resulting from the
failure of any sale or funding of any loan caused by any misstatement contained
in such estoppel certificate. At the option of the Landlord or any successor
landlord or the holder of any mortgage affecting the fee of the leased premises,
Tenant agrees that neither the cancellation nor termination of any ground
underlying lease to which this Lease is now or may hereafter become subject or
subordinate, nor any foreclosure of a mortgage affecting the fee title of the
leased premises, or the institution of any suit, action, summary or other
proceeding by the landlord herein or any successor landlord, or any foreclosure
proceeding brought by the holder of any such mortgage to recover possession of
the leased premises, shall by operation of law or otherwise result in the
cancellation or termination of this Lease or the obligations of the Tenant
hereunder, and Tenant covenants and agrees to attorn to the Landlord or to any
successor to the landlord's interest in the leased premises; or to such holder
of such mortgage or ground or underlying lease or to the purchaser of the
mortgaged premises in foreclosure.
16. ASSIGNMENT AND SUBLETTING.
A. Tenant agrees not to sell, assign, mortgage, pledge or in any manner
transfer this Lease or any estate or interest thereunder and not to sublet the
leased premises or any part or parts thereof and not to permit any licensee or
concessionaire therein without the previous written consent of the Landlord in
each instance. Before written approval or consent shall be given of any
assignment or sublease of the leased premises, landlord, in its sole discretion,
shall have the option to require Tenant or subtenant to renegotiate any or all
terms of this Lease. The consent by Landlord to any assignment or subletting
shall not constitute a waiver of the necessity for such consent to any
subsequent assignment or subletting. This prohibition against assigning or
subletting shall be construed to include an assignment or subletting by
operation of law. If this Lease be assigned or the leased premises or any part
thereof be sublet or occupied by anybody other than the Tenant, Landlord may
collect rent from the assignee, subtenant or occupant and apply the net amount
collected to the rent herein reserved, but no such assignment, subletting
occupancy or collection shall be deemed a waiver of this covenant, or the
acceptance of the assignee, subtenant or occupant as Tenant or a release of
Tenant from the further performance of Tenant by covenants on the part of Tenant
herein contained. Notwithstanding any assist or subleases, Tenant shall remain
fully liable on this Lease and shall not be released from performing any of
terms, covenants and conditions of this Lease.
B. If Tenant is a corporation, the shares of which at the time of execution
of this Lease are held by fewer than fifty (50) persons, and if at any time
during the term of this Lease persons, firms or corporations who own at least
one-third (1/3) of its shares at the time of the execution of this Lease, or
following Landlord's consent to a transfer of such shares, cease to own such
shares (other than as a result of transfer by bequest or inheritance) and such
transfer shall not first have been approved in writing by Landlord, such
transfer shall, at the option of Landlord, be deemed a default by Tenant under
this
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Lease and Landlord shall have all the rights and remedies granted to it
hereunder and by law in case of defaults.
17. INSURANCE AND INDEMNITY.
A. Tenant shall, during the entire term hereof, at its sole cost and
expense, provide and keep in full force and effect a policy of general public
liability and property damage insurance with respect, to the leased premises,
and the business operated by Tenant and any subtenants of Tenant in the leased
premises in which the limits of public liability shall be not less than
$500,000.00 per accident and in which the property damage liability shall be not
less than $300,000.00. The policy shall name Landlord, any person, firms or
corporations designated by Landlord, and Tenant as insured, and shall contain a
clause that the insurer will not cancel or change the insurance without first
giving the landlord ten (10) days prior written notice. The insurance shall be
in an insurance company approved by Landlord and a copy of the policy or
certificate of insurance shall be delivered to the Landlord. If the term of this
Lease is more than three (3) years (or extended beyond three (3) years),
Landlord shall have the right to require the amount of insurance to be increased
to approximate increases in the cost of living.
B. Tenant agrees that it will not keep, use, sell or offer for sale in or
upon the leased premises any article which may be prohibited by the standard
form of fire insurance policy. Tenant agrees to pay any increase in premises for
fire and extended coverage insurance that may be charged during the term of this
Lease on the amount of such insurance which may be carried by Landlord on said
premises or the building of which they are a part, resulting from the type of
activity or merchandise sold by Tenant in the leased premises, whether or not
Landlord has consented to the same. The Tenant also shall pay any additional
premium on the rent insurance policy that may be carried by the Landlord for its
protection against rent loss through fire. Bills for such additional premiums
shall be rendered by Landlord to Tenant at such times as Landlord may elect, and
shall be due from, and payable by, Tenant when rendered, and the amount thereof
shall be deemed to be, and be paid, as additional rent.
C. Tenant will indemnify Landlord "and save it harmless from and against
any and all claims, actions, damages, liability and expense in connection with
loss of fire, personal injury and/or damage to property arising from or out of
any occurrence in, upon or at the leased premises, or the occupancy or use by
Tenant of the leased premises or any part thereof, or occasioned wholly or in
part by any act or omission of Tenant, its agents, contractors, employees,
servants, lessees or concessionaires. In case Landlord shall, without fault on
its part, be made a party to any litigation commenced by or against Tenant, then
Tenant shall protect and hold Landlord harmless and shall pay all costs,
expenses and reasonable attorneys' fees incurred or paid by Landlord in
connection with such litigation. Tenant shall also pay all costs, expenses and
reasonable attorneys' fees (including appeals) that may be incurred or paid by
Landlord in enforcing the covenants and agreement in this Lease.
D. Tenant shall replace, at the expense of Tenant, any and all plate and
other glass damaged or broken from any cause whatsoever in and about the leased
premises. Tenant will insure, and keep insured, at Tenant's expense, all plate
and other glass in the leased premises for and in the name of Landlord during
the term of this Lease.
E. On default by Tenant in obtaining any insurance required hereunder or
delivering any policies or paying the premiums or other charges thereon as
aforesaid, it shall be the privilege, though not the obligation, of Landlord to
effect fully such insurance and likewise to pay any premiums or charges thereon.
All sums so paid by landlord and all costs and expenses incurred by Landlord in
connection therewith, together with interest thereon at the rate of eighteen
percent (18%) per annum from the respective dates of Landlord' s making of each
such payment, shall constitute additional rent payable by Tenant under this
Lease and shall be paid by Tenant to Landlord on demand, and Landlord shall not
be limited in the proof of any damages which Landlord may claim against Tenant
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arising out of or by reason of Tenant's failure to provide and keep in force
insurance as aforesaid, to the amount of the insurance premium or premiums not
paid or incurred by Tenant and which would have been payable upon such
insurance, but Landlord, in addition to any and all other rights and remedies
provided Landlord under the terms of this Lease, shall also be entitled to
recover as damages for such breach the uninsured amount of any loss, to the
extent of any deficiency in the insurance required by the provisions of this
Lease.
F. Each of landlord and Tenant hereby releases the other from any and all
liability or responsibility to the other or anyone claiming through or under
them by way of subrogation or otherwise for any loss or damage to property
caused by fire or any other perils insured in policies of insurance covering
such property, even if such loss or damage shall have been caused by the fault
or negligence of the other party, or anyone for whom such party may be
responsible, including any other tenants or occupants of the remainder of the
Building; provided, however, that this release shall be applicable and in force
and effect only to the extent that such release shall be lawful at that time and
in any event only with respect to loss or damage occurring during such times as
the releasor's policies shall contain a clause or endorsement to the effect that
any such release shall not adversely affect or impair said policies or prejudice
the right of the releasor to recover thereunder and then only to the extent of
the insurance proceeds payable under such policies. Each of Landlord and Tenant
agrees that it will request its insurance carriers to include in its policies
such a clause or endorsement. If extra cost shall be charged therefor, each
party shall advise the other thereof and of the amount of the extra cost, and
the other party, and its election, may pay the same, but shall not be obligated
to do so. If such other party fails to pay such extra cost, the release
provisions of this paragraph shall be inoperative against such other party to
the extent necessary to avoid invalidation of such releasor' s insurance.
18. SIGNS, FIXTURES, ALTERATIONS.
A. All fixtures installed by Tenant shall be new or completely
reconditioned. Tenant shall not make or cause to be made any alterations,
additions or improvements or install or cause to be installed any trade
fixtures, exterior signs, floor covering, interior or exterior lighting,
plumbing fixtures, or make any changes to the leased premises without first
obtaining Landlord's written consent and approval. Tenant shall present to the
Landlord plans and specifications for such work at the time approval is sought.
Tenant shall only install signs which are approved by Landlord and in
conformance with Landlord's criteria for signage. Tenant shall pay for all costs
of signs including installation and maintenance. Landlord will cooperate with
Tenant to name subject Building after the name of the Tenant in addition to
signage of the Building (Tenant shall pay all costs of such signage and landlord
reserves the right to approve or reject the signage program and same shall be
subject to approval of the County of Palm Beach and of the City of Juno Beach).
B. All trade fixtures installed by Tenant shall remain the property of the
Tenant and be removable at my time provided Tenant be hot in default at the
time, and Tenant shall promptly, at its own expense, repair any damage to the
premises in removing such trade fixture(s).
C. All improvements and alterations shall be done in a workmanlike manner
in keeping with all building codes and regulations and in no way harm the
structure of the leased premises, provided that at the expiration of this Lease
or any extension thereof, Tenant, at its expense, restores the within leased
premises to its original condition and repairs any damage to the premises
resulting from the installation or removal of such partitions, fixtures, or
equipment as may have been installed by Tenant if requested to do so by
Landlord.
D. The Landlord reserves the right, before approving any such changes,
additions, or alterations, to require the Tenant to furnish it a good and
sufficient bond, conditioned that will save Landlord harmless from the payment
of any claim, either by way of damages or liens. All of such changes, additions
or alterations shall be made solely at the expense of Tenant; and the Tenant
agrees to protect, indemnify and save harmless the
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Landlord on account of any injury to third persons or property, by reason of any
such changes, additions or alterations, and to protect, indemnify and save
harmless the Landlord from the payment of any claim of any kind or character on
account of bills for labor or material in connection therewith.
19. WASTE, NUISANCE, TRASH.
Tenant shall not commit or suffer to be committed any waste upon the leased
premises or any nuisance or other act or thing which may disturb the quiet
enjoyment of any other tenant in the building in which the leased premises may
be located or which may disturb the quiet enjoyment of any person within five
hundred (500) feet of the boundaries of the Building.
Tenant shall keep the premises and all glass doors clean. Tenant agrees
that the premises shall be kept free of pests, rodents, and insects. Tenant
shall not permit trash, garbage or refuse to be accumulated and to keep same in
proper containers on the interior until they are properly removed. Tenant shall
keep all mechanical apparatus free from vibration and noise which may be
transmitted beyond the confines of the premises and to avoid causing
objectionable odors from emanating from the premises.
20. POSTING.
That for the period of three (3) months prior to the expiration of this
Lease or any renewal thereof, Landlord shall have the right to display on the
exterior of the premises but not in any window or doorway thereof, the customary
sign "For Rent", and that during such period Landlord may show the premises and
all parts thereof to prospective tenants between the hours of 10:00 A.M. and
5:00 P.M. on any day except Sunday and any legal holiday on which Tenant shall
not conduct business.
21. GOVERNMENT REGULATIONS.
Tenant shall, at Tenant's sole cost and expense, comply with all of the
requirements of all county, municipal, state, federal and other applicable
governmental authorities, now in force, or which may hereafter be in force,
pertaining to the said premises, and Shall faithfully observe in the use of the
premises all municipal and County ordinances and state and federal statutes now
in force or which may hereafter be in force.
22. DESTRUCTION OF LEASED PREMISES.
If the leased premises or any part thereof shall be damaged by fire or
other casualty, this Lease and all of the terms, covenants and conditions hereof
shall, subject to the provisions hereinafter set forth, continue in full force
and effect. The Tenant shall give prompt notice of such damage or casualty to
landlord, and Landlord shall, subject to the provisions of this paragraph
hereafter set forth, upon receiving such notice, proceed, with reasonable
diligence and in a manner consistent with the provisions of any underlying
leases and mortgages, to repair, or cause to be repaired, such damage, and if
the leased premises shall be rendered untenantable by reason of such damage, the
minimum rent shall be abated for the period from the date of such damage to the
date when the damage shall have been repaired as aforesaid; provided, however,
that if Landlord shall be unable to collect the insurance proceeds applicable to
such damage because of some action or inaction on the part of Tenant, or the
employees, licensees, or invitees of Tenant, the cost of repairing such damage
shall be paid by Tenant and there shall be no abatement of rent. Tenant
acknowledges and agrees that landlord will not carry insurance of any kind on
Tenant's furniture or furnishings or on any trade fixtures, equipment,
improvements or appurtenances removable by Tenant under the provisions of this
Lease, and that Landlord shall not be obligated to repair any damage thereto or
replace the same landlord shall not be liable for any inconvenience or annoyance
in any way from such damage or the repair thereof.
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23. PARTIAL DESTRUCTION.
A. In the event that the leased premises or the Building shall be damaged
substantially or destroyed by such fire or other casualty during the term of
this Lease, or of any renewal term, then Landlord may, at its option, terminate
this Lease and the term and estate hereby granted by notifying Tenant, in
writing, of such termination within thirty (30) days after the date of such
damage, in which case this Lease and the term and estate hereby granted shall
expire as of the date specified in such notice (which date shall not be less
than thirty (30) days after the giving of such notice), as fully and completely
as if such date were the date hereinbefore set for the expiration of the term of
this Lease, and the rent and all other sums payable by Tenant under this Lease
shall be apportioned to the date of such termination.
B. Nothing herein contained shall relieve Tenant from any liability to
Landlord or to its insurer in connection with any damage to the leased premises
or to the Building by fire or other casualty if Tenant shall be legally liable
in such respect.
C. Anything contained herein to the contrary notwithstanding, it is
specifically understood and agreed that Landlord's obligation to repair and
rebuild pursuant to the foregoing shall be limited to a basic building and the
replacement of any interior work which may have originally been installed at
Landlord's cost. Except as herein provided, there shall be no obligation to
repair or rebuild in the case of fire or other casualty.
D. The provisions of this paragraph shall be considered as express
agreement governing any case of damage or destruction of the premises by fire or
other casualty.
24. EMINENT DOMAIN.
A. Total Condemnation. In the event that the whole of the Building shall be
lawfully condemned or taken in any manner for any public or quasi-public use,
this Lease and the term and estate hereby granted shall forthwith cease and
terminate as of the date of actual taking. In the event of a condemnation or
taking of-a substantial part of the leased premises so as to destroy the
usefulness of the leased premises for the purposes for which the premises were
leased, Tenant shall have the right, by delivery of notice in writing to
Landlord within thirty (30) days after the vesting of title, to terminate this
Lease and the term and estate hereby granted as of the date of actual taking.
B. Total Parking Area. If the whole of the common parking areas in the land
and Building shall be acquired or condemned by eminent domain for any public or
quasi-public use or purpose, then the term of this Lease shall cease and
terminate as of the date of title vesting in such proceeding unless Landlord
shall take immediate steps to provide other parking facilities substantially
equal to the previously existing ratio between the common parking areas and the
leased premises, and such substantially equal parking facilities shall be
provided by Landlord at its own expense within ninety (90) days from the date of
acquisition. In the event that Landlord shall provide such other substantially
equal parking facilities, then this Lease shall continue in full force and
effect. In any event, Tenant shall have no claim against Landlord for the value
of any unexpired term of this Lease.
C. Partial Condemnation of Leased Premises and/or Building. In the event of
a partial taking or condemnation which is not substantial enough to destroy the
usefulness of the premises for the purposes for which they were leased, or in
the event Tenant shall not terminate this Lease within the time above limited,
Landlord shall promptly, but subject to reasonable delays, restore the leased
premises to an architectural unit as nearly like its condition prior to such
taking as shall be practicable, not including Tenant's fixtures, furnishings,
floor coverings, equipment, stock or other personalty, and this Lease shall
continue in full force and effect, except that, effective as of the date of
actual taking, the fixed minimum rent applicable to that portion, if any, of the
leased premises which is so condemned or taken.
In the event of termination in any of the cases hereinabove provided, this
Lease and the term and estate hereby granted shall expire as of the date of such
taking in the same
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manner and with the same effect as if that were the date hereinbefore set for
the expiration of the term of this Lease, and the rent shall be apportioned as
of such date.
D. Condemnation Award. In the event of any condemnation or taking mentioned
in this paragraph, whether or not this Lease shall be terminated, Landlord shall
be entitled to receive the entire award in the condemnation proceeding without
deduction therefrom for any estate vested by this Lease in Tenant, and Tenant
shall receive no part of such award, title and interest of Tenant now or
hereafter arising in or to any such award or any part thereof.
Although all damages in the event of any condemnation are to belong to the
Landlord whether such damages are awarded as compensation for diminution in
value of the leasehold or to the fee of the leased premises, Tenant shall have
the right to claim and recover from the condemning authority, but not from
Landlord, such compensation as may be separately awarded or recoverable by
Tenant in Tenant's own right on account of any and all cost or loss to which
Tenant might be put in removing Tenant's merchandise, furniture, fixtures,
leasehold improvements and equipment.
25. DEFAULT OF THE TENANT.
(1) If Tenant shall default in the payment of any rent or other payments
required of Tenant, or any part thereof, and if such default shall continue for
five (5) days after the payment shall be due, or (2) if Tenant shall default in
the performance or observance of any other agreement or condition on its part to
be performed or observed, and if Tenant shall fail to cure said default within
ten (10) days after notice of said default from Landlord, or (3) if any person
shall levy upon, take, or attempt to take this leasehold interest or any part
thereof upon execution, attachment or other process of law, or (4) if Tenant
shall make default with respect to any other lease between it and Landlord, or
(5) if the premises shall be deserted, vacated, abandoned, or business
operations shall not be conducted therein for a period of three or more days, or
(6) if this Lease or any interest therein shall by operation of law devolve upon
or pass to any person or persons other than Tenant, or (7) if Tenant shall fail
to move into and take possession of the leased premises and open for business
within thirty (30) days after Landlord's giving notice to Tenant that the leased
premises are ready for occupancy by Tenant, or (8) if Tenant shall become
bankrupt or insolvent, or file any debtor proceedings, or take or have taken
against Tenant in any court, pursuant to any statute, either of the United
States or of any state, a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of all or a
portion of Tenant's property, or if Tenant makes and assignment for the benefit
of creditors, or petitions for or enters into an arrangement, or suffer this
Lease to be taken under any writ or execution or attachment, then, in any of
said cases (notwithstanding any license of any former breach of agreement or
condition or waiver of the benefit hereof or consent in a former instance)
Landlord lawfully may immediately, or at, any time thereafter, and without any
further notice or demand, terminate this Lease and Tenant will forthwith quit
and surrender the leased premises, but Tenant shall remain liable as hereinafter
provided, or (9) if Tenant does not at all times diligently pursue the approval
of its Bank Charter and does not keep Landlord informed of the status of such
Charter on a regular basis prior to commencement thereof.
If this Lease shall be terminated, as provided in this Paragraph:
A. Right to Re-Enter. The Landlord may immediately, or at any time
thereafter, re-enter and resume possession of the leased premises and remove all
persons and property therefrom either by summary dispossession proceedings or by
a suitable action or proceeding at law or in equity, or by force or otherwise,
without being liable for any damages therefor. No re-entry by the Landlord shall
be deemed an acceptance of a surrender of this Lease.
B. Right to Relet. The Landlord may relet the whole or any part of the
leased premises for a period equal to, or greater or less than the remainder of
the then term of this Lease, at such rental and upon such terms and conditions
as the Landlord shall dean
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reasonable, to any tenant or tenants which it may deem suitable and satisfactory
and for any use and purpose which it may deem appropriate. In no event shall the
Landlord be liable in any respect for failure to relet the leased premises, or
in the event of such reletting, for failure to collect the rent thereunder. Any
sums received by the Landlord on a reletting in excess of the rent reserved in
this Lease shall belong to the Landlord.
C. Additional Remedies. If this Lease shall be terminated as provided in
this paragraph, or by summary proceedings or otherwise, and whether or not the
premises shall be relet, the Landlord shall be entitled to recover from the
Tenant, and the Tenant shall pay to the Landlord, the following:
1. (a) An amount equal to all expenses, including reasonable attorneys'
fees (including appeals) incurred by the Landlord in recovering possession of
the leased premises, and
(b) All reasonable costs and charges for the care of the leased premises
while vacant, and
(c) An amount equal to all expenses incurred by the Landlord in
connection with the reletting of the leased premises or any part thereof,
including broker's commissions, advertising expenses, and the cost of repairing,
renovating or remodeling the leased premises, which amounts set forth in this
subparagraph 1 shall be due and payable by the Tenant to the Landlord at such
times as the expenses, costs and charges shall have been incurred, and
2. An amount equal to all minimum rent, additional rent and other charges
required to be paid by the Tenant under this Lease, less the net rent, if any,
collected by the Landlord on reletting the leased premises; which amount shall
be due and payable by the Tenant to the Landlord on the several days on which
such minimum rent and other charges would have become due and payable had this
Lease not been terminated, and the Tenant shall pay to the Landlord the amount
of any deficiency then existing. The net rent collected by the Landlord on
reletting shall be computed by deducting from the gross rents collected, the
expenses, costs and charges referred to in subparagraph 1 of this subparagraph
C. Without any previous notice or demand separate actions may be instituted by
the Landlord against the Tenant from time to time to recover any damages which
at the commencement of any such action shall then or theretofore have become due
and payable to the Landlord under any provisions hereof without waiting until
the end of the original term of this Lease, and neither the institution of suit
or suits, proceeding or proceedings, nor the entering of judgment therein shall
bar the landlord from bringing a subsequent suit or proceeding for damages of
any kind theretofore or thereafter suffered. It is expressly agreed that the
forbearance on the part of the Landlord in the institution of any suit or entry
of judgment for any part of the rent herein reserved to the Landlord shall in no
way serve as a defense against nor prejudice a subsequent action for such rent.
D. The landlord, at its election, which shall be exercised by the ,service
of a written notice on the Tenant, may collect from the Tenant and the Tenant
shall pay, in lieu of the sums becoming due after the service of such notice
under the provisions of subparagraph 2 of subparagraph C, an amount equal to the
difference between the minimum rent, additional rent and other charges required
to be paid by the Tenant under this Lease, (from the date of the service of such
notice to and including the date of the expiration of the term of this Lease
which has been in force immediately prior to any termination affected under this
paragraph), and the then fair and reasonable rental value of the leased premises
for the same period, discounted to the date of the service of such notice at the
rate of six percent (6%) per annum. In determining the rental value of the
leased premises, the rental realized by any reletting shall be deemed prima
facie evidence thereof.
E. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Landlord shall have the right of injunction and
the right to invoke any remedy allowed at law or in equity as if re-entry
summary proceedings and other remedies were not herein provided for. Mention in
this Lease of any particular
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remedy shall not preclude Landlord from any other remedy, in law or in equity.
Tenant hereby expressly waives any and all rights of redemption granted by or
under any present or future laws in the, event of Tenant being evicted or
dispossessed for any cause, or in the event of Landlord obtaining possession of
the leased premises, by reason of the violation by Tenant of any of the
covenants and conditions of this Lease, or otherwise.
26. ATTORNEYS' FEES.
Tenant shall be liable for and shall pay on demand all costs and expenses,
including reasonable attorneys' fees, court costs, and costs of appeals at trial
or appellate levels (whether or not litigation is filed) incurred by landlord in
enforcing the covenants, terms and conditions of this Lease.
27. LANDLORD'S LIEN.
In addition to any statutory lien for rent in Landlord's favor, Landlord
shall have and Tenant hereby grants to landlord a continuing security interest
for all rentals and other sums of money becoming due hereunder from Tenant, upon
all goods, wares, equipment, fixtures, furniture, inventory, accounts, contract
rights, chattel paper and other personal property of Tenant situated on the
premises, and such property shall not be removed therefrom without the consent
of Landlord until all arrearages in rent as well as any and all other sums of
money then due to Landlord hereunder shall first have been paid and discharged.
In the event of a default under this Lease, Landlord shall have, in addition to
any other remedies provided herein or by law, all rights and remedies under the
Uniform Commercial Code, including without limitation the right to sell the
property described in this paragraph at public or private sale upon five (5)
days notice to Tenant. Tenant hereby agrees to execute such financing statements
and other insets necessary or desirable in Landlord's discretion to perfect the
security interest hereby created. Any statutory lien for rent is not hereby
waived, the express contractual lien herein granted being in addition and
supplementary thereto.
28. ACCORD AND SATISFACTION.
No payment by Tenant or receipt by Landlord of a lesser amount than the
monthly rent herein stipulated shall be deemed to be other than on account of
the earliest stipulated rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such rent or pursue any
other remedy in this Lease provided.
29. ENTIRE AGREEMENT.
This Lease and the Exhibits (and Rider, if any), attached hereto and
forming a part hereof, set forth all the covenants, promises, agreements,
conditions and understanding between Landlord and Tenant concerning the leased
premises and there are no covenants, promises, agreements, conditions or
understandings, either oral or written, between them other than as set forth
herein. Except as herein or otherwise provided, no subsequent alteration,
amendment, change or addition to this Lease shall be binding upon Landlord or
Tenant unless reduced in writing and signed by them.
30. FORCE MAJEURE.
In the event either party hereto shall be delayed or hindered in or
prevented from the performing of any act required hereunder by reason of
strikes, lock-outs, labor troubles, inability to procure materials, failure of
power, restrictive governmental laws or regulations, riots, insurrection, war,
act of God, or other reason of a like nature not the fault of the party delayed
in performing work or doing acts required under the terms of this Lease, then
performance of such act shall be excused for the period of the delay and the
period for the performance of any such act shall be extended for a period
equivalent to the period of such delay. The provisions of this paragraph shall
not operate to excuse Tenant from the prompt
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payment of rent, percentage rent, additional rent or any other payments required
by any terms of this Lease.
31. NOTICES.
A. Any notice by Tenant to Landlord must be served by Certified or
Registered Mail, Return Receipt Requested, postage prepaid, addressed to
Landlord at the address first hereinabove given or at such other address as
Landlord may designate by written notice.
B. Any notice by Landlord to Tenant must be served by First Class Mail,
postage prepaid, addressed to Tenant at the leased premises or at such other
address as Tenant shall designate by written notice.
32. BROKER'S COMMISSION.
Each of the parties represents and warrants that there are no claims for
brokerage commissions or finder's fees in connection with the execution of this
Lease, and each of the parties agrees to indemnify the other against, and hold
it harmless from, all liabilities arising from any such claim (including,
without limitation, the cost of attorneys' fees in connection therewith).
33. INTERPRETATION.
The laws of the State of Florida shall govern the validity, performance and
enforcement of this Lease. It is agreed that if any provision of this Lease
shall be determined to be void by any court of competent jurisdiction then such
determination shall not affect any other provision of this Lease, all of which
other provisions shall remain in full force and effect, and it is the intention
of the parties hereto that if any provision of this Lease is capable of two
constructions, one of which would render the provision void and the other of
which would render the provision valid, then the provision shall have the
meaning which renders it valid.
34. NO OPTION.
The submission of this Lease for examination does not constitute an offer
to Lease, a reservation of, or option for the leased premises, and this Lease
becomes effective as a lease only upon execution and delivery thereof by
Landlord and Tenant.
35. NO REPRESENTATIONS BY LANDLORD.
It is understood and agreed by the parties hereto that this Lease contains
all of the covenants, agreements, terms, provisions and conditions relating to
the leasing of the leased premises, and that the Landlord has not made and is
not making, and the Tenant, in executing and delivering this Lease, is not
relying upon any warranties, representations, promises, or statements, except to
the extent that the same may expressly be set, forth in this Lease.
36. NO WAIVER.
The failure of the Landlord to insist in any one or more instances upon the
strict performance of any one of the covenants, agreements, terms, provisions or
conditions of this Lease or to exercise any election herein contained shall not
be construed as a waiver or relinquishment for the future of such covenant,
agreement, term, provision, condition or election, but the same shall continue
and remain in full force and effect. No waiver by the Landlord of any covenant,
agreement, term, provision or condition of this Lease shall be deemed to have
been made unless expressed in writing and signed by the Landlord. No surrender
of the leased premises or of any remainder of the term of this Lease shall be
valid unless accepted by the Landlord in writing. No employee of Landlord or of
Landlord's
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agents shall have any power to accept the keys of said premises prior to the
termination of the Lease. The delivery of the keys to any employee of Landlord
or of Landlord's agents shall not operate as a termination of the Lease or a
surrender of the premises. The receipt and retention by the Landlord of rent or
additional rent from anyone other than the Tenant shall not be deemed a waiver
of the breach by the Tenant of any covenant, agreement, term, provision or
condition herein contained, or the acceptance of such other person as a Tenant,
or a release of the Tenant from the further performance by the Tenant of the
covenants, agreements, terms, provisions and conditions herein contained. The
receipt and retention by the Landlord of rent or additional rent with knowledge
of the breach of any covenant, agreement, term, provision or condition herein
contained shall not be deemed a waiver of such breach. The taking of possession
of the leased premises by the Tenant shall be conclusive evidence as against
Tenant that Tenant accepts same "AS IS" and that said premises were in good and
satisfactory condition at the time such possession was so taken and that
Landlord has complied in all respects with any requirements set forth in this
Lease. If the term "Tenant", as used herein, refers to more than one person, the
Landlord may treat any breach of this Lease by one of such persons as a breach
by all.
37. RELATIONSHIP OF THE PARTIES.
Nothing contained herein in this Lease shall be construed by the parties
hereto or by any third party as constituting the parties as principal and agent,
partners, or joint venturers, nor shall anything herein render either party
(other than a guarantor) liable for the debts and obligations of any other
party, it being understood and agreed that the only relationship between
landlord and Tenant is that of Landlord and Tenant.
38. OPTION FOR ADDITIONAL TERMS.
Provided that Tenant has not defaulted under any of the terms, covenants or
conditions of this Lease, and further provided that Tenant shall give Landlord
written notice not less than one (1) year prior to the expiration date of the
base term of this Lease (or any additional term), Tenant shall have the option
to renew this Lease for four (4) additional terns of five (5) years each, on the
same covenants and conditions as herein provided, and on the same schedule as
shown in Section 10 above.
39. SURRENDER OF LEASED PREMISES.
Tenant covenants and agrees that it will, at the termination of this Lease,
in whatever manner such termination may be brought about, promptly surrender and
deliver such premises to Landlord in good condition ordinary wear and tear
excepted.
40. HOLDING OVER.
If the Tenant shall occupy said premises, with the consent of the Landlord,
after the expiration of this Lease, and rent is accepted from said Tenant, such
occupancy and payment shall be construed as an extension of this Lease for the
term of one (1) month only from the date of such expiration. In such event, if
either Landlord or Tenant desires to terminate said occupancy at the end of any
month, the party so desiring shall give the other party at least thirty (30)
days written notice. In the event the Tenant fails to give such notice, Tenant
shall be obligated to pay rent for an additional calender month following the
month in which Tenant has vacated the leased premises.
If such occupancy continues without the consent of the Landlord, Tenant
shall pay the landlord, as liquidated damages, double the amount of rent
specified in this Lease for the time Tenant retains possession of the premises
or any part thereof after termination of the term by lapse of time or otherwise.
41. QUIET ENJOYMENT.
Upon payment of the Tenant of the rents herein provided, and upon the
observance and performance of all the covenants, terms and conditions on
Tenant's part to be
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observed and performed, Tenant shall peaceably and quietly
hold and enjoy the leased premises for the term hereby demised without hindrance
or interruption by Landlord or any other person or persons lawfully or equitably
claiming by, through or under the Landlord, subject, nevertheless, to the terms
and conditions of this Lease.
42. MECHANIC'S LIEN.
Should any mechanic's lien or other liens be filed against any portion of
the Building by reason of Tenant's acts or omissions or because of a claim
against Tenant, Tenant shall cause the same to be cancelled and discharged of
record by bond or otherwise within ten (10) days after notice by Landlord.
43. IMPROVEMENTS TO REMAIN WITH LANDLORD.
Tenant agrees that any interior walls, carpeting or partitions installed by
the Tenant shall remain with the leased premises upon the expiration of this
Lease.
44. FINANCIAL STATEMENTS.
Upon Landlord's written request, Tenant shall promptly furnish to Landlord
or Landlord's mortgagee, from time to time, financial statements reflecting
Tenant's current financial condition.
45. EXCULPATION.
Anything to the contrary in this Lease notwithstanding, the covenants
contained in this Lease to be performed by Landlord shall not be binding
personally, but instead said covenants are made for the purpose of binding only
the Landlord's interest and the interest of Landlord's partners and Landlord's
general partners in the Building and shall be enforceable only with respect to
the right, title and interest of Landlord, Landlord's partners and Landlord's
general partners in the Building as the same may be encumbered. It is understood
that in no event shall Tenant have any right to levy execution against any
property of landlord (or its partners, general partners, agents and employees)
other than its interest in the Building.
46. RIGHT OF FIRST REFUSAL.
Landlord grants Tenant a "Right of First Refusal" for the adjoining space
to leased premises on the north, provided Tenant makes a written commitment
acceptable to Landlord for such space within fourteen (14) days of written
notice from Landlord as to the terms and conditions of such a right.
47. RESERVATION FEE.
Upon execution of this document Tenant is to pay landlord a Ten Thousand
Dollar ($10,000.00) nonrefundable reservation fee covering a period from the
date of execution of this Lease until December 31, 1986. If in the event Tenant
has not obtained necessary Bank Charter by January 1, 1987, Tenant shall have
the right to extend this reservation until May 1, 1987, for an additional
reservation fee (payable in advance) of Two Thousand Five Hundred Dollars
($2,500.00) per month.
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IN WITNESS WHEREOF, the parties have caused this instrument to be
executed as of the day and year first written above.
WITNESSES: LANDLORD: LOGGERHEAD ASSOCIATES
/s/ - By: /s/ Paul S. Ferber
- ------------------------ -----------------------------------
Paul S. Ferber, General Partner
TENANT: ADMIRALTY BANK, a Florida
corporation (in organization)
s/ - By: /s/ -
- ------------------------ ----------------------------------
Attest:
- ------------------------ ------------------------------
**See Attached Addendum, Paragraph 48 - Additional Provision
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ADDENDUM
48. ADDITIONAL PROVISION
Notwithstanding any other provisions contained in this lease, in the event
the Lessee is closed or taken over by the banking authority of the State of
Florida, or other bank supervisory authority, the Lessor may terminate the lease
only with the concurrence of such banking authority or other bank supervisory
authority, and any such authority shall in any event have the election either to
continue or to terminate the lease: Provided, that in the event this lease is
terminated, the maximum claim of Lessor for damages or indemnity for injury
resulting from the rejection or abandonment of the unexpired term of the lease
shall in no event be in an amount exceeding the rent reserved by the lease,
without acceleration, for the year next succeeding the date of the surrender of
the premises to the Lessor, or the date of re-entry of the Lessor, whichever
first occurs, whether before or after the closing of the bank, plus an amount
equal to the unpaid rent accrued, without acceleration up to such date.
Initial: _________ (As to Landlord)
Initial: _________ (As to Tenant)
20
SEAGRAPE SQUARE LEASE AGREEMENT
THIS LEASE, dated this day of , 1994 by and between Karl D. Griffin,
Trustee (the "Landlord"), by its agent William Branch, whose address is P.O. Box
263, Jupiter, FL. 33468-0263 (checks payable to Seagrape Square), and Admiralty
Bank, a state chartered banking corporation (the "Tenant").
ARTICLE I
BASIC LEASE PROVISIONS
W I T N E S S E T H:
SECTION 1.01 -- LEASED PREMISES
(A) In consideration of the rents, covenants, conditions and agreements
hereafter reserved and contained on the part of the Tenant to be observed and
performed, the Landlord demises and lets to the Tenant, and Tenant rents from
the Landlord, those certain premises now existing or hereafter to be erected in
Seagrape Square Shopping Center on that part of the South 769.80' of the SW 1/4
of the NW 1/4 of Section 6, Township 41 S., Range 43 E., lying North of
Indiantown Road (SR 706), LESS the West 812.50' thereof, and more specifically
described as unit No. 201 & 202, 185 East Indiantown Road, Jupiter, Florida,
33477.
(B) The premises extend to the exterior faces of all exterior walls and to the
center line (C/L) of walls separating the premises in the same building
(complex) not demised under this lease.
(C) Together with the appurtenances specifically granted in this lease,
including the non-exclusive use in common with others of the Common Areas as
herein more fully provided, but reserving and excepting to the Landlord (i) the
use of (a) the exterior faces of the exterior walls, (b) the roof, (c) the lower
surface of the floor slab of any higher floor, and (ii) the right to install,
maintain, use, repair and replace pipes, ducts, conduits and wires leading
through the premises in locations which will not materially interfere with
Tenant's use thereof and serving other parts of the building (complex)
containing the demised premises.
SECTION 1.02 -- LENGTH OF TERM
The term of this lease shall be for five (5) years and zero (O) months. *see
option.
SECTION 1.03 -- COMMENCEMENT OF TERM
The term of this lease shall commence on June 15, 1994 and end on June 14, 1999
unless sooner terminated. The Tenant's obligation to pay rent shall commence on
October 15, 1994 and end on June 14, 1999 unless sooner terminated.
<PAGE>
SECTION 1.04 -- COMMENCEMENT OTHER THAN THE FIRST DAY OF A MONTH
Should the term of this lease and the tenant's obligation to pay rent commence
on a day other than the first day of a month (except as provided under Section
1.03, then the term of this lease shall continue in force and effect for the
period from the Commencement Date hereof to the first day of the calendar month
next succeeding, plus the period of the term set forth in Section 1.02 hereof;
provided, however that the tenant shall pay rent for the fractional month on a
per diem basis (calculated on the basis of a 365 day year) and same shall be
paid in equal monthly installments on the first day of each and every month in
advance. All other monthly payments hereunder shall likewise be calculated and
paid on such per diem basis for any fractional month.
_____LL _____TN
ARTICLE II
RENT
SECTION 2.01 -- FIXED MINIMUM ANNUAL RENT
Tenant agrees to pay to Landlord throughout the full term of this lease, without
demand, set-off or deduction, but subject to adjustments for increases in the
cost of living, as hereinafter set forth, an annual guaranteed minimum rent of
eighteen thousand dollars ($18,000), payable in equal monthly installments (the
"Basic Monthly Rent ") of $1,500, in advance on the first (1st) day of each
calendar month of the term, to the Landlord s managing agent at P.O. BOX 263,
JUPITER, FL. 33468-0263 (PAYABLE TO SEAGRAPE SQUARE), or at such other place
Landlord may from time to time designate in writing.
SECTION 2.02 -- LEASE YEAR
The term "lease year" as used herein shall mean consecutive twelve month periods
commencing on each January 1 during the term of this lease. In the event that
the term of this lease commences on a date other than January 1 or expires on a
date other than December 31, the first and last years shall be partial lease
years, and in such case, the partial lease year shall commence on the
Commencement Date of the term of this lease and expire on December 31 next
following, and the last partial lease year shall commence on the last January
1st occurring during the term of this lease and shall expire on the expiration
date of this lease.
SECTION 2.03 -- COST OF LIVING INCREASES IN FIXED MINIMUM RENT
In view of the fluctuating purchasing power of the dollar, the parties hereto,
desiring to adjust the rent hereunder to such purchasing power, agree that for
each lease year of this lease succeeding the first lease year ("Base Year"), the
Basic Monthly Rent (hereinafter called BMR) shall be
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adjusted so as to reflect as nearly as possible such fluctuations. Such
adjustments shall be on the basis of any increase in the cost of living as
reported in the Consumers Price Index-All Items for All Urban Consumers
(1982-84= 100) for the United States (the "Index"), published by the Bureau of
Labor Statistics of the United States Department of Labor, between the level of
the index in effect for the third calendar month prior to the Commencement Date
of this lease (the "Base Level") and the index level in effect for the third
calendar month prior to January 1 of each year of and during the term of this
lease (for each such year the "Adjustment Level").
The BMR for each lease year during the term of this lease after the Base Year
shall be adjusted on the first day of January by multiplying the sum of $18,000
for each such lease year by a fraction, the numerator of which shall be the
Adjustment Level, and the denominator of which shall be the Base Level. As soon
as possible after publication of all statistics necessary for calculation of the
adjusted BMR applicable to any lease year of this lease after the Base Year,
Landlord shall compute the amount of adjusted BMR to be paid during such lease
year and shall notify Tenant thereof in writing, setting forth the manner in and
statistics upon. which adjusted BMR was computed. Said adjustments may result in
an increase over the prior lease year's BMR, but shall never decrease below the
rental originally provided for.
If the amount of the adjusted BMR payable in any lease year after the Base Year
has not or cannot be computed by the due date of the first installment thereof,
Tenant shall continue to pay monthly installments of BMR at the rate applicable
during the preceding lease year until the amount of the new installment has been
computed. If the new installment shall be greater than those during the
preceding year, Tenant shall pay the deficiency with the installment next
maturing, and if the new installment shall be less, tenant shall be allowed to
deduct such overage from the installment next maturing.
If the compilation and/or publication of the index shall be transferred to any
other department, bureau or agency of the U.S. Government, or if the Bureau
shall adopt a successor index, the index published for such successor or
transferee shall be adopted and used as a standard for computing adjustments to
the BMR, adjusted to the BMR of $1,500. This CPI adjustment will not apply
during any lease year where the annual CPI increase is less than 3%.
SECTION 2.04 -- TAXES
(A) Tenant agrees to pay to Landlord any sales or use tax or excise tax imposed
or levied against rent or any other charge or payment required hereunder to be
made by Tenant which has been imposed or may be levied by any governmental
agency having jurisdiction there over.
(B) Tenant shall pay as additional rent hereunder, during the original term
hereof and any extension thereof, a prorata share of all ad valorem and real
estate taxes levied or assessed against, and of all assessments for public
improvements benefitting the site containing the demised premises. Upon receipt
of each tax bill (disregarding any discounts or penalties) for any tax or
assessment against the property, Landlord shall advise Tenant in writing of the
amount of
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such tax or assessment, and Tenant's prorata portion thereof payable by Tenant
to Landlord, and Tenant shall pay such portion to Landlord together with and as
a part of the monthly installment of BMR next becoming due. If the term of this
lease does not commence on the first day of a calendar year and end on the last
day of a calendar year, Tenant's share of any such tax or assessment for the
year in which the lease term commences shall be prorated from the Commencement
Date, and Tenant's share of any such tax or assessment for the year in which the
lease term ends shall be prorated to the date upon which the lease term ends.
Reasonable expenses incurred by Landlord in obtaining or attempting to obtain a
reduction of any real estate taxes shall be added to and included in the amount
of any such real estate taxes. Such taxes as are being contested by Landlord
shall nevertheless be included for purposes of the computation of the liability
of the Tenant, provided, however that in the, event that Tenant shall have paid
any amount of additional rent pursuant to this section and Landlord shall
thereafter receive a refund of any portion of any real estate taxes on which
such payment shall have been based, Landlord shall pay to Tenant an appropriate
portion of such refund, Landlord shall have no obligation to contest, object or
litigate the levying or imposition of any real estate taxes and may settle,
compromise, consent to, waive or otherwise determine in its sole discretion any
real estate taxes without consent or approval of Tenant.
SECTION 2.05 -- INSURANCE PREMIUMS
During the original term and any extensions or renewals thereof, Tenant shall
pay to Landlord, as additional rent hereunder, Tenant's proportionate share of
all costs and expenses of Landlord, in maintaining insurance on the buildings
and the land (including all improvements thereto) such as, but not limited to:
fire and extended coverage and such other insurance covering all hazards and
perils included within customary "all risks" coverage, said insurance to be on a
full value repair or replacement basis, as determined by Landlord; flood
insurance, rent insurance and such other insurance as may be required by
Landlord's mortgagee; comprehensive general liability in an amount to be
determined by Landlord but not less $1,000,000.00 per occurrence. Tenant shall
also pay to Landlord, in addition to and together with Tenant's prorata share of
normal insurance costs and expenses, the entire amount of any extraordinary or
additional premium for insurance occasioned by or resulting from Tenant's use of
the premises.
SECTION 2.06 -- SHOPPING CENTER OPERATING COSTS
During the original term and any extensions or renewals thereof, Tenant shall
pay to Landlord, as additional rent, Tenant's prorata share of the costs paid or
incurred by Landlord in managing, operating, maintaining and repairing the
buildings, and any addition thereto, and in managing, operating and maintaining
the land, including without limitation, parking areas, driveways, walkways,
lighting, landscaping, irrigation, drainage, security and reserves for roof
replacement and parking lot repaving in the Seagrape Square Shopping Center
Complex.
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Such costs shall include, without limitation, all costs of: providing utilities,
drainage, sewage and utility facilities and equipment not serving exclusively
the premises nor serving exclusively any other tenant. At all times Landlord
shall allow to the Tenant the benefit of all warranties, if any, from workman
and suppliers that have performed work or services to the complex.
The Tenant's prorata share of all costs and expenses referred to in this Article
shall be as indicated in Section 2.07 below. A budget for the Base Year
itemizing estimated costs and expenses due under provisions of Sections 2.04,
2.05, 2.06 and any other applicable Sections of this lease, including a
statement of Tenant's prorata share of such costs and expenses is annexed hereto
and made a part of this lease. Tenant shall pay to Landlord with each
installment of Basic Monthly Rent, additional rent equal to 1/12th of Tenant's
annual prorata share of the estimated costs and expenses, based on the budget
therefor. Such budget may be modified by Landlord at its sole discretion
quarterly during each calendar year on January l, April l, July l, and October
l, to reflect Landlord's experience and reasonably anticipated costs and the
actual costs of such items in past quarters and, provided Landlord has given
Tenant notice of such amended budget at least five (5) days prior to the
effective date of such amendment, which shall be the first day of the quarter.
Tenant shall pay its prorata share of the amended budget monthly, beginning on
the first day of such quarter, together with Basic Monthly Rent and sales tax.
Such an amended budget shall constitute an amendment to this lease but shall not
require the consent of or execution by the Tenant.
SECTION 2.07 -- TENANT'S PRORATA OR PROPORTIONATE SHARE
Tenant and Landlord hereby agree that the gross leasable square footage of the
premises is 1,500 square feet and the gross leasable area of the buildings in
Seagrape Square at the, Commencement Date is 48,750 square feet. As used in this
lease the term "Tenant's Prorata or Proportionate Share" shall mean 3.07692% of
the respective item, so long as there are no additions to the building(s), then
such term shall mean a fraction of the respective item, the numerator of which
fraction shall be the gross leasable square footage of the premises and the
denominator of which shall be the then gross leasable square footage of floor
area of the building and/or additional buildings or additions constructed on the
land.
SECTION 2.08 -- PARKING AND COMMON AREAS
In addition to the demised premises, Tenant shall have the right to
non-exclusive use of all facilities furnished by Landlord in Seagrape Square and
designated for the general use, in common, with Landlord, other tenants, and the
guests, employees and invitees of same, subject to the terms and conditions of
this lease and to reasonable rules and regulations for the use thereof as
prescribed from time to time by Landlord. The parking area shall be provided
with adequate lighting and shall be maintained in good condition by Landlord,
and Landlord shall have the right at any time to change or modify the design and
layout of the parking area(s).
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The common areas shall be subject to the exclusive control and management of
Landlord, who shall have the right to establish, modify, change and enforce from
time to time rules and regulations with respect to the common areas so long as
such rules are not discriminatory against Tenant; and Tenant agrees to abide and
conform with such rules and regulations. Tenant further agrees that it and
officers and employees will park their vehicles only in such areas as Landlord
may from time to time designate for employee parking, which areas may be within
or without the area adjacent to the demised premises. Tenant agrees that it
will, within five (5) days after written request by Landlord, furnish to
Landlord the state automobile license numbers assigned to its vehicles and those
of its employees. Vehicles belonging to Tenant or Tenant's employees which
violate a restriction to park in designated areas may be towed away by Landlord
at the cost of Tenant or Landlord may charge Tenant a daily rate of $10.00 per
day for any such vehicle parked in the common areas other than the designated
employee parking area.
In the event that Landlord deems it necessary to prevent the acquisition of
public rights in and to the site, Landlord may from time to time temporarily
close portions of the common areas, and may erect private boundary markers or
take such steps as deemed appropriate for that purpose. Such action shall not
constitute or be considered an eviction or disturbance of Tenant's quiet
possession of the premises. Neither the parking area nor any other part of the
common areas shall be used by Tenant, or any agent or employee of Tenant, for
any advertising, political campaigning or other similar use, including, without
limitation, the dissemination of advertising or campaign leaflets or flyers.
SECTION 2.09 -- LICENSE
All common areas and facilities not within the leased premises, which Tenant may
be permitted to use and occupy, are to be used and occupied under a revocable
license, and if such license be revoked, or if the amount of such areas are
diminished, Landlord shall not be subject to any liability nor shall Tenant be
entitled to any compensation or dimunition or abatement of rent, nor shall such
revocation or dimunition of such areas be deemed constructive or actual
eviction.
SECTION 2.10 -- ADDITIONAL RENT
In order to give Landlord a lien of equal priority with Landlord's lien for
rent, and for no other purpose, any and all sums of money or charges required to
be paid by Tenant under this lease, whether or not the same be so designated,
shall be considered "Additional Rent". If such amounts or charges are not paid
at the time provided in this lease, they shall nevertheless, if not paid when
due, be collectible as additional rent will, the next installment of rent
thereafter falling due hereunder, but nothing herein contained shall be deemed
to suspend or delay the payment of any amount of money or charges as the same
become due and payable hereunder, or limit any other remedy of the Landlord.
_____LL _____TN
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ARTICLE III
CONSTRUCTION OF LEASED PREMISES
SECTION 3.01 -- LANDLORD'S WORK AND TENANT'S WORK
Landlord agrees that it will supply, tit its own expense, its standard store
(space) as more particularly set forth in Exhibit "A", annexed hereto and made a
part hereof.
Tenant agrees, at its own cost and expense, to perform all other work as more
particularly described in Exhibit "A".
SECTION 3.02 -- CHANGES AND ADDITIONS TO BUILDINGS
Landlord hereby reserves the right at any time to build additional stories onto
and/or perform alterations to the building in which the premises are contained,
and to build adjoining the same. Landlord also reserves the right to construct
other buildings or improvements, including, but not limited to, structures for
motor vehicle parking, and Tenant agrees to cooperate with Landlord in
permitting Landlord to accomplish such construction, if any.
_____LL _____TN
ARTICLE IV
CONDUCT OF BUSINESS BY TENANT
SECTION 4.01 -- USE OF PREMISES
Tenant, its successors and assigns, shall use the premises exclusively for the
purpose of operating a full service bank and for no other uses or purpose
whatsoever, and further agrees to conduct its business in the premises under the
name of or trade name of Admiralty Bank, and no other name, except as may be
first approved by Landlord in writing.
SECTION 4.02 -- TENANT SHALL/SHALL NOT
Tenant shall comply with all laws, ordinances, rules and regulations of
governmental authority respecting the use, operation and activities of the
premises (including sidewalks, street approaches, drives, entrances and other
common areas serving the premises); maintain the show windows, if any, in a neat
and clean condition and shall keep the walkways adjacent to the premises clean
and free from rubbish.
Tenant shall not permit any unlawful, improper or offensive use of the premises,
common areas, or such other areas, or any part thereof, nor permit any nuisance
thereon; make any use of the
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premises which would make void or voidable any policy of insurance covering the
premises or common areas; burn any trash of any kind in or about the premises;
permit rubbish, refuse or garbage to accumulate; permit any fire or health
hazard to exist, upon or about the premises; leave premises vacant or suffer or
permit any waste or mistreatment thereof.
_____LL _____TN
ARTICLE V
SECURITY DEPOSIT
5.01 -- AMOUNT OF DEPOSIT
Tenant, contemporaneously with the execution of this lease, has deposited with
Landlord, and Landlord hereby acknowledges receipt of a $3,975 irrevocable
standby letter of credit, which shall be held by Landlord, without accrual of
interest, as security for the faithful performance by Tenant of all the terms of
the lease by Tenant to be observed and performed. Said deposit shall not be
mortgaged, assigned, transferred or encumbered by Tenant without the express
prior written consent of Landlord, and any such act on the part of the Tenant
shall be without force and effect and shall not be binding upon the Landlord.
At the option of the Landlord, each time that the monthly installment of Basic
Monthly Rent shall increase, the Landlord may demand that the Tenant promptly
pay Landlord, as additional security deposit, twice the amount of any increase
in the said monthly installment of Basic Monthly Rent, such additional sums to
be added to the security deposit held hereunder.
SECTION 5.02 -- USE AND RETURN OF DEPOSIT
If any of the rents herein reserved or any other sum payable by Tenant to
Landlord hereunder shall be overdue or unpaid, or should Landlord make payments
on behalf of the Tenant, or if Tenant shall fail to perform any of the terms of
this lease, then Landlord, at its option and without prejudice to any other
remedy which Landlord may have on account thereof, may appropriate and supply
said entire deposit, or so much thereof as may be necessary to compensate
Landlord, toward the payment of any rent or additional sum due hereunder or to
any loss or damage sustained by Landlord due to such breach on the part of
Tenant; and Tenant shall forthwith upon demand restore said security deposit to
the origin sums deposited. Should Tenant comply with all of the terms and
promptly pay all of the rentals and all other sums payable by Tenant to Landlord
as they become due, said deposit shall be returned in full to Tenant at the end
of the term. In the event of Bankruptcy or other creditor debt proceedings
against Tenant, the security deposit shall be deemed to be first applied to the
payment of rent and other charges due Landlord for all periods prior to the
filing of such proceedings.
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SECTION 5.03 -- TRANSFER OF DEPOSIT
Landlord may deliver the security and any other deposit made hereunder by Tenant
to the purchaser of Landlord's interest in the property in the event that such
interest be sold or otherwise conveyed, and thereupon Landlord shall be
discharged from any further liability with respect to such deposit; and this
provision shall also apply to any subsequent transferee of Landlord.
_____LL _____TN
ARTICLE VI
SIGNS, MERCHANDISE DISPLAY, ALTERNATIONS AND LIENS
SECTION 6.01 -- SIGNS
Tenant shall not place or suffer to be placed or maintained upon any exterior
door, roof, wall or window of the premises any sign, awning, canopy or
advertising matter or any thing of any kind, and will not place or maintain any
freestanding standard within or upon the common area or the premises immediately
adjacent thereto, without first obtaining Landlord's express prior written
consent. Signage shall include a standard sign showing business hours. Tenant
also agrees to maintain such sign, awning, canopy, decoration, lettering,
advertising matter or other thing as may be approved by Landlord in good
condition and repair at all times and to remove the same at the end of this
lease, as and if requested by Landlord. Upon removal thereof, Tenant agrees to
repair any damage caused by such installation and/or removal. Tenant shall
provide Landlord with a copy of a bona fide contract for signage over his/her
space, complying with Landlord's sign specifications and prior approval, within
60 days after the commencement date of this lease or the effective date of any
approved assignment or sub-lease requiring a change in signage. The new proposed
signage must be in place no later than 120 days from such commencement or
transfer date, or at its option, Landlord may demand an increase in the Basic
Monthly Rent (BMR) payable under this lease, by an amount not to exceed 10% of
the BMR in effect immediately prior to such election by Landlord.
SECTION 6.02 -- MERCHANDISE DISPLAY
Tenant shall not have the right to display any merchandise in showcases or other
installations on the exterior of the premises, nor shall Tenant maintain any
loud speaker, voice-making or other sound projection device in such a manner as
to be audible to anyone outside of the premises. In addition, Landlord shall
have the right to approve or disapprove any merchandise display, whether within
or without the premises, which is visible from the exterior of the premises.
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SECTION 6.03 -- ALTERATIONS
Tenant shall not make any alterations or addition to the premises, including the
installation of air-conditioning or the installation of any floor covering other
than carpeting, without Landlord's prior written consent. Any alteration or
addition made shall remain on and be surrendered with the premises on expiration
or termination of the lease, except the Landlord can elect within thirty (30)
days before, or within ten (90) days after expiration or termination of the term
of the lease, to require Tenant to remove any alterations or addition that
Tenant or its assignor has made to the premises, including remote teller, ATM,
etc.
If Landlord so elects, Tenant at its own cost shall restore the [)remises to the
condition designated by Landlord in its election, before the last day of the
term, or within thirty (30) days after notice of election is given, whichever is
later.
SECTION 6.04 -- LIENS
Tenant agrees that it will make full and prompt payment of all sums necessary to
pay for the cost of repairs, alterations, improvements, changes or other work
done by Tenant to the premises and further agrees to indemnify and hold harmless
the Landlord from and against any and all such costs and liabilities incurred by
Tenant, and against any and all mechanic's, material man's or laborer's liens
arising out of or from such work or the cost thereof which may be asserted,
claimed or charged against the premises or the principals of Seagrape Square.
Notwithstanding anything to the contrary in the lease, the interest of Landlord
in the premises shall not be subject to liens for improvements made by or for
Tenant, whether or not the same shall be made or done in accordance with an
agreement between Landlord and Tenant, and it is specifically understood and
agreed that in no event shall Landlord or the interest of the Landlord in the
premises be liable for or subjected to any mechanic's, material man's or
laborer's liens for improvements made by Tenant or for which Tenant is
responsible for payment under terms of this agreement. All persons dealing with
Tenant are hereupon placed upon notice of this provision. In the event any
notice or claim of lien shall be asserted of record against the interest of
Landlord in the premises or Seagrape Square on account of or growing out of
improvement or work done by or for Tenant, or any person claiming by, through or
under Tenant, or for improvements or work the cost of which is the
responsibility of Tenant, Tenant agrees to have such notice or claim of lien
canceled and discharged of record as a claim against the interest of Landlord in
the premises or Seagrape Square (either by law) within ten (10) days after
notice to Tenant by Landlord, and in the event Tenant shall fail to do so,
Tenant shall be considered in default under this lease. Upon execution of this
agreement, Landlord and Tenant shall execute a Memorandum of this lease (at the
option of the Landlord), said Memorandum to be recorded in the public records of
Palm Beach County, State of Florida, setting forth the provisions of this
Section 6.04. Tenant shall notify all contractors and sub-contractors that this
notice is recorded in and for the records of Palm Beach County ORB:6556, Page:
1578.
_____LL _____TN
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ARTICLE VII
REPAIRS, MAINTENANCE AND ACCESS BY LANDLORD
SECTION 7.01 -- RESPONSIBILITY OF LANDLORD
Landlord shall not be called upon and shall have no obligation to make any
repairs, improvements or alterations whatsoever to the premises. Landlord shall
maintain the exterior walls (but not glass, plate glass, windows, doors or
painting) in good repair, and shall keep the roof of the buildings water tight;
provided, however, that Landlord shall not be required to make any repairs to
the roof or any other part of the premises until notice of the need for such
repairs is given to the Landlord by Tenant, and it is understood and agreed that
Landlord shall not be responsible to the Tenant for any damage Tenant may
sustain by a leak in the roof, windows, walls or pipes or for any damage on
account of windstorm, hurricane, fire or otherwise. Also, Landlord shall not be
liable for or required to make any repairs, or perform any maintenance to or
upon the premises, which are required by, related to, or which arise out of
negligence, fault, misfeasance or malfeasance of and by Tenant, its employees,
agents, invitees, licensees or customers, in which event Tenant shall be
responsible therefor. Tenant agrees to pay to Landlord Tenant's proportionate
share of all costs and expenses whatsoever of maintaining the roof (including
reserves for replacement thereof, in accordance with generally accepted
accounting practices) and exterior walls of the building as aforesaid.
SECTION 7.02 -- RESPONSIBILITY OF TENANT
Tenant shall service, keep and maintain the interior of the premises including
all plumbing, wiring, piping, heating and cooling equipment, and fixtures,
doors, (including closers), windows, equipment and appurtenances, and the air
conditioning fixtures and equipment on the exterior of the premises, in good and
substantial repair during the entire term of this lease and shall replace all
glass in the windows and doors broken during the lease term, but such agreement
of Tenant shall not apply to any damage caused by fire or other casualty which
is covered (except for any applicable deductible, which will be the Tenant's
responsibility to pay) standard fire, extended coverage and other perils
insurance. Tenant agrees to make repairs promptly as they may be needed at its
own expense, and at the end of the term of this lease Tenant shall deliver up
the premises in a broom-clean condition with all glass and all windows and doors
intact. Tenant shall pay during the term of this lease a prorata share of an
air-conditioning maintenance and service contract selected by Landlord to
service all units in the Seagrape Square complex. At all times, the Landlord
shall give the Tenant the benefit of any warranties from workmen and suppliers
who have performed or delivered work, services or material to the complex.
In the event Tenant does not keep and maintain the premises to Landlord's
satisfaction or make the said repairs or replacements within a ten (10) day
period after notice from Landlord, or in case of repair which, for cause beyond
Tenant's control, cannot with due diligence be cured
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within said allotted period of ten days, if Tenant shall not have promptly after
notice commenced such repairs and thereafter diligently prosecuted same to
completion, within a reasonable time, then Landlord may, in addition to any
other remedies it may have under law or this lease, enter upon the premises and
maintain the premises and/or make the said repairs or replacements itself; as
the case may be, and charge the cost thereof to Tenant plus 20% for overhead as
additional rent hereunder together with interest at the rate of 18% from the
date of expenditure by Landlord to the date of payment by Tenant.
SECTION 7.03 -- ACCESS BY LANDLORD
Landlord or its representatives shall have the right at any reasonable time to
enter upon the premises, in accordance with Federal and State banking
regulations, for the purpose of inspection and to make or cause to be made any
repairs or otherwise to protect its interest, but the right of the Landlord to
enter, repair or do anything else to protect its interest, or the exercise or
failure to exercise said right, shall in no way diminish Tenant's obligations or
enlarge Landlord's obligations under this lease, or affect any right of
Landlord, or create any duty or liability by Landlord to Tenant or any third
party. Landlord may, within ninety (90) days next preceding the expiration of
the term, enter to place and maintain notices, forletting, free from hindrance
or control of Tenant, and to show the premises to prospective tenants thereof at
times which will not unreasonably interfere with business of Tenant. If Tenant
shall vacate the premises during the last month of the term of this lease,
Landlord shall have the unrestricted right to enter same after Tenants moving to
commence preparations for the succeeding tenant or for any other purpose
whatsoever, without affecting Tenant's obligations to pay rent for the full
term.
_____LL _____TN
ARTICLE VIII
CASUALTY, INSURANCE, AND ASSUMPTION OF RISK
SECTION 8.01 -- CASUALTY
If the premises are rendered untenable by fire or other casualty, Landlord shall
have the option of terminating this lease or rebuilding the premises by first
giving written notice to Tenant within thirty (30) days after occurrence of such
casualty. If Landlord elects to rebuild, the premises will be restored to their
former condition within 120 working days from date of such election (otherwise
Tenant shall have the option to cancel this lease), during which time the
payment of rent shall abate for such untenable space. If lease is canceled by
either party, the rent shall be paid to and adjusted as of the date of such
casualty, and the term of this lease shall be of no further force or effect and
Landlord shall be entitled to sole possession of the premises.
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Whether or not Landlord is required or elects to restore the premises as
provided in this section, Landlord shall not be required to compensate Tenant or
to restore: alterations made by Tenant, Tenant's improvements, Tenant's trade
fixtures or Tenant's personal property, such excluded property being the sole
responsibility of Tenant to restore or insure for such hazards at its own cost
and expense.
SECTION 8.02 -- INSURANCE
The Landlord shall obtain the insurance for which Tenant makes required payments
to Landlord as provided in Section 2.05 herein. Landlord shall not be liable for
injury caused to any person or property by reason of the failure of Tenant to
perform any of its covenants or agreements hereunder, nor for such damages or
injury caused by reason of any defect in the premises now or in the future
existing, or for any damages or injuries caused by reason of any present or
future defect in the plumbing, wiring or piping of the premises. Tenant agrees
to indemnify and hold harmless Landlord from and against any and all loss,
damage, claim, demand, liability or expense by reason of any damage or injury to
persons (including loss of life) or property which may arise or be claimed to
have arisen as a result of or in connection with the occupancy or use of the
premises by Tenant. Tenant shall, at its expense, provide and maintain in force,
during the entire term of this lease, and any extension or renewal hereof,
comprehensive general liability insurance with limits of coverage of not less
than $500,000 for any property damage or loss from any one accident, and not
less than $1,000,000 for injury to any one person from any one accident. Each
policy of such insurance shall name as the insured thereunder, Landlord and
Tenant. During the lease term, Tenant shall provide, at its own expense, plate
glass insurance providing full coverage replacement of destroyed or damaged
glass in or upon the premises. The original of each such policy of insurance or
certified duplicates thereof issued by the insuring organization shall be
delivered by Tenant to Landlord on or before 10 days prior to occupancy of the
premises by Tenant.
SECTION 8.03 -- ASSUMPTION OF RISK
All property belonging to Tenant or any occupant of the leased premises of
Seagrape Square shall be there at the risk of Tenant or such other person only,
and Landlord shall not be liable for damage thereto or theft or misappropriation
thereof.
SECTION 8.04 -- INCREASE IN FIRE INSURANCE PREMIUM
Tenant agrees that it will not keep, use, sell or offer for sale in or upon the
leased premises any article which may be prohibited by the standard form of fire
and extended risk or liability insurance policy. Tenant agrees to promptly pay
any increase in premiums for such insurance that may be charged during the term
of this lease on the amount of insurance which may be carried by Landlord on
said premises or the building of which they are a part, resulting from the type
of merchandise sold by Tenant in the leased premises, whether or not Landlord
has consented to the same. In determining whether increased premiums are the
result of Tenant's use
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of the leased premises, a letter or schedule issued by the organization making
the insurance rate on the leased premises or a letter from an organization that
refused to insure because of the use by Tenant, shall be conclusive evidence of
same. Tenant agrees to promptly make, at Tenant's cost, any repairs,
alterations, changes and/or improvements to equipment in the leased premises
required by the company issuing Landlord's fire insurance so as to avoid the
cancellation of, or the increase in premiums for said insurance. In the event
Tenants occupancy and use of the leased premises causes any increase of premium
for the fire, boiler and/or casualty rates on the leased premises or any part
thereof above the rate for the least hazardous type of occupancy legally
permitted on the premises, the Tenant shall pay the additional premium on the
fire, boiler and/or casualty insurance policies by reason thereof. The Tenant
shall also pay in such event, any additional premium on the rent insurance
policy that may be carried by the Landlord for its protection against rent loss
through fire or other casualty. Bills for such additional premiums shall be
rendered by Landlord to Tenant at such times as Landlord may elect and shall be
due from and payable by Tenant when rendered, and the amount thereof shall be
deemed to be additional rent.
_____LL _____TN
ARTICLE IX
QUIET ENJOYMENT
SECTION 9.01 -- QUIET ENJOYMENT
Landlord covenants that so long as Tenant pays the rent reserved in this lease
and performs its agreements hereunder, Tenant shall have the right to quietly
enjoy and use the premises for the term hereof, subject only to the provisions
of this agreement.
_____LL _____TN
ARTICLE X
ASSIGNMENT AND SUBLETTING
SECTION 10.01 -- ASSIGNMENT AND SUBLETTING
Tenant shall not assign this lease nor any rights hereunder, nor let or sublet
all or any part of the premises, nor suffer or permit any person or corporation
to use any part of the premises, without first obtaining the express prior
written consent of Landlord which consent Landlord may arbitrarily withhold. A
copy of any proposed assignment or sub-lease must be submitted to Landlord.
Should Landlord consent to such assignment or to a sub-lease of all or any part
of the
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premises, Tenant does hereby guarantee payment of all rent herein reserved until
the expiration of the term hereof, and no failure of the Landlord to promptly
collect from any assignee or subtenant, or any extension of the time for the
payment of such rents, shall release or relieve Tenant from its guaranty or
obligation of payment of such rents. No acceptance by the Landlord from other
than the Tenant of any payment due hereunder shall be construed a consent by
Landlord to any assignment or subletting by the Tenant, or give the Tenant any
right to permit another to occupy any portion of the premises except as herein
expressly provided.
_____LL _____TN
ARTICLE XI
UTILITIES
SECTION 11.01 -- UTILITIES
Tenant shall pay all costs and expenses for gas, water, electricity, cooling,
sewerage and any and all other utilities furnished to or used in connection with
the premises for any purpose whatsoever during the term of this lease, promptly
as each thereof shall become due and payable.
The cost of trash and/or garbage collection shall be paid directly by Tenant to
the person or entity performing such removal service ("Removal Contractor"), or
Landlord may, at its sole option, elect to contract for trash and/or garbage
removal for any individual Tenant, several Tenants, or all Tenants (hereunder
called "Participants"). If Landlord so elects, the Participants shall pay a
"fair share" of the costs thereof, such "fair share" to be determined as
follows:
The Removal Contractor, based on its expertise, shall make a determination as to
the requirements for disposal for each individual Participant and the cost
thereof. The "fair share" shall be the percentage (%) that each Participant's
cost bears to the total cost of all Participants, multiplied times the actual
cost of the contract. Such amounts shall be payable under the terms of this
lease, and shall be in addition to common area maintenance expense.
It shall be the Tenants sole responsibility to place all garbage and trash from
their respective premises in a dumpster or trash bin, if any, provided by
Landlord or Removal Contractor which has been designated for use by Tenant.
Otherwise, it is to be placed on appropriate days for pick-up in approved
containers as required by Removal Contractor. No trash or garbage shall be
allowed to collect upon or about the premises except in a dumpster or other
approved receptacles on scheduled pick-up days. No dumpster or other receptacles
shall be placed on parking or other common areas, except at authorized
designated places on scheduled days, without prior written approval of Landlord.
in the event Tenant should place any refuse material in an unapproved area or
outside, the approved receptacle, Landlord may, two (2) days after verbally
notifying Tenant, have said refuse removed and Tenant shall make prompt payment
for all the costs of said removal.
_____LL _____TN
15
<PAGE>
ARTICLE XII
DEFAULT OF TENANT
SECTION 12.01-- DEFAULT OF TENANT
In the event Tenant shall (a) fail to make any rental or other payment due
hereunder within ten (10) days after the same shall become due, or in the event;
(b) a petition in bankruptcy (including Chapter X and Chapter XI bankruptcy
proceedings or any other reorganization proceedings under the Bankruptcy Act) be
filed by the Tenant, or be filed against the Tenant, and such petition is not
dismissed within thirty (30) days from the filing thereof, or in the event
Tenant is adjudged a bankrupt; or, (c) an assignment for the benefit of
creditors is made by Tenant; or, (d) of an appointment by any court of a
receiver or other court officer of Tenant's property and such receivership is
not dismissed within thirty (30) days from such appointment; or (e) Tenant
removes, attempts to remove, or permits to be removed from the leased premises,
except in the usual course of trade, the goods, furniture, effects or other
property of the Tenant brought thereon; or, (f) Tenant before the expiration of
the term hereof and without the written consent of the Landlord, vacates the
leased premises or abandons the possession thereof, or uses the same for
purposes other than the purpose for which the same are leased, or ceases to use
the leased premises for the purposes herein expressed; or, (g) an execution or
other legal process is levied upon the goods, furniture, effects or other
property of Tenant brought on the leased premises, or upon the interest of
Tenant in this lease, and the same is not satisfied or dismissed within ten (10)
days from such levy or process; or, the breach or fail to perform any of the
agreements herein other than the agreement to pay rent, and shall fail to cure
such breach within ten (10) days after written notice from Landlord, then
Landlord in any such event shall have the options as follows:
SECTION 12.02 -- REMEDIES OF LANDLORD
Landlord shall have the immediate right to re-enter the leased premises, either
by summary proceedings, by force or otherwise, and to dispossess Tenant and all
other occupants therefrom and remove and dispose of all property therein in the
manner provided in the third paragraph of this Section, all without service of
any notice of intention to re-enter and with or without resort to legal process
(which Tenant expressly waives), and without Landlord being deemed guilty of
trespass or becoming liable for any loss or damage which may be occasioned
thereby. Landlord shall also have the right, at its option, to terminate this
lease upon ten (10) days prior written notice to Tenant, and to thereupon
re-enter and take possession of the said premises with or without legal process.
In the event on any such default or breach, Landlord shall have the right, at
its option, from time to time, without terminating this lease, to re-enter and
relet the premises, or any part thereof, with or without legal process, as the
agent and for the account of Tenant upon such terms and conditions as Landlord
may deem advisable or satisfactory, in which event the rents received on such
re-letting shall be applied first to the expense of such re-letting and
16
<PAGE>
collection including, but not limited to, necessary renovation and alterations
of the leased premises, reasonable attorney's fees, any real estate commissions
paid, and thereafter toward payment of all sums due or to become due Landlord
hereunder, and if a sufficient sum shall not be thus realized or secured to pay
such sums and other charges, (I) at Landlord's option, Tenant shall pay Landlord
any deficiency monthly, notwithstanding Landlord may have received rental in
excess of the rental stipulated in this lease in previous or subsequent months,
and Landlord may bring an action therefor as such monthly deficiency shall
arise, or (II) at Landlord's option, the entire deficiency, which is subject to
ascertainment for the remaining term of this lease, shall be immediately due and
payable by Tenant. Nothing herein, however, shall be construed to require
Landlord to re-enter and re-let in any event. The Landlord shall not, in any
event, be required to pay Tenant any surplus of any sums received by Landlord on
a re-letting of said premises in excess of the rent provided in this lease.
In the event of any such default or breach, the Landlord shall have the right,
at its option, to declare the rents for the entire remaining term and other
indebtedness, if any, immediately due and payable without regard to whether or
not possession shall have been surrendered to or taken by Landlord, and may
commence action immediately thereupon and recover judgement therefor.
The Landlord, in addition to other rights and remedies it may have, shall have
the right to remove all or any part of the Tenant's property from said premises
and any property removed may be stored in any public warehouse or elsewhere at
the cost of, and for the account of Tenant and the Landlord shall not be
responsible for the care or safekeeping thereof, and the Tenant hereby waives
any and all loss, destruction and/or damage or injury which may be occasioned by
any of the aforesaid acts.
No such entry or taking possession of said leased premises by Landlord shall be
construed as an election on Landlord's part to terminate this lease unless a
written notice of such intention is given to Tenant. Notwithstanding any such
re-letting without termination, Landlord may at all times thereafter, elect to
terminate this lease for such previous default or breach. Any such re-entry
shall be allowed by Tenant without hindrance, and Landlord shall not be liable
in damages for any such re-entry, or guilty of trespass or forcible entry. The
delivery of keys to Landlord or any employees of Landlord or the Landlord's
agent or any employee thereof, shall not operate as a termination of this lease
or surrender of the premises. Any and all sums due under this lease from Tenant
to Landlord and not paid on the date due shall bear interest from the date due
at the rate of eighteen per-cent (18%) per annum until fully paid; and if any
payment of rent is not received within ten (10) days after the date due, Tenant
shall be charged a penalty of $25.00 per week or fraction thereof for each week
of such delinquency.
The remedies for which provision is made in this Article XII shall not be
exclusive and any and all rights, remedies and options given in this lease to
Landlord shall be cumulative and in addition to and without waiver of or in
derogation of any right or remedy given to it under any law now or hereafter in
effect. In any event, and irrespective of any option exercised by Landlord,
Tenant agrees to pay and the Landlord shall be entitled to recover all costs and
17
<PAGE>
expenses incurred by Landlord, including reasonable attorney's fees, in
connection with collection of rent or damages or enforcing other rights of
Landlord in event of a breach or abandonment by Tenant. Tenant hereby expressly
waives any and all rights of redemption, if any, granted by or under any present
or future law in the event Tenant shall be evicted or dispossessed for any
cause, or event Landlord shall obtain possession of the premises by virtue of
the provisions of this lease, or otherwise.
_____LL _____TN
ARTICLE XIII
WAIVER OR ESTOPPEL
SECTION 13.01 -- WAIVER OR ESTOPPEL
The failure of Landlord to insist, in any one or more instances, upon strict
performance of any covenants or agreements of this lease, or exercise any option
of Landlord herein contained, shall not be construed as a waiver or
relinquishment for the future of such covenant, agreement or option, but the
same shall continue and remain in full force and effect. Receipt of rent by
Landlord, with knowledge of the breach of any covenant or agreement hereof,
shall not be deemed a waiver of such breech and no waiver by Landlord of any
provision hereof shall be deemed to have been made unless expressed in writing
and signed by Landlord. Any acceptance of rent or other such payment in a lesser
amount than is herein required to be paid by the Tenant, regardless of any
endorsement of any check or any statement m any letter accompanying the payment
of the same shall not be construed as an accord and satisfaction or in any
manner other than as a payment on account by the Tenant. No waiver by the
landlord in respect to any other Tenant shall constitute a similar waiver in
favor of Tenant.
_____LL _____TN
ARTICLE XIV
ATTORNMENT AND SUBORDINATION
SECTION 14.01 -- ATTORNMENT AND SUBORDINATION
All rights and interests of Tenant hereunder are and shall be and remain
subject, subordinate and inferior to all mortgages, heretofore or hereafter
given and encumbering the premises, or any part thereof, and shall likewise be
subordinate and inferior to all renewals, modifications,
18
<PAGE>
consolidations, replacements and extensions of any such mortgage, and the right
of the holder of any such mortgage shall at all times be and remain prior and
superior to all rights and interests of Tenant. This provision shall operate as
a subordination agreement with respect to all such mortgages and all renewals,
modifications, consolidations, replacements and extensions thereof. If the
holder of any such mortgage or any person, firm or corporation agreeing to not
take a loan secured by a mortgage on the premises shall require confirmation of
any subordination for which provision is herein made or a separate subordination
agreement with respect to any mortgage transaction, Tenant shall execute such
confirmation or subordination agreement in the form required by such mortgage
holder or other person, firm or corporation agreeing to make a loan secured by a
mortgage on the premises, and the execution of the same shall not diminish or
affect the liability of Tenant hereunder or of any other party responsible for
or guaranteeing the obligations of Tenant under this lease.
_____LL _____TN
ARTICLE XV
CONDEMNATION
SECTION 15.01 -- CONDEMNATION
All compensation awarded for any such taking by, or conveyance to, any public or
quasi-public authority by reason of any act of such authority for which damages
are payable, shall be the property of the Landlord, whether such damage shall be
awarded as compensation for dimunition in the value or the leasehold or to the
fee of the demised premises, and Tenant hereby assigns to Landlord all of
Tenant's right, title and interest in and to any and all such compensation.
Tenant shall be entitled to claim, prove and receive in the condemnation
proceeding such awards as may be allowed for trade fixtures or for loss of
business "good will", depreciation or injury to and cost of removal of stock in
trade, but only if such awards shall be made by the condemnation court or by the
condemnor in addition to, and shall not result in a reduction of, the award for
the land and buildings so taken.
_____LL _____TN
ARTICLE XVI
MISCELLANEOUS
SECTION 16.01 -- NOTICES
All notices shall be in writing and any notice by Tenant to Landlord must be
served by certified or registered mail, postage prepaid, addressed to Landlord
or the agent of Landlord at the address
19
<PAGE>
first herein above given or at such other address as Landlord or its agent may
designate by written notice. After commencement of the term hereof any notice by
Landlord to Tenant shall be served by first class mail, postage prepaid,
addressed to Tenant tit the leased premises or at such other address as Tenant
shall designate by written notice or by delivery by Landlord to the leased
premises or to such other address. Prior to the commencement of the term hereof
such notice may be given by Landlord by such mail or delivery at the following
address: Admiralty Bank, 185 E. Indiantown Rd., Jupiter, FL. 33477, or
________________________________________________________________.
Notice shall be deemed to be properly given if addressed to Tenant at its last
known address, if such first class mail is refused or otherwise not delivered.
SECTION 16.02 -- DEPOSITS AND ADVANCES
Any funds paid by Tenant to Landlord as a deposit or advance pursuant to the
terms of this lease, or any exhibit, addendum or modification hereto, may be
commingled with other funds of Landlord and need not be placed in trust,
deposited in escrow or otherwise held in a segregated account. In addition if
any sums of money shall become payable by Tenant to Landlord pursuant to the
terms of agreement, or any exhibit, addendum or modification hereto, or by a
law, ordinance or regulation affecting this agreement, Landlord shall have the
right to apply any deposits or advances theretofore made by Tenant against sums
due by Tenant to Landlord.
SECTION 16.03 -- CAPTIONS AND SECTION NUMBERS
The captions, section numbers, article numbers and index appearing in this lease
are inserted only as a matter of convenience and in no way define, limit,
construe, or describe the scope or intent of such sections or articles of this
lease nor in any way affect this lease.
SECTION 16.04 -- BROKERAGE
Tenant warrants and represents that it has not dealt with any broker in
connection with this lease or the premises, and agrees to defend, indemnify and
hold the Landlord harmless from and against any and all claims for brokerage
fees and commissions by any broker claiming to have dealt with him in connection
with this lease. Landlord warrants and represents that William Branch is the
only broker it has dealt with in connection with this lease or the premises and
agrees to defend, indemnify and hold the Tenant harmless from and against any
and all claims for brokerage fees and commissions by any other broker claiming
to have dealt with it in connections with this lease.
SECTION 16.05 -- RECORDING
Tenant shall not record this lease, but upon the request by the Landlord, both
parties shall
20
<PAGE>
execute and deliver a notice of memorandum of lease, in a form satisfactory to
Landlord and appropriate for recording; the costs of such notices of memorandum
shall be borne by the Landlord.
SECTION 16.06 -- MERCHANT'S ASSOCIATION
If Landlord so requests, Tenant shall become and remain a member in good
standing of any merchant's association existing or which may be organized in
Seagrape Square and shall abide by any rules or regulations promulgated by such
association. Tenant shall contribute annually to the cost and expense of
operating said merchant's association a sum equal to 25 cents per annum for each
square foot of gross floor area in the premises, which sum will be upwardly
adjusted in each year by the percent of rise from the Basic Monthly Rent to the
adjusted Basic Monthly Rent for each year pursuant to Section 2.03 herein.
Tenants whose occupancy is limited to professional office use are not required
to be a member of the Merchant's Association, but shall contribute the sum
required as above, in this section in support thereof.
SECTION 16.07 -- INFESTATION AND FUMIGATION
If necessary to vacate the premises for fumigation or other similar treatment
for termites, insects, etc., Tenant, after a minimum of 14 days prior written
notice, shall vacate the premises for the required time for such treatment to be
performed. If such treatment does not exceed 3 days and 4 nights (excluding any
preparation time performed on the common areas, and not materially interfering
with the business operations of Tenant), it shall be without any rent abatement.
Any longer period shall abate the current rent for such additional period on a
pro-rata per diem basis. Tenant shall permit exterminator access to premises as
required by law or regulations regarding such treatment.
SECTION 16.08 -- ENTIRE AGREEMENT
Tenant agrees that Landlord has not made any statement, promise or agreement or
taken upon itself any engagement whatsoever, verbally or in writing in conflict
with the terms of this lease, or which in any way modifies, varies, alters,
enlarges or invalidates any of its provisions. This lease sets forth the entire
understanding between Landlord and Tenant, and shall not be changed, modified or
amended except by an instrument in writing signed by the party against whom the
enforcement of any such change, modification or amendment is sought. The
covenants and agreements herein contained shall bind, and the benefits and
advantages hereof shall inure to, the respective heirs, legal representatives,
successors and assigns of Landlord and Tenant.
Whenever used, the singular number Shall include the plural, the plural shall
include the singular, and the use of any gender shall include all genders. The
headings set forth in this lease are for ease of reference only, and shall not
be interpreted to modify or limit the provision hereof. This agreement shall be
construed in accordance with the laws of the state of Florida. Should any
provisions of this lease and/or its conditions be illegal or not enforceable
under the laws of said
21
<PAGE>
State, it or they shall be considered severable, and the lease and its
conditions shall remain in force and be binding upon the parties as though said
provisions had never been included.
SECTION 16.09 -- RADON AND OTHER
Florida Statutes, Section 404.056(8) requires the following disclosure:
Radon is a naturally occurring radioactive gas that, when it is accumulated
in a building in sufficient quantities, may present health risks 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 testing may be obtained from a county public
health unit.
_____LL _____TN
ARTICLE XVII
ADDENDUM
SECTION 17.01 -- ADDENDUM
The following addendum (exhibits) annexed hereto, comprise an integral part of
this lease.
Exhibit "A" consisting of 3 pages.
Exhibit "B" Sign Specs consisting of 1 page.
Exhibit "C" Budget consisting of 1 page.
Exhibit "D" Option consisting of 1 page.
Exhibit "E' Drawing of modifications consisting of 1 page.
_____LL _____TN
22
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have caused this lease to be
executed as required by law on this, the day and year first above written.
Signed, sealed and delivered
in the presence of:
LANDLORD:
/s/Carol Branch /s/ William W. Branch
- ------------------------- ---------------------------------
William W. Branch
- ------------------------ ---------------------------------
TENANT:
/s/ /s/Keith Duffy
- ------------------------ ---------------------------------
Keith Duffy
Admiralty Bank
- ------------------------ ----------------------------------
23
<PAGE>
EXHIBIT "A"
SEAGRAPE SQUARE LEASE
DESCRIPTION OF LANDLORD'S & TENANT'S WORK
LANDLORD'S WORK
A: Common Facilities
1 Sidewalks, parking lot, drives, roads, landscaping, paving,
drainage, outdoor lighting and directional and locational signs.
B: Utilities
1. Sanitary sewer lines
2. Water lines w/separate meters
3. Electric Service
a. wired conduit from meter to panel (meter installation and
hookup by tenant).
b. circuit breaker panel
c. wall receptacles; wired conduits, switches and fixtures for
bathroom, rear entrance & suspended ceiling.
d. conduit & box for time clock (wiring & clock by tenant).
4. Telephone
a. empty conduit from terminal cabinet to premises
5. Heat & A/C
a. Central system w/ducts, grills & thermostat Landlord to
warranty A/C system for 60 days.
C. Building
1. Basic bldg shell consisting of structural steel & concrete frame;
concrete slab & concrete and frame exterior walls
2. Exterior finishes of stucco, frame siding & glass fronts
3. Interior finishes of concrete floors; steel bar joists; metal studs
w/drywall, steel rear doors; bathroom fixtures:
4. Other: suspended ceiling with acoustical tile panels. Lessee
accepts in "as-is" condition
<PAGE>
TENANT'S WORK
A. All work required to complete and place the demised premises in finished
condition for opening of business or occupancy, except that work described
herein as Landlord's Work, is to be done exclusively by Tenant at Tenant's
sole expense. Included in such work, but without limitation is: All work
proposed by Tenant, as shown in Tenant's plan sketch, drawings, plans and
specifications, and which shall have and require prior written approval of
Landlord. Tenant is to provide permits, inspections and approval thereof
by all necessary governmental agencies, and furnish copies thereof to
Landlord.
B. Store interior finish work
1. Floor-finished floor covering
2. Walls-interior painting & decorating
3. Electrical-completion of all necessary requirements and equipment
not provided by Landlord. Payment of all deposits for service;
installation of meter in meter room.
4. Telephone-provide all necessary equipment for needs. All service
must be via conduit to the terminal cabinet. Conduits and wires to
be concealed in ceiling & wall space.
5. Trade fixtures & equipment as required.
6. Water and sewer -- payment of turn-on charges and other deposits
required for use thereof. Tenant shall also pay for any extra
amounts required for Landlord to pay to hook-up Tenant to said
service caused by Tenant's use of premises that is over and above
the standard amount for the typical storefront.
C. Temporary Service -- During the construction period for Tenant's work, Tenant
shall pay for all trash removal, water, electrical and other necessary
utilities.
D. Tenant's Signs and Graphics -- As required and approved by Landlord. Signs to
be installed only in area designated by Landlord.
<PAGE>
E. Insurance requirements of Tenant's contractors:
Kind Limits
---- ------
1. Workman's Compensation covering all Statutory
employees who are engaged in any work under the
contract. Statutory
2. Employer's Liability $ 100,000
3. Comprehensive General Liability
(a)Contractor's public liability
Bodily injury $1,000,000
Property damage $ 500,000
The insurance shall include contractual liability
to cover the liability assumed by the contract or
under the agreement with the Tenant.
4. Comprehensive auto liability, including owned,
non-owned and hired vehicles. Bodily injury $ 500,000 ea/person
$1,000,000 ea/acc
Property damage $1,000,000 ea/acc
Included in the agreement between the Tenant and his contractor there should be
a hold harmless clause running in favor of the Tenant and the Landlord with
wording as follows:
"The contractor shall indemnify and save harmless the Landlord and Tenant
against any and all claims and demands for damage to the property of any person,
firm or individual or for personal injuries (including death) arising out of, or
suffered while engaged in, or caused, in whole or in part, by the execution of
the work; he shall well and truly defend the Landlord and Tenant and shall pay
all monies awarded for such damages or injuries (including death) as may be
sustained, all costs including attorney's fees, and shall obtain a full
acquittance and release in favor of the Landlord & Tenant, unless such liability
results solely from a the negligence of the Landlord or Tenant or their
respective agents or employees."
The Tenant's contractor shall maintain such insurance at all times during
the course of the work which shall be evidenced by a Certificate of Insurance to
be issued to the Landlord. The contractor shall name the Landlord as an
additional insured under the liability contracts.
The hold harmless agreement should be noted on the reverse side of the
Certificate of Insurance.
Upon initial occupancy or prior thereto, other than by assignment or
sub-lease, Tenant shall cause to be prepared and delivered to Landlord, plans
and specifications for construction and improvements of and to the premises.
Such plans, etc., and the General Contract for Tenant's
<PAGE>
improvement and work shall be subject to Landlord's written approval PRIOR TO
COMMENCEMENT OF CONSTRUCTION. In the event that Landlord shall disapprove of
plans and specifications or the general contractor, either party hereto shall
have the option to terminate this lease by notice to the other party delivered
within ten (10) days of such disapproval by Landlord; and in the event of such
termination, all deposits and prepaid rents shall be refunded to Tenant.
Existing Conditions -- Both parties acknowledge improvements and conditions
of the leased premises as are described herein on page 19 under Landlord's Work,
or as otherwise described below:
Walls Fair, need paint/pch
Ceiling Fair, need sone tiles
Light fixtures Average
Bathroom Good
Glass Average-tinted
Partitions Back room & bath only
A/C & heat Average
Other Normal glass fronts
<PAGE>
EXHIBIT "B"
SEAGRAPE SQUARE
SIGN SPECIFICATIONS
A. Type of signs approved.
1. Channel Letters with Plex faces with 1" Trim Cap only.
2. Formed Plex type letters with type (D) mounting devices.
B. Style of copy for signs.
1. Any style of letters such or Block or Script.
C. Colors of all signage. (VERY IMPORTANT.) Please read.
1. All channel letter returns (Letter Cabinets) will only be approved to
be finished to match Plex color #Ivory 047-2 by Acrylite Acrylic. These letters
will only be used on the darker parts of tile building. The faces will only be
approved in the same Plex #047-2 by Acrylite. The (Trim Cap) will only be
approved in 1" and will be finished in the same color.
2. All channel letter returns (Letter Cabinets) will only be approved to
be finished to match #456 BR Duranodic Bronze by Spraylat (Lacryl) for aluminum
finishes. These letters will only be used on the lighter areas of the building.
The faces will only be approved in the Acrylite Acrylic Bronze 311-1, backed by
Plexiglass White 7328. The (Trim Cap) will only be approved in 1" and will be
finished in the same color to match the Acrylite Acrylic Bronze: 311-1.
D. Color of all Neon.
1. All Neon will only be approved in (WHITE).
2. It is not necessary to illuminate signs. This is a Tenant option.
E. Logo's
1. Logo will be approved upon submission to the Landlord for their final
approval. They may be either illuminated or non-illuminated.
F. Raceways will not be approved. (VERY IMPORTANT.) PLEASE READ.
NOTICE: THERE ARE TWO AREAS OF COLOR FACIAS OF THE CENTER. ITEM C
EXPLAINS BOTH OF THE AREAS OF COLOR TO BE USED.
<PAGE>
EXHIBIT "C"
SEAGRAPE SQUARE -- BUDGET (1994)
(AS OF 4/1/94)
ITEM ANNUAL COST
---- -----------
Insurance $ 18,233.00
Taxes (prorated) 52,000.00
Landscape & Maintenance 30,000.00
Exterminator & Lawn Spray 1,900.00
Plumbing & Sprinklers 4,000.00
Air Conditioning Maintenance 3,100.00
Parking Lot Maintenance 500.00
Electric 9,800.00
Water 7,800.00
Reserves for Roof 4,500.00
Reserves for Asphalt 7,575.00
Miscellaneous Expenses 7,000.00
===========
TOTAL $146,108.00
PRICE PER SQUARE FOOT = $3.00
Budget for 1993 was: $ 133,775.00
Actual expenses were: 134,037.03
------------
Difference $ 262.03 ($.00) per sf
Adjustment to 1994 Budget:
1994 Budget amount $ 146,108.00
plus 1993 Over
budget 262.03
------------
Adjusted 1994 Budget $ 146,370.03
1994 CAM PER SQUARE FOOT = $3.00
-----
<PAGE>
EXHIBIT "D"
SEAGRAPE SQUARE
OPTION TO RENEW LEASE
OPTION -- The Tenant shall have the option to renew this lease for an additional
term of five (5) year(s), with the Basic Monthly Rent (BMR) to be determined by
use of the Consumer's Price Index (as described in Section 2.03 of this lease).
The BMR for the initial 12 month term of such renewal shall be arrived at
by multiplication of $1,500.00 by a fraction of which the numerator shall be the
level of the index in effect for the third calendar month prior to the
commencement date of the new term (which will be the Base Level in the new
lease), and the denominator of which shall be the level of the index in effect
for the third calendar month prior to commencement date of this lease.
The BMR for each remaining year of the new term (if any) shall be computed
by multiplying the amount of the BMR far the Base Year of the new term (as
determined in the preceding paragraph) by a fraction, the numerator of which
shall be the level of the Index in effect for the third calendar month prior to
each anniversary of the commencement date of the new term, and the denominator
of which shall be the Base Level of the new lease.
Nothing in this option, shall, however, allow the BMR to be less than the
BMR in effect for the period immediately preceding the term extended by exercise
of this option.
Such option must be exercised by the Tenant not later than thirty (30) days
prior to the expiration of the original term hereof in writing to Landlord or
it's authorized agent via Certified Mail, Return Receipt Requested. Landlord may
refuse to renew if any rent or other expenses payable by the Tenant is in
arrears, or if Tenant is in violation of any covenant contained in this lease.
If this option is exercised by proper notification from Tenant, this lease
shall become the new lease with all the same terms and conditions except for the
extended lease termination date will change to June 14, 2004.
<PAGE>
EXHIBIT "E"
TENANT MODIFICATION PLAN
<PAGE>
INDEX
SEAGRAPE SQUARE LEASE
ARTICLE PAGE
------- ----
I Basic Lease Provisions 1
II Rent 2
III Construction of Leased Premises 6
IV Conduct of Business by Tenant 6
V Security Deposit 7
VI Signs, Merchandise Display,
Alterations and Liens 8
VII Repairs, Maintenance and Access
by Landlord 9
VIII Casualty, Insurance, Assumption
of Risk 11
IX Quiet Enjoyment 12
X Assignment and Subletting 12
XI Utilities 13
XII Default 13
XIII Waiver and Estoppel 15
XIV Attornment and Subrogation 15
XV Condemnation 16
XVI Miscellaneous 16
XVII Addendum 18
<PAGE>
EXHIBITS
"A" Landlord and Tenant's Work 19
"B" Sign Specifications 22
"C" Budget 23
"D" Option 24
"E" Tenant Modification Drawing 25
FIRST LEASE AMENDMENT
This First Lease Amendment (this "First Amendment") is made as of this
29th day of June, 1994 between RIMCO XII, INC., a Florida corporation, as
successor in interest to ADMIRALTY MANAGEMENT COMPANY (the "Lessor") and
ADMIRALTY BANK, a state chartered commercial bank (the "Lessee").
RECITALS:
WHEREAS, Lessor or its predecessor interest and Lessee entered into that
certain lease (the "Lease") dated October 14, 1988 for the premises (the
"Premises") described as Suites 100 and 200 in Admiralty II, Tower A, located at
4400 PGA Boulevard, Palm Beach Gardens, Florida 33410.
WHEREAS, Lessor and Lessee have agreed to reduce the Base Rent payable
under the Lease and to extend the term of the Lease as set forth in and subject
to the following:
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00), by
each party in hand paid to the other and the mutual agreements hereinafter set
forth, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree that:
1. RECITALS. The above recitals are true and incorporated herein by this
reference.
2. TERM OF LEASE. Lessor and Lessee hereby agree that the term of the
Lease for the entire Premises is hereby extended by four years and the
expiration of the term for the entire Premises is hereby changed from October
31, 1994 (the original expiration date) to October 31, 1998.
3. BASE RENT. Lessee agrees to pay Lessor as Base Rent for the Extended
Term the sum of $539,240.00 for the rental of the Premises. Such Base Rent shall
be paid on a monthly basis in the sum of $11,234.17 per month plus applicable
sales taxes thereon. The monthly payments shall be payable in advance on the
first day of each and every month during the Extended Term. If a monthly
installment is not paid on the due date, Lessee shall be deemed in breach of the
Lease and Lessor shall have the remedies described in Paragraph 15 of the Lease,
including the right to accelerate the payments due under the Lease. In addition
to the remedies in Paragraph 15 of the Lease, upon failure to make timely
payments, Lessor may collect a "late charge" not to exceed an amount equal to
10% of any monthly payment which is not paid within five (5) days of the due
date thereof, to cover the extra expense involved in handling delinquent
payments. Provided, however, in no event shall the collection of the late charge
be deemed a waiver by Lessor of any of its other rights or remedies under the
Lease as modified by this First Amendment.
<PAGE>
4. ADDITIONAL RENT AND RENT ESCALATION. In addition to Base Rent, Lessee
shall be required to pay Additional Rent (including, without limitation,
electric charges), Lessee's proportionate percentage of any increase in taxes
and insurance, increases in Base Rent pursuant to the Consumer Price Index
adjustments contained in the Lease and all other rent, taxes, impositions,
increases, rent escalations and other amounts as more particularly set forth in
the Lease, including, without limitation, all sums and other amounts payable
pursuant to Paragraph 33 of the Lease.
5. RENEWAL ADDENDUM. The Renewal Addendum attached as Exhibit A to the
Lease is hereby deleted in its entirety. Notwithstanding anything to the
contrary contained in the Lease, Lessee shall not have an option to renew or
extend the Lease at the expiration of the term as extended by this First
Amendment.
6. EFFECTIVE DATE AND MODIFICATION. This First Amendment shall be
effective as of the 29th day of June, 1994. Lessor and Lessee acknowledge that
the Lease, as amended hereby, remains in full force and effect without breach or
default by Lessor, and on the date hereof, Lessee has no offsets, defenses or
claims regarding the performance of any of its obligations under the Lease, and
the Lease, as amended hereby, is mutually ratified, confirmed and approved in
all respects.
7. ESCROWED FUNDS. Promptly after Lessor's execution of this First
Amendment, Lessor shall return to Lessee the sum of $58,971.90 which was
previously escrowed by Lessor pursuant to that certain restructuring proposal,
(the "Proposal") by Lessor' s predecessor in interest dated April 26, 1993.
8. LIENS. The right, title and interest of Lessor in all or any portion of
the Premises or the building (the "Building") in which the Premises are located
or the land (the "Land") on which the Building is located shall not be subject
to any liens arising directly or indirectly out of any improvements, alterations
or changes made to the Premises, Building or Land by or on the behalf of Lessee,
its officers, employees, servants or agents. Lessee shall promptly pay for all
materials supplied and work done with respect to the Premises, Building or Land.
Lessee covenants and agrees that it shall not incur any indebtedness giving a
right to a lien of any kind or character upon the right, title or interest of
Lessor in and to all or any portion of the Premises, Building or Land. Pursuant
to Section 713.10, Florida Statutes, as amended from time to time, the parties
will, at the option of Lessor, execute, acknowledge and deliver a Short Form of
Lease in the form required by Lessor. If any lien resulting from work contracted
for by Lessee shall be filed against all or any part of the Premises, Building
or Land, then Lessee shall cause the same to be discharged or transferred to
bond in a manner as provided by law within 10 days after the filing of the lien
by the lienor upon the public records. Failure to do so shall constitute a
default hereunder and Lessor shall have the right to remove such lien by bonding
or payment and the cost thereof shall be paid immediately from Lessee to Lessor.
Lessee has no right or authority to create any mechanics' or materialmen's lien
on the Premises, Building or Land or Lessor's right, title or interest therein
and Lessee shall so notify all suppliers of labor or
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materials, in writing, and obtain written acknowledgment thereof, prior to
ordering such labor or materials. Lessee agrees to indemnify and save harmless
Lessor from any and all liabilities, expenses, costs, expenditures or otherwise,
including attorneys' fees at all judicial levels, for breach of this provision.
9. BANK DRIVE-THRU. Lessee has requested that Lessor consent to Lessee's
construction of the bank drive-thru facility (the "Drive-Thru Improvements") as
reflected in the site plan (the "Site Plan") attached hereto and made a part
hereof as Exhibit A. Lessor hereby agrees to permit the installation by Lessee
of the Drive-Thru Improvements provided all of the following are satisfied:
A. Lessee must submit reasonably detailed final plans and
specifications and working drawings of the Drive-Thru Improvements
and the name of its contractor at least thirty (30) days before the
date it intends to commence the Drive-Thru Improvements.
B. The Drive-Thru Improvements shall be approved by all appropriate
governmental agencies, and all applicable permits and authorizations
shall be obtained by Lessee at its sole cost and expense before the
commencement of the Drive-Thru Improvements. It shall be Lessee's
sole responsibility to obtain all permits, licenses, authorizations
and other approvals for the Drive-Thru Improvements and Lessor makes
no representations or warranties regarding same.
C. The Drive-Thru Improvements shall be commenced no later than 8/1/94
and completed no later than 12/1/94 with due diligence and in
compliance with the plans and specifications and working drawings
approved by Lessor and in accordance with all applicable laws.
D. Before commencing the Drive-Thru Improvements and at all times
during construction, Lessee's contractor shall maintain insurance as
reasonably required by Lessor.
E. The Drive-Thru Improvements shall be performed in a manner which
will not interfere with the operation, access, use, and/or quiet
enjoyment of the tenants, customers, invitees, guests and/or
personnel of the Building or of the Radisson Hotel (the "Radisson
Hotel") located adjacent to the Building.
F. The Drive-Thru Improvements made shall remain on and be surrendered
with the Premises on the expiration or termination of the term of
the Lease.
G. Notwithstanding anything to the contrary contained in the Lease,
Lessee shall at: its sole cost and expense maintain in good repair
and replace ifnecessary the Drive-Thru Improvements, including,
without limitation, the fabric canopies, roof, columns, ATM
machines, traffic lights, drive-thru windows, concrete beams,
planting areas, customer units, parking areas, sidewalks and
driveways.
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H. In no event shall the Drive-Thru Improvements or the use or
operation of such bank drive-thru in any manner whatsoever and at
any time impair, impede, obstruct or delay access to the Building or
to the Radisson Hotel by tenants, customers, invitees, guests,
personnel or other persons whomsoever.
I. The Drive-Thru Improvements shall comply in all respects with all
other terms, conditions and provisions of the Lease as modified by
this First Amendment, including, without limitation, the provisions
of paragraph 8 (Liens) of this First Amendment.
J. All costs and expenses related to the Drive-Thru Improvements shall
be paid by Lessee.
10. CONFLICT. To the extent that any of the provisions of this First
Amendment conflict with any of the provisions, terms or conditions contained
within the Lease, or in correspondence between Lessor and Lessee, then and in
that event, the provisions of this First Amendment shall prevail in construing
or interpreting the Lease, of which this First Amendment is a part.
11. BROKERS. Lessor and Lessee represent to each other that no broker
brought about this First Amendment and that neither party has consulted with any
broker on its part in connection herewith, and each party does hereby indemnify
the other party against any claim for a commission.
12. AUTHORITY. Lessee is a duly authorized and existing state chartered
commercial bank qualified to do business in the state in which the Premises are
located, and Lessee has full right and authority to enter into this First
Amendment, and each of the persons signing on Lessee's behalf are authorized to
do so. In addition, Lessee warrants that it is not necessary for any other
person, firm, corporation or entity to join in the execution of this Lease to
make Lessee's execution complete, appropriate and binding.
13. ENTIRE AGREEMENT. This First Amendment and the Lease constitute the
entire Agreement between Lessor and Lessee concerning the Premises and supersede
and replace all prior agreements including, without limitation, the Proposal,
and there are no other agreements or understandings between them either oral or
written.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as of the date and year first written above.
Signed, Sealed and Delivered LESSOR:
in the Presence of:
RIMCO XII, INC.,
a Florida corporation
/s/ -
- ------------------------
/s/ Tanya McCrary By: /s/ -
- ------------------------ ------------------------
(CORPORATE SEAL)
LESSEE:
ADMIRALITY BANK,
a state chartered commercial
bank
/s/ -
- -----------------------
/s/ - By: /s/ Keith F. Duffy
- ----------------------- -------------------------
(CORPORATE SEAL)
5
<PAGE>
LEASE
THIS Lease made and dated ___________________19__, by and between ADMIRALTY
MANAGEMENT COMPANY,
4440 PGA Blvd., Suite 501, Palm Beach Gardens, FI 33410 hereinafter called
the LESSOR, and ADMIRALTY BANK
whose address is 1205 U. S. Highway #1, Juno Beach, FL 33408
hereinafter called the LESSEE,
WITNESSETH:
The parties agree as follows:
1. PREMISES. That in consideration of the sum of EIGHTEEN THOUSAND ONE
HUNDRED SEVENTY- DOLLARS paid by the Lessee, which said sum is hereby
acknowledged to have been received as part payment of rents accruing under this
Lease, and in the further consideration of the covenants, agreements and
conditions herein contained on the part of the Lessee to be kept, done and
performed, the said Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, upon all of the terms and conditions hereinafter set forth, the
following described space:
Suite #100&200 in the ADMIRALTY II TOWER A located in Palm Beach Gardens, FL
hereinafter referred to as the Premises.
2. ACCEPTANCE OF PREMISES. The Premises shall be available for occupancy
approximately on or before November 1, 1989 provided, however, that Lessor shall
not be responsible for any delays occasioned by strikes, work stoppages or other
matters beyond the control of Lessor, or acts of God. By occupying the Premises
as a tenant, Lessee accepts the Premises as constructed and acknowledges that
the Premises are in proper condition as agreed upon between the parties hereto.
This Lease shall not be rendered void or voidable by the inability of Lessor to
deliver possession to Lessee on the date set forth above, and Lessor shall not
be liable to Lessee for any loss or damage suffered by reason of such delay.
Lessee hereby accepts the Premises in the condition they are in at the beginning
of this Lease and agrees to maintain said Premises in the same condition, order
and repair as they are at the commencement of said term, excepting only
reasonable wear and tear arising from the use thereof under this Lease, and to
make good to said Lessor immediately upon demand, any damage to the Premises, or
any portion thereof, or any fixtures, appliances or appurtenances of said
Premises, or of the building of which the Premises are a part, caused by any act
or neglect of Lessee, or of any person or persons in the employ or under the
control of the Lessee. Lessee accepts the premises without warranty, either
express or implied, as to the condition or repair thereof.
3. TERM OF LEASE. The term of this Lease shall commence on the date of
occupancy of the Premises of Lessee, which date shall be not more than ten (10)
days after completion of the Premises as evidenced by a Certificate of Occupancy
obtained by Lessor from Palm Beach Gdns
The term of this Lease shall continue from said date for a period of 120 months
thereafter.
4. RENT. Lessee agrees to pay to Lessor the Base Rent and Additional Rent
as described below and any reference to rent herein shall specifically include
Base Rent and Additional Rent, as adjusted.
(a) Base Rent. Lessee agrees to pay to Lessor the sum of Two million one
hundred eighty thousand four hundred Dollars ($2,180,400) for rental of the
Premises, said sum hereinafter referred to as "Base Rent." The Base Rent shall
be paid on a monthly basis in the sum of eighteen thousand one hundred Dollars
($18,170.00) per month, which sum includes the monthly Base Rent, plus sales tax
thereon. The monthly payments shall be payable in advance on the first day of
each and every month during the term hereof, with the first and last month's
rent being payable upon execution of this Lease. Provided, however, if any
monthly installment is not paid on the due date, Lessee shall be deemed in
breach hereof and Lessor shall have the remedies described in Paragraph 15,
including the right to accelerate the payments due under the Lease.
In addition to the remedies in Paragraph 15, upon failure to make timely
payment, Lessor may collect a "late charge" not to exceed an amount equal to ten
percent (10%) of any monthly payment which is not paid within five (5) days of
the due date thereof, to cover the extra expense involved in handling delinquent
payments. Provided, however, in no event shall the collection of the late charge
be deemed a waiver by Lessor of any of its other rights or remedies under this
Lease.
(b) Additional Rent. The sums described below shall be deemed to be
Additional Rent (i) Electric Charge. The sum of One Thousand Seven hundred
eighty Dollars ($1,780.00), representing electric current to be supplied to the
Premises by Lessor, plus sales tax thereon, which shall be paid monthly, in
advance, on the first day of each and every month during the term hereof, with
the first and last month's electric charge being payable upon execution of this
Lease. This sum may be adjusted by Lessor on a monthly basis in accordance with
the actual usage and cost of electricity to Lessor, relative to the building in
which the Premises are located, the attendant parking facilities and related
grounds, as further described in Paragraph 33(d).
(ii) Any additional charges described in Paragraph 33, as applicable.
5. USE OF PREMISES. The Premises may be used only for General Offices.
Lessee will make no other use of the Premises, or any portion thereof, without
the express written consent of Lessor, which consent may be withheld in Lessor;s
sole discretion. Any such other use shall be deemed to be a breach of this
Lease. Without limitation, in no event will the Premises, or any portion
thereof, be used as medical or dental offices. Additionally, Lessee shall
neither use nor occupy the Premises, or any part thereof, for any unlawful,
disreputable or ultra-hazardous business purpose nor operate or conduct his
business in a manner constituting a nuisance of any kind. Lessee shall
immediately, on discovery of any unlawful, disreputable or ultra-hazardous use,
take appropriate action to halt such activity.
6. CARE OF PREMISES. Lessor at its expense shall maintain in good repair
the outside walls and roof of the building and the surface of all parking areas,
sidewalks and driveways, and the structural soundness of the building. Lessee at
its expense shall maintain and keep in good repair the inside of the Premises
including the plumbing, electrical wiring, interior walls, partitions and
windows, floor coverings, and Lessee shall be responsible for all damage to
glass. Lessee shall not make any alterations in the Premises without prior
written consent of the Lessor. Lessee shall not perform any acts or carry on any
practice which may injure the Premises or be a nuisance or menace to other
tenants in the building and Lessee shall keep the Premises under its control
clean and free from rubbish at all times. Any and all structural repairs and/or
improvements to the interior of the Lessee's Premises including carpeting shall
remain the property of the Lessor upon termination of the Lease, and only shall
be made in accordance with all applicable rules, regulations, ordinances and
appropriate licenses required thereof. all janitoral service on the interior of
the Premises shall be furnished by the Lessee at Lessee's cost, and the exterior
of the Premises and the parking and other common areas shall be maintained and
cared for at Lessor's cost. All trash and rubbish shall be placed in receptacles
designated by Lessor and Lessor shall cause the removal of all trash and rubbish
from the office building at Lessor's cost. All improvements made by the Lessee
to the Premises which are so attached to the Premises that they cannot be
removed without injury to the Premises as well as all carpeting, window blinds
and verticals, shall become the property of the Lessor upon installation. Not
later than the last day of the term of the Lease, Lessee, at its expense, shall
remove all of the Lessee's personal property which has not become the property
of the Lessor and surrender the Premises in as good condition as they were at
the beginning of the term of this Lease, reasonable wear and tear excepted. All
property of the Lessee remaining on the Premises after the last day of the term
of this Lease shall conclusively be deemed abandoned and may be removed by the
Lessor, and the Lessee shall reimburse the Lessor for the cost of such removal.
Lessor may have any such property stored at Lessee's risk and expense.
7. UTILITIES. Lessor shall provide water and electric service to the
Premises in accordance with the provisions of Paragraph 4(b) (i) and 8.
Additional utility services will be provided by Lessor, if requested by Lessee,
but the cost of said additional services shall be borne by Lessee.
8. SERVICES. Lessor shall furnish the following services: (a) air
conditioning and heat, whichever be required from 8:00 A.M. to 6:00 P.M., Monday
through Friday, excluding legal holidays; (b) cold water for lavatory purposes
without charge, but if a further supply of water is required by Lessee, Lessee
shall, at its expense, install (and shall thereafter maintain at Lessee's
expense) a water meter to register such consumption, and Lessee shall pay as
additional rent, when and as bills are rendered, for water consumed, at the cost
to the Lessor, and for sewer rents and all other rents and charges based upon
such consumption of water; (c) janitorial service for the hallways and common
areas of the building.
9. TAXES. Lessor shall pay all real estate taxes assessed against the
underlying real property and improvements upon which the Premises are located.
Lessee shall pay all taxes assessed upon personal property in the Premises,
including trade fixtures and inventory.
10. SIGNS. In order to maintain the general architectural theme and
aesthetic beauty of the office building, no sign, picture, or other advertising
material shall be affixed to the interior of any glass window or door of the
Premises or affixed to the office building itself, or erected or constructed on
any exterior part of the office building
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<PAGE>
property without the prior written approval of the Lessor. No temporary sign
shall be placed upon any glass window or door. In the event the Lessee violates
any of the provisions of this paragraph or fails to obtain the written consent
of the Lessor or otherwise erects or maintains any sign or advertising which is
not in the opinion of Lessor in general conformity with the architectural theme
and aesthetic beauty of the office building, Lessor may, without notice and at
Lessee's expense, remove any such sig and may, if necessary, enter upon the
Premises to remove such sign without being deemed guilty of trespass or
incurring any liability whatsoever to Lessee. Lessor shall erect and maintain a
lighted directory at the office building entrance advertising the place of
business of all floor tenants of the office building.
11. PARKING. It is hereby agreed and understood by all parties of this
Lease that Lessee and all of its employees and associates shall park on the
third floor of the parking garage located directly to the south of the Premises.
It is agreed that any vehicle of Lessee or its employees and associates that is
parked (without Lessor's express written consent) on the first or second level
of the parking garage will be towed away at the vehicle owner's expense. Lessee
agrees to notify all of its employees and its associates of this restriction on
first and second floor parking. Lessee agrees to hold Lessor harmless from any
and all claims that might arise while towing cars of Lessee's employees and its
associates, who should violate the terms of this Lease as they pertain to
parking. The Lessor retains the right and/or privilege to authorize first and
second floor parking rights on case-by-case basis, under a written agreement
with building occupants concerned.
12. LIABILITY INSURANCE. Lessee shall, at its own cost and expense,
maintain in force continuously through the term of this Lease, public liability
insurance covering the Premises with limits of $100,000.00 for death or injury
to one person, $300,000.00 for the death or injury to more than one person, and
$25,000.00 for property damage, and shall upon request of Lessor, furnish Lessor
a certificate of the insurer that such insurance is in force, as stated, and may
not be cancelled or amended with respect to Lessor without ten (10) days notice
by registered mail. In the event that Lessee's use of the Premises causes an
increase in the insurance of the building, then Lessee shall pay the
differential caused by his, the Lessee's individual use and occupancy.
13. LIGHTING. All interior light fixtures shall be at Lessor's expense and
any lighting fixtures permanently affixed to the Premises shall become a part of
the Premises and shall be left upon the Premises at the expiration of this
Lease. The Lessee, at his expense, shall replace all interior light bulbs
located within his Premises. Lessor shall maintain and operate all night
lighting as required by law and shall furnish garden lighting in the parking
areas.
14. ASSIGNMENT. Notwithstanding any other provisions of this Lease, this
Lease shall not be assigned, mortgaged, or sublet in whole or in part by Lessee
without the prior written consent of Lessor, which consent may be withheld by
Lessor at Lessor's sole discretion.
15. DEFAULT. In the event the Lessee shall default in the payment of the
rental as required by this Lease, or shall default in any of the terms and
conditions hereof, such default shall be considered a material and significant
breach of this Lease. Upon such breach, Lessor may: (a) retake possession of the
Premises for the account of Lessee, (b) accelerate the payments due under this
Lease so that all installments of rent for the entire term of the Lease,
including Base Rent and Additional Rent, shall become immediately due and
payable, (c) take any and all actions necessary to correct such default, at
Lessee's sole cost and expense, or (d) enforce the full and complete performance
of all of the terms of this Lease in any manner provided by law or equity,
including, without limitation, the right of specific performance. In the event
of any breach of any of the terms and conditions of this Lease or a default
thereunder, the party causing such breach or default shall hold the other party
harmless and shall pay all costs and expenses incurred in connection with the
enforcement of the terms of this Lease, including, without limitation, court
costs and reasonable attorneys' fees, including those arising out of any
declaratory or appellate action. Attorneys' fees incurred by any party as a
result of a breach by the remaining party shall be collectible whether or not
suit is actually brought to enforce the terms of the Lease.
16. RECORDING. This Lease shall not be filed for public record.
17. RETURN OF DEPOSIT. If, for any reason whatsoever, the Lessor shall be
unable to deliver Premises in accordance with the provisions hereof, it is
agreed that the Lessor's liability shall be limited to the return of the payment
made by the Lessee on the signing hereof, and upon the return of said sum, this
Lease shall be null and void.
18. ABATEMENT OF RENT. In the event the Premises are destroyed or damaged
by fire, rain, wind, or other cause beyond the control of Lessee, the rent due
hereunder shall abate during the period that the Premises are untenable and the
Lessor shall repair and restore the Premises within a reasonable time. If the
damage results from the fault of Lessee or Lessee's agents, servants, visitors
or licenses, Lessee shall not be entitled to any abatement or reduction or rent,
except to the extent, if any, that Lessor receives the proceeds of rent
insurance in lieu of such rent.
19. CONTINUAL USE. If in the event hereinbefore described Premises are
vacant or closed for business for a period of ten consecutive calendar days, or
not used for the purpose for which they were rented, same shall be grounds for
eviction and/or termination of this Lease at the sole discretion of the Lessor.
20. HEIRS, SUCCESSORS, ETC. This Lease shall bind and inure to the parties
hereto and to their heirs, successors, executors, administrators, and permitted
assigns. In the event Lessor and any successor owner of the Premises shall
convey or otherwise dispose of the Premises and/or the building of which the
Premises forms a part, all liabilities and obligations of Lessor under this
Lease shall terminate.
21. LESSOR'S RIGHT TO COLLECT RENT FROM ANY OCCUPANT. If (a) the Premises
are underlet or occupied by anybody other than Lessee and Lessee is in default
hereunder, or (b) this Lease is assigned by Lessee, then Lessor may collect rent
from the assignee, under-tenant or occupant, and apply the net amount collected
to the rent herein reserved; but no such collection shall be deemed a waiver of
the covenant herein against assignment and underletting, or the acceptance of
such assignee, under-tenant or occupant as Lessee, or a release of Lessee from
further performance of the covenants herein contained.
22. LESSOR'S RIGHT TO CURE LESSEE'S BREACH. If Lessee breaches any covenant
or condition of this Lease, Lessor may, on reasonable notice to Lessee (except
that no notice need be given in case of emergency) cure such breach at the
expense of Lessee and the reasonable amount of all expenses, including
attorneys' fees, incurred by Lessor in doing so) (whether paid by Lessor or
not), together with interest at the maximum rate from time to time permitted by
law, shall be deemed additional rent payable on demand.
23. NOTICES. Any notice by either party to the other shall be in writing
and shall be deemed to be duly given only if mailed by registered or certified
mail return receipt requested in a postpaid envelope addressed (a) if to Lessee,
at the building and (b) if to Lessor, at Lessor's address first above set forth,
or at such other address as Lessee or Lessor, respectively, may designate in
writing. Any notice by Lessor to Lessee shall also be deemed duly given if
personally delivered to Lessee at the building. Notice shall be deemed to have
been duly given, if delivered personally, upon delivery thereof, and if mailed,
upon the 3rd day after the mailing thereof.
24. LESSOR'S RIGHT TO INSPECT AND REPAIR. Lessor may, but shall not be
obligated to enter the Premises at any reasonable time, on reasonable notice to
Lessee (except that no notice need be given in case of emergency) for the
purpose of inspection or the making of such repairs, replacements and additions
in, to, on and about the Premises or the building, as Lessor deems necessary or
desirable. Lessee shall have no claim or cause of action against Lessor by
reason thereof.
25. RULES AND REGULATIONS. Lessee shall observe and comply with the rules
and regulations hereinafter set forth under Exhibit C, which is made part
hereof, and with such further reasonable rules and regulations as Lessor may
prescribe, on written notice to Lessee, for the safety, care and cleanliness of
the building and the comfort, quiet and convenience of other occupants of the
building. Failure by Lessee to observe and comply with said rules and
regulations, as amended from time to time, will be deemed to be a breach of the
Lease by Lessee.
26. SEPARABILITY. If any term of this Lease or the application thereof to
any person or circumstances, shall to any extent be invalid or unenforceable,
the remainder of this Lease, or the application of such term to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby, and each term of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
27. INDEMNITY. Lessee hereby agrees to indemnify Lessor against and hold
harmless from any and all damages, liability, costs and expense, including
attorneys' fees and disbursements, arising out of any injury or damage to
persons or property in or on the Premises, the building in which the Premises
are located, the attendant parking facilities and related grounds or as a
result, in whole or in part, of any action or failure to take action by Lessee,
its servants, agents, employees, guests, licenses and contractors. In case
Lessor shall be made a party to any litigation commenced by or against Lessee,
Lessee shall protect and hold Lessor harmless and pay all costs and expenses and
reasonable attorneys' fees at the trial and appellate levels.
28. RELOCATION. Lessee agrees that Lessor may relocate Lessee to other
space in the building containing at least the same amount of rentable space as
is contained in the Premises, provided that the costs of relocating Lessee and
the cost of altering the new space to make it comparable to the Premises is
borne by Lessor.
29. AUTHORITY. In the event Lessee is a corporation, Lessee represents that
the execution and delivery of this Lease has been authorized by its Board of
Directors.
30. LESSOR'S LIMITED LIABILITY. Lessee agrees that it shall not seek any
monetary or other damage against Lessor for any default in the performance of
any of the terms, conditions, covenants, agreements or obligations to be
performed by Lessor hereunder and that it shall not seek any specific
performance of any of the foregoing by injunction or other court order, but
shall look solely to the building for the satisfaction of any and all rights
which it may have by reason of any such default hereunder.
31. QUIET ENJOYMENT. Lessor covenants that if and so long as Lessee pays
the rent and additional rent and performs the covenants hereof, Lessee shall
peaceably and quietly have, hold and enjoy the Premises for the term herein
mentioned, subject to the provisions of this Lease.
32. WAIVER OF JURY TRIAL. To the extent such waiver is permitted by law,
the parties waive trial by jury in any action or proceeding brought in
connection with this Lease or the Premises.
33. RENT ESCALATION. (a) Definitions. For the purpose of this Paragraph 33,
the following terms shall have the meanings set forth:
(1) "Taxes" shall mean the aggregate amount of real estate taxes and
assessments imposed upon the real property on which the Premises are (or will
be) located, to include attendant parking facilities relative to such building,
atrium, and the grounds surrounding said building (any assessments, if payable
in installments, shall be deemed payable in the maximum number of permissible
installments), including any tax excise or fee payable with respect to any rent
and levied against Lessor in substitution, in whole or in part, for taxes
presently imposed upon the real property on which the Premises are (or will be)
located and/or the building in which the Premises are (or will be) located or
the occupancy, rents or income therefrom, in substitution for, or in addition
to, any of the foregoing taxes.
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(2) "Assessed Valuation" shall mean the amount for which the real
property on which the Premises are (or will be) located, attendant parking
facilities relative to such building, atrium, and the grounds surrounding said
building, are assessed for the purpose of imposition of Taxes.
(3) "Insurance" shall mean any and all hazard, fire, flood, casualty,
liability, umbrella, and other insurance purchased by Lessor, as determined in
its sole business judgment and discretion, to cover the building in which the
Premises are (or will be) located, the attendant parking facilities relative to
such building, atrium, and the grounds surrounding such building.
(4) "Index" shall mean the "Revised Consumers' Price Index" (1982-1984 =
100) published by the Bureau of Labor Statistics of the United States Department
of Labor for all Urban Consumers, U.S. city average, all items. If the Index
shall hereafter be converted to a different standard reference base used on the
date of commencement of this Lease, the determination of the increased rental as
described below shall be made by reference to such conversion factor, formula or
table for converting the Indes as may be published by the Bureau of Labor
Statistics, or if such Bureau shall not publish same, then by reference to such
conversion factor, formula or table as may be published by Prentice Hall, Inc.
or, failing such publication, by any other nationally recognized publisher of
similar statistical information chosen by Lessor. If the Index shall cease to be
published, there shall be substituted therefor a price index (or a combination
of indices, with such adjustments as may be required to afford compatibility)
published by the Bureau of Labor Statistics or successor governmental agency
which is intended to be representative of substantially similar changes in the
cost of living of the United States as a whole.
(5) "Comparison Index" is the Index in January of each succeeding year
under the Lease term, or any renewal thereof.
(6) "Base Year" shall mean the calendar year within which occurs the
commencement date of this Lease.
(7) "Base Month" shall mean the calendar month within which occurs the
commencement date of this Lease.
(8) "Comparison Year" is each calendar year occurring during the term of
this Lease or any renewal thereof, after the Base Year.
(9) "Base Taxes" shall mean the Taxes payable for the Base Year.
(10) "Base Insurance Cost" shall mean the cost to Lessor of providing
the Insurance during the Base Year of the Lease.
(11) "Base Electric Cost" shall mean the cost to Lessor of supplying
electric service to the building on which the Premises are located, attendant
parking facilities relative to such building, atrium, and the grounds
surrounding said building during the Base Month.
(12) "Lessee's Proportionate Percentage is 13.0%". (b) Taxes. (1) If the
Taxes payable for any calendar year (any part or all of which falls within the
Lease term or any extension thereof) shall represent an increase above the
amount payable in the Base Year, then the Base Rent payable under this Lease for
such calendar year (Comparison Year), and thereafter until Lessee is notified of
any additional increase, shall be increased by the Lessee's Proportionate
Percentage of the increase. The taxes shall be computed on the basis of the
Assessed Valuation in effect at the time Lessee is notified of such increase (as
the same may have been settled or finally adjudicated prior to such time),
regardless of any then pending application, proceeding or appeal respecting the
reduction of any such Assessed Valuation, but shall be subject to subsequent
adjustment as provided in subparagraph (3).
(2) At any time during or after any Comparison Year, Lessor shall send
to Lessee a comparative statement showing: (x) a comparison of the Taxes for the
Comparison Year with the Base Taxes and the resulting increase in Taxes, and (y)
the amount of the increase in Lessee's Annual Base Rent attributable to such
increase (which shall be determined by multiplying Lessee's Proportionate
Percentage by the amount of such increase.) On the first day for the payment of
a monthly rent installment following the furnishing to Lessee of the said
comparative statement, (i) Lessee shall pay to Lessor as additional rent, a sum
equal to 1/12th of Lessee's Proportionate Percentage of such increase,
multiplied by the number of months (and any fraction thereof) of the Lease term
then elapsed since January 1st of the Comparison Year for which the increase is
applicable, and (ii) thereafter, commencing with the then current monthly rent
installment, and continuing monthly thereafter, until a new comparative
statement is sent to Lessee, Lessee shall pay as additional rent, together with
the monthly installments of rent, an amount equal to 1/12th of Lessee's
Proportionate Percentage of said increase.
(3) If after a comparative statement has been sent to Lessee, the
Assessed Valuation which had been utilized in computing the Taxes for a
Comparison Year is reduced (as a result of settlement, final determination of
Legal proceedings or otherwise), and as a result thereof a net refund of Taxes
(i.e., the amount of refund, exclusive of any interest included therein, less
all expenses and costs, including counsel and experts' fees incurred in
connection with obtaining such reduction and refund), is actually received by or
on behalf of Lessor, then promptly after receipt of such net refund, Lessor
shall send to Lessee a statement adjusting the Taxes for such Comparison Year
and setting forth such net refund and Lessee's Proportionate Percentage thereof
and Lessee shall be entitled to receive such Percentage by way of a credit
against the rent next becoming due after the sending of such statement,
provided, however, that Lessee's share of such net refund shall be limited to
the amount, if any, which Lessee has theretofore paid to Lessor as increased
rent for such Comparison Year on the basis of the Assessed Valuation before it
had been reduced.
(c) Insurance. (1) If the cost of Insurance for any calendar year ((any
part or all of which falls within the Lease term or any extension thereof) shall
represent an increase above the Base Insurance Cost, then the Base Rent payable
under this Lease for such calendar year ("Comparison Year") and thereafter until
Lessee is notified of any additional increase, shall be increased by Lessee's
Proportionate Percentage of the increase.
(2) At any time during or after any Comparison Year, Lessor shall send
to Lessee a comparative statement showing: (x) a comparison of insurance cost
for the Comparison Year with the Base Insurance Cost and the resulting increase
in cost to Lessor, and (y) the amount of increase in Lessee's Annual Base Rent
attributable to such increase (which shall be determined by Multiplying Lessee's
Proportionate Percentage by the amount of such increase). On the first day for
the payment of a monthly rent installment following the furnishing to Lessee of
said comparative statement, (i) Lessee shall pay to Lessor as additional rent a
sum equal to one-twelfth (1/12th) of Lessee's Proportionate Percentage of the
increase, multiplied by the number of months (and any fraction thereof) of the
Lease term then elapsed since the increase in the Base Insurance Cost, and (ii)
thereafter, commencing with then current monthly rent installment and continuing
monthly thereafter, until a new comparative statement is sent to Lessee, Lessee
shall pay as additional rent, together with the monthly installments of rent, an
amount equal to one-twelfth (1/12th) of Lessee's Proportional Percentage of said
increase.
(3) If the cost of insurance decreases in any Comparison Year, the Base
Rent will be reduced in the same manner as increases are determined (i.e.,
Lessee's monthly Base Rent will be decreased by Lessee's Proportionate
Percentage of said decrease, divided by one-twelfth (1/12th) provided, however,
that Lessee's share of said decrease shall be limited to the amount, if any,
which Lessee has theretofore paid to Lessor as increased rent for such
Comparison Year on the basis of the insurance costs before reduction).
(d) Electric. (1) The additional rent described in Paragraph 4(b)
represents Lessor's estimate of Lessee's Proportionate Percentage of the Base
Electric Cost. In the event that the actual electric cost incurred by Lessor for
supplying electric service to the building in which the Premises are located,
attendant parking facilities, atrium, and grounds, should exceed the Base
Electric Cost, at any time during the term of this Lease or any extension
thereof, the additional rent payable under paragraph 4(b) shall be increased as
described below.
(2) At any time during the term of the Lease or any extension thereof,
Lessor shall send to Lessee a comparative statement showing: (x) a comparison of
the Base Electric Cost with the actual cost of supplying electric to the
building, parking facilities, atrium, and grounds as described above and the
resulting increase in cost to Lessor, and (y) the amount of Lessee's
Proportionate Percentage of the increase (which shall be determined by
multiplying the increase by Lessee's Proportionate Percentage).
(3) On the first day for the payment of a monthly rent installment
following the furnishing to Lessee of said comparative statement, (i) Lessee
shall pay to Lessor as additional rent, a lump sum, equal to Lessee's
Proportionate Percentage of the increase multiplied by the number of months said
increase has been in effect, and (ii) thereafter, commencing with the then
current monthly rent installment, and continuing monthly thereafter, until a new
comparative statement is sent to Lessee, Lessee shall pay an additional rent,
together with the monthly installments of rent, an amount equal to Lessee's
Proportionate Percentage of the increase.
(4) If the cost of supplying electric service as described above
decreases during any month of this Lease or any extension hereof, the rental
described herein and Paragraph 4(b) will be reduced in the same manner as
increases are determined (i.e., Lessee's monthly electric charge will be
decreased by Lessee's Proportionate Percentage of said decrease).
(e) Consumer Price Index. (1) In view of the fluctuating purchasing power
of the dollar, the Parties, desiring to adjust the Base Rent to such purchasing
power, agree that adjustments shall be made in the Annual Base Rent commencing
in the thirteenth month of the term of the Lease, and every twelve (12) months
thereafter as hereinafter provided so as to reflect as nearly as possible such
fluctuation. Each such yearly adjustment shall be determined by adding to the
Annual Base Rent payable in the immediately preceding year, the product
(expressed in dollars) derived by multiplying the Annual Base Rent for the
preceding year by the percentage by which the Comparison Index for that calendar
year has increased over the Index in the preceding calendar year. (The Index
shall always be based on the Index in January of each calendar year), provided,
however, that in no event will the Annual Base Rent payable in any year of the
Lease (or any renewal thereof) increase by less than five percent (5%) of the
Annual Base Rent payable in the immediately preceding year. Further provided
that in the event the increase in the Annual Base Rent for any Comparison Year
would reflect an increase in the Annual Base Rent of more than fifteen percent
(15%) of the immediately previous year's Annual Base Rent, the Annual Base Rent
shall be increased by fifteen percent (15%) plus one-half (1/2) of the increase
above fifteen percent. In no event will Annual Base Rent payable in any year
decrease from the amount paid in the previous year as a result of a change in
the Index or otherwise. No adjustments or recoupments, retroactive or otherwise,
shall be made due to any revision of the Index which may later be made in the
published figures for January, as to that year.
(2) At any time prior to the anniversary date of the Lease, Lessor shall
send to Lessee a comparative statement setting forth: (i) the Index for the
preceding year (which shall be the Index in effect for January of that year);
(ii) the Comparison Index for that calendar year; (iii) the percentage increase
in the Index as to that Comparison Year; and (iv) the increase in Annual Base
Rent attributable thereto. On the first day of the calendar month following the
month in which the comparative statement is sent, commencing with the current
month and continuing monthly thereafter until a different comparative statement
is sent to Lessee, the monthly installments of rent shall be increased by an
amount equal to one-twelfth (1/12th) of said increase. In the event that the
Index is not available for any month of January, monthly installments of Annual
Base Rent shall be made on the basis of the preceding December's installment
until the cost of living adjustment is available. At such time, Lessee shall pay
Lessor with its next following monthly
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payment, in addition to the adjusted monthly Base Rent installment, an
adjustment payment equal to the difference between the monthly Base Rent paid
and the monthly Base Rent which would have been paid if the Index were
available.
(3) For the purposes of determining increases in Annual Base Rent for
any Comparison Year due to fluctuations in the Index. the Annual Base Rent for
the preceding year shall specifically include the sum of the monthly Base Rents
payable for the immediately preceding twelve (12) months, with such figure
specifically including any increases in said monthly Base Rent resulting from
increases in Taxes, Insurance, and the Consumer Price Index as described in
Paragraph 33(b), (c) and (e), during the preceding year. The Annual Base Rent of
the preceding year, however, does not include increases due to electrical charge
increases as described in Paragraph 33(d).
(f) Controversies. If in the event of any controversy arising as to the
proper adjustment for rental payments under this Paragraph 33, Lessee shall pay
the increased rental contained in any comparative statement sent by Lessor until
such time as said controversy has been settled, at which time an adjustment will
be made, retroactive to the beginning of the adjustment period in which the
controversy arose.
(g) Applicability. The provisions of this Paragraph 33 shall be applicable
during the term of this Lease and any renewal or extension thereof.
(h) Expiration of Lease. The expiration or termination of this Lease during
any calendar year for any part or all of which there is an increase in the rent
under this Paragraph 33 shall not affect the rights or obligations of the
Parties hereto respecting such increase and any
comparative statement relating to such increase may, on a pro rata basis, be
sent to Lessee subsequent to, and all such rights and obligations shall survive
any such expiration or termination.
(i) Not Mutually Exclusive. The provisions relative to rent escalation
contained in this Paragraph 33 are not mutually exclusive and increases under
one subparagraph will not affect the right of Lessor to make increases under any
other provision.
(j) NOTWITHSTANDING ANY OTHER PROVISION OF THIS LEASE, THE TOTAL RENT
PAYABLE BY LESSEE HEREUNDER SHALL NOT INCREASE FOR ONE (1) YEAR FROM THE DATE OF
THIS LEASE BEYOND THE RENT DESCRIBED IN PARAGRAPH 4 WITH THE SOLE EXCEPTION OF
ADJUSTMENTS FOR REAL ESTATE TAXES, INSURANCE, AND ELECTRIC AS DESCRIBED I N
PARAGRAPHS 33(b), (c) AND (d).
34. MASTER LEASE. The Parties expressly acknowledge that the Premises are
located on real property which is the subject of a long-term Ground Lease
("Master Lease") by and between JOHN D. and CATHERINE T. MacARTHUR FOUNDATION,
an Illinois not-for-profit corporation as Landlord ("MacARTHUR") and Lessee as
tenant. The terms and provisions of this Lease and the rights of the Parties
hereunder are expressly subject to and subordinate to the terms and provisions
of the Master Lease, and in the event of any conflict between the terms of this
Lease and the Master Lease, the Master Lease shall control. In the event of a
cancellation or termination of the Master Lease in accordance with its terms or
by surrender thereof, whether voluntary, involuntary or by operation of law,
this Lease shall continue in full force and effect and will not be cancelled or
terminated as a result of such cancellation, termination, or surrender of the
Master Lease. Upon such cancellation, termination or surrender, Lessee shall
make full and complete attornment to MacARTHUR for the balance of the term of
this Lease with the same force and effect as though this Lease were originally
made directly by Lessee with MacARTHUR. Nothing contained herein shall be
construed as granting Lessee third-party beneficiary status as a result of the
Master Lease.
Notwithstanding the foregoing, MacARTHUR shall not be liable in any way or
manner to Lessee for any act or omission, neglect or default on the part of
Lessor, or be responsible for any monies owing by or on deposit with Lessor to
the credit of Lessee and Lessee shall not have the right to set off or assert
against MacARTHUR any such claim or any damages arising therefrom.
At any time and from time to time, within fifteen (15) days after a request
by Lessor or MacARTHUR, Lessee shall deliver to Lessor and MacARTHUR an Estoppel
Certificate certifying to MacARTHUR and Lessor that this Lease is in full force
and effect and unmodified, that Lessor is not in default thereunder, describing
the space occupied by Lessee, the term of this Lease, the amount of rent to be
paid thereunder and the date to which such rent has been paid.
In the event Lessee fails to deliver such Estoppel Certificate after
request by Lessor or MacARTHUR as provided above, Lessor and MacARTHUR shall
both have all rights and remedies available to Lessor under this Lease for
breach, including the right to collect legal fees and expenses from Lessee,
including those arising out of any appellate action, as well as any and all
other legal or equitable remedies.
The interests of MacARTHUR and Lessor under the Master Ground Lease shall
not be subject to liens for improvements contracted for or made by or on behalf
of Lessee, or parties claiming by, through or under Lessee. The interests of
MacARTHUR and Lessor under the Master Lease in the real property and building on
which the Premises are located shall not be subject to a lien for any
improvements made by Lessee, or for any work done or materials furnished to the
Premises (or underlying property), at Lessee's request, and Lessee shall notify
any contractor employed by Lessee to do work on or furnish materials to the
Premises (or underlying property), prior to Lessee's entering into a contract
with any such contractors, that the interests of MacARTHUR and Lessor under the
Master Lease are not subject to such a lien, and the failure of Lessee to so
notify any contractor, at the option of Lessor, shall be deemed as a default
hereunder.
In the event that any claim of lien is filed for any improvements by
Lessee, or for any work done or materials furnished to the Premises (or
underlying property) at Lessee's request, Lessee shall, within thirty (30) days
of receipt of notice of any such claim of lien, transfer said lien to security
in accordance with the provisions of Section 713.24, Florida Statutes (or any
successor statute) or cause a release or satisfaction of lien to be recorded in
the Public Records of Palm Beach County, Florida, totally releasing the Premises
(or underlying property) therefrom. Failure to so transfer or discharge any such
lien within the time provided shall be deemed as a default hereunder.
35. COMPLIANCE WITH LAW. Lessee shall comply with all laws, ordinances,
rules or regulations of the constituted public authorities applicable to the use
and occupancy of the Premises and the business there conducted.
36. ADDITIONAL RENT. All taxes, charges, and costs and expenses that Lessee
assumes or agrees to pay hereunder, together with all interest and penalties
that may accrue thereon in the event of the failure of Lessee to pay those
items, and all other damages, costs, expenses, and sums that Lessor may suffer
or incur, or that may become due, by reason of any default of Lessee or failure
by Lessee to comply with the terms and conditions of this Lease shall be deemed
to be additional rent, and, in the event of nonpayment, Lessor shall have all
the rights and remedies as herein provided for failure to pay rent.
37. CONDEMNATION. (1) In the event of a total condemnation of the Premises
or of the building in which the Premises are located, this Lease shall terminate
as of the date the condemning authority takes possession. In the event that less
than the whole of said building is condemned or taken, then this Lease shall
remain in force and effect; provided, however, that if the taking shall so
interfere with the use of said building as to render the continued operation
thereof economically infeasible to Lessor, then Lessor (whether or not the
Premises be directly affected) may, at its option, terminate this Lease by
notifying Lessee in writing of such termination.
(2) In the event that less than the whole of the Premises shall be
condemned if the space so taken renders continued operation of the Premises
unusable for its intended purposes, then Lessee may at its option terminate this
Lease as of the day the condemning authority takes possession by notifying
Lessor in writing of such termination.
(3) Upon any taking or condemnation and the continuation in force of
this Lease as to any part of the Premises, the Base Rent shall be diminished by
an amount representing the part of the said Rents properly allocated to the
portion of the Premises which may be so condemned or taken and Lessor shall
repair, alter and restore the remaining part of said building and the Premises
to substantially their former condition, due allowance being made for the impact
of such taking or condemnation.
(4) Lessor shall be entitled to receive the entire award in any
condemnation proceeding, including any award for the value of any unexpired term
of this Lease, and Lessee shall have no claim against Lessor or against the
proceeds of the condemnation. The foregoing shall not prohibit Lessee from
making a claim against the condemning authority for relocation costs and for the
value of any of Lessee's personal property, and for business damages and/or
consequential damages, provided the same does not have the effect of decreasing
Lessor's award.
38. SUBORDINATION. This Lease and all rights of Lessee hereunder shall be
subject and subordinate to the lien of any and all mortgages that may now or
hereafter affect the Premises, or any part thereof, and to any and all renewals,
modifications, or extensions of any such mortgages. Lessee shall on demand
execute, acknowledge, and deliver to Lessor, without expense to Lessor, any and
all instruments that may be necessary or proper to subordinate this Lease and
all rights therein to the lien of any such mortgage or mortgages and each
renewal, modification, or extension, and if Lessee shall fail at any time to
execute, acknowledge, and deliver any such subordination instrument, Lessor, in
addition to any other remedies available in consequence thereof, may execute,
acknowledge, and deliver the same as Lessee's attorney in fact and in Lessee's
name. Lessee hereby irrevocably makes, constitutes and appoints Lessor, its
successors and assigns, his attorney in fact for that purpose.
39. TIME OF ESSENCE. Time is of the essence in al provisions of this Lease.
40. WAIVERS. The failure of Lessor to insist on a strict performance of any
of the terms and conditions shall be deemed a waiver of the rights or remedies
that Lessor may have regarding that specific instance only, and shall not be
deemed a waiver of any subsequent breach or default in any terms and conditions.
41. BANKRUPTCY; REMEDIES. If at any time after the date hereof, Lessee
files in any court of the United States or of any state, a Petition in
Bankruptcy (for dissolution or reorganization) or for the appointment of a
receiver or trustee of all or a portion of Lessee's property, or if Lessee makes
an assignment for the benefit of creditors, or Lessee petitions for or enters
into an arrangement or composition with creditors, this Lease shall be
automatically terminated without further action and neither Lessee nor any
persons claiming through or under Lessee by virtue of any statute or any order
of any court shall be entitled to possession of the Premises and Lessor, in
addition to any other rights and remedies given by virtue of any other provision
in this Lease or by virtue of any statute or rule of law, may retain as
liquidated damages any deposits, rents, or monies received by Lessor from Lessee
or others on behalf of Lessee prior to Lessee's action described above.
42. COMPLETE AGREEMENT. This Lease contains the complete expression of all
agreements between the parties hereto and there are no promises, representations
or inducements except as herein set forth, and no change shall be made in any of
the terms and conditions hereof unless made in writing by both parties hereto.
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43. The hereinbefore acknowledged deposit as well as additional deposits
received from the Lessee prior to occupancy mentioned herein shall bear interest
on said deposits at the rate of 5% per annum from the date funds are received to
the actual date of Certificate of Occupancy issued on said Leased Suite. This
interest is to be paid by the Lessor to Lessee at the time of final payment
required under this lease prior to occupancy. If in the event Lessee defaults in
any of the terms and conditions of said Lease at any time prior to Lessee's
occupancy, Lessee shall forfeit all claim to accrued interest on the deposits
and said interest as well as principal shall revert to the Lessor.
44. Addendum #1 further describing terms and conditions of this lease is hereby
attached and made a part of this Lease.
IN WITNESS WHEREOF, the parties have hereunto signed and sealed this Lease
the day and year first above written.
ADMIRALTY MANAGEMENT COMPANY
________________________________,(SEAL)
LESSOR Vincent J. Pappalardo,
President
Signed, sealed and delivered
in the presence of:
____________________________ ADMIRALTY BANK
________________________________,(SEAL)
____________________________ LESSEE
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ADDENDUM #1
This Addendum is made a part of that certain Lease between ADMIRALTY II, as
Lessor, and ADMIRALTY BANK , as Lessee, dated ____________________.
45. Lessor hereby agrees to complete interior improvements to Suites 100
and 200 in accordance with plans of Architect Schwab & Twitty, dated May 2,
1988, consisting of Sheets ID2.1, ID2.2, MID1 and E2.8 within an allowance of
$160,140.00 in accordance with Exhibit "B" attached hereto and Cost Analysis
proposal dated 7/21/88, per attached Exhibit "D".
46. It is hereby understood by both parties to this Lease that this Lease
is contingent upon Lessee receiving regulatory approval for location of a
banking facility in tile Tower A of ADMIRALTY II, and Lessee hereby agrees to
make application to the proper Regulatory agency by November 1, 1988.
47. Lessor shall provide for Lessee, at no additional cost to Lessee, two
covered parking spaces on the second deck of the appurtenant parking garage, for
the duration of this lease.
48. Notwithstanding the above, it is hereby understood by Lessor and Lessee
that all pass-through expenses are included in the Base Rental, except
electrical service, and except for increases in real estate taxes and insurance
above the Base Year estimate of Lessor, which are as follows:
A. Real Estate Taxes............... $ 155,000.00
B. Insurance ...................... $ 18,000.00
Lessee agrees to pay his pro-rata share of any increases in taxes or insurance
above the amounts shown above, in accordance with the terms of this Lease.
49. Lessor will permit Lessee to install an Automatic Teller Machine (ATM)
in the Atrium of Radisson Hotel immediately east of bank's lobby in a kiosk
which shall be bank's (Lessee's) sole expense. Lessor will furnish telephone and
electric wiring to said kiosk at his expense. Lessee shall secure written
approval of the design and finish of said kiosk from the Lessor which said
approval will not be unreasonably withheld.
50. Exhibit A (Renewal Addendum) and Exhibit B (Preconstruction Addendum to
Lease) are hereby attached and made a part of this Lease.
IN WITNESS WHEREOF, the Parties have hereunto signed and sealed this Lease
Addendum the day and year first above written.
ADMIRALTY MANAGEMENT COMPANY
__________________________________ (SEAL)
LESSOR Vincent J. Pappalardo,
President
Signed, sealed and delivered
in the presence of:
_______________________ ADMIRALTY BANK
__________________________________ (SEAL)
_______________________ LESSEE
<PAGE>
EXHIBIT "A"
RENEWAL ADDENDUM
Lessor hereby grants to Lessee an option to renew the Lease to which this
addendum is attached for an additional term of two 10-yr terms following the
term of said Lease. This option must be exercised by giving written notice
thereof to Lessor not less than 120 days prior to the expiration of said Lease.
The rental for the additional term shall be the rental for the term of the
Lease as adjusted in accordance with the following formula:
In the event the Index (as defined by Paragraph 33(a) of the Lease) at the
time of commencement of the additional term is greater than such Index at the
commencement of the term of this Lease, then the total base rental for the
additional term shall be an amount equal to the Base Rent under Paragraph 4 of
the Lease, increased proportionately to the increase in said Index.
If the Index in January of any calendar year during the additional term
shall exceed the Index at the time of the commencement of the additional term,
then the Rent (which shall include the Base Rent, but shall exclude the charge
for electric current consumed at the Premises) payable for the calendar year
during which such January occurs, thereafter, until a new comparative statement
is sent to Lessee, shall be increased by an amount equal to the proportionate
increase in said Index. At any time after January 1st of such calendar year,
Lessor shall send to Lessee a comparative statement setting forth (i) the Index
in January of such year, (ii) the Index at the commencement of the additional
term, (iii) the percentage increase and (iv) the increase in the Rent. On the
first day of the calendar month ("Current Month") following the month in which
the comparative statement is sent (x) Lessee shall pay to Lessor a sum equal to
1/12th of said increase in the Rent multiplied by the number of calendar months
of the Lease term that elapsed since said January 1st, and (y) thereafter,
commencing with the current month and continuing monthly thereafter until a
different comparative statement is sent to Lessee, the monthly installments of
Rent shall be increased by an amount equal to 1/12th of said increase. In no
event shall the rental due and payable during the additional term be less than
the rental payable for the first full month of the additional term.
If, at the expiration of the original term of the Lease, said Index shall
no longer be compiled, another Index generally recognized as authoritative will
be substituted by agreement of the Parties, and if the Parties cannot agree to a
substitute Index, such substitute Index shall be selected by arbitrators, one
being appointed by Lessor, one by Lessee, and a third by the two arbitrators
thus selected.
Additional increases for Consumer Price Index increases shall be made every
twelve (12) months thereafter during the term of this extension, in the same
manner as described herein, provided that the increase in Rent will be based on
a comparison of the Index for that calendar year with the Index for the previous
calendar year.
Notwithstanding the foregoing, in no event will the Annual Base Rent
payable during any year of the extension increase by less than five percent (5%)
of the Annual Base Rent payable in the immediately preceding year and in no
event will the Annual Base Rent payable in any year decrease from the amount
paid in the previous year as a result of a decrease in the Index. Further
provided that in the event the increase in the Annual Base Rent for any year
would result in a change in the Annual Base Rent of more than fifteen percent
(15%) of the immediately preceding year's Annual Base Rent as a result of a
change in the Index, the Annual Base Rent shall be increased by fifteen percent
(15%) plus one-half (1/2) of the increase above fifteen percent (15%).
At any time after January 1st of any Comparison Year, Lessor shall send to
Lessee a comparative statement setting forth: (1) the Index for the preceding
year (which shall be the Index in effect for January of that year); (2) the
Comparison Index for that calendar year; (3) the percentage increase in the
Index as to that Comparison Year; and (4) the increase in Annual Base Rent
attributable thereto.
The Annual Base Rent during the term of the extension shall also include
periodic tax increases as described in Paragraph 33(b) of the Lease, and
periodic insurance increases as described in Paragraph 33(c) of the Lease.
Additionally, Lessee shall pay with each monthly Rent installment the electric
charge described in Paragraph 4(b), as adjusted during the term of the Lease and
as further periodically adjusted during the term of the extension in accordance
with Paragraph 33(d) of the Lease.
All terms herein shall have the same definition as contained in the Lease.
IN WITNESS WHEREOF, the parties have hereunto signed the Lease Renewal Addendum
the day and year first above written.
ADMIRALTY MANAGEMENT COMPANY
__________________________________ (SEAL)
LESSOR Vincent J. Pappalardo,
President
Signed, sealed and delivered
in the presence of:
_______________________ ADMIRALTY BANK
__________________________________ (SEAL)
_______________________ LESSEE
<PAGE>
EXHIBIT "B"
PRECONSTRUCTION ADDENDUM TO LEASE
THIS ADDENDUM TO LEASE ("Addendum") made this ________ day of
_________________ by and between ADMIRALTY MANAGEMENT COMPANY ("LESSOR") and
ADMIRALTY BANK ("LESSEE").
The following terms and provisions are hereby incorporated into that
certain Lease ("Lease") by and between Lessor and Lessee dated , 19 , and shall
be considered a part thereof.
PRECONSTRUCTION LEASES
(1) Definitions. For the purpose of this Addendum, the following terms shall
have the meanings set forth:.
(i) "Actual Construction Cost" means the actual total cost of constructing
the building in which the Premises are to be located, and the
attendant parking facilities, but specifically excluding individual
tenant improvements. Such costs shall include all of the costs and
charges, whether direct or indirect, so incurred by Lessor and shall
include, without limitation: (1) Materials; (2) Labor; (3) Four
percent (4%) profit for construction company; (4) Five percent (5%)
overhead for construction company; (5) Extras; (6) Insurance; (7)
Equipment rental; (8) Attorneys' fees; (9) Utilities; (10)
Landscaping.
(ii) "Estimated Construction Cost" means the cost of constructing the
building in which the Premises are to be located, and the attendant
parking facilities, but specifically excluding individual tenant
improvements, as estimated prior to the commencement of the
construction thereof.
(2) Lease Executed Prior to Construction. The Parties specifically acknowledge
that this Lease is entered into prior to the commencement of the
construction of the building in which the Premises will be located. The
monthly Base Rent contained in Paragraph 4(a) is based on the assumption
that the Actual Construction Cost will be $ 5,968, 537.00 ("Estimated
Construction Cost"). In the event that the Actual Construction Cost varies
from the Estimated Construction Cost, the monthly Base Rent payable
hereunder shall be adjusted in the manner provided below.
(3) Certification of Estimated Construction Cost. Prior to the execution of
this Lease, Lessor shall provide Lessee with a figure for the Estimated
Construction Cost, certified by the Lessor and general contractor of Lessor
as being a true and accurate estimate of the total cost of construction of
said building and attendant parking facilities.
(4) Certification of Actual Construction Cost. Within sixty (60) days of the
completion of the construction of the building in which the Premises are to
be located and attendant parking facilities, as evidenced by the issuance
of a Certificate of Occupancy, Lessor shall send notice to Lessee of the
Actual Construction Cost, certified by the general contractor of Lessor as
being true and accurate.
(5) Determination of Base Rent. In the event that the Actual Construction Cost
varies from the Estimated Construction Cost, the Base Rent payable under
Paragraph 4(a) shall be adjusted in accordance with the following formula:
Actual Construction Cost
------------------------------ x $18.85 = Base Rent Per Square Foot
Estimated Construction Cost
The monthly Base Rent will then be determined by multiplying the number of
square feet including prorata share of core area leased by Lessee by the
product of the above formula. Said sum shall be the monthly Base Rent
payable as of the commencement date of the Lease and such figure shall be
substituted into the body of this Lease in Paragraph 4(a). The total Base
Rent shall be determined by multiplying the new monthly Base Rent by the
number of months of the Lease Term. The new Base Rent will then be subject
to further adjustment as described in the Lease.
(6) Limitation on Increase in Base Rent. Notwithstanding any other provisions
herein, in no event will the Base Rent payable per square foot be increased
to a figure of more than $ 2.00 per square foot or decreased to a figure of
less than $ 2.00 per square foot, as a result of the adjustments contained
in this Exhibit.
(7) Cost of Interior Improvements. Lessor has agreed to cause its general
contractor to construct interior improvements to the Premises in accordance
with the plans and specifications submitted by Lessee and approved by
Lessor. Said improvements shall be constructed within an allowance of One
Hundred Sixty Thousand One Hundred Forty Dollars ($ 160,140.00 ) which
figure specifically includes the cost to Lessor of the general contractor's
overhead (5%) and profit (4%). In the event that the actual cost to Lessor
of causing said interior improvements to be constructed is greater that
said allowance, Lessee shall pay to Lessor the amount of such overage
(which shall include payment of Lessor's general contractor's overhead (5%)
and profit (4%)). In the event that the actual cost to Lessor of causing
said interior improvements to be constructed is less than said allowance,
Lessor shall pay to Lessee said difference. (Provided,
<PAGE>
that the actual cost to Lessor shall include payment of Lessor's general
contractor's overhead (5%) and profit (4%).
(8) This Addendum shall be attached to and made a part of this Lease.
(9) Cost Analysis: Interior Improvements proposal dated 7-21-88 is hereby
attached hereto shown as Exhibit "D" and made a part of this Lease.
IN WITNESS WHEREOF, the parties have hereunto signed the Lease Renewal Addendum
the day and year first above written.
ADMIRALTY MANAGEMENT COMPANY
__________________________________ (SEAL)
LESSOR Vincent J. Pappalardo,
President
Signed, sealed and delivered
in the presence of:
_______________________ ADMIRALTY BANK
__________________________________ (SEAL)
_______________________ LESSEE
<PAGE>
ADMIRALTY MANAGEMENT COMPANY
EXHIBIT "C"
RULES AND REGULATIONS REFERRED TO IN THE FOREGOING LEASE
As a tenant in the ADMIRALTY II, you are hereby requested to observe the
following rules and regulations. Their intent is to insure the orderly use of
the building by all Lessees and their customers.
1) Inquiries with respect to the ADMIRALTY complex shall be made to the
Manager located in Suite 801, 4400 PGA Blvd., Palm Beach Gardens, FL.
Rental checks are to be made payable to: ADMIRALTY II, Suite 801, 4400 PGA
Blvd., Palm Beach Gardens, FL 33410.
2) Lettering or signs identifying a Lessee's suite of business will not be
permitted except professional lettering on entrance doors. Notwithstanding
any other provisions of this Lease or the Rules and Regulations, it is
hereby agreed by both the Lessee and the Lessor that if the Lessee is
desirous of having a sign on his entrance door, same shall be limited in
size, color and design to those specifications provided by Lessor, which
specifications may change from time to time.
3) No sign, picture or other advertising material shall be affixed to the
interior of any glass window of the leased Premises or affixed to the
office building itself, or erected or constructed on any exterior part of
the office buildings, atrium or restaurant.
4) All horizontal blinds and/or verticals of Lessees in the ADMIRALTY complex
that adorn exterior windows shall have exterior facing liners dark bronze,
black or dark blue in color; no other color will be permitted. No bottles,
parcels or other articles shall be placed on the window sills in any part
of the buildings.
5) Security of each individual suite is to be the responsibility of Lessee.
Regular night patrols and door checks of the building entrance doors will
be made by the Palm Beach Gardens Police Department. It is recommended that
a local telephone number be registered with the Police Department in the
event of an emergency.
6) Garbage and trash are to be stored in the parking structure trash areas in
the dumpsters provided. All garbage is to be containerized by Lessee before
depositing the same in the dumpsters. Cardboard boxes must be flattened
before being placed in said dumpsters.
7) All Lessees and their employees/licensees shall park on the top deck of the
appropriate parking garage, as located on the Premises, or at assigned
spaces on the second deck. In general, first and second floor parking shall
be reserved for visitor and paid parking. Lessee shall insure that its
servants, agents, employees, guests, licensees, and contractors do not use
parking spaces in excess of those granted by this Lease which, for Suite
#100 & 200, shall be 27 parking spaces.
8) For security reasons, the office building entry doors will be locked
electronically at 6:00 PM each evening. Lessees can secure entrance by the
security code provided; however, Lessee's visitors shall utilize the
telephone security entry system as provided at each office building.
9) Lessee shall not lay linoleum, ceramic tile or other similar floor covering
so that the same shall come in direct contact with the floor of the
Premises and, if linoleum, ceramic tile or other similar floor covering is
desired to be used, an interlining of builder's sound deadening felt shall
be first fixed to the floor with a paste or other material that may be
easily removed with water. The use of cement or other similar adhesive
material is expressly prohibited.
10) Lessee shall not make, or permit to be made, any unseemly or disturbing
noises or interfere with other tenants or those having business with them,
nor shall Lessee perform any cooking in the Premises.
11) No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by Lessee, and Lessee shall, upon the termination of this
tenancy, deliver to Lessor all keys to any space within the building,
either furnished to or otherwise procured by Lessee, and in the event of
the loss of any keys so furnished, Lessee shall pay to Lessor the cost
thereof. Lessee shall not do anything which may in any way impair the
security of the buildings.
12) Lessor reserves the right to prescribe the weight and position of all safes
and other heavy equipment so as to distribute properly the weight thereof
and to prevent any unsafe condition from arising. Business machines and
other equipment shall be placed and maintained by Lessee at Lessee's
expense in settings sufficient in Lessor's reasonable judgment to absorb
and prevent unreasonable vibration, noise and annoyance.
13) Lessee shall clean or permit the cleaning of any window in the Premises
from the outside, in strict conformity with applicable law and the Rules
and Regulations promulgated thereunder, by the Lessor, at Lessee's expense.
14) In moving into the building, Lessee may tie up only one designated elevator
for use in moving furniture, etc. All move-in/move-out activity must be
scheduled for a weekend or at other times as so approved by Lessor.
<PAGE>
15) Lessor shall not be responsible to Lessee for the non-observance or
violation of any of these Rules and Regulations by any other tenants.
16) The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors and public parts of the buildings shall not be
obstructed or encumbered by Lessee or used by Lessee for any purpose other
than ingress and egress to and from the Premises. If the Premises are
situated on the ground floor with direct access to the street, then Lessee
shall, at Lessee's expense, keep the sidewalks and curbs directly in front
of the Premises clean and free from refuse.
17) No awnings, air conditioning units or other projections shall be attached
to the outside walls or window sills of the buildings or otherwise project
from the buildings.
18) Tenant shall not install or permit the use of any electrical appliances or
equipment which will overload the electrical circuitry in the Premises, and
further expressly agrees not to install or permit the use of any stove or
other appliance, other than office machines customarily utilized, without
the express written consent of the Lessor.
LIST OF SUBSIDIARIES
1) Admiralty Bank, a Florida state chartered bank
Exhibit 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated March 13, 1998, accompanying the
consolidated financial statements of White Eagle Financial Group, Inc. and
Subsidiary (Predecessor Company) contained in the Registration Statement and
Prospectus. We consent to the use of the aforementioned report in the
Registration Statement and Prospectus, and to the use of our name as it appears
under the caption "Experts."
GRANT THORNTON LLP
West Palm Beach, Florida
July 30, 1998
Exhibit 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated July 21, 1998, accompanying the financial
statements of Admiralty Bancorp, Inc. contained in the Registration Statement
and Prospectus. We consent to the use of the aforementioned report in the
Registration Statement and Prospectus, and to the use of our name as it appears
under the caption "Experts."
GRANT THORNTON LLP
Philadelphia, Pennsylvania
July 30, 1998
POWER OF ATTORNEY
Pursuant to the requirement of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby authorizes and constitutes Bruce A. Mahon and Richard P. Rosa, and each
of them singly, his true and lawful attorneys will full power to them, and each
of them singly, to sign for him and in his name in the capacities indicated
below any and all amendments (including post-effective amendments) to this
Registration Statement and to file the same, with exhibits thereto, and other
documents in connection therewith, and he hereby ratifies and confirms his
signature as it may be signed by said attorneys, or any of them, to any and all
such amendments.
/s/Bruce A. Mahon Chairman of the Board and CEO July 31, 1998
- ------------------------- (Principal Executive Officer)
BRUCE A. MAHON
/s/Michael E. Golden Vice Chairman of the Board July 31, 1998
- -------------------------
MICHAEL E. GOLDEN
/s/Leslie E. Goodman Director July 31, 1998
- -------------------------
LESLIE E. GOODMAN
/s/Thomas L. Gray, Jr. Director July 31, 1998
- -------------------------
THOMAS L. GRAY, JR.
/s/Sidney L. Hofing Director July 31, 1998
- -------------------------
SIDNEY L. HOFING
/s/Peter L. A. Pantages Director July 31, 1998
- -------------------------
PETER L. A. PANTAGES
/s/Richard P. Rosa Director and Chief Financial Officer July 31, 1998
- ------------------------- (Principal Accounting and Financial
RICHARD P. ROSA Officer)
/s/Craig A. Spencer Director July 31, 1998
- -------------------------
CRAIG A. SPENCER
/s/Mark A. Wolters Director July 31, 1998
- -------------------------
MARK A. WOLTERS
/s/George R. Zoffinger Director July 31, 1998
- -------------------------
GEORGE R. ZOFFINGER
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