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Filed Persuant To Rule 424(b)(3)
Registration No. 333-60283
[LOGO]
FIRST NATIONAL BANK OF MANATEE
5817 Manatee Avenue West
Bradenton, Florida 34209
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD
December 17, 1998
TO THE SHAREHOLDERS OF FIRST NATIONAL BANK OF MANATEE:
You are hereby notified that a special meeting of the shareholders of First
National Bank of Manatee (the "Bank") will be held on December 17, 1998 at 4:30
p.m. (local time), at 5817 Manatee Avenue West, Bradenton, Florida 34209, for
the purpose of considering and acting upon the following:
1. To consider and vote upon the formation of a holding company by the
adoption of a Consolidation Agreement (the "Agreement") which provides for
the consolidation of Manatee Interim Bank, N.A. a subsidiary of First
National Bancshares, Inc., an Florida corporation (the "Company"), with and
into the Bank under the name and charter of First National Bank of Manatee
with shareholders of the Bank receiving two(2) shares of Company stock for
each share of Bank stock held by them.
2. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF.
The Board of Directors has fixed September 30, 1998 as the record date for
the determination of shareholders entitled to notice of and to vote at the
meeting.
By order of the Board of Directors
/s/ Glen W. Fausset
Glen W. Fausset, President
The affirmative vote of the holders of two-thirds (2/3) of the outstanding
common stock of First National Bank of Manatee is required for approval of the
Agreement. Directors of the Bank beneficially owned 100,751 shares, or
13.4 percent of the outstanding common stock of the Bank as of September 30,
1998.
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. YOU
MAY REVOKE YOUR EXECUTED PROXY AT ANY TIME BEFORE IT IS EXERCISED AT THE SPECIAL
MEETING OF SHAREHOLDERS BY NOTIFYING THE CHAIRMAN OF THE MEETING OR THE
SECRETARY OF THE BANK AT, OR PRIOR TO THE MEETING, OF YOUR INTENTION. IF YOUR
STOCK IS HELD IN MORE THAN ONE NAME, ALL PARTIES MUST SIGN THE PROXY FORM.
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PROXY STATEMENT/PROSPECTUS
GENERAL INFORMATION
OFFERING OF 1,502,956 COMMON VOTING SHARES OF FIRST NATIONAL
BANCSHARES, INC.
This Proxy Statement/Prospectus and the accompanying form of proxy is
furnished in connection with the solicitation, by the Board of Directors of
First National Bank of Manatee, 5817 Manatee Avenue West, Bradenton, Florida
34209, (941) 794-6969, of proxies to be voted at the special meeting of
shareholders of First National Bank of Manatee to be held on December 17, 1998,
at 4:30 p.m. (local time), at 5817 Manatee Avenue West, Bradenton, Florida
34209.
This Proxy Statement has been mailed to all holders of record of the
common stock of First National Bank of Manatee as of the close of business on
September 30, 1998. The cost of soliciting proxies will be borne by the
Company.
First National Bancshares, Inc., 5817 Manatee Avenue West, Bradenton,
Florida 34209, (941) 794-6969, has filed a Registration Statement with the
Securities and Exchange Commission concerning the securities to be issued by it
in connection with a plan of reorganization described in this Proxy Statement.
This Proxy Statement also constitutes a "prospectus" and has been filed with the
Securities and Exchange Commission as part of the Registration Statement. Please
see page 11 "Risk Factors" for a descriptions of certain risks in connection
with the shares of the Company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
THE OFFICE OF THE COMPTROLLER OF THE CURRENCY, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR THE OFFICE OF
THE COMPTROLLER OF THE CURRENCY PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF STOCK OF FIRST NATIONAL BANCSHARES, INC., OFFERED HEREBY, ARE NOT
BANK DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER AGENCY OR COMPANY. THE SECURITIES ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF THE PRINCIPAL INVESTED.
ADDITIONAL INFORMATION
This Prospectus and Proxy Statement constitutes part of the
Registration Statement covering the shares to be offered pursuant to the
consolidation transaction by the Company, as filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended. This
Prospectus and Proxy Statement does not contain all the information set forth in
such Registration Statement and the exhibits thereto, certain portions of which
have been omitted pursuant to the rules and regulations of the Securities and
Exchange Commission.
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Such Registration Statement may be inspected, without charge, at the
principal office of the Securities and Exchange Commission, 450 Fifth Street,
N.W., Washington, D.C., and copies of all or part thereof may be obtained from
the Securities and Exchange Commission upon payment of its prescribed fees.
The Securities and Exchange Commission also maintains a Web Site at
http:// www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission, including the Company. A copy of the Registration Statement of the
Company on Form S-4 of which this Proxy Statement/Prospecutus is a part and all
exhibits thereto are available at such Web Site.
THE BANK'S COMMON STOCK IS REGISTERED UNDER SECTION 12G OF THE
SECURITIES AND EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT"), PURSUANT TO WHICH IT
FILES ANNUAL AND QUARTERLY FINANCIAL REPORTS WITH THE OFFICE OF THE COMPTROLLER
OF THE CURRENCY. THE BANK'S FORM 10-K ANNUAL REPORT WHICH INCLUDES FINANCIAL
STATEMENTS AND SCHEDULES, BY REFERENCE, IS FILED WITH THE OFFICE OF THE
COMPTROLLER OF THE CURRENCY IN WASHINGTON, D.C. A COPY OF THIS REPORT IS
AVAILABLE TO SHAREHOLDERS UPON REQUEST TO THE SECRETARY, FIRST NATIONAL BANK OF
MANATEE, 5817 MANATEE AVENUE WEST, BRADENTON, FLORIDA 34209, (941) 794-6969. THE
FIRST COPY WILL BE PROVIDED WITHOUT CHARGE. NEITHER THE ANNUAL REPORT TO
SHAREHOLDERS NOR THE FORM 10-K ARE TO BE TREATED AS PART OF THE PROXY
SOLICITATION MATERIAL, NOR AS HAVING BEEN INCORPORATED HEREIN BY REFERENCE.
ADDITIONALLY SUCH FORM 10-K ANNUAL REPORT MAY BE INSPECTED AND COPIED AT THE
OFFICES OF THE OFFICE OF THE COMPTROLLER OF THE CURRENCY, 490 L'ENFANTE PLAZA,
S.W., WASHINGTON D.C., 20219.
The date of this Proxy Statement is October 15, 1998.
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TABLE OF CONTENTS
Page
----
SUMMARY 7
General 7
Terms of the Consolidation Agreement 8
The Exchange Ratio and Market Value 8
Business of the Company, the Bank, and the New Bank 8
Management 9
Shareholders' Approval 9
Regulatory Approval 9
Dissenters' Rights 9
Differences Between Company Stock and Bank Stock 10
Tax Consequences 10
Reports 10
Antitakeover Measures 11
Risk Factors 11
Per Share Summary of the Bank and Pro Forma Per Share Summary
of the Company 13
GENERAL 13
REVOCATION OF PROXIES 13
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF 14
PURPOSE OF THE MEETING 14
THE PROPOSED REORGANIZATION 15
Reasons for the Proposed Transaction 15
Description of the Reorganization 15
Conversion and Exchange of Stock 16
Negotiation of Terms of the Agreement 16
Affiliate Restrictions 16
Conditions of Consummation 17
Other Considerations 18
Expenses 18
Federal Tax Consequences 18
State Tax Consequences 19
Appraisal Rights of Dissenting Shareholders 19
Accounting Treatment 20
MARKET PRICES OF STOCK 21
The Company 21
The Bank 21
DIVIDENDS 22
The Company 22
The Bank 22
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TABLE OF CONTENTS (CONT.)
CAPITALIZATION 22
FINANCIAL STATEMENTS 23
HISTORY AND BUSINESS OF THE COMPANY 25
General 25
Competition 25
Employees 25
Property 25
Board of Directors 26
Remuneration of Directors and Officers 26
Indemnification 26
HISTORY AND BUSINESS OF THE BANK 27
General 27
Competition 27
Employees 27
Property 28
Litigation 28
Year 2000 28
Board of Directors 29
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS 31
EXECUTIVE COMPENSATION AND OTHER INFORMATION 32
Summary of Cash and Certain Other Compensation 32
Change of Control Agreements 33
Directors' Compensation 33
401(k) Retirement Plan 33
Employee Vesting Schedule 34
Pension Plan 34
Stock Option Plans 34
CERTAIN TRANSACTIONS 36
SUPERVISION AND REGULATION 37
The Company 37
Bank 38
Capital 38
Additional Regulation 39
Dividend Regulation 39
Government Policies and Legislation 39
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TABLE OF CONTENTS (CONT.)
DESCRIPTION OF COMMON STOCK--COMPARATIVE RIGHTS 40
General 40
Voting Rights 40
Right of Redemption 41
Liquidation Rights 41
Preemptive Rights 41
Dissenters' Rights 41
Cumulative Voting 41
Indemnification 42
Dividend Rights 42
Transfer and Assessability 42
Antitakeover Measures 43
ANTITAKEOVER MEASURES 43
Discussion of Fair Price and Supermajority Vote Provisions 43
Reasons for Fair Price and Supermajority Vote Provisions 44
Summary of Fair Price and Supermajority Vote Provisions 45
Comparison with Current Requirements 47
Classified Board of Directors and Supermajority Vote Required
to Remove Directors 48
Additional Considerations 48
REPORTS 50
LEGAL OPINION 50
OTHER MATTERS 50
ADDITIONAL INFORMATION 50
CONSOLIDATION AGREEMENT Appendix I
DISSENTER'S STATUTE 12 U.S.C. SECTION 215 AND BANKING Appendix II
CIRCULAR 259
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF THE COMPANY Appendix III
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN AS CONTAINED HEREIN IN CONNECTION WITH THE OFFER
CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON. THIS PROXY
STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY OF THE SECURITIES OFFERED BY THIS PROXY STATEMENT-PROSPECTUS
IN ANY STATE TO ANY PERSON TO WHOM IT WOULD BE UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION. THE DELIVERY OF THIS PROXY STATEMENT-PROSPECTUS AT ANY TIME DOES
NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
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THE PROPOSED REORGANIZATION TO FORM A
ONE-BANK HOLDING COMPANY
SUMMARY
This summary contains a brief description of the proposed
reorganization. This summary is not a complete statement of all the information
contained in the Proxy Statement or the Consolidation Agreement. A thorough
reading of both documents is recommended.
General
If this proposal is adopted, shareholders of the Bank would exchange
their current stock in the Bank for stock of the Company on a two-for-one basis;
two shares of the Company's stock will be exchanged for each one share of Bank
stock. The two-for-one exchange ratio was established by the Boards of Directors
of the Bank and the Company after a review of current market prices of the Bank
disclosed that market price for shares of the Company after the consummation of
the transaction would be in the range of $10.00-$15.00 per share. The Boards of
Directors believe that such a price will make the shares affordable for a larger
group of potential shareholders thus increasing the liquidity of the shares.
Please see page 21 "Average Trading Price During Quarter" for the effect of such
exchange ratio on the average selling price for shares of the Bank. The terms of
the transaction and the method of carrying it into effect are more fully
described below.
Shareholders of First National Bank of Manatee (the "Bank") are being
asked to vote on a proposal to reorganize the Bank into a one-bank holding
company. This section describes the proposal for the consolidation of Manatee
Interim Bank, N.A. (the "New Bank"), a new federally-chartered bank to be
organized solely for the purpose of this transaction, with the Bank under the
charter of the Bank. At or immediately prior to the consolidation, First
National Bancshares, Inc. (the "Company") will own all of the capital stock of
the New Bank. Following the consolidation of the Bank and the New Bank, the
Company will own all of the outstanding shares of common stock of the Bank and
the New Bank combined, and the Bank will continue to do business under the name
of "First National Bank of Manatee" (the "Resulting Bank"). As of the effective
date of the consolidation, the shares of New Bank will be redeemed and canceled
with the effect that the capital stock of the Resulting Bank at and after the
effective date of the consolidation will be equal to the capital structure of
the Bank immediately prior to the effective date of the consolidation. Assuming
the consolidation is approved, all shareholders of the Bank, except those
shareholders who properly exercise dissenters' rights, will become shareholders
of the Company.
The Bank's Board of Directors determined by resolution that an
affiliation with the Company will permit the Company and the Bank greater
financial and corporate flexibility in such areas as acquisitions and debt
financing as well as the possibility that the Company and the Bank may be able
to offer new services, provide them access to new markets, and provide them an
opportunity to participate in activities which are not permissible for the Bank
to engage in directly. (See "THE PROPOSED REORGANIZATION--Reasons for the
Proposed Transaction" and "SUPERVISION AND REGULATION--The Company.")
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Terms of the Consolidation Agreement
The Bank, the New Bank, and the Company have entered into a
Consolidation Agreement (the "Agreement"). The Agreement provides for the
consolidation of the New Bank and the Bank under the name and charter of the
Bank, and for the conversion of each share of the Bank's common stock
outstanding on the effective date of the consolidation into two (2) shares of
common stock of the Company. A copy of the Agreement is included as Appendix I
to this Proxy Statement.
The Exchange Ratio and Market Value
Each share of the common stock of the Bank outstanding on the effective
date of the proposed consolidation will be converted into two (2) shares of
common stock of the Company.
Stock of the Company has not been publicly traded as the Company is a
new company and has not engaged in any business activity prior to its intended
acquisition of the outstanding shares of the Bank. There is, therefore, no
published information as to the market price of Company stock. Because no
meaningful market can be said to exist for Company stock at this time, there can
be no assurance that an established market will develop for Company stock after
the consolidation. (See "MARKET PRICE OF STOCK--The Company.")
Bank stock is traded among Bank shareholders and customers mostly in
the Manatee County area. Trading, however, has not been sufficient to support an
established "over-the-counter" market. (See "MARKET PRICE OF STOCK--The Bank.")
There is no established market for the New Bank's stock as it is a nonoperating
bank, formed solely for the purpose of this transaction, nor is there any
information about its market price. (See "MARKET PRICE OF STOCK--The Bank.")
Further, as a result of the proposed consolidation, no market will
exist for the Resulting Bank's stock as the Company will be its sole
shareholder.
Business of the Company, the Bank, and the New Bank
The Company is a business corporation formed under the laws of the
State of Florida on June 15, 1998. Since its incorporation, it has not engaged
in any business. Upon consummation of the reorganization, the Company will
become a registered bank holding company, whose principal asset will be its
shareholdings in the Resulting Bank. (See "HISTORY AND BUSINESS OF THE
COMPANY.")
The Bank is a federally-chartered bank incorporated under the banking
laws of the United States. The Bank engages in the commercial banking business
in the County of Manatee, Florida, and in the surrounding area.
(See "HISTORY AND BUSINESS OF THE BANK.")
The New Bank is a newly formed bank, chartered under the banking laws
of the United States solely for the purpose of this transaction. Prior to the
consummation of the transaction,
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the New Bank will not conduct any business. At or prior to the consolidation,
the Company will own all of the capital stock of the New Bank. (See "THE
PROPOSED REORGANIZATION--Description of the Reorganization.")
Management
Under the terms of the Agreement, the Directors and officers of the
Bank, immediately prior to the effective date of the proposed consolidation,
will continue to be Directors and officers of the Resulting Bank following the
consolidation. It is also anticipated that, upon completion of the
reorganization, the present directors of the Bank will constitute the first
Board of Directors of the Company. Thereafter, the replacement for the Board of
Directors of the Company whose terms have expired, will be elected by
shareholders of the Company each year.
Shareholders' Approval
The banking laws of the United States require that the Agreement be
ratified and confirmed by the holders of at least two-thirds (2/3) of the issued
and outstanding shares of common stock of the Bank. All of the Directors of the
Bank have signed the Agreement and therefore have agreed to vote the shares of
Bank stock owned by them, personally, in favor of the reorganization. (See "THE
PROPOSED REORGANIZATION--Conditions of Consummation" and "Appraisal Rights of
Dissenting Shareholders.") As of September 30, 1998, the record date, the Board
of Directors and management of the Bank owned in the aggregate 106,350 shares or
14.2% of the outstanding shares of the Bank. It is expected that all members of
management also will vote their shares in favor of the transaction.
Regulatory Approval
The proposed transaction is subject to regulatory approval. An
application to charter the New Bank and consolidate the New Bank with the Bank
was filed with the Office of the Comptroller of the Currency ("OCC"). The OCC
authorized the organization of Manatee Interim Bank on August 19, 1998 and
approved the proposed transaction on September 11, 1998. In addition, an
application was filed with the Board of Governors of the Federal Reserve System
("FRS") for the acquisition of the Bank by the Company. The application was
accepted for processing on August 10, 1998 and approved by the FRS on September
11, 1998.
Dissenters' Rights
Under the provisions of Section 215 of Title 12, of the United States
Code, any stockholder who has voted against the Consolidation at the Annual
Meeting of Stockholders, or who has given notice in writing at or prior to such
meeting to the Bank that such stockholder dissents from the Consolidation, shall
be entitled to receive the value of the Bank Common Stock held by such
stockholder. Failure to follow the procedures enumerated in Section 215 of Title
12 of the United States Code which is Appendix II of this Proxy Statement (the
Dissenters Statute), will waive the shareholder's right of appraisal. (See "THE
PROPOSED REORGANIZATION--Appraisal Rights of Dissenting Shareholders.")
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Differences Between Company Stock and Bank Stock
Shareholders of the common stock of the Company will have rights
generally comparable to those rights which they now have as shareholders of the
common stock of the Bank. Shareholders of the Company will not have preemptive
rights and shareholders of the Bank currently do not have preemptive rights.
Preemptive rights permit a shareholder to subscribe to a sufficient number of
shares so as to maintain their relative pro rata ownership upon the issuance of
additional shares by a corporation, except in certain circumstances. The lack of
preemptive rights will remove the ability of a shareholder to assure themselves
that they will continue to own the same percentage of the outstanding shares of
the Company after an issuance of additional shares by the Company. Shareholders
of the Company will not have the right to vote cumulatively in the election of
directors as provided by Florida law unlike the stockholders of the Bank which
currently have the right to cumulate their shares in the election of directors.
A shareholder voting cumulatively may cast the number of shares he owns times
the number of Directors to be elected in favor of one nominee or allocate such
votes among the nominees as he determines. The Articles of Incorporation and
Bylaws of the Company contain certain "antitakeover" provisions as detailed
herein. Further, shareholders will be affected by certain differences between
Florida law governing corporations and federal law governing banks. Shareholders
will also be affected by differing provisions of the Articles of Incorporation
and Bylaws of the Company and the Articles of Association and Bylaws of the
Bank. For a more complete discussion regarding preemptive rights and cumulative
voting, see DESCRIPTION OF COMMON STOCK-COMPARATIVE RIGHTS-"Preemptive Rights"
and "Cumulative Voting" and "ANTITAKEOVER MEASURES" below. There are also
differences as to the availability of funds for the payment of dividends by a
bank organized under federal law and a corporation organized under the laws of
the State of Florida. (See "DIVIDENDS").
Tax Consequences
An opinion of special legal counsel, Werner & Blank Co., L.P.A., has
been obtained that states, among other things, that no gains or losses will be
recognized by either the Bank or the Company or their respective shareholders as
a result of the consolidation, except for those shareholders who perfect their
dissenters' rights and receive cash for their shares. A copy of such opinion is
attached as an exhibit to the Registration Statement of which this Proxy
Statement/Prospecutus is a part. (See "THE PROPOSED REORGANIZATION--Federal Tax
Consequences.")
EACH BANK SHAREHOLDER SHOULD RELY UPON HIS OWN TAX ADVISOR WITH RESPECT
TO THE FEDERAL, STATE AND LOCAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION.
Reports
The Bank currently files periodic reports with the Office of the
Comptroller of the Currency ("OCC") pursuant to Section 12g of the Securities
Exchange Act of 1934 (the "1934 Act") as a "reporting company." Subsequent to
the consummation of the transaction, the Company as "successor" to the Bank will
file similar annual and quarterly reports with the
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Securities and Exchange Commission ("SEC"). The Company will deliver to the
shareholders of the Company an annual report containing audited financial
information as required under the 1934 Act. While the Company will file
quarterly reports with the SEC, copies of which may be obtained from the SEC,
the Company is not obligated and does not currently intend to provide copies of
such quarterly reports to shareholders.
Antitakeover Measures
The Company's Amended and Restated Articles of Incorporation contain a
"fair price and super vote" provision. If the transaction is approved, such
provisions will require the affirmative vote of the holders of Eighty percent
(80%) of the shares of the Company entitled to vote to approve certain business
combination transactions, unless the transaction is authorized and approved by
the "Continuing Directors" as defined in the Company's Amended and Restated
Articles of Incorporation. Certain other conditions must also be met which
result in a "fair price" being paid to all shareholders. The Board of Directors
of the Bank believes that the inclusion of this provision in the corporate
structure of the Company will aid in assuring that shareholders are treated
fairly in any offer for their investment in the Company. The Company has certain
other provisions which are also "antitakeover" in nature such as a classified
election system for the election of directors and a supermajority provision for
removal of one or all of the directors.
The Board of Directors of the Company and the Bank believe that the
conversion to a holding company form of ownership is the appropriate time to
implement such antitakeover provisions. The adoption of such provisions is not
in response to any attempted takeover of the Bank or the Company. The Bank has
not been the target of an attempted takeover in the past. The further reasons
behind the adoption of the antitakeover provisions are discussed below. (See
"ANTITAKEOVER MEASURES.")
The presence of these "antitakeover" provisions may have the effect of
discouraging outside offers for the shares of the Company and may also give
management more control over the acceptance or rejection of these business
combination transactions, than otherwise. Such provisions may have certain
negative effects. One such negative effect could be protecting the incumbent
Board of Directors and management by discouraging takeover attempts which are
not supported by the Board but which may be supported by the majority of
shareholders. (See "ANTITAKEOVER MEASURES.")
Risk Factors
The transactions contemplated by the Agreement are principally designed
to reorganize the corporate structure of the Bank in order to conduct the
business of the Bank as a wholly owned subsidiary of a registered bank holding
company. The transaction, if consummated, does not represent any material change
in the nature of the business conducted by the Bank.
Presented below are certain "risk factors" associated with the combined
business of the Company and the Bank which may be present as a result of the
Bank's reorganizing its business structure, through the consummation of the
transaction contemplated by the Agreement, into a subsidiary of the Company.
These risk factors represent those identified by the Board of
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Directors of the Bank and may not represent all of the risk factors associated
with the transaction contemplated by the Agreement.
COMPANY'S FINANCIAL CONDITION. Shareholders electing to receive Company
stock for Bank stock do so without the ability of analyzing the historical
financial performance of the Company. The Company is a newly formed Florida
corporation and has no history of financial performance. The Company's financial
condition immediately following the effective date of the consolidation
contemplated by the Agreement will depend on the operation and profitability of
the Bank at the time of and after the effective date of the reorganization. As
the Company continues to operate in the future, additional factors may affect
its profitability including, among others: (i) businesses started or acquired by
the Company other than the Bank; (ii) the nature of federal or state laws and
regulations applicable to the Company; and (iii) the effect of management. While
the Company intends to operate the Bank in substantially the same manner that it
has been operated to date, changes to the operations of the Bank and/or
commencing additional businesses could have an impact upon the financial
performance and condition of the Company as a whole and the return to
shareholders of the Company.
BANKING INSTITUTIONS. The financial services industry and banking in
particular has undergone a complex deregulation process. Interest rate
limitations on what banks may pay to depositors have been phased out; interstate
banking, allowing financial institutions to cross state lines have been and will
continue to be enacted nationally and in many states; and competition has
increased among banks and other companies to provide traditional banking
services. These changes have resulted in increased competition for a market
share of the financial services industry. The Company and the Bank will continue
to be affected by these changes in the future. The conduct of the Bank's
business as a subsidiary of the Company may increase the ability to compete in
this newly deregulated environment, but there can be no assurance that the
organization of the holding company will shelter the Company and the Bank from
such increased competition.
ANTITAKEOVER PROVISIONS. The Company's Articles of Incorporation and
Bylaws contain provisions intended to be "antitakeover" in nature as discussed
above, including a supermajority vote provision, fair price provision, staggered
terms for the Board of Directors, supermajority removal clause for the Board of
Directors and additional items. The presence of all of these provisions and
additional provisions of Florida law may have the effect of discouraging outside
offers for the shares of the Company and may also give management more control
over the acceptance or rejection of business combination transactions, than
otherwise. Such provisions may have certain negative effects. One such negative
effect could be protecting the incumbent Board of Directors and management by
discouraging takeover attempts which are not supported by the Board but which
may be supported by the majority of shareholders. Such antitakeover provisions
also may have the effect of reducing the likelihood of an acquisition of the
Company by another entity and thus restraining the price of the shares of the
Company. (See "DESCRIPTION OF COMMON STOCK--COMPARATIVE RIGHTS and "ANTITAKEOVER
MEASURES.")
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Per Share Summary of the Bank and Pro Forma Per Share Summary of the Company
Presented below is certain per share financial information of the Bank.
Certain pro forma per share information is provided for the Company, assuming
there are no dissenters to the transaction and each share of the Bank's common
stock is exchanged for two (2) shares of the Company's common stock.
<TABLE>
<CAPTION>
PER SHARE DATA
YEAR ENDED DECEMBER 31
First National Bank of Manatee(1) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Income (Loss) $0.81 $0.69 $0.72 $0.76 $1.08
Cash Dividend Declared N.A. N.A. N.A. N.A. N.A.
Book Value (at period end) $15.63 $14.87 $14.47 $13.05 $12.84
- ----------------------------------------------------------------------------------------------------------------------
Pro Forma First National Bancshares, Inc.(2)
Net Income (Loss) $0.41 $0.35 $0.36 $0.38 $0.54
Cash Dividends Declared N.A. N.A. N.A. N.A. N.A.
Book Value (at period end) $7.82 $7.44 $7.24 $6.53 $6.42
</TABLE>
(1) Based on 711,200 shares outstanding and 706,538 average shares outstanding
for the year-end 1997.
(2) Based on 1,422,400 shares outstanding and 1,413,076 average shares
outstanding for the year-end 1997.
GENERAL
This Proxy Statement is furnished to the shareholders of First National
Bank of Manatee ("Bank") in connection with the solicitation of proxies to be
used in voting at a special meeting of shareholders to be held on December 17,
1998 at 5817 Manatee Avenue West, Bradenton, Florida 34209, at 4:30 p.m.
("Meeting"). THE ENCLOSED PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
(HEREINAFTER SOMETIMES REFERRED TO AS "MANAGEMENT") OF THE BANK. This Proxy
Statement and the enclosed form of proxy are first sent or delivered to the
Bank's shareholders on or about October 15, 1998.
The Meeting has been called for the purpose of: (i) acting on a
proposal to form a holding company; and (ii) considering such other matters as
may properly come before the Meeting.
REVOCATION OF PROXIES
The names and addresses of Management's designated Proxy Committee are:
NAME ADDRESS
Francis I. duPont, III 5817 Manatee Avenue West
Bradenton, Florida 34209
Glen W. Fausset 5817 Manatee Avenue West
Bradenton, Florida 34209
13
<PAGE> 15
All shareholders who execute proxies retain the right to revoke them at
any time. Unless so revoked, the shares represented by such proxies will be
voted at the Meeting and all adjournments thereof. Proxies may be revoked at any
time before they are exercised at the special meeting by filing a written notice
with the Secretary of the Bank or by delivering to the Secretary of the Bank a
subsequently dated proxy prior to the commencement of the meeting. A written
notice of revocation of a proxy should be sent to the Secretary of First
National Bank of Manatee, 5817 Manatee Avenue West, Bradenton, Florida 34209. A
previously submitted proxy will also be revoked if a shareholder attends the
Meeting and votes in person. In the event a shareholder attends the special
meeting and does not wish to have his/her proxy used, he/she should notify the
Secretary of the Bank prior to the start of the business meeting. Proxies
solicited by the Board of Directors of the Bank will be voted in accordance with
the directions given therein. Where no instructions are indicated, proxies will
be voted in favor of each proposal set forth in this Proxy Statement for
consideration at the Meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Shareholders of record as of the close of business on September 30,
1998, are entitled to one vote for each share then held. As of September 1,
1998, the Bank had 751,478 shares of common stock authorized, issued,
outstanding and entitled to vote.
Management of the Bank is not aware of any person who owns,
beneficially or of record, more than five percent (5%) of the Bank's outstanding
common stock except as listed below. Management is not aware of any changes in
control of the Bank which have occurred or of any arrangement which may, at a
subsequent date, result in a change in control of the Bank.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
NAME AND POSITION AMOUNT BENEFICIALLY OWNED PERCENT OF CLASS BENEFICIALLY OWNED
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Raymond Weigel, Jr. 67,178(1) 8.95%
9919 Spoonbill Road
Bradenton , Florida 34209
Shareholder
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Weigel owns 31,906 of these shares as joint tenants with his wife. Mr.
Weigel is the father of Raymond A. Weigel, III, currently a director of the
Bank.
PURPOSE OF THE MEETING
The purpose of the meeting, as set forth in the notice of the special
meeting, is to vote upon a proposed reorganization by which the New Bank, a
subsidiary of the Company, will consolidate with the Bank under the name and
charter of the Bank. The effect of approving the reorganization would be the
exchange of each share of the Bank's stock for two (2) shares of the Company's
stock, and the acquisition of control of the Bank by the Company. The Bank would
then continue to do business as a wholly owned subsidiary of the Company, and
shareholders of the Bank would become shareholders of the Company.
14
<PAGE> 16
The Board of Directors of the Bank unanimously approved the Agreement
and recommends that shareholders vote in favor of the Agreement. This Proxy
Statement/Prospectus is being solicited by the Board of Directors of the Bank.
THE PROPOSED REORGANIZATION
The Board of Directors of the Bank approved a plan of reorganization
under which the business of the Bank would be conducted as a wholly owned
subsidiary of Company.
Reasons for the Proposed Transaction
A bank holding company form of organization will increase the corporate
and financial flexibility of the business operated by the Bank through the
combined business of the Bank and the Company, such as increased structural
alternatives in the area of acquisitions, the ability to augment capital by
means of the incurrence of debt and the ability of the Company to redeem its own
stock, subject to, in certain instances, notice to and approval by the Board of
Governors of the Federal Reserve.
A bank holding company can engage in certain bank-related activities in
which the Bank cannot presently engage; thus this reorganization would broaden
the scope of services which could be offered to the public. The Company has not
made any specific determination as to which of these types of activities it may
engage in after consummation of the proposed transaction. Furthermore, a bank
holding company is not subject to the same geographical limitations as to where
it may carry on its business whereas the Bank is currently limited. (See
"SUPERVISION AND REGULATION--The Company.")
Description of the Reorganization
The Company will subscribe for and will hold all of the One Thousand
(1,000) authorized shares of common stock of the New Bank, an interim bank, to
be chartered under the laws of the United States, solely for the purpose of this
transaction. The Bank will consolidate with the New Bank under the name and
charter of the Bank, pursuant to the terms of the Agreement. (See Appendix I of
this Proxy Statement.) Upon consummation of the transaction, the consolidated
banks (the "Resulting Bank") will redeem and cancel the shares used to
capitalize the New Bank.
After the consolidation, the business of the Bank will be conducted by
the Resulting Bank under the name "First National Bank of Manatee." All of the
outstanding shares of stock of the Resulting Bank will be owned by the Company.
The Resulting Bank will have the same directors, officers, interests and
properties as those of the Bank immediately prior to the consolidation. The
Resulting Bank will continue to be subject to regulation and supervision by the
Office of the Comptroller of the Currency, to the same extent as the Bank and,
in addition, as a subsidiary of the Company, will be subject to examination and
regulation by the Board of Governors of the Federal Reserve System. (See
"SUPERVISION AND REGULATION.")
15
<PAGE> 17
Conversion and Exchange of Stock
Upon consummation of the reorganization, each outstanding share of the
Bank's common stock will be converted into two (2) shares of the Company's
common stock. Each holder of Bank stock certificates, which immediately prior to
the reorganization represented shares of the Bank's common stock, upon surrender
of such certificates for cancellation, will be entitled to receive certificates
representing the number of shares of the Company's common stock into which such
shares shall have been converted.
The Company anticipates that the stock certificates representing shares
of the Company's common stock will be distributed to shareholders of the Bank
soon after December 31, 1998, assuming approval of the organization of the
holding company at the special meeting. However, the distribution of stock
certificates to a particular shareholder will be dependent upon the date of
receipt by the Company of such shareholder's Bank stock certificate for exchange
and, therefore, there is no final date by which all Company stock certificates
will be mailed. Shareholders of the Bank will continue to be entitled to sell or
transfer their common stock in the Bank through the date of consummation of the
Consolidation, which is expected to occur as of the close of business December
31, 1998. Further, sales of stock in the Company may be made after the effective
date of the Consolidation but before receipt of certificates representing shares
in the Company. Such sales or transfers will require presentation of the
shareholder's Bank stock certificate(s).
Until so surrendered, certificates nominally representing the Bank's
common stock will be deemed, for all corporate purposes, to evidence the number
of shares of the Company's common stock which the holder thereof would be
entitled to receive upon surrender. AT THE DIRECTION OF THE BOARD OF DIRECTORS
OF THE COMPANY, NO DIVIDENDS WILL BE PAID UPON THE CERTIFICATES NOMINALLY
REPRESENTING THE BANK'S COMMON STOCK AFTER CONSUMMATION OF THE REORGANIZATION,
BUT SUCH DIVIDENDS WILL BE ACCUMULATED AND PAID, WITHOUT INTEREST, AT THE TIME
OF SURRENDER OF SUCH CERTIFICATES FOR CERTIFICATES REPRESENTING THE COMPANY
STOCK.
Negotiation of Terms of the Agreement
The terms of the Agreement were agreed upon by the Boards of Directors
of the Bank, the New Bank and the Company. Since the management and Boards of
Directors of these three (3) organizations are substantially the same, the terms
of the Agreement were not a result of arms length negotiations.
Affiliate Restrictions
The shares of stock to be issued upon consummation of the Agreement by
the Company will be registered pursuant to the 1933 Securities Act ("Act").
However, the resale of such shares by the Directors, principal officers and
principal shareholders of the Bank presently and of the Company upon
consummation of the Agreement may be restricted by the Act and by the rules
promulgated by the Securities and Exchange Commission if such Directors,
principal
16
<PAGE> 18
officers and principal shareholders are deemed to be "affiliates" as that term
is defined by the Act and appropriate SEC rules.
Persons considered to be in control of an issuer are known as
"affiliates" and may include officers, Directors and shareholders who own 10
percent or more of the outstanding stock. Shares of common stock of the Company
received after the transaction by "affiliates" of the Bank or the Company will
be "control stock," which can only be sold if they are registered or in a
transaction exempt from registration under the Act, such as pursuant to Rules
144 and 145, or pursuant to a private placement. Rules 144 and 145 generally
require that before an affiliate can sell his "control stock":
(1) There must be on file with the Securities and Exchange Commission
public information filed by the issuer;
(2) The affiliate must sell his stock in a routine unsolicited broker's
transaction or directly to a market maker in the stock; and
(3) During any three-month period, the amount of the securities that can be
sold is limited to the greater of one percent of the outstanding stock
of the company or the average weekly trading volume during the four
calendar weeks preceding the receipt of an order to sell by the broker
or the sale to a market maker.
It may be advisable for those shareholders of the Bank who may be
"affiliates" of the Company to confer with legal counsel of their own choosing
prior to the sale of any Company stock received as a result of this transaction.
Conditions of Consummation
Federal Banking Law provides that a consolidation of a bank with
another bank requires the approval of a consolidation agreement by a majority of
both banks' Boards of Directors and by shareholders holding two-thirds (2/3) of
the outstanding common stock of each bank.
Acquisition of the voting shares of the Bank by the Company must be
approved by the Board of Governors of the Federal Reserve System. The
reorganization must also be approved by the Office of the Comptroller of the
Currency.
The obligation of the Bank and the Company to consummate the
reorganization is conditioned further upon the following: (i) the absence of any
action, suit, proceeding or claim, made or threatened, related to the proposed
consolidation, or any other reason which makes consummation of the consolidation
inadvisable in the opinion of the Board of Directors of the Bank or the New
Bank; (ii) receipt of a favorable opinion of counsel with respect to the tax
consequences of the consolidation (see "THE PROPOSED REORGANIZATION--Federal Tax
Consequences"); (iii) the receipt of all necessary regulatory approvals and the
expiration of all required waiting periods; and (iv) the performance of all
covenants and agreements. The Boards of Directors of the Bank, the New Bank and
the Company may, in their discretion, terminate the
17
<PAGE> 19
Agreement before or after approval by the shareholders of the Bank if they deem
such termination advisable.
Other Considerations
The Company is a business corporation formed under the general
corporation laws of the State of Florida. As a general "for profit" corporation,
the Company will have greater flexibility in certain corporate procedures than
the Bank (which is subject to Banking Laws of the United States and is regulated
by the Office of the Comptroller of the Currency) including, but not limited to,
the ability to incur debt for leveraged growth, redeem its own common stock to
create greater flexibility for trading of such common stock, and operate related
financially oriented businesses.
Upon consummation of the reorganization, the Company will become a
registered bank holding company and will become subject to the Federal Bank
Holding Company Act of 1956, as amended. As a bank holding company under federal
law, the Company will be permitted to carry on a wider range of business
activities than the Bank presently can under state and federal law. (See
"SUPERVISION AND REGULATION.")
Expenses
Expenses to be incurred in implementing the reorganization are
estimated at $60,000, of which approximately $30,000 can be attributed to legal
fees paid in connection with the transaction. The remaining amount of expenses
can be attributed to application fees, printing costs and other miscellaneous
expenses. The Company has paid the costs associated with the transaction and
borrowed the funds to do so from an unaffiliated third party bank, the repayment
of which loan has been personally guaranteed by certain persons, each of whom is
a Director of the Company and the Bank. In the event the transaction is approved
and consummates, the Bank will pay a special dividend to the Company which will
be used by the Company to retire the debt incurred to pay such expenses.
Federal Tax Consequences
An opinion of special legal counsel, Werner & Blank Co., L.P.A., has
been obtained in regard to the transaction. A copy of such opinion is attached
as an exhibit to the Registration Statement of which this Proxy
Statement/Prospecutus is a part. The opinion states the following: (i) the
transaction will qualify as a reorganization within the meaning of Internal
Revenue Code Section 368(a)(1)(A) and (a)(2)(E); (ii) no gain or loss will be
recognized for federal income tax purposes by shareholders of the Bank upon
conversion of the common stock of the Bank into common stock of the Company,
except for those shareholders of the Bank who dissent from the plan of
reorganization and perfect their appraisal rights (see "THE PROPOSED
REORGANIZATION--Appraisal Rights of Dissenting Shareholders"); (iii) the tax
basis of the common stock of the Company received by the shareholders of the
Bank will be the same as the tax basis of the common stock of the Bank
surrendered by the shareholders; and (iv) the holding period of the common stock
of the Company received by shareholders of the Bank will include the holding
period of the common stock of the Bank surrendered by shareholders, provided
that
18
<PAGE> 20
the stock of the Bank is held as a capital asset by shareholders on the
date of consummation of the consolidation. Shareholders who dissent from the
transaction and receive cash in exchange for their Bank shares will recognize
taxable gain or loss on the exchange of the shares in an amount equal to the
difference between their basis in the shares held by them and the amount of cash
received for such shares.
Gain or loss for federal and other income tax purposes may be
recognized upon the receipt of cash by dissenting shareholders, if any. THE TAX
TREATMENT OF SUCH GAIN OR LOSS MAY VARY WITH THE PARTICULAR CIRCUMSTANCES OF
EACH DISSENTING SHAREHOLDER.
State Tax Consequences
Depending upon the state of residence of a Bank shareholder, the
transaction may be subject to certain state law provisions relating to capital
gains tax.
Shares of the common stock of the Bank may in some jurisdictions have
certain advantages not available to shares of common stock of the Company, such
as exemption from personal property taxes, exemption from taxation on dividend
income, and qualification as a legal investment for various categories of
investors. For shareholders who are residents of the State of Florida, there are
no material differences in the state tax treatment of gains, losses and
distributions from the Bank or the Company nor are there any other significant
differences as to the tax treatment of shares of the Bank or the Company.
SHAREHOLDERS ARE URGED TO REVIEW THEIR TAX STATUS UNDER ANY STATE OR
LOCAL TAX LAWS WITH THEIR OWN TAX ADVISORS.
Appraisal Rights of Dissenting Stockholders
Pursuant to the provisions of Section 215 of Title 12 of the United
States Code, the Consolidation Agreement provides that any stockholder of the
Bank who has voted against the Consolidation Agreement at the Special Meeting of
Bank's stockholders, or who has given notice in writing at or prior to such
meeting to the presiding officer that such stockholder dissents from the
Consolidation, shall be entitled to receive the value of the Bank Common Stock
so held by such stockholder. The relevant portions of Section 215 of Title 12 of
the United States Code are attached hereto as Appendix II. A failure to vote
against the Consolidation Agreement or to give such notice in writing at or
prior to the meeting will be deemed a waiver of a stockholder's right of
appraisal. Any stockholder of the Bank who votes against the Consolidation
Agreement at the Special Meeting of the Bank's stockholders, or who gives a
notice in writing at or prior to such meeting to the presiding officer that such
stockholder dissents, will be notified in writing of the date of consummation of
the Consolidation.
In order to receive the value of the Bank Common Stock held, a
stockholder must make a written request for payment to the continuing bank at
any time before thirty days after the date of consummation of the Consolidation,
accompanied by the surrender of such stockholder's stock certificates. This
written request for payment should be sent to: First National Bank of Manatee,
5817 Manatee Avenue West, Bradenton, Florida 34209, Attention: Secretary.
19
<PAGE> 21
The value of the shares of any dissenting stockholder will be
ascertained, as of the effective date of the Consolidation, by an appraisal made
by a committee of three persons comprised of (1) one selected by the vote of the
holders of the majority of the stock, the owners of which are entitled to
payment in cash (by reason of such request for appraisal); (2) one selected by
the directors of the continuing bank; and (3) one selected by the two so
selected. The valuation agreed upon by any two of the three appraisers shall
govern.
If the value so fixed shall not be satisfactory to any dissenting
stockholder who has requested payment, that stockholder may, within five days
after being notified of the appraised value of such shares, appeal to the Office
of the Comptroller of the Currency ("OCC"), which shall cause a reappraisal to
be made which shall be final and binding as to the value of the shares of the
dissenting stockholder. If within ninety days from the date of consummation of
the Consolidation, for any reason one or more of the appraisers is not selected
as above provided, or if the appraisers fail to determine the value of such
shares, the OCC shall, upon written request of any interested party, cause an
appraisal to be made which shall be final and binding on all parties. The
expenses of the OCC in making the reappraisal or the appraisal, as the case may
be, shall be paid by the continuing bank. The value of the shares ascertained
shall be promptly paid to the dissenting stockholders by the continuing bank. In
performing the appraisal or reappraisal, the OCC selects an appropriate
valuation method, or combination of methods, after reviewing the facts of each
case to establish a reasonable estimate of the value of the shares. The OCC may
review the market value of the shares being appraised, the investment value of
the shares based upon earnings of the bank and similarly situated banks, and the
adjusted book value of the shares. A combination of methods may be used with the
OCC applying varying weights to the different methods. SEE APPENDIX II TO THIS
PROXY STATEMENT/PROSPECTUS FOR A MORE DETAILED DESCRIPTION OF THE VALUATION
METHODS USED BY THE OCC TO ESTIMATE THE VALUE OF A BANK'S SHARES WHEN THE BANK
IS INVOLVED IN A TRANSACTION SUCH AS THE CONSOLIDATION.
The foregoing summary of Section 215 does not purport to be complete
and is qualified in its entirety by reference to Section 215. The failure of a
stockholder to follow the procedures set forth in Section 215 will terminate
such stockholder's appraisal rights. As a consequence, each stockholder of the
Bank who desires to exercise such rights should review Section 215 and follow
its provisions.
Accounting Treatment
The consolidation of Bank and New Bank will be accounted for in an
method similar to a pooling of interest.
20
<PAGE> 22
MARKET PRICES OF STOCK
The Company
First National Bancshares, Inc. was incorporated on June 15, 1998. No
shares of the Company have been publicly traded since the date of its
incorporation to the present time. Therefore, no meaningful market exists at
this time for the Company's stock. Bank shareholders will exchange their Bank
stock for Company stock. Currently, no established "over-the-counter" market
exists for Bank stock. Assuming the market for Company stock will be the same as
for Bank stock, it is not anticipated that an established "over-the-counter"
market will develop for Company stock.
The Bank
There has been only a limited over-the-counter market for the Bank's
common stock. The Bank's common stock is not listed on the National Association
of Securities Dealers' Automated Quotation System ("NASDAQ") or any other
exchange. The Bank had approximately 531 shareholders as of September 30, 1998.
The Bank is not aware of any securities dealer which is appropriate to classify
as a "market maker" in shares of the Bank. The latest trade known to management
was for 752 shares at a price of $26 per share on September 23, 1998. The
average trading price of shares of the Bank's Common Stock of which the Bank is
aware over the past three (3) years is as follows:
<TABLE>
<CAPTION>
Quarter Ended: Average Trading Price During Pro Forma Effect of 2 for 1 Exchange
- -------------- ---------------------------- ------------------------------------
Quarter: Ratio on Average Trading Price During
-------- -------------------------------------
Quarter
-------
<S> <C> <C>
September 30, 1995 16.13 8.07
December 31, 1995 16.00 8.00
March 31, 1996 16.00 8.00
June 30 , 1996 16.25 8.13
September 30, 1996 N/A N/A
December 31, 1996 17.00 8.50
March 31, 1997 17.00 8.50
June 30, 1997 17.00 8.50
September 30, 1997 19.68 9.84
December 31, 1997 20.00 10.00
March 31, 1998 21.20 10.60
June 30, 1998 24.33 12.17
September 30, 1998 25.71 12.86
</TABLE>
21
<PAGE> 23
DIVIDENDS
The Company
Since the date of its incorporation, the Company has paid no dividends.
After consummation of the reorganization, the amount and timing of future
dividends will be determined by its Board of Directors and will substantially
depend upon the earnings and financial condition of its principal subsidiary,
the Resulting Bank. At the present time, the Company has no established dividend
policy. The ability of the Company to obtain funds for the payment of dividends
and for other cash requirements is largely dependent on the amount of dividends
which may be declared by its subsidiary, the Bank. Generally, a national bank
may not declare a dividend, without the approval of the OCC if the total of
dividends declared by such bank in a calendar year exceeds the total of its net
profits for that year combined with its retained profits of the preceding two
years. The amount of dividends paid to the Company by the Bank will have a
direct impact upon the Company's ability to pay dividends to its shareholders
and engage in the additional activities available to a holding company.
The Bank
The Bank last paid a cash dividend to shareholders in 1990 in the amount of
$0.15 per share. Since 1994, the Bank has adopted a policy of regularly paying a
5% stock dividend, as opposed to cash dividends, in each year. The Bank's Board
of Directors most recently declared a 5% stock dividend to shareholders of
record as of July 31, 1998 payable on August 31, 1998. The Company anticipates
continuing to pay such stock dividends in the future and has no current plans to
pay cash dividends to its shareholders.
The amount and timing of future dividends will be determined by the
Board of Directors of the Bank, and will depend upon the Bank's earnings and
financial condition, as well as upon federal economic policies and other
relevant factors. (See "SUPERVISION AND REGULATION.")
CAPITALIZATION
The following table sets forth the capitalization of the Bank as of
June 30, 1998 and the pro forma capitalization of the Company as of June 30,
1998, assuming that the reorganization had been consummated at such date, that
no shareholder of the Bank had exercised dissenters' rights, and that the
Company had redeemed and canceled the shares of New Bank issued to the Company
in connection with its formation at the price paid therefore.
22
<PAGE> 24
<TABLE>
<CAPTION>
Bank New Bank Adjustments Company
(Actual) (Actual) (Pro Forma) (Pro Forma)(2)(3)
-------- -------- ----------- -----------------
<S> <C> <C> <C> <C>
Shareholders' Equity
Common 3,573,575 100,000(1) (100,000)(1) 3,573,575
Surplus 4,154,358 20,000(1) (20,000)(1) 4,154,358
Undivided Profits 3,779,291 0 (3,779,291) 0
Undistributed Profits of
Subsidiary 0 3,779,291 3,779,291
Unrealized loss on
Investments Securities (42,877)(4) (42,877)
---------- -------- ---------- -----------
Total Shareholders Equity 11,464,347 120,000 (120,000) 11,464,347
</TABLE>
(1) Represents the capitalization of the New Bank in accordance with federal
banking law which requires minimum capitalization of $120,000, which
capital will be immediately withdrawn through a redemption of such stock by
the Bank. The capital of the Resulting Bank and the Company therefore will
be equal to the capital of the Bank immediately before the transaction and
will not be affected by the temporary capitalization of the New Bank.
(2) Reflects that the capital stock of the Bank is the sole investment of
the Company upon the consummation of the transaction.
(3) Does not reflect the effect of the incurrence of debt by the Company to pay
organizational costs estimated at $60,000. The Company has a line of credit
which entitles the Company to borrow up to $200,000 from an unaffiliated
bank for the purpose of paying expenses relating to the transaction
contemplated by the Agreement. Upon consummation of the transaction, the
Resulting Bank will pay a dividend to the Company which will be used to
retire this debt.
(4) Represents unrealized loss on Investment securities classified as
"Available for Sale" under Statement of Financial Accounting Standards No.
115 "Accounting for Certain Investments in Debt and Equity Securities"
which became effective January 1, 1994.
FINANCIAL STATEMENTS
The Bank's audited Balance Sheets as of December 31, 1997, and 1996,
the related audited Statements of Income, Statements of Changes in Shareholders'
Equity, and Statements of Cash Flows for each of the three years ended December
31, 1997, are included in the Bank's Annual Report, which was sent to each
shareholder in connection with the annual meeting of shareholders held May 7,
1998. Financial statements of the Bank are not included herein as they are not
deemed material to the exercise of prudent judgment by shareholders with respect
to the matters to be acted upon at the Special Meeting. If any shareholder so
desires, he may obtain an additional copy of such financial statements upon
written request to Glen w. Fausset, President, First National Bank of Manatee,
5817 Manatee Avenue West, Bradenton, Florida 34209.
23
<PAGE> 25
Provided below is a five-year summary of selected financial data of the Bank.
SELECTED FINANCIAL DATA OF FIRST NATIONAL BANK OF MANATEE
AS OF OR FOR THE PERIOD ENDED DECEMBER 31,
(000'S EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS DATA: 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
TOTAL INTEREST INCOME $9,277 $7,139 $6,254 $5,221 $5,006
TOTAL INTEREST EXPENSE $4,904 $3,686 $3,091 $2,272 $2,241
------ ------ ------ ------ ------
NET INTEREST INCOME $4,373 $3,453 $3,163 $2,949 $2,765
PROVISION FOR LOAN LOSSES $255 $83 $167 $53 $157
------ ------ ------ ------ ------
NET INTEREST INCOME (NET PROVISION) $4,118 $3,370 $2,996 $2,896 $2,608
NONINTEREST INCOME $711 $541 $450 $209 $668
NONINTEREST EXPENSE (NET) $3,986 $3,249 $2,826 $2,465 $2,366
SECURITIES GAIN & (LOSS) $3 $7 $4 $1 $0
PENSION PLAN CURTAILMENT GAIN $0 $0 $0 $0 $0
TAX $269 $188 $141 $138 $203
ACCOUNTING CHANGE $0 $0 $0 $0 $0
------ ------ ------ ------ ------
NET INCOME $574 $473 $478 $502 $707
PER SHARE DATA (1):
NET INCOME $0.81 $0.69 $0.72 $0.76 $1.08
BOOK VALUE $15.63 $14.87 $14.47 $13.05 $12.84
CASH DIVIDENDS N.A. N.A. N.A. N.A. N.A.
BALANCE SHEET DATA:
TOTAL ASSETS $140,988 $111,974 $94,650 $80,892 $80,033
TOTAL DEPOSITS $121,188 $96,978 $79,800 $68,716 $69,709
TOTAL NET LOANS $82,814 $58,912 $50,372 $40,567 $40,960
ALLOWANCE FOR LOAN LOSSES $915 $653 $562 $474 $431
SHAREHOLDER'S EQUITY $11,117 $10,321 $9,694 $8,602 $8,466
</TABLE>
(1) PER SHARE INFORMATION ADJUSTED TO ACCOUNT FOR 5% STOCK DIVIDEND IN EACH
YEAR FROM 1994 THROUGH 1997.
24
<PAGE> 26
HISTORY AND BUSINESS OF THE COMPANY
General
The Company was incorporated under the laws of the State of Florida on
June 15, 1998, at the direction of management of the Bank, for the purpose of
becoming a bank holding company by acquiring all of the outstanding shares of
the Bank. Immediately prior to consummation of the reorganization, the Company
will own all of the stock of the New Bank except for shares held by directors as
qualifying shares. Thereafter, the New Bank will consolidate with the Bank.
Shareholders of the Bank will become shareholders of the Company (subject to
their dissenters' rights; see "THE PROPOSED REORGANIZATION--Appraisal Rights of
Dissenting Shareholders") and the Company will become the sole shareholder of
the Resulting Bank. The Resulting Bank will carry on the business of the Bank
and the New Bank under the name "First National Bank of Manatee," without
interruption. The principal office of the Company is located at 5817 Manatee
Avenue West, Bradenton, Florida 34209. A copy of the Company's Amended and
Restated Articles of Incorporation is attached as Appendix III.
Competition
As the Company is a bank holding company in formation and currently
controls no banking subsidiaries, it is not engaged in competition with any
other bank or corporation. However, upon consummation of the reorganization, the
Bank will become a wholly owned subsidiary of the Company, and the Company's
competition will primarily be the same as that of the Bank. (See "HISTORY AND
BUSINESS OF THE BANK--Competition.")
Employees
The Company has no employees other than its officers, each of whom is
also an employee and officer of the Bank and who serve in their capacity as
officers of the Company without additional compensation. Upon consummation of
the reorganization, the Company, whose sole business function will be to hold
one hundred percent (100%) of the Bank's stock, does not anticipate any
immediate change in the number of or status of its employee officers. The status
of the Bank's current employees is not expected to be affected by the
reorganization.
Property
The Company is not currently engaged in any business activity and
currently owns no property. Upon consummation of the reorganization, the Company
will conduct its business from the Bank's offices. It is anticipated that the
Company will continue to operate its business from the offices of the Bank
immediately following the consummation of the acquisition of the Bank by the
Company. Because initially following the consummation of the transaction the
Company will not conduct any business other than its ownership of the Bank's
stock, the Company will not compensate the Bank for the use of office space in
the Bank's main office facility.
25
<PAGE> 27
Board of Directors
The present Directors of the Company are the same individuals who are
presently Directors of the Bank. (For information regarding the present
Directors of the Company, See "HISTORY AND BUSINESS OF THE BANK-Board of
Directors.") Directors of the Bank are elected annually. Directors of the
Company are elected to staggered three-year terms. Upon consummation of the
reorganization, the Directors of the Company will own the same percentage of
Company stock, as they currently own of Bank stock, assuming there are no
dissenters to the transaction who elect to receive the value of their shares in
cash.
Remuneration of Directors and Officers
The Company has paid no remuneration, direct or otherwise, to its
officers and/or directors since its incorporation. Furthermore, it is not
anticipated that the Company's officers and Directors will initially be paid any
additional compensation by the Company other than that currently paid to them by
the Bank.
Indemnification
Article IX of the Company's Amended and Restated Articles of
Incorporation provides as follows:
ARTICLE IX
INDEMNIFICATION
In addition to any and all rights and duties under applicable law, the
Corporation shall indemnify and hold harmless all of its directors, officers,
employees and agents, and former directors, officers, employees and agents from
and against all liabilities and obligations, including attorneys' fees, incurred
in connection with any actions taken or failed to be taken by said directors,
officers, employees and agents in their capacity as such to the fullest extent
possible under law.
The Bylaws of the Company further expand the provisions of
indemnification for directors, officers, employees and agents.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES
ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS, OR PERSONS CONTROLLING THE
COMPANY PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED
THAT, IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, SUCH
INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT OF
1933, AND IS THEREFORE UNENFORCEABLE.
Additionally, the provisions regarding indemnification may not be
applicable under certain federal banking laws and regulations. For a complete
description of the provisions regarding indemnification provided by the Company
see "DESCRIPTION OF COMMON STOCK--COMPARATIVE RIGHTS, Indemnification" of this
Proxy Statement.
26
<PAGE> 28
The Company's provisions regarding indemnification are for the personal
benefit of the directors, officers, employees and agents of the Company.
The reorganization of the Bank into a subsidiary of the Company is not
expected to have any effect, positive or negative, on the Bank nor the Company's
ability to obtain officers and directors indemnification insurance nor the rates
at which such insurance is available.
HISTORY AND BUSINESS OF THE BANK
General
The Bank opened for business on July 18, 1986 and has been
headquartered at 5817 Manatee Avenue West, Bradenton, Florida since its
organization after operating in a temporary trailer for a brief period.
The Bank provides customary retail and commercial banking services to
its customers, including checking and savings accounts, time deposits, safe
deposit facilities, personal loans, real estate mortgage loans, installment
loans, IRAs and night depository facilities. The Bank also operates a trust
department. The Bank is located in Bradenton, Florida, a community approximately
50 miles from Tampa in Manatee County. The area served by the Bank includes the
City of Bradenton and commuter/suburban and agricultural areas surrounding the
City of Bradenton.
The Bank's deposits are insured by the Federal Deposit Insurance
Corporation ("FDIC") to applicable legal limits and the Bank is supervised and
regulated by the FDIC and OCC.
Competition
The Bank operates in a highly competitive industry, due to the Florida
and federal laws permitting statewide and national branching by banks and
savings and loan associations, and credit unions. The Bank's main competition
comes from other commercial banks, national or state savings and loan
institutions, security dealers, mortgage bankers, financial companies and
insurance companies.
Banks generally compete with other financial institutions through the
banking products and services offered, the pricing of services, the level of
service provided, the convenience and availability of services, and the degree
of expertise and personal manner in which these services are offered. The Bank
encounters strong competition from most of the financial institutions in the
Bank's extended market area.
Employees
As of September 30, 1998, the Bank had 51 full-time employees and 5
part-time employees. The Bank provides a number of benefits for its full-time
employees, including health and life
27
<PAGE> 29
insurance, workers' compensation, social security, paid vacations, numerous bank
services and 401(k) and defined benefit retirement plans.
Property
The Bank operates its main office at 5817 Manatee Avenue West,
Bradenton, Florida 34209 pursuant to a 20 year lease with an unaffiliated
Florida General Partnership. The lease also has four (4) five year renewal
options. During 1997, the total lease payments pursuant to the lease amounted to
$196,500. In addition the Bank operates the following branches, listed in the
order in which they were opened. All of the branches are owned by the Bank.
COMMON NAME OF OFFICE ADDRESS
Island Office 5324 Gulf Drive, Holmes Beach, FL
State Road 64 Office 502 48th Street, Ct. E., Bradenton, FL
State Road 70 Office 9000 State Road 70 East, Bradenton, FL
The Bank also has purchased additional land in the Lakewood Ranch development in
Bradenton for future expansion. It is not anticipated that the Bank will open a
branch on such site until at least 1999 and the Bank has not applied to the OCC
for approval to open a branch as of this date.
Litigation
There is no material pending litigation to which the Company, the Bank
or the New Bank is a party, other than routine litigation incidental to the
business of the Bank. Further, there is no material legal proceeding in which
any Director, executive officer, principal shareholder, or affiliate of the
Company, the Bank or the New Bank or any associate of any such Director,
executive officer, or principal shareholder is a party and has a material
interest adverse to the Company, the Bank or the New Bank. None of the routine
litigation in which the Bank is involved is expected to have a material adverse
impact upon the financial position or results of operations of the Company, the
Bank or the New Bank.
Year 2000
As a financial institution the Bank is subject to the potential risks
to the financial services industry and the Bank's business specifically, of the
"Y2K" issue. The Y2K issue is the acronym and terminology currently utilized to
describe a wide variety of application specific potential technological problems
inherent in computer software which is designed to read only a 2 digit annual
date position. Many software packages currently employed by the financial
services industry as well as by industries which provide products and services
which may effect the financial services industry, either directly or indirectly
through suppliers, customers, and other persons, are not able to identify the
advent of the year 2000 as "00." Therefore, there is wide spread concern over
the risks posed to the financial services industry which is both highly
automated and dependent upon information processing technology. Concerns include
but are not limited to possible erroneous checking account transactions,
interest calculations or payment schedules. Similarly Y2K issues extend to
possible problems with ATM systems or credit and
28
<PAGE> 30
debit cards. The potential problems do not end at financial systems. Any machine
or device controlled by a computer is susceptible to the Y2K problem. The
financial impact to the industry as a whole to address Y2K could be substantial.
The Securities and Exchange Commission as well as all banking regulatory
agencies have alerted companys under their respective jurisdictions to consider
and address the risks posited by Y2K and to disclose where appropriate the
specific impact of Y2K on the Company.
The Bank is currently installing and testing, through NCR, a new data
processing system. Among the many enhancements of the system is Y2K
compatibility. One of the tasks of the Bank of major importance is confirmation
that all of its systems are Y2K compatible. This covers systems as simple as the
employee time clock, to telephone systems, PC's and networks, security systems,
and operating software. The Bank's task is simplified by the fact that all of
its systems are purchased from outside vendors and no programming is done by the
Bank. But, the burden falls on the Bank to monitor that all of our vendors
complete their programming changes in a timely manner. To this end, the Bank
formed a Y2K Committee to monitor its vendors' progress. The Bank currently
believes that all of its vendors are devoting adequate resources to the issue
and will complete the appropriate changes in a timely manner. The Bank
anticipates that new hardware and software will be completely installed by
November 30, 1998. Testing of such new products are scheduled before December
31, 1998. The Bank does not believe that the Y2K issue will materially affect
its profits, products, services or competitive condition.
Board of Directors
The Bank's Board of Directors is presently composed of 10 members, each
of whom stand for election each year.
The following table sets forth for each of the directors, name, age (as
of September 30, 1998), principal occupation(s) during the past five years, the
year they first became a director, and the number of shares of the Bank
beneficially owned by such person.
<TABLE>
<CAPTION>
SHARES OF BANK
STOCK
BENEFICIALLY PERCENT OF
OWNED AS OF TOTAL DIRECTOR PRINCIPAL
NAME AGE 9/30/98 OUTSTANDING SINCE OCCUPATION
<S> <C> <C> <C> <C> <C>
Beverly Beall 53 4,146 0.5% 1992 Customer Service Manager of
Beall's, Inc.
Robert G. Blalock 59 19,667(1) 2.62% 1986 Senior Law Partner,
Blalock, Landers, Walters
and Vogler, P.A.
Allen J. Butler 52 19,791(2) 2.64% 1986 President, H. Butler
Footwear, Inc.
Rosemary C. Carlson 50 210 0.03% 1998 VP and General Manager of
Time Warner Communications
</TABLE>
29
<PAGE> 31
<TABLE>
<CAPTION>
SHARES OF BANK
STOCK
BENEFICIALLY PERCENT OF
OWNED AS OF TOTAL DIRECTOR PRINCIPAL
NAME AGE 9/30/98 OUTSTANDING SINCE OCCUPATION
<S> <C> <C> <C> <C> <C>
Francis I. duPont, III 53 38,254(3) 4.93% 1994 Chairman of the Board and
CEO of the Bank
Glen W. Fausset 49 18,616 2.4% 1986 President, COO and
Secretary of the Bank
Stephen J. Korcheck, 66 254(4) 0.03% 1994 Retired President of
Ph.D. Manatee Community College
William J. Thompson 66 10,846(5) 1.4% 1986 Orthodontist
Raymond A. Weigel, III 53 6,253(6) 0.8% 1994 President of CLB
Consulting, Inc.
Dan C. Zoller 59 1,857 0.2% 1997 President of Zoller,
Najjar, Shroyer, Inc.
</TABLE>
- --------------------------------------------------------------------------------
(1) Includes 3,643 shares which Mr. Blalock owns as joint tenant with his
wife, 5,569 shares held in trusts of which Mr. Blalock is either sole
trustee or co-trustee. His wife owns 607 shares solely in her name which
are included but in which Mr. Blalock disclaims any interest. An
additional 9,817 of such shares are owned by Mr. Blaloch in "street name."
(2) Mr. Butler owns these shares as joint tenant with his wife.
(3) Mr. duPont's shares include 19,123 shares of common stock which may be
acquired immediately or within 60 days upon exercise of certain stock
options. His wife owns 2,794 shares solely in her name which are included
but in which Mr. duPont disclaims any interest.
(4) Dr. Korcheck owns these shares as joint tenant with his wife.
(5) Dr. Thompson owns 8,295 shares as joint tenant with his wife. His wife owns
2,551 shares solely in her name which are included but in which Dr.
Thompson disclaims any interest.
(6) Includes 3,614 owned individually by Mr. Weigel and
2,095 owned as custodian for his daughter. His wife owns 543 shares solely
in her name which are included but in which Mr.Weigel disclaims any
interest.
The following is a list of executive officers of the Bank other than
Francis I. duPont, III and Glen W. Fausset, who are listed above, together
with share ownership information:
<TABLE>
<CAPTION>
NO. OF SHARES
BENEFICIALLY OWNED IN OPTIONS TO
OFFICERS TITLE BANK AS OF 9/30/98 PURCHASE SHARES % OWNERSHIP
<S> <C> <C> <C> <C>
Maryellen Brennan Sr. V.P. Branch Administration 2,528 1,076 0.34%
Thomas Hodgson Sr. V.P. Loans 2,096 1,076 0.28%
Robert Matejcek Sr. V.P. and Cashier 975 1,103 0.13%
Steve Mills Sr. V.P. Trust -0- 1,103 -0-
Paul Welsh Sr. V.P. Marketing -0- -0- -0-
</TABLE>
30
<PAGE> 32
As of September 30, 1998, The Board of Directors and executive officers of the
Bank owned in the aggregate 106,350 shares or 14.2% of the outstanding shares of
the Bank exclusive of outstanding stock options.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Bank's Board of Directors held twelve (12) regular meetings in
1997. During the year that ended December 31, 1997, no director attended fewer
than 75% of the aggregate of the total number of meetings of the Board plus the
total number of meetings of all the committees of the Board on which he or she
served.
In 1997 the bank had eight standing committees: The Executive
Committee; Loan Review, Audit & Compliance Committee; Loan Committee; Nomination
Committee; Planning Committee; CRA Committee; Compensation and Benefits
Committee; and Trust Committee.
The Executive Committee was comprised of Messrs. Blalock, Butler,
duPont, Fausset and Thompson. The committee met twelve (12) times in 1997. The
principal function of the Executive Committee is to act on behalf of and to
exercise all of the powers of the Board of Directors when the Board is not in
session, except those powers specifically reserved to the Board under the Bank's
Bylaws or applicable law.
The Loan Review, Audit & Compliance Committee is comprised of Ms. Beall
and Messrs. Butler and Zoller, none of whom are officers of the Bank. The
committee met four (4) times during 1997. The principal functions of this
committee are to:
1. Recommend to the Board the engagement of the Bank's independent
auditors.
2. Review the scope of the annual audit prior to publication.
3. Review the results of the audit with the independent auditors.
4. Determine that no restrictions are placed by management on the
scope or implementation of the independent auditors'
examination of the Bank.
5. Report the results of such examination in writing to the Board at a
regular meeting.
6. Review the adequacy of the system of internal accounting controls.
7. Review internal audit reports.
8. Review internal loan review reports.
The Loan Committee, which is comprised of Ms. Beall, and Messrs.
Blalock, Butler, duPont, Fausset and Zoller, met twenty (20) times during 1997.
The principal functions of the Loan Committee are to:
31
<PAGE> 33
1. Examine and approve loans and discounts.
2. Buy and sell bills of exchange.
3. Discount and purchase bills, notes, and other evidences of debt.
The Nominating Committee is comprised of the entire Board of Directors
of the Bank. The full Board of Directors acted on nominations in 1997 but held
no meetings for this special purpose outside of the regular board meetings.
The Planning Committee, comprised of Mrs. Carlson, and Messrs. Blalock,
Butler, duPont, Fausset, Korcheck, and Weigel, met once in 1997. The principal
function of the Planning committee is to develop a strategic plan for the Bank.
The Community Reinvestment Act Committee (CRA), comprised of Mrs.
Carlson and Messrs. duPont, Fausset, Korcheck and Weigel, and officers and
employees of the bank, met three (3) times in 1997. The principal function of
this committee is to monitor the Bank's compliance with the Community
Reinvestment Act.
The Compensation and Benefits Committee met three (3) times in 1997. It
is comprised of Ms. Beall and Messrs. Korcheck, Thompson and Zoller. The
principal function of this committee is to review the compensation and benefits
package of the Bank to ensure the hiring and retention of qualified officers and
employees for the Bank. The committee also reviews the performance of the
Executive Officers of the Bank annually and makes salary recommendations to the
Board.
The Trust Committee, is comprised of Mrs. Carlson and Messrs. Korcheck,
Thompson, and Weigel. It met six (6) times in 1997. The principal function of
this committee is to monitor the trust activities of the trust department of the
Bank.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning
compensation paid or accrued by the Corporation and/or its subsidiaries, to or
on behalf of the Bank's Chairman and Chief Executive Officer and President and
Chief Operating Officer, respectively, for the fiscal years ended December 31,
1997, 1996 and 1995, and to all executive officers as a group during 1997:
32
<PAGE> 34
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
Name and Principal Year Salary ($) Bonus ($) Other Annual Awards SARs LTIP All Other
Position Compensation(1) ($) ($) Payouts Compensation
($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Francis I. duPont, III, 1997 129,448 10,000 7,621
Chairman of the Board & 1996 123,284 5,000 6,857 0 0 0 0
CEO 1995 119,000 5,000 7,295 0 0 0 0
Glen W. Fausset, 1997 97,026 5,000 7,636
President & COO 1996 97,026 2,500 5,872 0 0 0 0
1995 97,026 0 5,912 0 0 0 0
</TABLE>
- --------------------------------------------------------------------------------
(1) Includes value of bank car allocated to personal use and bank paid premiums
on life, medical, dental, and disability insurances.
Change of Control Agreements
In 1997, the Board of Directors of the Bank entered into agreements
with Messrs. duPont and Fausset providing for compensation to them in the event
of a change of the controlling interest of the Bank or dismissal without cause.
The agreements provide for the payment of up to three times base compensation
upon a change of control of the Bank or dismissal without cause.
Directors' Compensation
Directors who are not also employees receive $750.00 for each board
meeting attended (including one paid absence). In addition, such Directors are
paid $225.00 for the first of each committee meeting attended and $50.00 for
each subsequent committee meeting attending during the month. There is no intent
by the Company or the Bank to materially change the compensation received by the
Directors as a result of the formation of the holding company.
401(k) Retirement Plan
The Bank has a 401(k) Retirement Plan (the "401K Plan") which covers
substantially all of its employees. The 401K Plan was originally adopted
effective January 1, 1995. The purpose of the 401K Plan is to allow the
employees of the Bank the opportunity to provide for their retirement through a
tax deferred program to which the Bank also may contribute. An employee may
participate in the 401K Plan after having worked for the Bank for one year and
after having reached the age of 21. The contributions to the 401K Plan are made
by the employee and are limited to the lesser of 15% of the employees' income or
$10,000. The Bank may, but is not required to, "match" contributions made by the
employees. During 1997, the Bank contributed $0.50 for each $1.00 contributed by
the employee on the first 6% of the employee's income. The Bank also has the
right under the 401K Plan to make additional discretionary contributions on
behalf of employees. The employees have the option of investing in various funds
to met their investment objectives, including the Bank's stock. The employee is
entitled to the full value of their 401K Plan at the time of retirement, death
or permanent disability. An employee is entitled to receive the full "vested"
portion of his or her account upon other termination from the Bank but forfeits
the unvested portion.
33
<PAGE> 35
Employee Vesting Schedule
Number of Years of Service Percentage
Less than one year 0%
One to two years 33%
Two to three years 66%
More than three years 100%
As of December 31, 1997, 25 employees were participating in the 401K
Plan. During 1997, the Bank contributed $30,800 to the Plan.
Pension Plan
The Bank has a qualified, contributory defined benefit retirement plan
which is administered by the Bank and an advisory committee appointed by the
Board of Directors. Employees of the Bank are eligible to participate in the
Bank's qualified pension plan after they have completed six months of service
and have attained age 21. Contributions are to be made by the Bank annually in
amounts determined by the plan's actuary as necessary to fund retirement
benefits under the plan.
The plan provides for monthly retirement benefits to, or on behalf of,
each covered employee or beneficiary upon death or retirement at age 65. At age
65, such retirement benefits will be equal to 56% of an employee's average
earnings (defined as the average of his monthly base salary during the best paid
60 consecutive month period). Benefits under the plan begin to vest after three
years of service and do not fully vest until completion of seven years of
credited service. Benefits are reduced for employees who retire with less than
28 years of service.
The following table illustrates annual benefits which would be payable
to employees upon reaching the age of 65 for various levels of compensation and
years of service.
<TABLE>
<CAPTION>
COMPENSATION 10 YEARS 20 YEARS 30 YEARS 40 YEARS
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$10,000 $2,000 $4,000 $5,600 $5,600
- --------------------------------------------------------------------------
20,000 4,000 8,000 11,200 11,200
- --------------------------------------------------------------------------
30,000 6,000 12,000 16,800 16,800
- --------------------------------------------------------------------------
40,000 8,000 16,000 22,400 22,400
- --------------------------------------------------------------------------
50,000 10,000 20,000 28,000 28,000
- --------------------------------------------------------------------------
60,000 12,000 24,000 33,600 33,600
- --------------------------------------------------------------------------
</TABLE>
Stock Option Plans
On July 17, 1986, the Bank adopted an Incentive Stock Option Plan
("Option Plan"), which authorizes the Bank's Stock Option Plan Committee to
grant to officers and other key employees of the Bank nontransferable options to
purchase an aggregate of 75,000 shares of the Bank's Common Stock (subject to
adjustment pursuant to anti-dilution provisions). This plan expired on July 17,
1996.
34
<PAGE> 36
At the 1995 Annual Meeting of the Shareholders of the Bank, the
shareholders of the Bank voted in favor of the ratification of a replacement
successor plan which will expire in 5 years from its approval (April 20, 2000).
The plan authorizes the Bank's Board of Directors to grant officers and other
key employees of the Bank non-transferable options to purchase an aggregate of
25,000 shares of the Bank's common stock (subject to adjustment pursuant to the
anti-dilution provisions).
The purpose of the Option Plan is to advance the interests of the Bank
by providing officers and other key employees who have substantial
responsibility for the direction and management of the Bank with additional
incentive to promote the success of the business, to increase their proprietary
interest in the success of the Bank, and to encourage them to remain in its
employ. All options granted under the Option Plan are intended to qualify as
"incentive stock options" pursuant to Section 422A of the Internal Revenue Code
of 1986, as amended.
The Stock Option Plan is administered by the entire Board of Directors
of the Bank. The Board determines, subject to the provisions of the Option Plan,
in its sole discretion, to whom options will be granted, the time at which
options will be granted, the option price (as specified below) of the shares
subject to each option, the time when each option will be exercisable and the
duration of the exercise period, and interpretations of the Option Plan. All
recipients must agree in writing to remain in the employ of the Bank for a
period of at least three years from the date of grant.
The Option Plan provides that the exercise price of the stock options
will be determined by the Stock Option Plan Committee at the date of grant, but
in no event will the purchase price be less than 100% of the fair market value
(as defined in the Option Plan) of the Bank's Common Stock on such date.
Each option granted under the Option Plan becomes exercisable only
after one year continued employment of the optionee with the Bank immediately
following the date of grant. No option may be exercised unless the optionee is,
at the time of exercise, in the employ of the Bank and shall have been
continuously so employed since the date of grant of the option. In no event,
however, will an option under the original plan be exercisable after ten years
from the date of grant or, under the successor plan, after five years from the
date of grant.
The Option Plan provides that an optionee may exercise his option by
surrendering case, certified bank check, or Common Stock of the Bank which the
optionee owns at its then fair market value in payment of the exercise price of
the option. If an optionee exercises his stock option rights (other than as a
result of certain events set forth in the Option Plan), such optionee will be
subject to a restrictive covenant not to compete with the Bank within Manatee
County, Florida for a period of two years after such exercise of his stock
option rights.
The Option Plan provides that if a change of control of the Bank
occurs, the options will be immediately exercisable by the optionee. The Option
Plan also provides that no option will be exercisable more than three months
after termination of the optionee's employment with the Bank unless such
termination of employment occurs by reason of disability or death. In the
35
<PAGE> 37
event of the disability or death of a recipient of options while an employee of
the Bank (or his death within three months after retirement), the options which
were otherwise exercisable on the date of disability or death, as the case may
be, will be exercisable by the optionee or the estate of the optionee or by any
person who acquires such option by bequest or inheritance from the optionee at
any time prior to the expiration of one year from the date of his disability or
death.
The Board of Directors of the Bank has the right to amend, suspend, or
terminate the Option Plan at any time, but no such action will affect or impair
the rights of a recipient under any option previously granted under the Option
Plan. The original Option Plan terminates ten years from its effective date and
the successor Option Plan terminates five years from its effective date, or at
such earlier time as the Board of Directors of the Bank may determine, as to any
shares not at the time subject to options.
Since 1986, the Board of Directors has granted options to 6 current
executive officers of the Bank to purchase 48,539 shares of Common Stock. At
December 31, 1997, options to purchase 27,660 shares (including accrued stock
dividends) remained outstanding. The following table shows the stock options
granted to its current Chief Executive Officer and President.
The Bank has also granted options to thirteen other current key
employees of the Bank. Options to purchase a total of 6,072 shares of Common
Stock remain outstanding. The option exercise price for each option share was
100% of the fair market value of the Common Stock on the date of the grant.
AGGREGATED OPTION/SAR EXERCISES
IN FISCAL 1997 AND FISCAL YEAR END OPTION VALUES(1)
<TABLE>
<CAPTION>
Number of
Unexercised Value of Unexercised
Shares Acquired Value Options at in-the-money Options at
Name on Exercise (#) Realized 12/31/97(2) 12/31/97(3)
<S> <C> <C> <C> <C>
Francis I. duPont, III 0 0 18,232 $128,389
Glen W. Fausset 11,576 $96,798 6,077 $59,040
</TABLE>
(1) The bank does not have a stock appreciation rights (SAR) plan.
(2) Includes additional shares accrued due to stock dividends.
(3) Based on a market value of $20 per share at year end, 1997 which represents
the last known trade before year end.
CERTAIN TRANSACTIONS
There are no existing or proposed material transactions between the
Bank and any of the Bank's officers, directors, or the immediate family or
associates of any of the foregoing persons, except as indicated below.
Robert G. Blalock, a director of the Bank, is a member of the law firm
on Blalock, Landers, Walters and Vogler, P.A., which does the majority of the
Bank's legal work relating to litigation on defaulted loans. The Bank has
reviewed the fees and believes they are competitive within the market place.
Fees paid by the Bank were less than 5% of the law firm's revenues.
36
<PAGE> 38
Mr. Ray Weigel, III, a Director of the Bank and is the son of Mr. Ray
Weigel, Jr. who owns greater than 5% of the outstanding stock of the Bank. This
statement is made to comply with securities disclosures and has no bearing upon
the operation of the business of the Bank.
Some of the directors of the Bank, as well as the companies with which
such directors are associated, are customers of, and have had banking
transactions with the Bank in the ordinary course of the Bank's business and the
Bank expects to have such ordinary banking transactions with such persons in the
future. In the opinion of management of the Bank, all loans and commitments to
lend included in such transactions were made in compliance with applicable laws
on substantially the same terms, including interest rates and collateral, as
those prevailing for comparable transactions with other persons of similar
creditworthiness and did not involve more than a normal risk of collectability
or present other unfavorable features. During 1997, none of the Bank's directors
or principal officers had outstanding indebtedness that exceeded ten percent
(10%) of the Bank's equity capital accounts.
The Bank expects to have in the future, banking transactions, in the
ordinary course of its business with directors, officers, principal
shareholders, and their associates, on substantially the same terms, including
interest rates and collateral on loans, as those prevailing at the same time for
comparable transactions with others and which do not involve more than the
normal risk of collectability or present other unfavorable features.
SUPERVISION AND REGULATION
The following is a summary of certain statutes and regulations
affecting the Company. This summary is qualified in its entirety by such
statutes and regulations.
The Company
The Company will be a registered bank holding company under the Bank
Holding Company Act of 1956 (the "Banking Act") as amended, and as such will be
subject to regulation by the Federal Reserve Board (FRB). A bank holding company
is required to file with the FRB annual reports and other information regarding
its business operations and those of its subsidiaries. A bank holding company
and its subsidiary banks are also subject to examination by the FRB.
The Banking Act requires every bank holding company to obtain the prior
approval of the FRB before acquiring substantially all the assets of any bank or
bank holding company or ownership or control of any voting shares of any bank or
bank holding company, if, after such acquisition, it would own or control,
directly or indirectly, more than five percent (5%) of the voting shares of such
bank or bank holding company.
In approving acquisitions by bank holding companies of companies
engaged in banking-related activities, the FRB considers whether the performance
of any such activity by a subsidiary of the holding company reasonably can be
expected to produce benefits to the public,
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such as greater convenience, increased competition, or gains in efficiency,
which outweigh possible adverse effects, such as overconcentration of
resources, decrease of competition, conflicts of interest, or unsound banking
practices.
Bank holding companies are restricted in, and subject to, limitations
regarding transactions with subsidiaries and other affiliates.
Bank
The Bank is regulated by the Office of the Comptroller of the Currency
("OCC") as a national banking association organized under the laws of the United
States. Deposits of the Bank are insured by the Federal Deposit Insurance
Corporation ("FDIC") and thus the Bank is subject to certain FDIC rules and
regulations. The regulatory agencies have the authority to regularly examine the
Bank and the Bank is subject to the regulations promulgated by its supervisory
agencies.
Capital
The FRB, OCC, and FDIC require banks and holding companies to maintain
minimum capital ratios.
In December 1988, the FRB approved final "risk-adjusted" capital
guidelines for bank holding companies. The new guidelines became fully
implemented as of December 31, 1992. The FDIC has adopted substantially similar
risk-based capital guidelines. These ratios involve a mathematical process of
assigning various risk weights to different classes of assets, then evaluating
the sum of the risk-weighted balance sheet structure against the Company's
capital base. The rules set the minimum guidelines for the ratio of capital to
risk-weighted assets (including certain off-balance sheet activities, such as
standby letters of credit) at 8 percent. At least half of the total capital is
to be composed of common equity, retained earnings, and a limited amount of
perpetual preferred stock less certain goodwill items ("Tier 1 Capital"). The
remainder may consist of a limited amount of subordinated debt, other preferred
stock, or a limited amount of loan loss reserves. At June 30, 1998, on a pro
forma basis as if the transaction had been consummated on such date, the
Company's consolidated risk-adjusted Tier 1 Capital and total capital, as
defined by the regulatory agencies based on the fully phased in 1992 guidelines,
were 13.1 percent and 14.2 percent of risk-weighted assets, respectively, well
above the 4 percent and 8 percent minimum standards mandated by the regulatory
agencies.
In addition, the federal banking regulatory agencies have adopted
leverage capital guidelines for banks and bank holding companies. Under these
guidelines, banks and bank holding companies must maintain a minimum ratio of
three percent (3%), Tier 1 Capital (as defined for purposes of the year-end 1992
risk-based capital guidelines) to total assets. However, most banking
organizations are expected to maintain capital ratios well in excess of the
minimum levels and generally must keep such Tier 1 ratio at or above 5 percent.
As of June 30, 1998, on a pro forma basis as if the transaction had been
consummated on such date, the Company's leverage ratio was 7.8 percent, well
above the regulatory minimum.
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Regulatory authorities may increase such minimum requirements for all
banks and bank holding companies or for specified banks or bank holding
companies. Increases in the minimum required ratios could adversely affect the
Bank and the Company, including their ability to pay dividends.
Additional Regulation
The Bank is also subject to federal regulation as to such matters as
required reserves, limitation as to the nature and amount of its loans and
investments, regulatory approval of any consolidation or consolidation, issuance
or retirement by the Bank of its own securities, limitations upon the payment of
dividends and other aspects of banking operations. In addition, the activities
and operations of the Bank are subject to a number of additional detailed,
complex and sometimes overlapping laws and regulations. These include state
usury and consumer credit laws, laws relating to fiduciaries, the Federal
Truth-in-Lending Act and Regulation Z, the Federal Equal Credit Opportunity Act
and Regulation B, the Fair Credit Reporting Act, the Truth in Savings Act, the
Community Reinvestment Act, antiredlining legislation and antitrust laws.
Dividend Regulation
The ability of the Company to obtain funds for the payment of dividends
and for other cash requirements is largely dependent on the amount of dividends
which may be declared by its subsidiary, the Bank. Generally, a national banking
association may not declare a dividend, without the approval of the OCC if the
total of dividends declared by such bank in a calendar year exceeds the total of
its net profits for that year combined with its retained profits of the
preceding two years. In addition, national banks are subject to dividend
regulation by their primary federal bank regulatory agency in connection with
general supervisory authority as it relates to a bank's requirement to maintain
adequate capital.
Government Policies and Legislation
The policies of regulatory authorities, including the OCC, FRB, FDIC
and the Depository Institutions Deregulation Committee, have had a significant
effect on the operating results of commercial banks in the past and are expected
to do so in the future. An important function of the Federal Reserve System is
to regulate aggregate national credit and money supply through such means as
open market dealings in securities, establishment of the discount rate on member
bank borrowings, and changes in reserve requirements against member bank
deposits. Policies of these agencies may be influenced by many factors,
including inflation, unemployment, short-term and long-term changes in the
international trade balance and fiscal policies of the United States government.
The United States Congress has periodically considered and adopted
legislation which has resulted in further deregulation of both banks and other
financial institutions, including mutual funds, securities brokerage firms and
investment banking firms. No assurance can be given as to whether any additional
legislation will be adopted or as to the effect such legislation would have on
the business of the Bank or the Company. In addition to the relaxation or
elimination of geographic restrictions on banks and bank holding companies, a
number of
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regulatory and legislative initiatives have the potential for eliminating many
of the product line barriers presently separating the services offered by
commercial banks from those offered by nonbanking institutions.
DESCRIPTION OF COMMON STOCK--COMPARATIVE RIGHTS
General
The authorized common stock of the Company consists of two million five
hundred thousand (2,500,000) shares of voting common stock, with $0.10 par value
per share. The authorized capital stock of the Bank consists of one million
(1,000,000) shares of Five Dollar ($5.00) par value per share, 751,478 of which
were outstanding as of September 30, 1998. Upon the consolidation of the Bank
and the New Bank becoming effective, 1,502,956 shares of the Company stock will
be exchanged for all of the outstanding shares of Bank stock, subject to the
exercise of dissenters' rights of appraisal.
Assuming the consummation of the transaction contemplated by the
Agreement, the Company will issue 1,502,956 shares of its $0.10 par value common
stock to existing shareholders of the Bank on the basis of two (2) shares of
Company common stock for each share of $5.00 par value common stock of the Bank.
Assuming no dissenters to the transaction, the Company will, immediately upon
the effective date of the transaction contemplated by the Agreement, have a
capital structure of two million five hundred thousand (2,500,000) authorized
shares of $0.10 par value common stock of which 1,502,956 shares would then be
issued and outstanding.
Voting Rights
Each share of common stock of the Company and the Bank entitles the
holder thereof to one (1) vote on all matters including the election of
directors. Under Florida General Corporation Law and the Articles of
Incorporation of the Company, shareholders of the Company will not have
cumulative voting rights. (See "DESCRIPTION OF COMMON STOCK COMPARATIVE
RIGHTS--Cumulative Voting.") Pursuant to the Company's Bylaws, the affirmative
vote of 75% of the shares represented at a duly called meeting for such purpose
may remove any one or all of the directors of the Company. Pursuant to federal
banking law, a majority of shares represented may remove any one or all of the
directors of the Bank. A special meeting of shareholders of the Bank may be
called by shareholders of the Bank who own not less than twenty-five percent
(25%) of the voting power of the Bank. A special meeting of shareholders of the
Company may be called by shareholders who own in the aggregate not less than
fifty percent (50%) of the stock of the Company.
Right of Redemption
The Bank has limited ability to buy its outstanding shares (redeem its
shares) from its shareholders. The Company is specifically empowered by its
Articles of Incorporation and Florida General Corporation Law to buy its shares
of outstanding common stock from its shareholders, at the mutual accord of the
shareholder and Company.
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Liquidation Rights
In the event of liquidation, holders of common stock of the Company and
the Bank are entitled to similar rights as to assets distributable to
shareholders on a pro rata basis.
Preemptive Rights
Holders of common stock of the Company will not have the preemptive
right to subscribe for or to purchase any additional securities which may be
issued by the Company as provided by the Florida General Corporation Law.
Holders of common stock of the Bank currently do not have preemptive rights to
subscribe for or to purchase additional securities issued by the Bank as
provided by federal banking law and the Articles of Association of the Bank.
Preemptive rights permit a shareholder to subscribe to a sufficient
number of shares so as to maintain their relative pro rata ownership upon the
issuance of additional shares by a corporation, except in certain circumstances.
Dissenters' Rights
Shareholders of the Corporation and the Bank have similar dissenters'
rights in certain transactions pursuant to federal banking and Florida general
corporate law. Under Section 607.1301 et. seq. of the Florida Business
Corporation Act, and Section 215 of Title 12 of the United States Code,
shareholders of the Company and the Bank may elect to dissent from a merger,
consolidation or sale of substantially all of the assets of a Florida
corporation and a national bank and receive the fair cash value of their shares.
Cumulative Voting
Each share of common stock of the Bank entitles the holder thereof to
one (1) vote on all matters except for the election of directors where
shareholders are entitled to vote cumulatively. The shareholders of the Company
will have a right to one vote on all matters, including the election of
directors, and will not have the right to cumulate their shares in the election
of Directors. A shareholder voting cumulatively may cast the number of shares he
owns times the number of Directors to be elected in favor of one nominee or
allocate such votes among the nominees as he determines.
Indemnification
The Company's Articles of Incorporation and Bylaws provide for
indemnification of officers, directors, employees and agents to the fullest
extent permitted by Florida law. Similarly, the Articles of Association of the
Bank provide for indemnification of directors and officers of the Bank. Florida
law provides for indemnification in both derivative and nonderivative actions.
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Florida law generally provides for the payment of expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually and
reasonable incurred by the indemnities provided such person acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and with respect to any criminal action or
proceeding if he had no reasonable cause to believe his conduct was unlawful.
However, in derivative suits, if the suit is lost, no indemnification is
permitted in respect of any claim, issue or matter as to which the prospective
indemnitee is adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation and then only if, and only to the
extent that, a court of competent jurisdiction determines upon view of all the
circumstances of the case, the prospective indemnitee is fairly and reasonable
entitled to indemnity for such expenses as the court deems proper. Further, this
indemnity in derivative suits is limited to expenses incurred in defending the
suit, not the amount of any judgment, fine or other penalty levied against the
prospective indemnitee. Finally, no indemnification may be provided in any
action or suit in which the only liability asserted against a director is
pursuant to a statutory provision outlawing loans. dividends, and distribution
of assets under certain circumstances.
The provisions regarding indemnification may not be applicable under
certain federal banking and securities laws and regulations.
Dividend Rights
Dividends may be paid on common stock of the Company as are declared by
the Board of Directors out of funds legally available therefor. Dividends may
not exceed the surplus of the Company, as defined by the Florida General
Corporation Act, and may not be declared if the Company is insolvent or would
thereby be made insolvent. (See "SUPERVISION, REGULATION AND LEGISLATION--The
Company.")
Dividends may be paid on common stock of the Bank as are declared by
the Board of Directors out of funds legally available therefor. Dividends paid
by the Bank on its common stock must be declared out of the net profits of the
Bank.
Transfer and Assessability
Transfer of common stock of the Company may not be restricted by the
Company and, when issued, common stock of the Company is fully paid and
nonassessable.
The transfer of common stock of the Bank may not be restricted, except
as is reasonably calculated by the Bank to simplify the work of the Bank with
respect to stock transfers, voting at shareholders' meetings and related
matters, and to protect it against fraudulent transfers. The common stock of the
Bank is subject to assessment by the Board of Directors in order to restore
capital impaired by losses or otherwise, and shares owned by public shareholders
who fail to pay any assessment may be sold at public or private sale.
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Antitakeover Measures
A vote of the holders of at least two-thirds (2/3) of the issued and
outstanding common shares of capital stock of the Bank is required to effectuate
a voluntary liquidation of the Bank, reorganization of the Bank, consolidation
or consolidation of the Bank with another bank, or the increase or decrease of
the Bank's authorized or outstanding capital stock. A two-thirds (2/3) vote of
the issued and outstanding stock is also required for such transactions of the
Company, unless a higher or lower voting requirement is established in the
Company's Articles of Incorporation. Pursuant to the Articles of Incorporation
of the Company, a majority vote of the issued and outstanding shares is
sufficient to amend the Articles of Incorporation of the Company, other than
Article XIII. In accordance with Article XIII of the Articles of Incorporation
of the Company a "business combination" (which includes any consolidation or
consolidation; sale, lease exchange, mortgage, pledge or other disposition of
greater than 10 percent of the assets of the Company; issuance or sale of any
securities of the Company; adoption of a plan of liquidation by the Company)
requires the approval of eighty percent (80%) of the total outstanding shares of
common stock and sixty-six and two-thirds percent (66 2/3%) of the outstanding
shares of common stock held by the Independent Shareholders (as defined in
Article XIII), unless such "Business Combination" has been approved by the
"Continuing Directors." In addition, amendment of Article XIII of the Company's
Articles of Incorporation may also require the vote of eighty percent (80%) of
the Company's outstanding shares and shares held by sixty-six and two-thirds
percent (66 2/3%) of the Independent Shareholders if such amendment is not
approved by the Continuing Directors as defined by Article XIII. Because the
Executive officers and Directors of the Company will own approximately 14.2%
percent of the shares of the Company (assuming consummation of the proposed
consolidation and assuming there are no dissenting shareholders to the
transaction), a "Business Combination" with an Interested Shareholder may be
difficult to approve without the consent of the Continuing Directors (as such
term is defined by Article XIII) and Management. The Bank currently has no
antitakeover provision which is substantially similar to Article XIII of the
Company's Articles of Incorporation. (See "ANTITAKEOVER MEASURES.")
ANTITAKEOVER MEASURES
Discussion of Fair Price and Supermajority Vote Provisions
The Company's Amended and Restated Articles of Incorporation contain a
"Fair Price" and "Supermajority Vote" provision. Such provision has been
included in the Company's Articles of Incorporation based on the fact that
certain tactics have become relatively common in corporate takeover practice,
including the accumulation of a substantial block of stock as a prelude to an
attempted takeover or proxy fight or the use of a partial tender offer followed
by a second step consolidation or Business Combination involving less favorable
considerations than were offered in the partial tender offer. The Board
considers that such tactics can be highly disruptive and can result in
dissimilar and unfair treatment of shareholders.
The Fair Price and Supermajority Vote provisions are designed to
encourage potential takeover bidders to negotiate at arms length with the Board
of Directors. In the absence of such
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negotiations, the provisions are intended to achieve a measure of assurance
that any multistep attempt to take over the Company is made on terms that
offer similar treatment to all shareholders. Neither the proposed fair price
provision nor the supermajority vote provision will impede a takeover that
is approved by a majority of the directors of the Company who are unaffiliated
with a 10 percent or more shareholder.
The Board of Directors is not aware of any current efforts to obtain
control of the Bank or to effect substantial accumulations of its common shares.
The provisions are proposed in order to have in place appropriate safeguards to
protect the shareholders in light of numerous two-step takeover attempts for
public corporations and in light of developments in legislation regarding
interstate banking.
An effect of the Fair Price provision and the Supermajority Vote
provision is to make more difficult the consummation of a Business Combination
with a 10 percent or more shareholder in the absence of the approval of the
Board of Directors of the Company. Accordingly, the provisions may discourage
takeover attempts which are not supported by the Board of Directors even in
transactions which may be supported by a majority of shareholders. (See "Purpose
and Effect of Amendments to Articles of Incorporation Concerning Fair Price and
Supermajority Vote Provisions.")
Reasons for Fair Price and Supermajority Vote Provisions
The Board of Directors of the Bank and the Company (which Boards are
comprised of the same individuals and, therefore, the Agreement was not the
result of any arms-length negotiation) unanimously approved the Agreement (the
law requires a simple majority of the Bank's Board of Directors approve such an
agreement), which Agreement provides for the exchange of Company common shares
for Bank common shares. Company common shares are subject to the provisions of
its Articles of Incorporation, including Article XIII, which Articles of
Incorporation were adopted at the direction of and with the approval of the
Bank's and Company's Boards of Directors. The so-called "Fair Price" and
"Supermajority Vote" provision would be applicable in the case of certain
Business Combinations with a shareholder owning ten percent (10%) or more of the
voting stock of the Company. The Board of Directors determined that the
provisions are desirable to assure all shareholders fair and equitable treatment
in the event of certain types of "two-step" acquisition transactions.
There have been a number of takeovers of publicly owned corporations
accomplished by the purchase of a control block of stock by means of open market
purchases or by means of a tender offer made directly to a target corporation's
shareholders at a price above the prevailing market price, followed by a
second-step consolidation or other Business Combination. The value of the
consideration given for the acquired corporation's shares in the second step of
such an acquisition may be, and frequently is, less than the value paid in the
first step and/or the form of the consideration in the first step. The Board of
Directors is concerned that the interest of all shareholders may not be
adequately protected in such a two-step acquisition.
The Bank has a large number of long-term shareholders who individually
hold a small number of Bank common shares. The Board believes that sophisticated
arbitrageurs and other
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market professionals are generally in a better position to take advantage of
the more lucrative first step transaction, while long-term shareholders
will often, as a practical matter, be compelled to accept the less
favorable consideration payable in the second step consolidation or other
Business Combination. Although the remaining shareholders subject to the second
step may have available certain legal remedies in such a situation, including
the right to dissent under Florida law in a consolidation and certain other
Business Combinations, the enforcement of such rights or remedies by a minority
shareholder may involve significant expense, delay and uncertainty.
The potential for future use of the two-step acquisition and further
expansion of interstate banking have convinced the Board of Directors of the
Bank and the Company that these provisions are desirable in order to preserve
for the shareholders the benefits which will accrue to the Company and its
subsidiary, the Bank, including its increased ability to compete in the
significantly deregulated banking industry.
Summary of Fair Price and Supermajority Vote Provisions
The following summary is qualified by reference to the full text of the
Amended Articles of Incorporation (attached hereto as Appendix III). Capitalized
terms used throughout this discussion of Article XIII shall have the meaning
given to such terms in Article XIII of the Company's Articles of Incorporation.
Article XIII contains both a "Fair Price" and "Supermajority Vote" provision.
Under the "Fair Price" provision, no Business Combination may be
effected without the approval of the Continuing Directors, unless either:
(i) Approved by holders of not less than 66 2/3 percent of the Voting Stock
held by all Independent Shareholders voting together as a class; or
(ii) The minimum price and other requirements and conditions set forth in
Article VI (D.) are complied with
It is possible that, if the Interested Shareholder has not made a
recent purchase of Corporation stock, the "Fair Price" might be a price paid by
the Interested Shareholder several years ago. That price may have no relation to
the present market value of the stock, particularly if the stock has declined in
value during the interim period.
As the fair price is an aggregate of the cash and Fair Market Value of
property paid plus interest paid on such property from the date the Interested
Shareholder became such to the date of consummation, a determination of whether
the price paid satisfies the Fair Price provision may conceivably not be made
until the date of consummation. Due to this uncertainty of whether the Fair
Price provision has been satisfied, the actual vote required at the meeting of
shareholders may not be determinable until consummation. This uncertainty may
preclude an Interested Shareholder from actually determining the price required
to satisfy the Fair Price provision, even if the Interested Shareholder had
every intention of doing so.
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The uncertainty associated with the Fair Price provision may have the
effect of encouraging an Interested Shareholder who is not assured of the eighty
percent (80%) Supermajority Vote to negotiate any proposed Business Combination
with the Board of Directors, and more specifically, negotiate with the
Continuing Directors.
The purpose of the foregoing conditions is to require, in the absence
of the approval of the Continuing Directors or holders of at least 66 2/3
percent of all Voting Stock held by the Independent Shareholders, that the
Independent Shareholders receive in a Business Combination the "minimum price"
specified in Article XIII (D.), which is the highest price per share paid by the
Interested Shareholder in acquiring shares of such class or series or, if
greater, in the case of preferred stock, the amount of the per share redemption
price, plus interest, less cash dividends received. The form of the
consideration would be the same as previously paid by the Interested Shareholder
to acquire the largest number of shares of such class or series. The conditions
in Article XIII (D)(3) are to deter the Interested Shareholder from self-dealing
or taking advantage of its equity position in the Corporation.
Article XIII also contains a "Supermajority Vote" provision. The vote
required by the Supermajority Vote provision is in addition to any vote required
by the Fair Price Provision. Under the Supermajority Vote provision, no Business
Combination with an Interested Shareholder may be effected without the approval
of the Continuing Directors, unless approved by holders of not less than eighty
percent (80%) of the outstanding Voting Stock voting together as a single class.
(This 80 percent Supermajority Vote requirement includes the vote of the
Interested Shareholder.)
Any vote of Shareholders of the Corporation under Article XIII is in
addition to any required vote of the holders of any class of shares of capital
stock of the Corporation and is required notwithstanding that no shareholder
vote or a lesser percentage shareholder vote may be required by law or other
provisions of the Articles of Incorporation.
All actions required to be taken by the Continuing Directors under
Article XIII shall be taken by the vote or written consent of two-thirds (2/3)
of the Continuing Directors. In the event that the number of Continuing
Directors is at any time less than five (5), all power and authority of the
Continuing Directors under Article XIII shall cease, including the authority to
approve Business Combinations and successor Continuing Directors and filling
director vacancies. The Continuing Directors are given authority under Article
XIII to determine, consistent with their fiduciary obligations, such matters as
whether any person is an Interested Shareholder; Fair Market Value of property,
securities and other noncash considerations; and other matters.
Provisions of Article XIII (H) restrict the manner in which the Article
may be repealed, amended, supplemented or otherwise modified.
Comparison with Current Requirements
Under Florida law, the following transactions or actions generally
require shareholder approval:
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(i) To effect a merger or consolidation;
(ii) To sell or otherwise dispose of all or substantially all the assets of
the Corporation;
(iii) To dissolve the Corporation; and
(iv) To adopt amendments to its Articles of Incorporation.
The Shareholder vote required by Florida law to authorize any of the
foregoing is a majority subject to an increase to two-thirds (2/3) of the voting
power of the Bank on such proposals as noted below. It should be noted, however,
that certain transactions are included within the definition of Business
Combinations which would not, in absence of the proposed Fair Price and
Supermajority Vote provisions, require any shareholder approval. In addition,
under the Fair Price provision, the affirmative vote of the holders of at least
sixty-six and two-thirds percent (66 2/3%) of the Voting Stock held by the
Independent Shareholders voting as a single class is required to approve a
Business Combination with an Interested Shareholder in the absence of the
approval of the Continuing Directors or in the absence of compliance with the
minimum price and other conditions and requirements of the Fair Price provision.
The Board of Directors has determined that encouraging a prospective
purchaser to negotiate directly with the Board and Management will be beneficial
to all shareholders. The Board has determined that it and Management, in
consultation with their professional advisors, are in the best position to
assess the business and prospects of the Company. Accordingly, the Board is of
the opinion that negotiations between the Company and a potential acquiror will
increase the likelihood that shareholders will receive a higher price for their
shares.
The fair price and supermajority vote provisions may have the effect of
protecting the incumbent Board of Directors and management by discouraging
takeover attempts which are not supported by the Board and management. As a
result, shareholders may not have the opportunity to sell some or all of their
shares in such a takeover attempt. Tender offers for control usually involve a
purchase price higher than the prevailing market price and may result in a
bidding contest between competing takeover bidders. In addition, these
"antitakeover" provisions could affect the price of the Company's common shares
by making it less attractive to persons who invest in securities in anticipation
of an increase in price if a takeover attempt occurs. On the other hand,
defeating undesirable tender offers can be expensive and disruptive. The fair
price and supermajority vote provisions may also deter an Interested Shareholder
from proceeding with a second-step business combination unless approved by the
Continuing Directors, especially if the market price of the Company shares had
declined from the highest price paid by the interested shareholder in acquiring
shares of such class. Furthermore, unless the Continuing Directors approve a
business combination, these "antitakeover" provisions would give the holder of a
minority of the total outstanding shares a veto power over a business
combination with an Interested Shareholder notwithstanding that the other
shareholders, including the Interested Shareholder, may believe the business
combination to be desirable or beneficial.
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Classified Board of Directors and Supermajority Vote Required to Remove
Directors
The Company's Board of Directors is divided into three classes and each
class will be elected for a three-year term. The classified election system for
Directors provides continuity of Directors and also serves as a defense against
unwanted takeovers. Shareholders desiring to change a majority of the Board
would have to wait two years, in that one class of the Directors are elected
annually. This may discourage potential acquirors of the Company's shares from
making acquisitions of the Company's shares.
Further the Company Bylaws require a vote of 75% to remove a director
from office which is increased from the majority of shareholders typically
required under Florida law.
Additional Considerations
The Bank currently has no intended antitakeover provisions in its
Articles of Association. The Company's Articles of Incorporation contain express
antitakeover provisions as set forth above. In addition, because the Company's
Articles of Incorporation do not "opt out" of the provisions, the antitakeover
provisions of Sections 607.901 and 607.902 of the Florida Business Corporation
Act will apply to certain attempted acquisition of the Company by an "interested
shareholder" in the future in the event that the Company has at that time in
excess of 300 shareholders. Currently the Bank has 531 shareholders.
Under Section 607.901, acquisition activities with "interested
shareholders" (i.e. those with greater than 10% ownership interest) are subject
to a supermajority/fair price provision. This provision increases to 66 2/3% of
the disinterested shareholders (from a mere majority of all shareholders) the
vote required to approve certain transactions with interested shareholders.
These provisions, however, do not apply (i) in the event the transaction has
been approved by a majority of Directors who are not affiliated with the
interested shareholder; (ii) if the company has had less than 300 shareholders
for each of the last 3 years; (iii) if the interested shareholder has been the
beneficial owner of 80% of the company's outstanding shares for at least 5
years; (iv) if the interested shareholder is the beneficial owner of at least
90% of the outstanding shares of the company, exclusive of shares acquired from
the company, unless such acquisition has been approved by disinterested
directors; or (v) the amount to be paid to the shareholders is a "fair price"
meaning that the highest price paid by the interested shareholder to purchase
shares of the target in the last two years must be maintained for additional
purchases. The intent of the latter provision is to eliminate two-tiered
transactions where an acquiror pays a significant premium for control of the
company then squeezes out the remaining shareholders at a much lower price.
Section 607.902 embodies a "control share acquisition statute" which
places certain procedural restrictions upon the acquisition of ranges of voting
power of the Company (20% to 33 1/3%; 33 1/3% to 50%; and greater than 50%). The
statute provides that the proposed buyer may give a notice to the Company before
or after such an acquisition has occurred and can request that a shareholders
meeting be held to consider the proposed acquisition if the acquiring person
agrees to pay the company expenses in regard to the meeting. Unless the buyer
agrees otherwise, the meeting is to be held within 50 days after receipt of the
notice by the company. A notice to the shareholders of the company is to be sent
and shall include: (i) a copy of the
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acquiring persons statement delivered by the proposed buyer; (ii) a statement
by the board of directors of its position or recommendation or that it is
making no recommendation with respect to the proposed acquisition; and (iii)
a statement that the shareholders are or may be entitled to assert dissenters
rights in regard to the proposed transaction. If the company's Articles of
Incorporation or Bylaws contain a provision to the effect that the shares so
purchased are subject to redemption by the company (which the Company's
currently do not), the company may redeem such shares where no acquiring
person statement was filed for a period of up to 60 days after the
last such acquisition at their "fair value." The effect of this section is to
make such control share acquisition more difficult to complete without the prior
approval and support of the Board of Directors and shareholders of the Company.
These sections, if they are applicable to the Company, may have the
effect of further protecting the incumbent Board of Directors and management by
discouraging takeover attempts which are not supported by the Board and
management. As a result, shareholders may not have the opportunity to sell some
or all of their shares in such a takeover attempt. Tender offers for control
usually involve a purchase price higher than the prevailing market price and may
result in a bidding contest between competing takeover bidders. In addition,
these "antitakeover" provisions could affect the price of the Company's common
shares by making it less attractive to persons who invest in securities in
anticipation of an increase in price if a takeover attempt occurs. On the other
hand, defeating undesirable tender offers can be expensive and disruptive. These
provisions may also deter an interested shareholder from proceeding with a
second step business combination unless approved by the Directors, especially if
the market price of the Company shares had declined from the highest price paid
by the interested shareholder in acquiring shares of such class. Furthermore,
unless the Directors approve a business combination, these "antitakeover"
provisions would give the holder of a minority of the total outstanding shares a
veto power over a business combination with an interested shareholder
notwithstanding that the other stockholders, including the interested
shareholder, may believe the business combination to be desirable or beneficial.
Federal law requires prior approval by the Board of Governors of the
Federal Reserve System before any company acquires control of a bank or bank
holding company. In addition, pursuant to national banking law, no person or
entity shall directly or indirectly, acquire a controlling interest in a bank
without the prior written approval of OCC. Independent of any provision of the
Company's Articles of Incorporation or Bylaws, the requirement for such
regulatory approval may delay efforts to obtain control over the Company.
The Company has 2,500,000 shares of authorized common stock of which,
after consummation of the proposed reorganization, there will be 1,502,956
shares issued and outstanding. Therefore the Company will have 997,044 shares of
its authorized common stock available for future issuance, without further
action by the shareholders of the Company, by the Board of Directors for any
proper corporate purpose. These shares could be issued into "friendly" hands by
the Board of Directors of the Company in the event of an attempt to gain control
of the Company without the approval of the incumbent members of the Board of
Directors. Because the Company's excess authorized shares could be utilized in
this manner they represent a potential "antitakeover" device.
49
<PAGE> 51
The Company's Articles of Incorporation and Bylaws currently contain no
other provisions that were intended to be or could fairly be considered as
antitakeover in nature or effect. The Board of Directors has no present
intention to amend further the Articles of Incorporation to add any antitakeover
provisions. These antitakeover provisions are not the result of Management's
knowledge of any effort to obtain control of the Company by any means.
Reports
The Bank currently files periodic reports with the OCC pursuant to
Section 12g of the Securities Exchange Act of 1934 (the "1934 Act") as a
"reporting company." Subsequent to the consummation of the transaction, the
Company as "successor" to the Bank will file similar annual and quarterly
reports with the Securities and Exchange Commission ("SEC"). The Company will
deliver to the shareholders of the Company an annual report containing audited
financial information as required under the 1934 Act. While the Company will
file quarterly reports with the SEC, copies of which may be obtained from the
SEC, the Company is not obligated and does not currently intend to provide
copies of such quarterly reports to shareholders.
LEGAL OPINION
Legal matters in connection with the issuance of common stock of the
Company in the consolidation will be passed upon by special counsel in
connection with the reorganization, Werner & Blank Co., L.P.A., Toledo, Ohio.
OTHER MATTERS
The management of the Bank is not aware of any other matters to be
presented for consideration at the meeting or any adjournments thereof. If any
other matters should properly come before the meeting, it is intended that the
persons' names in the enclosed proxy will vote the shares represented thereby in
accordance with their judgment, pursuant to the discretionary authority granted
therein.
ADDITIONAL INFORMATION
This Prospectus and Proxy Statement constitutes part of the
Registration Statement covering the shares to be offered pursuant to the
consolidation transaction by the Company, as filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended. This
Prospectus and Proxy Statement does not contain all the information set forth in
such Registration Statement and the exhibits thereto, certain portions of which
have been omitted pursuant to the rules and regulations of the Securities and
Exchange Commission.
Such Registration Statement may be inspected, without charge, at the
principal office of the Securities and Exchange Commission, 450 Fifth Street,
N.W., Washington, D.C., and copies
50
<PAGE> 52
of all or part thereof may be obtained from the Securities and Exchange
Commission upon payment of its prescribed fees.
The Securities and Exchange Commission also maintains a Web Site at
http:// www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission, including the Company.
THE BANK'S COMMON STOCK IS REGISTERED UNDER SECTION 12G OF THE
SECURITIES AND EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT"), PURSUANT TO WHICH IT
FILES ANNUAL AND QUARTERLY FINANCIAL REPORTS WITH THE OFFICE OF THE COMPTROLLER
OF THE CURRENCY. THE BANK'S FORM 10-K ANNUAL REPORT WHICH INCLUDES FINANCIAL
STATEMENTS AND SCHEDULES, BY REFERENCE, IS FILED WITH THE OFFICE OF THE
COMPTROLLER OF THE CURRENCY IN WASHINGTON, DC. A COPY OF THIS REPORT IS
AVAILABLE TO SHAREHOLDERS UPON REQUEST TO THE SECRETARY, FIRST NATIONAL BANK OF
MANATEE, 5817 MANATEE AVENUE WEST, BRADENTON, FLORIDA 34209, (941) 794-6969 THE
FIRST COPY WILL BE PROVIDED WITHOUT CHARGE. NEITHER THE ANNUAL REPORT TO
SHAREHOLDERS NOR THE FORM 10-K ARE TO BE TREATED AS PART OF THE PROXY
SOLICITATION MATERIAL, NOR AS HAVING BEEN INCORPORATED HEREIN BY REFERENCE.
ADDITIONALLY SUCH FORM 10-K ANNUAL REPORT MAY BE INSPECTED AND COPIED AT THE
OFFICES OF THE OFFICE OF THE COMPTROLLER OF THE CURRENCY, 490 L'ENFANTE PLAZA,
S.W., WASHINGTON D. C., 20219.
By Order of the Board of Directors of
First National Bank of Manatee
/s/ Glen W. Fausset
Glen W. Fausset, President
51
<PAGE> 53
APPENDIX I
CONSOLIDATION AGREEMENT
<PAGE> 54
CONSOLIDATION AGREEMENT
This CONSOLIDATION AGREEMENT (hereinafter called the "Agreement") dated
as of September 17, 1998 between First National Bank of Manatee (hereinafter
called the "Bank") and Manatee Interim Bank, N.A. (hereinafter called the "New
Bank") joined in by First National Bancshares, Inc. (hereinafter called the
"Corporation"), as the parent corporation of New Bank.
WITNESSETH:
WHEREAS, the Bank and the New Bank are each national banking
associations duly organized under the laws of the United States, each with its
principal office in Bradenton, County of Manatee, State of Florida. The Bank is
a banking corporation engaged in the business of banking. The New Bank is a
banking corporation which is not engaged in the business of banking and will not
be engaged in the business of banking prior to the consolidation as provided
herein. New Bank and Bank shall consolidate pursuant to the provisions of 12
U.S.C. Section 215 of the banking laws of the United States, under the charter
of Bank and with the name "First National Bank of Manatee."
WHEREAS, as of December 31, 1997, the capital funds of the Bank
consisted of capital stock of $3,556,000, divided into 711,200 shares of common
stock of a par value of $5.00 per share, surplus of $4,164,869 and undivided
profits, including capital reserves and unrealized loses on "available for sale
securities" of $3,396,342, for total equity capital of $11,117,211.
WHEREAS, an application to charter New Bank has been submitted to and
approved by the Office of the Comptroller of the Currency and, upon the
effective date of the Consolidation, the New Bank will have capital stock of
$100,000, divided into 1,000 shares of common stock of the par value of $100.00
per share and surplus of $20,000 for total capital funds of $120,000.
WHEREAS, all of the shares of the Bank and the New Bank outstanding
immediately prior to the Consolidation of New Bank and Bank (the
"Consolidation") will be owned by the Corporation immediately following the
Consolidation, and such shares of the New Bank will be retired and canceled by
the Corporation immediately subsequent to the Consolidation.
WHEREAS, Corporation is a for-profit corporation duly organized under
the laws of the State of Florida which has its registered office in Bradenton,
County of Manatee, State of Florida. As of the date hereof, Corporation has
1,000,000 common shares with $0.10 par value authorized, one (1) organizational
share of which is currently issued and outstanding, and which will be canceled
in connection with the Consolidation. Corporation's Articles of Incorporation
will be amended prior to consummation of the transactions specified herein to
increase its total shares of common stock authorized to 2,000,000.
WHEREAS, from and after the time the Consolidation becomes effective,
and as and when required by the provisions of this Agreement, the Corporation
will issue shares of its common stock as hereinafter provided.
WHEREAS, a majority of the Board of Directors of the Bank and a
majority of the Board of Directors of the New Bank, respectively, approved this
Agreement and authorized its execution, and a majority of the Board of Directors
of the Corporation has approved this Agreement, undertaken that the Corporation
shall join in and be bound by it, and authorized the undertaking hereinafter
made by the Corporation.
NOW, THEREFORE, in consideration of the premises, covenants and
conditions contained herein, the Bank and the New Bank hereby enter into this
Agreement and prescribe the terms and conditions set forth herein.
1. Consolidation. The New Bank and the Bank shall be consolidated under
the Charter of the Bank pursuant to the provisions of, and with the effect
provided under 12 U.S.C. Section 215.
2. Name, Articles and Bylaws. Upon the Consolidation becoming
effective, the name of the Bank (hereinafter called the "Consolidated Bank"
whenever reference is made to it as of the time of Consolidation or thereafter)
shall be "First National Bank of Manatee," its Articles of Association shall be
the current Articles of Association of the Bank, and its Bylaws shall be the
current Bylaws of the Bank upon the effective date of the Consolidation. The
principal office of the Consolidated Bank shall be the currently existing
principal office of the Bank and the Consolidated Bank shall continue to operate
all legally established branches of the Bank.
<PAGE> 55
3. Effect of Consolidation. Upon the Consolidation becoming effective,
the corporate existence of the Bank and the New Bank shall be consolidated into
and continued in the Consolidated Bank, as provided by the aforementioned
federal banking laws, and the Consolidated Bank shall be deemed to be the same
association as the Bank and the New Bank combined, possessing all the rights,
interests, privileges, powers and franchises and being subject to all
restrictions, liabilities and duties of each. All and each of the rights,
interests, privileges and franchises of the Bank and New Bank and all property,
real, personal and mixed, and all debts due to the Bank and New Bank on whatever
account, shall be transferred to and vested in the Consolidated Bank without any
deed or other transfer and without any order or other action on the part of any
court or otherwise; and, all property, rights, privileges, powers, franchises
and interests and each and every other interest of the Bank or New Bank shall be
thereafter the property of the Consolidated Bank. The Consolidated Bank, by
virtue of the Consolidation, and without any order or other action on the part
of any court or otherwise, shall hold and enjoy the same and all rights of
property, franchises and interests, including appointments, designations and
nominations and all other rights and interests as trustee, executor,
administrator, registrar of stocks and bonds, guardian of estates, assignee,
receiver, guardian of mentally incompetent persons and in every other fiduciary
capacity, in the same manner and to the same extent as such rights, franchises
and interests were held or enjoyed by the Bank and New Bank immediately prior to
the Consolidation of the Bank and the New Bank.
4. Liabilities. Upon the Consolidation becoming effective, the
Consolidated Bank shall be liable for all deposits, debts, liabilities,
obligations and contracts of the Bank and of the New Bank, respectively, matured
or unmatured, whether accrued, absolute, contingent or otherwise; and whether or
not reflected or reserved against on balance sheets, books of account, or
records of the Bank or the New Bank, as the case may be, shall be those of the
Consolidated Bank, and shall not be released or impaired by the Consolidation;
and, all rights of creditors and other obligees and all liens on property of
either the Bank or the New Bank shall be preserved unimpaired.
5. Conversion, Exchange and Consolidation of Shares. Upon the
Consolidation becoming effective:
(a) The shareholders of the Bank of record at the time the
Consolidation becomes effective shall be allocated and
entitled to receive shares of the common stock of the
Corporation, $0.10 par value, at the rate of two (2) such
shares of the Corporation for each one (1) share of the common
stock of the Bank.
(b) Each share of the common stock of the Bank shall, ipso facto
and without any action on the part of the holder thereof,
become and be converted into two (2) shares of the common
stock of the Corporation, and outstanding certificates
representing shares of the common stock of the Bank shall
thereafter represent shares of the common stock of the
Corporation, and such certificates may be exchanged by the
holders thereof, after the Consolidation becomes effective,
for the new certificates for the appropriate number of shares
bearing the name of the Corporation.
(c) The amount and number of shares of capital stock of the Bank
outstanding immediately before the Consolidation becomes
effective shall be increased in the amount and the number of
shares of the capital stock of the New Bank outstanding
immediately before the Consolidation becomes effective. Upon
the effective date of the Consolidation, the capital stock of
the New Bank will be retired and canceled.
(d) Upon and by reason of the Consolidation becoming effective,
stock shall be allocated as follows:
(i) To shareholders of the Bank of record at the time the
Consolidation becomes effective there shall be
allocated two (2) shares of common stock of the
Corporation for each one (1) share of common stock of
the Bank held of record at the time of the
Consolidation; and
(ii) To the Corporation there shall be allocated the
amount and the number of shares of capital stock of
the Consolidated Bank of the par value of $5.00 each,
which shall be equal to the amount and the number of
shares of capital stock of the Bank outstanding
immediately before the Consolidation.
(e) No dividend, except if and to the extent permitted by
the Board of Directors of the Corporation, payable by the
Corporation as of any date subsequent to the date the
Consolidation becomes effective, shall be payable to any
holder of shares of the Corporation evidenced by any
certificate for stock of the Bank outstanding on the
effective date of the Consolidation, unless and until such
<PAGE> 56
outstanding certificate for Bank stock shall have been
surrendered to the Corporation in exchange for a certificate
or certificates evidencing shares of the common stock of the
Corporation. Upon the surrender of any such Bank certificate
for a new certificate or certificates evidencing shares of
the common stock of the Corporation, there shall be paid to
the holder of the certificate the amount of dividends payable
by the Corporation as of a date subsequent to the effective
date of the Consolidation and not theretofore paid on such
shares of its common stock.
6. Employee Benefit Plans. Any employee benefit plan of Bank shall not
be terminated upon consummation of the Consolidation, but shall continue
thereafter as the plan of the Consolidated Bank. The parties hereto may enter
into a succession agreement relating to such plans to reflect such continuation,
to adapt such plans to the corporate structure existing from and after the
Consolidation becomes effective, and to make provisions for the employees of the
Corporation to participate therein, all in such manner as the Boards of
Directors of the respective parties may deem necessary or desirable.
7. Directors and Officers. The Board of Directors and Officers of the
Consolidated Bank, upon the Consolidation becoming effective, shall consist of
all persons who are directors or officers, as the case may be, of the Bank
immediately before the Consolidation becomes effective.
8. Shareholder and Regulatory Approvals. This Agreement shall be
submitted to the shareholders of the Bank and the New Bank for ratification and
confirmation at meetings to be called and held in accordance with the applicable
provisions of law and the respective Articles of Association and Bylaws of the
Bank and the New Bank. The Bank and the New Bank shall proceed expeditiously and
cooperate fully in the procurement of any other consents and approvals and in
the taking of any other action, and the satisfaction of all other requirements
prescribed by law or otherwise, necessary for consummation of the Consolidation
on the terms herein provided; including, without being limited to, the
preparation and submission of an application to the Office of the Comptroller of
the Currency to charter New Bank and application for approval under the
provisions of Section 18(c) of the Federal Deposit Insurance Act, as amended,
for prior approval to effect the Consolidation, and, incident thereto, to
establish a branch or branches under Section 9 of the Federal Reserve Act (12
USC 321), and an application by the Corporation to the Federal Reserve System to
acquire the Bank through the Consolidation.
9. Dissenters' Rights. A shareholder of the Bank who votes against the
Consolidation at the meeting of shareholders of the Bank held for the purpose of
considering the Consolidation or who gives notice in writing to the Bank at or
prior to such meeting that he dissents from the Consolidation, shall be entitled
to receive in cash, as provided in 12 U.S.C. Section 215, from the Consolidated
Bank if and when the Consolidation is consummated. A copy of the relevant
portions of Section 215 of the National Banking Laws is attached hereto as
Exhibit A.
10. Conditions. Effectuation of the Consolidation herein provided is
conditioned upon the following:
(a) Ratification and confirmation of this Agreement by vote of
the shareholders of the Bank and the New Bank, as required
by law; and
(b) Procurement of the consent of the Office of the Comptroller of
the Currency, Board of Governors of the Federal Reserve, and
all other necessary consents and approvals, and satisfaction
of all other requirements prescribed by law which are
necessary for consummation of the Consolidation.
11. Termination. If any of the following shall occur, then this
Agreement may be terminated at any time before the Consolidation becomes
effective, by the written notice by either the Bank or the New Bank to the other
of them, authorized or approved by resolution adopted by the Board of Directors
of one of them giving such notice:
(a) The number of shares of capital stock of the Bank voted
against the Consolidation, or in respect of which written
notice is given purporting to dissent from the Consolidation,
shall exceed five percent (5%) of the outstanding shares; or
(b) Any action, suit, proceeding or claim has been instituted,
made or threatened relating to the proposed Consolidation; or
(c) Any action, consent or approval, governmental or otherwise,
which is, or in the opinion of counsel for the Bank, may be
necessary to permit or enable the Consolidated Bank, upon and
after the Consolidation, to conduct all or any part of the
business activities of the Bank up to the time of the
<PAGE> 57
Consolidation, in the manner in which such activities and
businesses are then conducted, shall not have been obtained;
or
(d) Rulings from the Internal Revenue Service, or any opinion of
counsel in lieu thereof, satisfactory in form and substance to
the Bank and counsel for the Bank with respect to tax
consequences of the Consolidation and transactions referred to
herein shall not have been obtained and remain in effect; or
(e) In the event of the mutual agreement to terminate the
transactions contemplated by this Agreement, rendered by a
resolution electing to terminate, and adopted by the Boards of
Directors of the Bank and the New Bank.
Upon termination by written notice, as provided in this Section 11, this
Agreement shall be void and of no further effect, and there shall be no
liability by reason of this Agreement or the termination thereof on the part of
any of the Bank, the New Bank, the Corporation or the directors, officers,
employees, agents or shareholders of any of them.
12. Effective Time. Subject to the terms of this Agreement and upon
satisfaction of all requirements of law and the conditions specified in this
Agreement, the Consolidation shall become effective at the time specified in the
certificate of the Comptroller of the Currency approving the Consolidation.
13. Agreement of Directors. Each of the natural persons whose signature
is appended to this Agreement as a Director of the Bank hereby covenants and
agrees with each of the other natural persons whose signature is appended to
this Agreement as a Director of the Bank and New Bank, and with each of the
corporate parties to the Agreement, that he will vote any and all shares of the
capital stock of the Bank now owned, held, or standing in his name in his
individual, fiduciary, or other capacity that he may or shall be or become
entitled to vote, in favor of the adoption of this Agreement in any meeting of
shareholders of the Bank called for the purpose of voting on this Agreement.
14. Agreement of Affiliates. The Bank shall obtain agreements in the
form set forth as Exhibit B attached hereto, executed by each person, who is
identified as an "affiliate" (as such term is defined in Rule 144 under the
Securities Act of 1933) of the Bank.
15. Miscellaneous.
(a) Any of the terms or conditions of this Agreement may be waived
at any time by any party hereto, by action of its Board of
Directors, evidenced by a certificate signed by its President
or other duly authorized person.
(b) To the extent permitted by law, this Agreement may be amended
or supplemented at any time, whether before or after the vote
of shareholders of the Bank or New Bank, by written amendment
authorized by the Boards of Directors of each of the parties
and executed by a majority of members of the Boards of
Directors of each party.
(c) This Agreement and the instruments referred to herein
constitute the entire contract among the parties and supersede
all other understandings with respect to the subject matter
hereof.
(d) This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which
together shall be deemed one and the same Agreement, and shall
become binding on the parties hereto when one or more
counterparts have been signed by each of the parties and
delivered to the other parties.
(e) Any notices or other communications required or permitted
hereunder shall be sufficiently given if hand delivered or
sent by registered mail or certified mail, postage prepaid,
addressed, if to Corporation, Bank, or New Bank, 5817 Manatee
Avenue West, Bradenton, Florida 34209, or such other address
as shall be furnished in writing by any party, and any such
notice or communication shall be deemed to have been given as
of the date so mailed (except that a notice of change of
address shall not be deemed to have been given until received
by the addressee).
<PAGE> 58
(f) This Agreement shall be governed by and construed in
accordance with the laws of the United States.
(g) The descriptive headings of the several articles, sections and
paragraphs of this Agreement are inserted for convenience only
and do not constitute a part of this Agreement.
IN WITNESS WHEREOF, the Bank and the New Bank have caused this
Consolidation Agreement to be executed in counterpart by their duly authorized
officers and their corporate seals to be hereunto affixed as of the date first
above written.
FIRST NATIONAL BANK OF MANATEE
By: /s/ Glen W. Fausset, President By: /s/ Robert Matejcek, Cashier
------------------------------ ----------------------------
Glen W. Fausset, President Robert Matejcek, Cashier
(SEAL OF BANK)
MANATEE INTERIM BANK, N.A.
By: /s/ Glen W. Fausset, President By: /s/ Robert Matejcek, Cashier
------------------------------ -----------------------------
Glen W. Fausset, President Robert Matejcek, Cashier
(SEAL OF INTERIM BANK)
<PAGE> 59
THE UNDERSIGNED AGREES TO THE ABOVE TERMS AND CONDITIONS:
First National Bancshares, Inc.
By: /s/ Francis I. duPont, III, President
--------------------------------------
Francis I. duPont, III, President
And: /s/ Glen W. Fausset, Secretary
-------------------------------------
Glen W. Fausset, Secretary
The undersigned execute this Consolidation Agreement pursuant to the provisions
of Section 13.
/s/ Francis I. duPont, III /s/ Beverly Beall
- ------------------------------- ---------------------------------
Francis I. duPont, III Beverly Beall
/s/ Glen W. Fausset /s/ Rosemary Carlson
- ------------------------------- ---------------------------------
Glen W. Fausset Rosemary Carlson
/s/ Robert G. Blalock /s/ Stephen J. Korchek
- ------------------------------- ---------------------------------
Robert G. Blalock Stephen J. Korchek
/s/ Allen J. Butler /s/ Ray A. Weigel, III
- ------------------------------- ---------------------------------
Allen J. Butler Ray A. Weigel, III
/s/ William J. Thompson /s/ Dan C. Zoller
- ------------------------------- ---------------------------------
William J. Thompson Dan C. Zoller
<PAGE> 60
EXHIBIT A
DISSENTERS' RIGHTS {12 U.S.C. SECTION 215(B), (C), (D)}
(b) The consolidated association shall be liable for all liabilities of
the respective consolidating banks or associations. The capital stock of such
consolidated association shall not be less than that required under existing law
for the organization of a national bank in the place in which it is located:
Provided, That if such consolidation shall be voted for at such meetings by the
necessary majorities of the shareholders of each association and State bank
proposing to consolidate, and thereafter the consolidation shall be approved by
the Comptroller, any shareholder of any of the associations or State banks so
consolidated who has voted against such consolidation at the meeting of the
association or bank of which he is a stockholder, or who has given notice in
writing at or prior to such meeting to the presiding officer that he dissents
from the plan of consolidation, shall be entitled to receive the value of the
shares so held by him when such consolidation is approved by the Comptroller
upon written request made to the consolidated association at any time before
thirty days after the date of consummation of the consolidation, accompanied by
the surrender of his stock certificates.
(c) The value of the shares of any dissenting shareholder shall be
ascertained, as of the effective date of the consolidation, by an appraisal made
by a committee of three persons, composed of (1) one selected by the vote of the
holders of the majority of the stock, the owners of which are entitled to
payment in cash; (2) one selected by the directors of the consolidated banking
association; and (3) one selected by the two so selected. The valuation agreed
upon by any two of the three appraisers shall govern. If the value so fixed
shall not be satisfactory to any dissenting shareholder who has requested
payment, that shareholder may, within five days after being notified of the
appraised value of his shares, appeal to the Comptroller, who shall cause a
reappraisal to be made which shall be final and binding as to the value of the
shares of the appellant.
(d) If, within 90 days from the date of consummation of the
consolidation, for any reason one or more of the appraisers is not selected as
herein provided, or the appraisers fail to determine the value of such shares,
the Comptroller shall upon written request of any interested party cause an
appraisal to be made which shall be final and binding on all parties. The
expenses of the Comptroller in making the reappraisal or the appraisal, as the
case may be, shall be paid by the consolidated banking association. The value of
the shares ascertained shall be promptly paid to the dissenting shareholders by
the consolidated banking association. Within thirty days after payment has been
made to all dissenting shareholders as provided for in this section the shares
of stock of the consolidated banking association which would have been delivered
to such dissenting shareholders had they not requested payment shall be sold by
the consolidated banking association at an advertised public auction, unless
some other method of sale is approved by the Comptroller, and the consolidated
banking association shall have the right to purchase any of such shares at such
public auction, if it is the highest bidder therefor, for the purpose of
reselling such shares within thirty days thereafter to such person or persons
and at such price not less than par as its board of directors by resolution may
determine. If the shares are sold at public auction at a price greater than the
amount paid to the dissenting shareholders the excess in such sale price shall
be paid to such dissenting shareholders. The appraisal of such shares of stock
in any State bank shall be determined in the manner prescribed by the law of the
State in such cases, rather than as provided in this section, if such provision
is made in the State law; and no such consolidation shall be in contravention of
the law of the State under which such bank is incorporated.
<PAGE> 61
EXHIBIT B
Affiliate Letter
First National Bancshares, Inc.
5817 Manatee Avenue West
Bradenton, Florida 34209
Gentlemen:
I have been advised that I may be deemed an "affiliate," within the meaning of
Paragraph (c) of Rule 145 of the Rules and Regulations of the Securities and
Exchange Commission ("SEC") under the Securities Act of 1933 (the "Act"), of
First National Bank of Manatee, Bradenton, Florida, a national banking
association (the "Bank"), and may be deemed such at the time of the
Consolidation ("Consolidation") of the Bank with Manatee Interim Bank, N.A., a
newly chartered national banking association organized by First National
Bancshares, Inc. (the "Company") for the sole purpose of effecting the
affiliation of the Company and the Bank. Pursuant to the Consolidation, I will
acquire two (2) shares of the Common Stock of the Company ("Company Common
Stock") in exchange for each share of the Bank stock held by me and elected for
such exchange. I agree that I will not make any sale, transfer or other
disposition of the Company Common Stock in violation of the Act or the rules and
regulations promulgated thereunder by the SEC.
I have been advised that the issuance of the Company Common Stock to me pursuant
to the Consolidation has been registered under the Act by the Company by the
filing of a Registration Statement with the SEC or is exempt from such
registration. I have also been advised that such registration does not apply to
any distribution by me of the Company Common Stock received by me in the
Consolidation. I also have been advised that, since at the effective time of the
Consolidation, I may be deemed to have been an "affiliate" of the Bank, any
offering or sale by me of any of the Company Common Stock will, under current
law, require either: (i) the further registration under the Act of the Company
Common Stock to be sold; (ii) compliance with Rule 145 promulgated under the
Act; or (iii) the availability of another exemption from such registration. In
addition, I have been advised that any transferee in a private offering or other
similar disposition will be subject to the same limitations as those imposed on
me.
I represent and warrant to the Company that:
1. I have carefully read this letter and discussed its requirements and
other applicable limitations upon the sale, transfer or other
disposition of the Company Common Stock and to the extent I felt
necessary, with my counsel or counsel for the Bank.
2. I have been informed by the Company that the Company Common
Stock must be held by me indefinitely unless: (i) any of the Company
Common Stock received by me in the Consolidation and to be distributed
by me has been registered under the Act other than by the registration
by the Company referred to above; (ii) a sale of the Company Common
Stock is made in conformity with the volume and other applicable
limitations of Rule 144; or (iii) some other exemption from
registration is available with respect to any such proposed sale,
transfer or other disposition of the Company Common Stock. I will be
required to deliver to the Company evidence of compliance with such
requirements in connection with any proposed sale, transfer or other
disposition by me which may include, in the case of a distribution
under some other exemption from registration, an opinion of counsel
satisfactory to counsel for the Company that such exemption is
available.
3. I understand that the Company is under no obligation to register the
Company Common Stock that I may wish to sell, transfer, or otherwise
dispose of or to take any other action necessary in order to make
compliance with an exemption from registration available.
4. If I rely on the exemption from the registration provisions contained
in Section 4 of the Act (other than that contained in Rule 144 and
145), I will obtain and deliver to the Company a copy of a letter from
any prospective transferee which will contain: (a) representations
reasonably satisfactory to the Company as to the nondistributive
intent, sophistication, ability to bear risk, and access to information
of such transfer of the Company Common Stock; and (b) an assumption of
the obligations of the undersigned under this Paragraph 4.
<PAGE> 62
5. I also understand that to enforce the foregoing commitments, stop
transfer instructions will be given to the Company's transfer agent
with respect to the Company Common Stock and that there will be placed
on the certificates for the Company Common Stock, or any substitutions
therefor, a legend stating in substance:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IN
COMPLIANCE WITH THE REQUIREMENTS OF RULE 145 OR PURSUANT TO A
REGISTRATION STATEMENT UNDER SAID ACT OR AN EXEMPTION FROM SUCH
REGISTRATION.
Very truly yours,
- --------------------------------
<PAGE> 63
APPENDIX II
DISSENTER'S STATUTE
12 U.S.C. SECTION 215
AND OCC BANKING CIRCULAR 259 (ISSUED MARCH 5, 1992)
<PAGE> 64
DISSENTERS' RIGHTS {12 U.S.C. SECTION 215(B), (C), (D)}
(b) The consolidated association shall be liable for all liabilities of
the respective consolidating banks or associations. The capital stock of such
consolidated association shall not be less than that required under existing law
for the organization of a national bank in the place in which it is located:
Provided, That if such consolidation shall be voted for at such meetings by the
necessary majorities of the shareholders of each association and State bank
proposing to consolidate, and thereafter the consolidation shall be approved by
the Comptroller, any shareholder of any of the associations or State banks so
consolidated who has voted against such consolidation at the meeting of the
association or bank of which he is a stockholder, or who has given notice in
writing at or prior to such meeting to the presiding officer that he dissents
from the plan of consolidation, shall be entitled to receive the value of the
shares so held by him when such consolidation is approved by the Comptroller
upon written request made to the consolidated association at any time before
thirty days after the date of consummation of the consolidation, accompanied by
the surrender of his stock certificates.
(c) The value of the shares of any dissenting shareholder shall be
ascertained, as of the effective date of the consolidation, by an appraisal made
by a committee of three persons, composed of (1) one selected by the vote of the
holders of the majority of the stock, the owners of which are entitled to
payment in cash; (2) one selected by the directors of the consolidated banking
association; and (3) one selected by the two so selected. The valuation agreed
upon by any two of the three appraisers shall govern. If the value so fixed
shall not be satisfactory to any dissenting shareholder who has requested
payment, that shareholder may, within five days after being notified of the
appraised value of his shares, appeal to the Comptroller, who shall cause a
reappraisal to be made which shall be final and binding as to the value of the
shares of the appellant.
(d) If, within 90 days from the date of consummation of the
consolidation, for any reason one or more of the appraisers is not selected as
herein provided, or the appraisers fail to determine the value of such shares,
the Comptroller shall upon written request of any interested party cause an
appraisal to be made which shall be final and binding on all parties. The
expenses of the Comptroller in making the reappraisal or the appraisal, as the
case may be, shall be paid by the consolidated banking association. The value of
the shares ascertained shall be promptly paid to the dissenting shareholders by
the consolidated banking association. Within thirty days after payment has been
made to all dissenting shareholders as provided for in this section the shares
of stock of the consolidated banking association which would have been delivered
to such dissenting shareholders had they not requested payment shall be sold by
the consolidated banking association at an advertised public auction, unless
some other method of sale is approved by the Comptroller, and the consolidated
banking association shall have the right to purchase any of such shares at such
public auction, if it is the highest bidder therefor, for the purpose of
reselling such shares within thirty days thereafter to such person or persons
and at such price not less than par as its board of directors by resolution may
determine. If the shares are sold at public auction at a price greater than the
amount paid to the dissenting shareholders the excess in such sale price shall
be paid to such dissenting shareholders. The appraisal of such shares of stock
in any State bank shall be determined in the manner prescribed by the law of the
State in such cases, rather than as provided in this section, if such provision
is made in the State law; and no such consolidation shall be in contravention of
the law of the State under which such bank is incorporated.
2
<PAGE> 65
BC - 259
Date: March 5, 1992
BANKING ISSUANCE
- --------------------------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
-------------------------------------------------------------------------
Type: Banking Circular Subject: Stock Appraisals
- --------------------------------------------------------------------------------
To: Chief Executive Officers of National Banks, Deputy Comptrollers
(District), Department and Division Heads, and Examining Personnel
PURPOSE
This banking circular informs all national banks of the valuation methods used
by the Office of the Comptroller of the Currency (OCC) to estimate the value of
a bank's shares when requested to do so by a shareholder dissenting to the
conversion, merger, or consolidation of its bank. The results of appraisals
performed by the OCC between January 1, 1985 and September 30, 1991 are
summarized.
References: 12 U.S.C. 214a, 215 and 215a; 12 CFR 11.590 (Item 2)
BACKGROUND
Under 12 U.S.C. Section 214a, a shareholder dissenting from a conversion,
consolidation, or merger involving a national bank is entitled to receive the
value of his or her shares from the resulting bank. A valuation of the shares
shall be made by a committee of three appraisers (a representative of the
dissenting shareholder, a representative of the resulting bank, and a third
appraiser selected by the other two). If the committee is formed and renders an
appraisal that is acceptable to the dissenting shareholder, the process is
complete and the appraised value of the shares is paid to the dissenting
shareholder by the resulting bank. If, for any reason, the committee is not
formed or if it renders an appraisal that is not acceptable to the dissenting
shareholder, an interested party may request an appraisal by the OCC. 12 U.S.C.
Section 215 provides these appraisal rights to any shareholder dissenting to a
consolidation. Any dissenting shareholder of a target bank in a merger is also
entitled to these appraisal rights pursuant to 12 U.S.C. Section 215a.
The above provides only a general overview of the appraisal process. The
specific requirements of the process are set forth in the statutes themselves.
METHODS OF VALUATION USED
Through its appraisal process, the OCC attempts to arrive at a fair estimate of
the value of a bank's shares. After reviewing the particular facts in each case
and the available information on a bank's shares, the OCC selects an appropriate
valuation method, or combination of methods, to determine a reasonable estimate
of the shares' value.
Market Value
The OCC uses various methods to establish the market value of shares being
appraised. If sufficient trading in the shares exists and the prices are
available from direct quotes from the Wall Street Journal or a market-maker,
those quotes are considered in determining the market value. If no market value
is readily available, or if the market value available is not well-established,
the OCC may use other methods of estimating market value, such as the investment
value and adjusted book value methods.
3
<PAGE> 66
Investment Value
Investment value requires an assessment of the value to investors of a share in
the future earnings of the target bank. Investment value is estimated by
applying an average price/earnings ratio of banks with similar earnings
potential to the earnings capacity of the target bank.
The peer group selection is based on location, size, and earnings patterns. If
the state in which the subject bank is located provides a sufficient number of
comparable banks using location, size and earnings patterns as the criteria for
selection, the price/earnings ratios assigned to the banks are applied to the
earnings per share estimated for the subject bank. In order to select a
reasonable peer group when there are too few comparable independent banks in a
location that is comparable to that of the subject bank, the pool of banks from
which a peer group is selected is broadened by including one-bank holding
company banks in a comparable location, and/or by selecting banks in less
comparable locations, including adjacent states, that have earnings patterns
similar to the subject bank.
Adjusted Book Value
The OCC also uses an "adjusted book value" method for estimating value.
Historically, the OCC has not placed any weight on the bank's "unadjusted book
value," since that value is based on historical acquisition costs of the bank's
assets, and does not reflect investors' perceptions of the value of the bank as
an ongoing concern. Adjusted book value is calculated by multiplying the book
value of the target bank's assets per share times the average market price to
book value ratio of comparable banking organizations. The average market price
to book value ratio measures the premium or discount to book value, which
investors attribute to shares of similarly situated banking organizations.
Both the investment value method and the adjusted book value method present
appraised values which are based on the target bank's value as a going concern.
These techniques provide estimates of the market value of the shares of the
subject bank.
OVERALL VALUATION
The OCC may use more than one of the above-described methods in deriving the
value of shares of stock. If more than one method is used, varying weights may
be applied in reaching an overall valuation. The weight given to the value by a
particular valuation method is based on how accurately the given method is
believed to represent market value. For example, the OCC may give more weight to
a market value representing infrequent trading by shareholders than to the value
derived from the investment value method when the subject bank's earnings trend
is so irregular that it is considered to be a poor predictor of future earnings.
PURCHASE PREMIUMS
For mergers and consolidations, the OCC recognizes that purchase premiums do
exist and may, in some instances, be paid in the purchase of small blocks of
shares. However, the payment of purchase premiums depends entirely on the
acquisition or control plans of the purchasers, and such payments are not
regular or predictable elements of market value. Consequently, the OCC's
valuation methods do not include consideration of purchase premiums in arriving
at the value of shares.
STATISTICAL DATA
The chart below lists the results of appraisals the OCC performed between
January 1, 1985 and September 30, 1991. The OCC provides statistical data on
book value and price/earnings ratios for comparative purposes, but does not
necessarily rely on such data in determining the value of the banks' shares.
Dissenting shareholders should not view these statistics as determinative for
future appraisals.
In connection with disclosures given to shareholders under 12 CFR 11.590 (Item
2), banks may provide shareholders a copy of this banking circular or disclose
the information in the banking circular, including the past results of OCC
appraisals. If the bank discloses the past results of the OCC appraisals. If the
bank discloses the past results of the OCC appraisals, it should advise
shareholders that: (1) the OCC did not rely on all the information set
4
<PAGE> 67
forth in the chart in performing each appraisal; and (2) the OCC's past
appraisals are not necessarily determinative of its future appraisals of a
particular bank's shares.
APPRAISAL RESULTS
<TABLE>
<CAPTION>
OCC Average Price/
Appraisal Appraisal Price Earnings Ratio
Date * Value Offered Book Value of Peer Group
------ ----- ------- ---------- -------------
<S> <C> <C> <C> <C>
1/1/85 107.05 110.00 178.29 5.3
1/2/85 73.16 NA 66.35 6.8
1/15/85 53.41 60.00 83.95 4.8
1/31/85 22.72 20.00 38.49 5.4
2/1/85 30.63 24.00 34.08 5.7
2/25/85 27.74 27.55 41.62 5.9
4/30/85 25.98 35.00 42.21 4.5
7/30/85 3,153.10 2,640.00 6,063.66 NC
9/1/85 17.23 21.00 21.84 4.7
11/22/85 316.74 338.75 519.89 5.0
11/22/85 30.28 NA 34.42 5.9
12/16/85 66.29 77.00 89.64 5.6
12/27/85 60.85 57.00 119.36 5.3
12/31/85 61.77 NA 73.56 5.9
12/31/85 75.79 40.00 58.74 12.1
1/12/86 19.93 NA 26.37 7.0
3/14/86 59.02 200.00 132.20 3.1
4/21/86 40.44 35.00 43.54 6.4
5/2/86 15.50 16.50 23.69 5.0
7/3/86 405.74 NA 612.82 3.9
7/31/86 297.34 600.00 650.63 4.4
</TABLE>
- --------------------------------------------------------------------------------
* - The "Appraisal Date" is the consummation date for the conversion,
consolidation, or merger.
NA - Not Available NC - Not Computed
5
<PAGE> 68
APPRAISAL RESULTS
<TABLE>
<CAPTION>
OCC Average Price/
Appraisal Appraisal Price Earnings Ratio
Date * Value Offered Book Value of Peer Group
------ ----- ------- ---------- -------------
<S> <C> <C> <C> <C>
8/22/86 103.53 106.67 136.23 NC
12/26/86 16.66 NA 43.57 4.0
12/31/86 53.39 95.58 69.66 7.1
5/1/87 186.42 NA 360.05 5.1
6/11/87 50.46 70.00 92.35 4.5
6/11/87 38.53 55.00 77.75 4.5
7/31/87 13.10 NA 20.04 6.7
8/26/87 55.92 57.52 70.88 NC
8/31/87 19.55 23.75 30.64 5.0
8/31/87 10.98 NA 17.01 4.2
10/6/87 56.48 60.00 73.11 5.6
3/15/88 297.63 NA 414.95 6.1
6/2/88 27.26 NA 28.45 5.4
6/30/88 137.78 NA 215.36 6.0
8/30/88 768.62 677.00 1,090.55 10.7
3/31/89 773.62 NA 557.30 7.9
5/26/89 136.47 180.00 250.42 4.5
5/29/90 9.87 NA 11.04 9.9
</TABLE>
- --------------------------------------------------------------------------------
* - The "Appraisal Date" is the consummation date for the conversion,
consolidation, or merger.
NA - Not Available NC - Not Computed
For more information regarding the OCC's stock appraisal process, contact the
Officer of the Comptroller of the Currency, Bank Organization and Structure.
/S/ Frank Maguire
- --------------------------------------
Frank Maguire
Acting Senior Deputy Comptroller
Corporate Policy and Economic Analysis
6
<PAGE> 69
APPENDIX III
AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
FIRST NATIONAL BANCSHARES, INC.
<PAGE> 70
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
FIRST NATIONAL BANCSHARES, INC
The following Articles of Incorporation of FIRST NATIONAL BANCSHARES,
INC, a Florida corporation (the "Corporation") amend in their entirety and
restate those Articles of Incorporation which were originally filed for the
Corporation on June 15, 1998. These Amended and Restated Articles permit the
shareholders of the Corporation to increase the voting requirement for
shareholders over that required by the Florida Business Corporation Act. The
Amended and Restated Articles also include provisions related to Business
Combinations (as defined therein). These Amended and Restated Articles eliminate
information in the Articles which was of historic value and reform the original
Articles to take into consideration the changes noted above. These Amended and
Restated Articles were adopted by the Board of Directors on July 16, 1998 and by
the Sole Shareholder through an action by written consent on July 16, 1998.
All amendments included herein were adopted pursuant to Section
607.194(4), Florida Statutes, and there is no discrepancy between the
Corporation's Articles of Incorporation as theretofore amended other than the
inclusion of these amendments and the omission of matters of historical
interest.
ARTICLE I
NAME AND PRINCIPAL OFFICE
The name of this Corporation shall be FIRST NATIONAL BANCSHARES, INC,
whose principal office and mailing address shall be located at 5817 Manatee
Avenue West, Bradenton, Florida 34209.
ARTICLE II
COMMENCEMENT OF CORPORATE EXISTENCE
This Corporation commenced existence on June 15, 1998, and shall exist
perpetually unless sooner dissolved according to law.
ARTICLE III
PURPOSES AND GENERAL POWERS
The general purpose of this Corporation shall be the transaction of any
and all lawful business. This Corporation shall have all of the powers
enumerated in the Florida General Corporation Act, as the same now exists and as
hereafter amended, and all such other powers as are permitted by applicable law,
including, without limitation to act as a bank holding company and, to the
extent permitted under applicable federal and state laws, now or hereafter
existing, relating to bank holding companies and their activities.
ARTICLE IV
CAPITAL STOCK
1. Number and Class of Shares Authorized; Par Value.
The capital stock authorized, the par value thereof, and the class of
such stock shall be as follows:
<TABLE>
<CAPTION>
Number of Par Value Class
Shares Authorized Per Share of Stock
----------------------------------------------------------------------
<S> <C> <C>
2,500,000 $0.10 Common
</TABLE>
The consideration for all of the above stock shall be payable in cash
or, in lieu of cash, property (tangible and intangible), labor or services
(past, present or future), at a just valuation to be fixed by the Board of
Directors of the Corporation.
<PAGE> 71
2. Voting Rights.
The Common Stock shall possess and exercise exclusive voting rights and
at all meetings of the shareholders, each record holder of such stock shall be
entitled to one vote for each share held. Shareholders holding Common Stock
shall have no cumulative voting rights in any election of directors of the
Corporation.
3. No Preemptive Rights.
No shareholder of the Corporation shall have the right, upon the sale
for cash or otherwise, of any new stock of the Corporation or of any stock of
the Corporation held by it in its treasury or otherwise, of the same or any
other kind, class or series as that which he already holds, to purchase his pro
rata or any other share of such stock at the same price at which it is offered
to others or any other price.
4. Relative Rights.
Each share of Common Stock shall have the same relative rights as and
be identical in all respects with all other shares of common stock.
ARTICLE V
BOARD OF DIRECTORS
The business of the Corporation shall be conducted by a Board of
Directors. As of the date of adoption of these Amended and Restated Articles,
there are ten (10) members of the Board of Directors. The number of directors
may be either increased or diminished from time to time as provided in the
bylaws. Directors may be removed with or without cause.
ARTICLE VI
DISTRIBUTION OF ASSETS
The Board of Directors of the Corporation may, from time to time, and
at its discretion, distribute a portion of the assets of the Corporation to its
shareholders out of the capital surplus of the Corporation.
ARTICLE VII
PURCHASE OF SHARES
The Board of Directors of the Corporation may, from time to time, and
at its discretion, cause the Corporation to purchase its own shares to the
extent of unreserved and unrestricted capital surplus available for said
purchase.
ARTICLE VIII
BYLAWS
Except as otherwise provided by law, the power to adopt, alter, amend
or repeal the bylaws shall be vested in the Board of Directors. The shareholders
of the Corporation may adopt or amend a bylaw that fixes a greater quorum or
voting requirement for shareholders (or voting groups of shareholders) than is
required by the Florida Business Corporation Act.
ARTICLE IX
INDEMNIFICATION
In addition to any and all rights and duties under applicable law, the
Corporation shall indemnify and hold harmless all of its directors, officers,
employees and agents, and former directors, officers, employees and agents from
and against all liabilities and obligations, including attorneys' fees, incurred
in connection with any actions taken or failed to be taken by said directors,
officers, employees and agents in their capacity as such to the fullest extent
possible under law.
<PAGE> 72
ARTICLE X
CONFLICTS OF INTEREST
No contract or other transaction between this Corporation and any other
corporation, and no act of this Corporation, shall in any way be affected or
invalidated by the fact that any of the directors of this Corporation are
pecuniarily or otherwise interested in, or are the directors or officers of,
such other corporation. Any director individually, or any firm of which any
director may be a member, may be a party to, or may be pecuniarily or otherwise
interested in any contract or transaction of this Corporation, provided that the
fact that he or such firm is so interested shall be disclosed or shall have been
known to the Board of Directors or a majority thereof, and any director of this
Corporation who is also a director or an officer of such other corporation, or
who is so interested may be counted in determining the existence of a quorum at
any meeting of the Board of Directors of this Corporation which shall authorize
any such contract or transaction with like force and effect as if he were not
such a director or officer of such other corporation, or not so interested.
ARTICLE XI
LIMITED LIABILITY OF SHAREHOLDERS
The private property of the shareholders shall not be subject to
payment of the Corporation's debts to any extent.
ARTICLE XII
AMENDMENT
This Corporation reserves the right to amend or repeal any provisions
contained in these Articles of Incorporation, or any amendment hereto, subject
to the consent thereof by the holders of a majority of the Shares entitled to
vote thereon and any right conferred upon the shareholders is subject to this
reservation.
ARTICLE XIII
FAIR PRICE AND SUPER VOTE REQUIREMENT
A. Definitions as Used in This Article XIII.
(1) "Affiliate" or "Associate" shall have the respective meanings
given to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934.
(2) A person shall be a "beneficial owner" of any Voting Stock:
(i) which such person or any of its Affiliates or
Associates beneficially owns, directly
or indirectly, any shares of Voting Stock; or
(ii) which such person or any of its Affiliates or
Associates has by itself or with others: (a) the
right to acquire (whether such right is exercisable
immediately or only after the passage of time),
pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or
otherwise, or (b) the right to vote pursuant to any
agreement, arrangement or understanding; or
(iii) which is beneficially owned, directly or directly, by
any other person with which such person or any of its
Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares
of Voting Stock.
(3) "Business Combination" shall include:
(i) any merger or consolidation of the Corporation or any
of its subsidiaries with or into an Interested
Shareholder, regardless of which person is the
surviving entity;
(ii) any sale, lease, exchange, mortgage, pledge, or other
disposition (in one transaction or a series of
transactions) from the Corporation or any of its
subsidiaries to an Interested Shareholder, or from an
Interested Shareholder to the Corporation or any of
its
<PAGE> 73
subsidiaries, of assets having an aggregate Fair
Market Value of five percent (5%) or more of the
Corporation's total stockholders' equity;
(iii) the issuance, sale or other transfer by the
Corporation or any subsidiary thereof of any
securities of the Corporation or any subsidiary
thereof to an Interested Shareholder (other than an
issuance or transfer of securities which is effected
on a pro rata basis to all shareholders of the
Corporation);
(iv) the acquisition by the Corporation or any of its
subsidiaries of any securities of an Interested
Shareholder;
(v) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation
proposed by or on behalf of an Interested
Shareholder;
(vi) any reclassification or recapitalization of
securities of the Corporation if the effect, directly
or indirectly, of any transaction is to increase the
relative voting power of an Interested Shareholder;
or
(vii) any agreement, contract or other arrangement
providing for or resulting in any of the transactions
described in this definition of Business Combination.
(4) "Disinterested Director" shall mean any member of the Board of
Directors of the Corporation who is unaffiliated with the
Interested Shareholder and was a member of the Board of
Directors prior to the time that the Interested Shareholder
became an Interested Shareholder; any successor of a
Disinterested Director who is unaffiliated with the Interested
Shareholder and is approved to succeed a Disinterested
Director by the Disinterested Directors; any member of the
Board of Directors who is unaffiliated with the Interested
Shareholder and is approved by the Disinterested Directors.
(5) "Fair Market Value" shall mean:
(i) in the case of securities listed on a national
securities exchange or quoted in the National
Association of Securities Dealers Automated
Quotations System (or any successor thereof), the
highest sales price or bid quotation, as the case may
be, reported for securities of the same class or
series traded on a national securities exchange or in
the over-the-counter market during the 30-day period
immediately prior to the date in question, or if no
such report or quotation is available, the fair
market value as determined by the Disinterested
Directors; and
(ii) in the case of other securities and of other
property or consideration (other than cash), the Fair
Market Value as determined by the Disinterested
Directors; provided, however, in the event the prior
and authority of the Disinterested Directors ceases
and terminates pursuant to Subdivision F of this
Article XIII as a result of there being less than
five (5) Disinterested Directors at any time, then:
(a) for purpose of clause (ii) of the definition of
"Business Combination," any sale, lease, exchange,
mortgage, pledge or other disposition of assets from
the Corporation or any of its subsidiaries to an
Interested Shareholder or from an Interested
Shareholder to the Corporation or any of its
subsidiaries, regardless of the Fair Market Value
thereof, shall constitute a Business Combination; and
(b) for purposes of Paragraph 1 of Subdivision D of
this Article XIII, in determining the amount of
consideration received or to be received per share by
the Independent Shareholders in a Business
Combination, there shall be excluded all
consideration other than cash and the Fair Market
Value of securities listed on a national securities
exchange or quoted in the National Association of
Securities Dealers Automated Quotations System (or
any successor thereof) for which there is a reported
sales price or bid quotation, as the case may be,
during the 30-day period immediately prior to the
date in question.
(6) "Independent Shareholder" shall mean shareholders of the
Corporation other than the Interested Shareholder engaged in
or proposing the Business Combination.
<PAGE> 74
(7) "Interested Shareholder" shall mean: (a) any person (other
than the Corporation or any of its subsidiaries); and (b) the
Affiliates and Associates of such person, who, or which
together, are:
(i) the beneficial owner, directly or indirectly, of 10
percent or more of the outstanding Voting Stock or
were within the two-year period immediately prior to
the date in question the beneficial owner, directly
or indirectly, of 10 percent or more of the then
outstanding Voting Stock; or
(ii) an assignee of or other person who has succeeded to
any shares of the Voting Stock which were at any time
within the two-year period immediately prior to the
date in question beneficially owned by an Interested
Shareholder, if such assignment or succession shall
have occurred in the course of a transaction or
series of transactions not involving a public
offering within the meaning of the Securities Act of
1933.
Notwithstanding the foregoing, no Trust Department, or
designated fiduciary or other trustee of such Trust Department
of the Corporation or a subsidiary of the Corporation, or
other similar fiduciary capacity of the Corporation with
direct voting control of the outstanding Voting Stock shall be
included or considered as an Interested Shareholder. Further,
no profit-sharing, employee stock ownership, employee stock
purchase and savings, employee pension, or other employee
benefit plan of the Corporation or any of its subsidiaries,
and no trustee of any such plan in its capacity as such
trustee, shall be included or considered as an Interested
Shareholder.
(8) A "person" shall mean an individual, partnership, trust,
corporation, or other entity and includes two or more of the
foregoing acting in concert.
(9) "Voting Stock" shall mean all outstanding shares of capital
stock of the Corporation entitled to vote generally in the
election of directors of the Corporation.
B. Supermajority Vote to Effect Business Combination.
No Business Combination shall be effected or consummated unless:
(1) Authorized and approved by the Disinterested Directors and, if
otherwise required by law to authorize or approve the
transaction, the approval or authorization of shareholders of
the Corporation, by the affirmative vote of the holders of
such number of shares as is mandated the Florida Business
Corporation Act; or
(2) Authorized and approved by the affirmative vote of holders of
not less than 80 percent of the outstanding Voting Stock
voting together as a single class.
The authorization and approval required by this Subdivision B is in
addition to any authorization and approval required by Subdivision C of
this Article XIII.
C. Fair Price Required to Effect Business Combination.
No Business Combination shall be effected or consummated unless:
(1) All the conditions and requirements set forth in Subdivision D
of this Article XIII have been satisfied; or
(2) Authorized and approved by the Disinterested Directors; or
(3) Authorized and approved by the affirmative vote of holders of
not less than 66-2/3 percent of the outstanding Voting Stock
held by all Independent Shareholders voting together as a
single class.
Any authorization and approval required by this Subdivision C is in
addition to any authorization and approval required by Subdivision B of
this Article XIII.
<PAGE> 75
D. Conditions and Requirements to Fair Price.
All the following conditions and requirements must be satisfied in
order for clause (1) of Subdivision C of this Article XIII to be
applicable.
(1) The cash and Fair Market Value of the property, securities or
other consideration to be received by the Independent
Shareholders in the Business Combination per share for each
class or series of capital stock of the Corporation must not
be less than the sum of:
(i) the highest per share price (including brokerage
commissions, transfer taxes, soliciting dealer's fees
and similar payments) paid by the Interested
Shareholder in acquiring any shares of such class or
series, respectively, and, in the case of Preferred
Stock, if greater, the amount of the per share
redemption price; and
(ii) the amount, if any, by which interest on the per
share price, calculated at the Treasury Bill Rate
from time to time in effect, from the date the
Interested Shareholder first became an Interested
Shareholder until the Business Combination has been
consummated, exceeds the per share amount of cash
dividends received by the Independent Shareholders
during such period. The "Treasury Bill Rate" means
for each calendar quarter, or part thereof, the
interest rate of the last auction in the preceding
calendar of 91-day United States Treasury Bills
expressed as a bond equivalent yield.
For purposes of this Paragraph (1), per share amounts shall be
appropriately adjusted for any recapitalization,
reclassification, stock dividend, stock split, reverse split,
or other similar transaction. Any Business Combination which
does not result in the Independent Shareholders receiving
consideration for or in respect of their shares of capital
stock of the Corporation shall not be treated as complying
with the requirements of this Paragraph (1).
(2) The form of the consideration to be received by the
Independent Shareholders owning the Corporation's shares must
be the same as was previously paid by the Interested
Shareholder(s) for shares of the same class or series;
provided, however, if the Interested Shareholder previously
paid for shares of such class or series with different forms
of consideration, the form of the consideration to be received
by the Independent Shareholders owning shares of such class or
series must be in the form as was previously paid by the
Interested Shareholder in acquiring the largest number of
shares of such class or series previously acquired by the
Interested Shareholder, provided, further, in the event no
shares of the same class or series had been previously
acquired by the Interested Shareholder, the form of
consideration must be cash. The provisions of this Paragraph
(2) are not intended to diminish the aggregate amount of cash
and Fair Market Value of any other consideration that any
holder of the Corporation's shares is otherwise entitled to
receive upon the liquidation or dissolution of the
Corporation, under the terms of any contract with the
Corporation or an Interested Shareholder, or otherwise.
(3) From the date the Interested Shareholder first became an
Interested Shareholder until the Business Combination has been
consummated, the following requirements must be complied with
unless the Disinterested Directors otherwise approve:
(i) the Interested Shareholder has not received, directly
or indirectly, the benefit (except proportionately as
a shareholder) of any loan, advance, guaranty,
pledge, or other financial assistance, tax credit or
deduction, or other benefit from the Corporation or
any of its subsidiaries;
(ii) there shall have been no failure to declare and pay
in full, when and as due or scheduled, any dividends
required to be paid on any class or series of the
Corporation's shares.
(iii) there shall have been: (a) no reduction in the annual
rate of dividends paid on Common Shares of the
Corporation (except as necessary to reflect any split
of such shares); and (b) an increase in the annual
rate of dividends as necessary to reflect
reclassification (including a reverse split),
recapitalization or any similar transaction which has
the effect of reducing the number of outstanding
Common Shares; and
<PAGE> 76
(iv) there shall have been no amendment or other
modification to any profit-sharing, employee stock
ownership, employee stock purchase and savings,
employee pension or other employee benefit plan of
the Corporation or any of its subsidiaries, the
effect of which is to change in any manner the
provisions governing the voting of any shares of
capital stock of the Corporation in or covered by
such plan.
(4) A proxy or information statement describing the Business
Combination and complying with the requirements of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations under it (or any subsequent provisions replacing
that Act and the rules and regulations under it) has been
mailed at least 30 days prior to the completion of the
Business Combination to the holders of all outstanding Voting
Stock. If deemed advisable by the Disinterested Directors, the
proxy or information statement shall contain a recommendation
by the Disinterested Directors as to the advisability (or
inadvisability) of the Business Combination and/or an opinion
by an investment banking firm, selected by the Disinterested
Directors and retained at the expense of the Corporation, as
to the fairness (or unfairness) of the Business Combination to
the Independent Shareholders.
E. Other Applicable Voting Requirement.
The affirmative votes or approvals required to be received from
shareholders of the Corporation under Subdivisions B, C and H of this
Article XIII are in addition to the vote of the holders of any class of
shares of capital stock of the Corporation otherwise required by law,
or by other provisions of these Articles of Incorporation, or by the
express terms of the shares of such class. The affirmative votes or
approvals required to be received from shareholders of the Corporation
under Subdivisions B, C and H of this Article XIII shall apply even
though no vote or a lesser percentage vote, may be required by law, or
by other provisions of these Articles of Incorporation, or otherwise.
Any authorization, approval or other action of the Disinterested
Directors under this Article XIII is in addition to any required
authorization, approval or other action of the Board of Directors.
F. Disinterested Directors.
All actions required or permitted to be taken by the Disinterested
Directors shall be taken with or without a meeting by the vote or
written consent of two-thirds of the Disinterested Directors,
regardless of whether the Disinterested Directors constitute a quorum
of the members of the Board of Directors then in office. In the event
that the number of Disinterested Directors is at any time less than
five (5), all power and authority of the Disinterested Directors under
this Article XIII shall thereupon cease and terminate, including,
without limitation, the authority of the Disinterested Directors to
authorize and approve a Business Combination under Subdivisions B and C
of this Article XIII and to approve a successor Disinterested Director.
Two-thirds of the Disinterested Directors shall have the power and
duty, consistent with their fiduciary obligations, to determine for the
purpose of this Article XIII, on the basis of information known to
them:
(1) Whether any person is in Interested Shareholder;
(2) Whether any person is an Affiliate or Associate of another;
(3) Whether any person has an agreement, arrangement, or
understanding with another or is acting in concert with
another; and
(4) The Fair Market Value of property, securities or other
consideration (other than cash).
The good faith determination of the Disinterested Directors on such
matters shall be binding and conclusive for purposes of this Article
XIII.
G. Effect on Fiduciary Obligations of Interested Shareholders.
Nothing contained in this Article XIII shall be construed to relieve
any Interested Shareholder from any fiduciary obligations imposed by
law.
<PAGE> 77
H. Repeal.
Notwithstanding any other provisions of these Articles of Incorporation
(and notwithstanding the fact that a lesser percentage vote may be
required by law or other provision of these Articles of Incorporation),
the provisions of this Article XIII may not be repealed, amended,
supplemented or otherwise modified, unless:
(1) The Disinterested Directors (or, if there is no Interested
Shareholder, a majority vote of the whole Board of Directors
of the Corporation) recommend such repeal, amendment,
supplement or modification and such repeal, amendment or
modification is approved by the affirmative vote of the
holders of not less than 66-2/3 percent of the outstanding
Voting Stock; or
(2) Such repeal, amendment, supplement or modification is approved
by the affirmative vote of holders of: (a) not less than 80
percent of the outstanding Voting Stock voting together as a
single class; and (b) not less than 66-2/3 percent of the
outstanding Voting Stock held by all shareholders other than
Interested Shareholders voting together as a single class.
I. Further Considerations to Effect Business Combination.
No Business Combination shall be effected or consummated unless, in
addition to the consideration set forth in Subdivisions B, C, D and E
of this Article XIII, the Board of Directors of the Corporation,
including the Disinterested Directors, shall consider all of the
following factors and any other factors which they deem relevant:
(1) The social and economic effects of the transaction on the
Corporation and its subsidiaries, employees, depositors, loan
and other customers, creditors and other elements of the
communities in which the Corporation and its subsidiaries
operate or are located;
(2) The business and financial conditions and earnings prospects
of the Interested Shareholder, including, but not limited to,
debt service and other existing or likely financial
obligations of the Interested Shareholder, and the possible
effect on other elements of the communities in which the
Corporation and its subsidiaries operate or are located; and
(3) The competence, experience and integrity of the Interested
Shareholder and his (its) or their management.
ARTICLE XIV
HEADINGS AND CAPTIONS
The headings or captions of these various articles are inserted for
convenience and none of them shall have any force or effect, and the
interpretation of the various articles shall not be influenced by any of said
headings or captions.
IN WITNESS WHEREOF, the undersigned, being the President and Secretary
of the Corporation, for the purpose of amending and restating the Articles of
Incorporation as heretofore filed for the Corporation under the laws of the
State of Florida, hereby make and file these Amended and Restated Articles of
Incorporation declaring and certifying that the facts stated herein are true,
and hereby subscribe thereto and hereunto sets her hand and seal this
_________ day of ______________________, 1998.
(CORPORATE SEAL)
________________, President
________________, Secretary
