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As filed with the Securities and Exchange Commission on December 23, 1998
Registration File No. 333-65101
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2 TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FLORIDA BUSINESS BANCGROUP, INC.
(Name of small business issuer in its charter)
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Florida 6711 59-3517595
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(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
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AUSTIN CENTER WEST, TOWER II, 1408 NORTH WESTSHORE BOULEVARD,
SUITE 502, TAMPA, FLORIDA 33607
(Address, including zip code, and telephone number, including area code,
of Registrant principal executive offices)
A. BRONSON THAYER
CHAIRMAN, CHIEF EXECUTIVE OFFICER
Austin Center West, Tower II, 1408 North Westshore Boulevard, Suite 502
Tampa, Florida 33607
(813) 281-0009
------------------------
Copies Requested to:
EDWARD W. DOUGHERTY, ESQUIRE
OR A. GEORGE IGLER, ESQUIRE
IGLER & DOUGHERTY, P.A.
1501 PARK AVENUE EAST
TALLAHASSEE, FLORIDA 32301
(850) 878-2411
(850) 878-1230 (FACSIMILE)
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to rule 415 under the Securities Act of
1933 check the following box. [X]
If this Form is filed to register additional securities for an Offering pursuant
to rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of
Each Class of Proposed Proposed
Securities to be Amount (1) Maximum Offering Maximum Aggregate Amount of Registration
Registered to be Registered Price Per Share Offering Price (2) Fee
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Common Stock $.01 par value.. 3,000,000 $10.00 $30,000,000 $8,850
Warrants..................... 1,500,000 $ 0.00 $ 0 $ 0
Units........................ 1,500,000 $ 0.00 $ 0 $ 0
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(1) Common Stock is to be issued along with a warrant to purchase one share of
Common Stock. Together each share and warrant is referred to as a unit.
(2) Estimated solely for the purpose of calculating the registration fee on the
basis of the proposed maximum offering price per unit.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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1,500,000 UNITS, EACH CONSISTING OF ONE SHARE OF COMMON STOCK AND ONE
WARRANT FOR THE PURCHASE OF ONE SHARE OF COMMON STOCK
Minimum: 700,000 Units -- Maximum: 1,500,000 Units
FLORIDA BUSINESS BANCGROUP, INC.
A Proposed Bank Holding Company
for
(LOGO) BAY CITIES BANK
TAMPA, FLORIDA
A Proposed State-Chartered Bank
FLORIDA BUSINESS BANCGROUP, INC., a Florida corporation ("Company"), hereby
offers for sale a minimum of 700,000 Units and a maximum of 1,500,000 Units at a
price of $10.00 per unit (the "Offering") for a 90-day period following the
effective date of the Registration Statement filed under the Securities Act of
1933. The Company in its sole discretion may extend the duration of the Offering
for a period not to exceed an additional 90 days. In no event may the Offering
be extended beyond _____, 1999. Each Unit consists of one share of Common Stock,
par value $0.01, of the Company ("Common Stock") and one warrant ("Warrant") to
purchase one additional share of Common Stock at $10.00 per share. The minimum
number of Units that may be purchased is 1,000. Warrants may be exercised
immediately after issuance and will expire 36 months from the Effective Date
unless redeemed sooner by the Company. See "TERMS OF THE OFFERING - Warrants."
Warrants may be transferred by a holder, however, only in conjunction with the
simultaneous transfer of an equal number of shares. The Organizers intend to
purchase, in the aggregate, at least 305,000 Units or 43.57% of the total
minimum Unit Offering. See "TERMS OF THE OFFERING - Purchases by Organizers of
the Company."
Actual sales of Units to the public are expected to be made beginning on or
about ________, 1998 and end on or about _________, 1998. The Units of the
Company are offered on a best-efforts basis by certain directors and executive
officers of the Company, who will receive no commissions for such sales. All
subscription funds tendered during the Offering Period will be deposited in an
interest-bearing escrow account with the Independent Banker's Bank of Florida
("Escrow Agent"). The Offering will be terminated and all subscription funds,
together with any interest earned thereon, will be promptly returned if all
required conditional regulatory approvals have not been obtained or the minimum
number of Units have not been subscribed to by the end of the offering period.
________, 1999 is the latest date on which the subscription funds might be held
in escrow prior to their return in the event the minimum is not reached or the
Company has not satisfied the conditional regulatory approvals. The Company may
accept or reject subscriptions obtained in the Offering accepted or rejected in
whole or in part by the Company for any reason. Once a subscription is accepted
by the Company, however, it cannot be withdrawn. See "TERMS OF THE OFFERING."
THE COMPANY RESERVES THE ABSOLUTE RIGHT TO CANCEL ALL SUBSCRIPTIONS AND
RETURN ALL SUBSCRIPTION FUNDS, TOGETHER WITH ANY INCOME REALIZED FROM THE
INVESTMENT OF SUCH FUNDS, FOR ANY REASON WHATSOEVER, AT ANY TIME PRIOR TO THE
TIME THAT THE COMPANY WITHDRAWS SUBSCRIPTION FUNDS FROM THE SUBSCRIPTION ESCROW
ACCOUNT. SEE "TERMS OF THE OFFERING."
ONCE SUBSCRIPTION FUNDS HAVE BEEN RELEASED BY THE ESCROW AGENT AND SHARES
OF THE COMPANY'S COMMON STOCK ARE ISSUED, IN THE EVENT THE OFFERING IS
TERMINATED BECAUSE OF THE COMPANY'S FAILURE TO SATISFY THE CONDITIONAL
REGULATORY APPROVALS, SUBSCRIBERS WILL NOT RECEIVE A FULL REFUND OF THEIR
SUBSCRIPTION PAYMENT. SEE "TERMS OF THE OFFERING - FAILURE OF BANK TO COMMENCE
OPERATIONS."
The Company is a "development stage company" with no prior operating
history. see "RISK FACTORS - Start-up Enterprise - Lack of Operating History."
Prior to this Offering, there has been no public market for the Common Stock and
it is not anticipated that there will be an active trading market for the
Shares. There can be no assurance that an active trading market for such stock
will develop since the Company presently does not intend to seek to list the
Common Stock on a national securities exchange or to qualify such Common Stock
for quotation on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ").
INVESTMENT IN THE COMPANY INVOLVES A HIGH DEGREE OF RISK, AND INVESTORS SHOULD
NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF
THOSE RISKS THAT MANAGEMENT BELIEVES PRESENT THE SUBSTANTIAL RISKS TO AN
INVESTOR IN THIS OFFERING.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SEC PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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PRICE UNDERWRITING
TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) THE COMPANY
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Per unit.......................... $10 $0 $ 10
Minimum(3)........................ $7,000,000 $0 $ 7,000,000
Maximum(3)........................ $15,000,000 $0 $15,000,000
If all warrants are exercised..... $30,000,000 $0 $30,000,000
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The Date of this Prospectus is December ___, 1998.
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(Continuation of front cover)
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(1) The Offering price was arbitrarily determined by the Board of Directors of
the Company and does not bear any relationship to the Company's assets,
book value, net worth or any other recognized criteria of value.
(2) Before deducting Offering expenses, estimated to be approximately $30,000
including registration fees, legal and accounting fees, printing and other
expenses. See "USE OF PROCEEDS" for an itemized statement of expenses.
(3) These securities are offered on a best-efforts, 700,000 Unit minimum basis.
If payment in cash for 700,000 Units is not received prior to the end of
the Offering Period, the Offering will terminate and all subscription
funds, together with any interest earned thereon, will be promptly returned
to subscribers. All purchases of Units by the Company's Organizers will be
subject to affiliate resale limitations under the 33 Act and organizer's
purchases as described herein will be made on the same terms, including
Warrant provisions, as those made by other investors. The Organizers of the
Company have represented to the Company that all purchases of Common Stock
will be made for investment purposes only and not with a view toward
resale. The maximum number of Shares that will be sold in the Offering will
be 1,500,000 shares. In the event the maximum number of Shares are sold,
followed by the exercise of all of the Warrants to be issued, then the
maximum number of Shares which will be outstanding is 3,000,000. There can,
however, be no assurance given that any of the Warrants will be exercised.
See "RISK FACTORS," "TERMS OF THE OFFERING," and "ORGANIZERS AND PRINCIPAL
SHAREHOLDERS."
A MAP OF THE STATE OF FLORIDA IN THE SHAPE
OF THE STATE WITH A SMALL RECTANGULAR MAP
OF THE WESTSHORE AREA OF HILLSBOROUGH
COUNTY.
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AVAILABLE INFORMATION
Prior to the Offering, the Company has not been required to file reports
under the Securities Exchange Act of 1934 ("Exchange Act").
The Company has filed electronically with the SEC through its Electronic
Data Gathering Analysis and Retrieval ("EDGAR") system, a Registration Statement
on Form SB-2, as amended, (together will all exhibits and schedules thereto, the
"Registration Statement") under the Securities Act of 1933, as amended with
respect to the registration of the Units and shares offered by this Prospectus.
This Prospectus does not contain all of the information set forth in such
Registration Statement and the exhibits thereto, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information pertaining to the Units and Shares offered by this
Prospectus and related matters, reference is made to the Registration Statement,
including the exhibits filed as a part thereof.
The Registration Statement filed electronically with EDGAR by the Company
can be inspected and copied at the public reference facilities maintained by the
Commission at its Public Reference Section, 450 Fifth Street, N.W., Washington,
D.C. 20549. The Commission maintains a web site that contains registration
statements, reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
Company's complete Registration Statement is available for review on this Web
Site. The address of the Web Site is http://www.sec.gov. Copies of exhibits may
also be obtained by written request addressed to: Timothy A. McGuire, President,
Bay Cities Bank (In Organization), Austin Center West, Tower II, 1408 North
Westshore Boulevard, Suite 502, Tampa, Florida 33607.
REPORTS TO SECURITY HOLDERS
The Company intends to furnish annual reports to its shareholders which
will contain audited financial statements. In addition, the Company will be
required, under section 15(d) of the Exchange Act, to file annual and quarterly
reports with the Commission for a limited period of time. Copies of such reports
will be available to the Company's shareholders.
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PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
Prospectus and is qualified in its entirety by the more detailed information and
financial statements appearing elsewhere in this Prospectus. Prospective
investors are urged to read the entire Prospectus carefully.
RISK FACTORS
The securities offered hereby may be deemed to be speculative and involve
certain risks such as:
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- - Start-up Enterprise - Intended Purchases by Organizers
- - Dependency on Key Management - Anti-takeover Provision in Company's
- - Financial Position of the Company and Expected Articles of Incorporation
Lack of Initial Profitability - No Established Market for Shares
- - Highly Competitive Banking Market - Arbitrary Determination of Offering Price
Unpredictable Economic Conditions - Absence of Preemptive Rights
- - Extensive Governmental Regulation - Future Capital Needs of the Bank
- - No Plans to Pay Dividends in the - No Underwriting of this Offering
- - Foreseeable Future - Possible Dilution Resulting from Shares
Possible Return of Less Than the Subscription Issued Under Warrant Plan and Directors'
- - Amount and Incentive Option Plans and Option
Plans
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For these and other reasons, the purchase of the Units is highly
speculative and involves significant investment risks. A prospective investor
should carefully consider the matters set forth under "RISK FACTORS" and should
be prepared to lose his or her entire investment.
THE COMPANY
Florida Business BancGroup, Inc. was organized under the laws of the State
of Florida on May 18, 1998, for the purpose of operating as a bank holding
company pursuant to the Federal Bank Holding Company Act of 1956, as amended
("BHC Act"). The following persons organized the Company and are referred to as
the Organizers: John C. Bierley, Monroe E. Berkman, Troy A. Brown, Jr., Frank G.
Cisneros, Lawrence H. Dimmitt, III, Timothy A. McGuire, Eric M. Newman, Chris A.
Peifer, and A. Bronson Thayer. In order to fund the organizational and
pre-opening expenses of the proposed bank (estimated to be approximately
$400,000), the Organizers have advanced $390,000 to the Company in exchange for
the issuance of preferred stock by the Company of $390,000 in preferred stock
which is redeemable within one year after the release of subscription funds by
the Escrow Agent. The preferred stock pays a dividend at the sole discretion of
the Company and the Company intends to pay a dividend of 2% of the purchase
price within 30 days of the closing of the offering. Through September 30, 1998,
the Company has expended $72,471 for organizational expenses. See "TERMS OF THE
OFFERING - Purchases by Organizers of the Company." The Company intends to use
the net proceeds of this Offering to purchase 100% of the common stock to be
issued by Bay Cities Bank ("Bank"), to repay organizational expenses and for
other general corporate purposes. Neither the Company nor the Bank has commenced
business operations, and neither will do so until the Offering Period is
completed and the requisite approvals of the Florida Department of Banking and
Finance ("Department"), the Federal Deposit Insurance Corporation ("FDIC") and
the Board of Governors of the Federal Reserve System ("Federal Reserve") are
obtained. The main office of the Company and the Bank will be located in Tampa,
Hillsborough County, Florida. The Company's mailing address during the
organizational period is Austin Center West, Tower II, 1408 North Westshore
Boulevard, Suite 502, Tampa, Florida 33607 and the Company's telephone number is
(813) 281-0009. See "THE COMPANY."
THE BANK
It is anticipated that the Bank will commence business operations sometime
during the first quarter of 1999, or as soon thereafter as practicable. The Bank
will engage in a general commercial and retail banking business with primary
emphasis upon high quality service to meet the financial needs of the
individuals and businesses residing and located in and around Tampa, Florida. As
part of its regular business operations, the Bank will offer a full complement
of loans, including commercial, consumer/installment and real estate loans. The
Organizers expect that commercial
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loans will account for approximately one-half of the Bank's estimated total loan
portfolio. Commercial loans are loans made to individual, partnership or
corporate borrowers for a variety of business purposes. Commercial loans have a
higher risk of loss than consumer or real estate loans. To the extent that
borrowers fail to repay their loans, such failure may have a material adverse
effect on the Bank's and the Company's earnings and overall financial condition,
as well as, the value of the Common Stock. See "BUSINESS OF THE BANK."
It is intended that the Bank will operate at Austin Center West, Tower II,
1408 North Westshore Boulevard, Suite 502, Tampa, Florida 33607, for at least
the first 8 months of operation, and that the Bank's permanent facility will be
available for occupancy by October 1, 1999. The Company has entered into lease
agreements with NovaCare, Inc. for the temporary facility and Crescent
Resources, for the permanent facility. The permanent facility is to be located
in a commercial office building to be known as International Plaza. See
"BUSINESS OF THE COMPANY - Premises" and "BUSINESS OF THE BANK - General."
TERMS AND CONDITIONS OF THE OFFERING
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Units Offered .......................... Up to 1,500,000 Shares of Common
Stock ("Shares") are being offered to
the public in Units consisting of one
share of Common Stock and one
Warrant. A minimum of 700,000 Units
are required to be sold in this
Offering. See "TERMS OF THE OFFERING."
Warrants ............................... The Board has adopted a Warrant Plan
which permits the Company to issue up
to 1,500,000 Warrants in connection
with the Offering. Each Warrant will
entitle the holder thereof to
purchase one share of additional
Common Stock for $10.00 per share
during the 36-month period following
the Effective Date of Registration of
the Shares. Warrants will expire 36
months from the Effective Date of
Registration, unless redeemed sooner
by the Company. The Warrants are
transferrable only in connection with
the transfer of a like number of
Shares. See "TERMS OF THE OFFERING -
Warrants."
Common Stock Outstanding After the
Offering (exclusive of any shares issued
pursuant to the exercise of warrants and
options) ............................... Minimum - 700,000 Shares
Maximum - 1,500,000 Shares
Price .................................. $10.00 per Unit.
Use of Proceeds ........................ Proceeds of the Offering will be used
to purchase 100% of the issued and
outstanding capital stock of the
Bank; to provide working capital for
the Bank to commence its business
operations (including officers' and
employees' salaries); to pay expenses
in connection with the formation of
the Company, the organization of the
Bank, and this Offering; and for
other corporate purposes of the
Company. Proceeds not used to
purchase Bank stock will be retained
by the Company and will be used to
fund future capital requirements of
the Bank, as well as for other
permissible investments for bank
holding companies, including the
possible acquisition of other
financial institutions. See "USE OF
PROCEEDS."
Conditions of the Offering ............. The Offering will expire 90 days from
the Effective Date of Registration
unless extended for up to an
additional 90 days by the Company.
Funds received by the Company during
the Offering Period will be deposited
with the Escrow Agent. Funds so
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deposited may be released to the Company only in accordance with the
terms of the Escrow Agreement between the Company and the Escrow Agent.
The Offering will be terminated by the Company at the end of the Offering
Period if subscriptions for 700,000 Units have not been received and
deposited with the Escrow Agent or if all conditional regulatory approvals
have not been received by the Company and the Bank, or the Company has
canceled the Offering prior to withdrawing funds from the
Subscription Account.
Stock Options . . . . . . . . The Company intends to grant each of the proposed Organizing
directors options to purchase 7,694 shares of common stock under a
non-qualified Directors Stock Option Plan. The Company intends to grant
Timothy A. McGuire, the President of the Company and President and Chief
Executive Officer of the Bank, incentive stock options to purchase a
minimum of 34,444 shares of common stock pursuant to an Employee Stock
Option Plan. These stock options, which the Company intends to grant at no
cost to the directors or employees, bear a minimum exercise price of $10.00
per share, and are subject to shareholder approval following the Bank's
commencement of business. See "ORGANIZERS AND PRINCIPAL SHAREHOLDERS."
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RISK FACTORS
PROSPECTIVE INVESTORS IN THE COMMON STOCK SHOULD GIVE CAREFUL ATTENTION TO
THE FOLLOWING STATEMENTS WHICH DESCRIBE ALL MATERIAL RISKS APPLICABLE TO THE
OFFERING.
START-UP ENTERPRISE - LACK OF OPERATING HISTORY
Neither the Company nor the Bank has commenced business operations. Both
are newly organized entities with no operating history. The business of the
Company and the Bank is therefore subject to the risks associated with new
businesses. In addition, because the Bank has not commenced operations,
investors will not have the information normally associated with investments in
a financial institution with a history of operations. The Company's
profitability will depend primarily on the operations of the Bank. Therefore,
without any operating history there can be no assurance the Company will ever be
profitable.
DEPENDENCY ON KEY MANAGEMENT
Regulatory approval to establish and operate a state-chartered bank is,
among other things, dependent upon the Department's approval of such bank's
proposed chief executive officer. Generally, the chief executive officer of a
start-up financial institution is deemed to be vital to the potential success of
the new institution. The Bank's application for a charter filed with the
Department proposed Timothy A. McGuire as the Bank's Chief Executive Officer. In
the event of death, disability, resignation or other event causing the
unavailability of Mr. McGuire, final regulatory approval to commence banking
operations would be delayed until such time as a suitable replacement is
approved by the Department. The Company has obtained "Key Man" life insurance on
the life of Mr. Timothy A. McGuire in the amount of $250,000. See "MANAGEMENT."
FAILURE TO RECEIVE REGULATORY APPROVALS/COMMENCE OPERATIONS; POSSIBLE PARTIAL
LOSS OF SUBSCRIPTION FUNDS
The Company must obtain final approval from both the Department and the
FDIC before it can open the Bank for business, but the Company expects to issue
Common Stock and expand a portion of the proceeds of this Offering before it has
obtained all final regulatory approvals. The Company has filed an application
with the FDIC and the Florida Department of Banking and Finance and will file an
application with the Federal Reserve. If these applications are approved,
approvals will contain certain conditions for opening the Bank. In the event
that all final approvals to commence banking operations are not granted, or if
for any reason the Bank does not commence operations within twelve months after
receipt of conditional approval by the Department, the Company will solicit
shareholder approval for its dissolution or liquidation. In a liquidation or
dissolution, the Organizers who purchased preferred stock will receive a
distribution preference and will be repaid their purchase price prior to any
distribution to purchasers of common stock. It is, therefore, likely that
subscribers will receive only a portion of their initial investment in the event
that the Bank is unable to commence operations. See "TERMS OF THE OFFERING -
Failure of Bank to Commence Operations."
FINANCIAL POSITION OF THE COMPANY AND EXPECTED LACK OF INITIAL PROFITABILITY
The initial activity of the Company will be to act as the sole shareholder
of the Bank. Thus, the profitability of the Company will be dependent upon the
successful operation of the Bank. Typically, new banks are not profitable in the
first year of operation and sometimes are not profitable for several years. The
Bank will incur significant expenses in establishing itself as a going concern
and there can be no assurance that the Bank will be operated profitably or that
future earnings, if any, will meet the levels of earnings prevailing in the
banking industry. Although there can be no assurance of success, the Organizers
believe the Bank will be able to successfully implement its business plan as a
result of the selection of a favorable market area and the experience and
personal contacts of its Board of Directors and management.
HIGHLY COMPETITIVE BANKING MARKET
The Bank will engage in a general commercial and retail banking business in
Tampa, Hillsborough County, Florida. Competition among financial institutions in
the Bank's primary market area is intense. The Bank will compete
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with other state banks, consumer finance companies, money market mutual funds,
and other financial institutions which have far greater financial resources than
those available to the Bank. Additionally, the Bank will compete with banks,
savings institutions and credit unions located in nearby markets which solicit
business from the Bank's Primary Service Area. If the Bank is unable to compete
for deposits effectively in its primary service area, such inability would
likely have an adverse effect on the Bank's potential for growth and
profitability. See "BUSINESS OF THE BANK - Market Area and Competition."
UNPREDICTABLE ECONOMIC CONDITIONS
Commercial banks and other financial institutions are affected by economic
and political conditions, both domestic and international, and by governmental
monetary policies. Conditions such as inflation, recession, unemployment, high
interest rates, short money supply, international disorders and other factors
beyond the control of the Company and the Bank may adversely affect their
profitability. See "BUSINESS OF THE BANK - Monetary Policies."
EXTENSIVE GOVERNMENTAL REGULATION
The Company and the Bank will operate in a highly regulated environment and
will be subject to supervision by several governmental regulatory agencies,
including the Federal Reserve, the Department, the FDIC and the Commission. The
regulations governing the Company and the Bank are intended to protect
depositors, not shareholders. The Company and the Bank will be vulnerable to
future legislation and government policy, including bank deregulation and
interstate expansion, which could adversely affect the banking industry as a
whole, including the operations of the Company and the Bank. See "SUPERVISION
AND REGULATION."
NO PLANS TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE
It is not anticipated that the Company will distribute any dividends to
shareholders in the foreseeable future. Earnings of the Bank, if any, are
expected to be retained by the Bank to enhance its capital structure or
distributed to the Company to defray its operating costs. Dividend by state
banks are restricted by statute and regulation. See "DIVIDEND POLICY."
INTENDED PURCHASES AND POSSIBLE CONTROL OF THE COMPANY BY ORGANIZERS
The Organizers intend to purchase 305,000 Units in the Offering. These
purchases will represent 43.57% of the minimum of 700,000 Units required in
order to release subscription proceeds from the Subscription Escrow Account. The
exercise of Warrants or Options by the Organizers may result in Organizers
increasing their percentage of ownership thereby diluting non-organizers'
percentage of ownership. Assuming the sale of 700,000 Units, all of which
contain one Warrant, should the Organizers exercise all of their warrants and
options and other shareholders not exercise their warrants, the organizers would
own 64.12% of the outstanding common stock of the Company. See "ORGANIZERS AND
PRINCIPAL SHAREHOLDERS." The Organizers may purchase all of the Units sold in
the Offering. The ownership of more than 25% of the Company's Shares will
virtually assure control of the election of directors of the Company in future
years. The Organizers have represented to the Company that all purchases of
Common Stock will be made for investment purposes only and not with a view
toward resale. See "TERMS OF THE OFFERING - Purchases by Organizers of the
Company" and "ORGANIZERS AND PRINCIPAL SHAREHOLDERS."
POSSIBLE CREDITORS CLAIMS AGAINST THE COMPANY
Once the Company issues the shares of Common Stock offered hereby, the
Offering proceeds may be considered part of general corporate funds and thus may
be subject to the claims of creditors of the Company, including claims against
the Company that may arise out of actions of the Company's officers, directors,
or employees. It is possible, therefore, that one or more creditors may seek to
attach the proceeds of the Offering prior to the Bank's commencement of banking
operations. If such an attachment occurs and it becomes necessary to refund the
subscription proceeds to shareholders because of the failure to obtain the
required regulatory approvals, the refund process might be delayed and will be
reduced by the amount of the attachment.
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ANTI-TAKEOVER PROVISIONS
The Company's Articles of Incorporation ("Articles") contain provisions
requiring supermajority shareholder approval to effect certain extraordinary
corporate transactions which are not approved by the Board of Directors. The
effect of these provisions is to make it more difficult to effect a merger, sale
of control or similar transaction involving the Company even though a majority
of the Company's shareholders may vote in favor of such a transaction. In
addition, the Company's Articles provide for classes of Directors, whereby
one-third of the members of the Board of Directors shall be elected each year
and each director of the Company will serve for a term of three years. The
effect of these provisions is to make it more difficult to effect a change in
control of the Company through the acquisition of a large block of the Company's
Common Stock. See "DESCRIPTION OF COMMON STOCK" and "Appendix A."
EFFECT OF PREFERRED STOCK
The Company's Articles of Incorporation, as amended, permit the Company to
issue preferred stock with such terms and rights as the Board of Directors may
determine in its discretion, including dividend, redemption payments, and
liquidation payments in preference to dividends or payments to common
stockholders. Such dividends or payments could reduce the book value or market
value of common shares. The Board has established a Series A preferred stock and
the Company has issued 3,900 shares of Series A preferred stock to the
Organizers at $100 per share to obtain capital to pay for pre-opening and
organizing expense. Series A preferred stock is redeemable at the option of the
Company, pays a dividend at the discretion of the Board of Directors, and has a
distribution preference in the event of liquidation of the Company. Although the
Company intends to issue a one-time dividend equal to 2% of the purchase price,
there can be no assurance that the Company will not issue further dividends to
series A preferred shareholders or that the Company will not designate and issue
other series of preferred stock with dividend, redemption or preferred
distribution rights. See "TERMS OF THE OFFERING Purchase by Organizers of the
Company" and "Articles of Incorporation Summary Preferred Stock."
NO ESTABLISHED MARKET FOR SHARES
Presently there is no established market for the Common Stock. There can be
no assurance that an established public market will develop for such securities
upon completion of this Offering or that substantial trading activity in the
Shares will occur for several years, if at all. Moreover, in the event that the
Organizers subscribe for additional Units in this Offering, an established
public market of the Common Stock will be less likely to develop. As a result,
investors who may need or wish to dispose of all or a part of their investment
in the Common Stock may not be able to do so except by private, direct
negotiations with third parties. The Company does not presently intend to seek
to list the Common Stock on a national securities exchange or to qualify such
Common Stock for quotation on NASDAQ. At such time as the Company's stock
qualifies for listing on NASDAQ, the Company may seek to list the Shares for
quotation.
ARBITRARY DETERMINATION OF OFFERING PRICE
The Offering price was arbitrarily determined by the Board of Directors of
the Company, and does not bear any relationship to the Company's assets, book
value, net worth or any other recognized criteria of value. In determining the
Offering price of the Shares, the Department's capital requirements for the Bank
and general market conditions for the sale of such securities were considered.
ABSENCE OF SHAREHOLDER PREEMPTIVE RIGHTS
No holder of the Common Stock of the Company will have preemptive rights
with respect to the issuance of shares of any class of stock. The total number
of shares of Common Stock which the Company shall have the authority to issue is
10,000,000 shares of Common Stock. Each share of Common Stock is entitled to one
vote per share in all matters requiring a vote of shareholders. The Board of
Directors of the Company could from time to time determine to issue additional
shares of the authorized Common Stock in addition to the shares offered hereby,
and in such event the ownership interest of the subscribers in this Offering may
be diluted.
FUTURE CAPITAL NEEDS OF THE BANK
The Board of Directors of the Company may determine from time to time to
obtain additional capital through the issuance of additional shares of the
authorized Common Stock of the Company. There can be no assurance that such
shares will be issued at prices or on terms equal to the Offering price and
terms of this Offering.
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<PAGE> 11
NO UNDERWRITER OF THIS OFFERING
This Offering is being made without the services of an underwriter. Sales
of the Company's Units will be solicited only by certain executive officers and
directors of the Company. Accordingly, there can be no assurance that the
minimum number of Units required to be sold will be sold at the expiration of
the Offering period. Although the Company has no plans to engage an underwriter
to sell Units, the Company may engage an underwriter in the event that the
Offering Conditions have not been satisfied by February, 1999. Such an
engagement would substantially increase offering expenses. See "TERMS OF THE
OFFERING -- Other Terms."
POSSIBLE DILUTION RESULTING FROM WARRANTS AND OPTIONS
Up to 1,500,000 Shares may be issued pursuant to the exercise of Warrants
issued in the Offering, assuming the sale of all 1,500,000 Units. Additionally,
up to 57,496 Shares may be issued pursuant to the Directors' Stock Option Plan
("Directors' Plan") and the Key Employee Stock Option Plan ("Incentive Plan").
In the event all Warrants and Options are exercised, the Company will have
3,057,496 Shares outstanding. Warrants issued in this Offering are transferable
only if transferred simultaneously in conjunction with an equal number of
Shares. Shareholders who do not exercise, or are not able to exercise Warrants
received in this Offering, may suffer a dilution of their investment in terms of
book value if other Warrant or Option holders exercise their Warrants or Options
and the book value of the Shares is greater than $10.00 at the time of such
exercise. In addition, an individual shareholder's percentage of ownership may
be reduced if such shareholder fails to exercise his or her Warrants and other
shareholders exercise their Warrants or Options. See Organizers and Principal
Shareholders.
MINIMUM AND MAXIMUM LENDING LIMITS
Florida Law allows a state bank to extend credit to any one borrower in an
amount up to 25% of its capital accounts, provided that the unsecured portion of
any such loan may not exceed 15% of the capital accounts of the bank. Based upon
the proposed investment of $6,000,000 in capital stock of the Bank, the maximum
loan the Bank will be permitted to make is $1,500,000, provided that the
unsecured portion may not exceed $900,000. Assuming that the maximum proceeds of
the Offering including the exercise of all warrants were invested in the Bank,
the maximum loan the Bank would be permitted to make would be approximately
$7,500,000 provided that the unsecured portion could not exceed $4,500,000.
YEAR 2000; POTENTIAL ADVERSE EFFECTS ON BUSINESS, FINANCIAL CONDITIONS, OR
RESULTS OF OPERATION
Like many financial institutions, the Bank will rely upon computers for the
daily conduct of its business and for information systems processing. There is
concern among industry experts that on January 1, 2000, computers will be unable
to "read" the new year and there may be widespread computer malfunctions. While
the Company believe that it has available resources, and has adopted a plan, to
address Year 2000 compliance, the plan is largely dependent on third party
vendors. Vendors have informed the Company that their software is Year 2000
compliant or, if not, that they have adopted plans to ensure compliance.
Internal systems and software will be adequately programmed to address the Year
2000 issue. These systems will be tested to confirm that they will be Year 2000
compliant. Nevertheless, there is a risk that some hardware or software may not
be Year 2000 compliant, and the Company cannot, therefore, predict with any
certainty costs which might be incurred to respond to any Year 2000 issues.
Further, the business of many of the Bank's customers may be negatively
affected by the Year 2000 issue, and any financial difficulties incurred by the
Bank's customers in solving Year 2000 issues could negatively affect these
customers' ability to repay any loans which the Bank may have extended.
Therefore, even if the Bank does not incur significant direct costs in
connection with responding to the Year 2000 issue, there is a risk that the
failure or delay of customers or other third parties in addressing the Year 2000
issue or the costs involved in such process could have a material adverse effect
on the Bank's business, financial condition, or results of operations.
THE COMPANY
Florida Business BancGroup, Inc. was incorporated under the laws of the
State of Florida on May 18, 1998 to operate as a bank holding company pursuant
to the BHC Act, and to purchase 100% of the issued and outstanding capital stock
of Bay Cities Bank, a state-chartered commercial bank to be organized under the
laws of Florida. Bay Cities Bank will conduct a general banking business in
Tampa, Florida. The Organizers filed an Application for
9
<PAGE> 12
Authority to Organize with the Department on September 8, 1998. The Company also
filed its application for federal deposit insurance with the FDIC on September
28, 1998, and is awaiting FDIC conditional approval. The Company expects to file
an application to become a one-bank holding company with the Federal Reserve
Bank of Atlanta in the next 60 days.
The Bank expects to commence operations sometime in the fourth quarter of
1998, or at the earliest practicable time thereafter. See "BUSINESS OF THE
BANK." The Organizers of the Company are nine individuals, eight of whom reside
in Hillsborough County, Florida and one of which reside in Pinellas County,
Florida. See "ORGANIZERS AND PRINCIPAL SHAREHOLDERS." All of the Organizers of
the Company will serve on both the initial Board of Directors of the Company and
the initial Board of Directors of the Bank. See "MANAGEMENT."
Initially the principal offices of the Company and the Bank will be located
at Austin Center West, Tower II, 1408 North Westshore Boulevard, Suite 502,
Tampa, Florida 33607. See "BUSINESS OF THE COMPANY - Premises." The mailing
address of the Company's present office, which it will occupy until the Bank
opens for business, is Austin Center West, Tower II, 1408 North Westshore
Boulevard, Suite 502, Tampa, Florida 33607, and the Company's telephone number
is (813) 281-0009.
TERMS OF THE OFFERING
GENERAL
The Company is Offering hereunder up to 1,500,000 Shares of its Common
Stock for cash in Units at a price of $10.00 per Unit. A minimum subscription of
1,000 Units is required for each subscription hereunder. No single individual
investor, other than individual Organizers, may subscribe for more than 148,500
Units or more than 9.9% of the total number of Shares issued or subscribed for
at the time a subscription is received by the Company during the Offering
Period. The purchase price of $10.00 per Unit shall be paid in full upon
execution and delivery of the Unit Order Form. All subscriptions tendered by
investors are subject to acceptance by the Board of Directors of the Company
through its duly authorized Subscription Committee, and the Company reserves the
absolute and unqualified right to reject or reduce any subscription for any
reason prior to acceptance. Furthermore, the Company reserves the right to
cancel this Offering at any time prior to the time the Company withdraws funds
from the Subscription Escrow Account, for any reason whatsoever. For a 36-month
period following the effective date of Registration the Company will issue up to
1,500,000 Shares pursuant to the Company's Warrant Plan and the Warrants issued
thereunder.
WARRANTS
The Company has adopted a Warrant Plan which provides for the issuance of
up to 1,500,000 Warrants in connection with the Offering. The Warrant Plan sets
forth the terms and conditions of the Warrants. The Warrants subscribed to will
expire 36 months from the Effective Date of Registration unless redeemed sooner
in accordance with the terms of the Warrant Plan. Unexpired Warrants may be
exchanged for Shares upon the payment of $10.00 per share to the Company,
subject to the requirement that the minimum number of Shares which will be
issued upon any single presentment will be 100 Shares unless the Warrant
presented is for less than 100 Shares, at which time all shares must be
purchased. Certificated Warrants may be transferred by a holder only in
conjunction with the simultaneous transfer of an equal number of Shares.
Warrants may be exercised by presenting an executed Warrant Certificate, along
with a check representing the full amount of the exercise price, to: Timothy A.
McGuire, President, Florida Business BancGroup, Inc. at the main office, Suite
502, Austin Center West, Tower II, 1408 North Westshore Boulevard, Tampa,
Florida 33607, or at such other address established as the main office of the
Company of which the warrant holder is notified.
NO ESTABLISHED MARKET
Prior to this Offering there has been no established public market for the
shares of the Common Stock and/or Warrants and there can be no assurance that an
established market for such stock or Warrants will develop. The Offering price
has been arbitrarily determined and is not a reflection of the Company's book
value, net worth or any other such recognized criteria of value. In determining
the Offering price of the Common Stock, the regulatory capital requirements of
the Bank and general market conditions for the sale of such securities were
considered. There can be no assurance that, if a market should develop for the
Common Stock or Warrants, the post-Offering market price will equal or exceed
the initial Offering price.
10
<PAGE> 13
PLAN OF DISTRIBUTION
Pursuant to Commission Rule 415, (17 C.F.R. Section 230.415), the Company
intends to offer the Units on a continuous basis for a period of up to 180 days
from the effective date and shares to be issued pursuant to the Warrants for up
to three years from the Effective Date.
Units will be offered by certain officers and directors of the Company. The
officers and directors will not receive any commissions or other remuneration in
connection with these activities, but they may be reimbursed for reasonable
expenses incurred as a result of such activities, if any. In reliance on Rule
3a4-1 of the Securities and Exchange Act of 1934 ("Exchange Act"), the Company
believes that its officers and directors who are engaged in the sale of the
Units will not be deemed to be brokers and/or dealers under the Exchange Act.
Units will be offered primarily to persons who work or reside in Hillsborough
County, Florida. To a limited extent, Units will be offered to friends,
acquaintances and family members of the Organizers, some of whom live outside
the Hillsborough County community and some of whom may live outside of the State
of Florida. Persons indicating an interest in acquiring Common Stock will be
provided with a copy of this Prospectus prior to the acceptance of subscription
funds. Subscriptions will be accepted only if accompanied by a proper Unit Order
Form. During this Offering Period the Company will conduct its first Closing if
the conditions required to Close have been met.
CONDITIONS OF THE OFFERING
The Offering will expire at 5:00 p.m. Eastern Time, on ___________, 1999
(the "Expiration Date"). The Offering is expressly conditioned upon fulfillment
of the following conditions ("Offering Conditions") within the Offering Period.
The Offering Conditions, which may not be waived, are as follows:
(a) Subscriptions for not less than $7,000,000 shall have been deposited
with the Escrow Agent;
(b) The Company shall have received conditional approval from the Federal
Reserve of its application to become a one-bank holding company, the
Organizers shall have received conditional approval from the
Department to charter the Bank and the proposed Bank shall have
received conditional approval of its application for deposit insurance
from the FDIC; and
(c) The Company shall not have canceled this Offering prior to the time
funds are withdrawn from the Subscription Escrow Account.
ESCROW OF SUBSCRIPTION FUNDS
All subscription funds and documents tendered by investors will be placed
in the Subscription Escrow Account with the Independent Bankers' Bank of
Florida, Orlando, Florida ("Escrow Agent"), pursuant to the terms of the Escrow
Agreement, the form of which is attached to this Prospectus as Appendix "B."
Upon receipt of a certification from the Company during the Offering Period
that: (i) the required conditional regulatory approvals have been received; and
(ii) subscriptions totaling not less than $7,000,000 have been received, the
Escrow Agent will release all subscription funds, and any income received
thereon, to the Company.
Pending disposition of the Subscription Escrow Account under the Escrow
Agreement, the Escrow Agent is authorized, upon instructions to be given by
either A. Bronson Thayer or Timothy A. McGuire to invest subscription funds in
direct obligations of the United States Government, in short-term insured
certificates of deposit and/or money market management trusts for short-term
obligations of the United States Government, with maturities not to exceed 90
days. The Company will invest the subscription funds in a similar manner after
breaking escrow and prior to the time that the Company infuses capital into the
Bank. The Offering proceeds will be used to purchase capital stock of the Bank
and to repay expenses incurred in the organization of the Company and the Bank.
See "USE OF PROCEEDS."
In the event the Offering Conditions are not met within the Offering Period
or the Offering is terminated by the Company prior to withdrawing the
Subscription Funds, the Escrow Agent shall promptly return to the subscribers
their subscription funds, together with their allocated share of income, if any,
earned on the investment of the Subscription Escrow Account. Each Subscriber's
proportionate share of Subscription Escrow Account earnings shall be that
fraction (i) the numerator of which is the dollar amount of such subscriber's
tendered subscription multiplied by the number of days between the date of
acceptance of the investor's subscription and the date of the termination of the
Offering, inclusive (the subscriber's "Time Subscription Factor"), and (ii) the
denominator of which is the aggregate
11
<PAGE> 14
Time Subscription Factor of all investors depositing subscription funds in the
Subscription Escrow Account. The latest date to which the subscription funds
might be held in escrow prior to their return in the event the minimum is not
reached or the required regulatory approvals are not received is __________,
1999.
NO ASSURANCE CAN BE GIVEN THAT SUBSCRIPTION FUNDS CAN OR WILL BE INVESTED
AT THE HIGHEST RATE OF RETURN AVAILABLE OR THAT ANY INCOME WILL BE REALIZED FROM
THE INVESTMENT OF SUBSCRIPTION FUNDS.
If all Offering Conditions are satisfied, and the Company withdraws the
subscription funds from the Subscription Escrow Account, all earnings on such
account shall belong to the Company.
The Independent Bankers' Bank of Florida, by accepting appointment as
Escrow Agent under the Escrow Agreement, in no way endorses the purchase of the
Company's securities by any person.
FAILURE OF BANK TO COMMENCE OPERATIONS
The Department requires that a new state bank open for business (i.e.,
obtain a certificate of authorization) within 12 months after receipt of
preliminary approval from the Department. The Organizers anticipate that the
Bank will open for business sometime in the fourth quarter of 1998 or as soon
thereafter as practicable. Because final approval of the Bank's charter is
conditioned on the Company's raising funds to capitalize the Bank at $6,000,000,
the Company expects to issue the shares of Common Stock before it has obtained
all final regulatory approvals for the Bank. In the event that the Company
issues the shares of Common Stock and the Department does not grant the Bank
final regulatory approval to commence banking operations within 12 months after
the Bank's receipt of preliminary approval from the Department, the Company will
promptly return to subscribers all subscription funds and interest earned
thereon, less all expenses incurred by the Company, including the expenses of
the Offering and the organizational and pre-opening expenses of the Company and
the Bank. This return may be further reduced by amounts paid to satisfy claims
of creditors, as discussed in the following paragraph.
Once the Company issues the Common Stock offered hereby, the Offering
proceeds may be considered part of general corporate funds and thus may be
subject to the claims of creditors of the Company, including claims against the
Company that may arise out of actions of the Company's officers, directors, or
employees. It is possible, therefore, that one or more creditors may seek to
attach the proceeds of the Offering prior to the Bank's commencement of banking
operations. If such an attachment occurs and it becomes necessary to pay the
subscription funds to shareholders because of failure to obtain all necessary
regulatory approvals, the payment process might by delayed; and if it becomes
necessary to pay creditors from the subscription funds, the payment to
shareholders will be further reduced. As of September 30, 1998, the Company's
accumulated deficit was $72,471, and the Company will continue to incur
pre-opening expenses until the Bank commences operations. It is estimated that
the Company will expend as much as $400,000 in organizational expenses and in
the event of any liquidation, incur other costs of as much as $300,000, or $1.00
per Share based upon the minimum of 700,000 Shares. No assurances can be given
that such expenses and costs will not significantly exceed this estimate.
PURCHASES BY ORGANIZERS OF THE COMPANY
The Organizers have indicated they intend to purchase 305,000 Units in the
Offering. The Organizers may purchase all of the Shares in the Offering. All
additional purchases will be made on the same terms, including the same number
of Warrants, as those made by other investors. Any such purchases of Units by
the Organizers will be subject to affiliate resale limitations of the 33 Act.
The Organizers have represented to the Company that all purchases will be made
for investment purposes only and not with a view to resell such shares. See
"ORGANIZERS AND PRINCIPAL SHAREHOLDERS."
In order to provide funds for the payment of initial organizational and
pre-opening expenses, the Organizers initially advanced $90,000 to the Company.
The Company's obligation to repay these advances to the Organizers have been
extinguished in exchange for the issuance of 900 shares of redeemable preferred
stock from the Company on September 29, 1998 at a price of $100.00 per share.
The Company has issued an additional 3,000 shares of redeemable preferred stock
to organizers on December 3, 1998 at a price of $100.00 per share. The preferred
stock is redeemable by the Company for the purchase price at any time after the
release of funds by the escrow agent and will have a distribution preference
above common stock in the event of a dissolution of the Company. The preferred
stock pays a dividend at the sole discretion of the Company. The
12
<PAGE> 15
Company intends to declare a dividend of 2% of the purchase price of the
preferred stock within 30 days of the closing of the Offering. The aggregate
amount of the intended dividend is $7,800 and will be paid from the interest
accumulated on subscription funds in the escrow account.
OTHER TERMS AND CONDITIONS/HOW TO SUBSCRIBE
The Company may cancel this Offering for any reason at any time prior to
the release of subscription funds from the Subscription Escrow Account, and
accepted subscriptions are subject to cancellation in the event that the Company
elects to cancel the Offering in its entirety.
Units will be marketed on a best-efforts basis exclusively through certain
directors and executive officers of the Company, none of whom will receive any
commissions or other form of remuneration based on the sale of the Units. The
Company, therefore, does not have any specific plan to engage an underwriter to
sell the Units at this time. However, in the event that the Offering Conditions
have not been satisfied by April 1, 1999, the Company may engage an
underwriter to sell the Units on a best-efforts basis and such underwriter would
receive a commission based upon such sales. It is anticipated that commissions
paid to such underwriter, if retained, will not exceed 10% of the $10.00 per
Unit sales price and that other expenses of such underwriting will not exceed an
aggregate of $100,000. In the event the Company engages an underwriter to sell
Units prior to the expiration of the Offering Period, a post-effective amendment
to the Registration Statement will be filed with the SEC containing the terms of
any agreements entered into with such underwriters and discussing any fees or
expenses associated with such agreements. In the event that the Offering
Conditions have not been satisfied by the end of the Offering Period, this
Offering will be terminated and the subscription funds promptly returned to the
subscribers, together with their allocated share of earnings, if any, earned on
the investment of the Subscription Escrow Account as described herein. See
"TERMS OF THE OFFERING - Escrow of Subscription Funds."
As soon as practicable, but no more than ten-business days after receipt of
a subscription, the Company will accept or reject such subscription.
Subscriptions not rejected by the Company within this ten-day period shall be
deemed accepted. Once a subscription is accepted by the Company, it cannot be
withdrawn by the subscriber. Payment from any subscriber for Units in excess of
the number of Units allocated to such subscriber, if any, will be refunded by
mail, without interest within ten days of the date of rejection.
Subscriptions to purchase shares of Common Stock can be made by completing
the Stock Order Form attached to this Prospectus (Appendix C) and delivering the
same to the Company at its offices, Austin Center West, Tower II, 1408 North
Westshore Boulevard, Suite 502, Tampa, Florida 33607, or mailing the same in the
enclosed self-addressed envelope. Full payment of the purchase price must
accompany the subscription. Failure to pay the full subscription price shall
entitle the Company to disregard the subscription. No Unit Order Form is binding
until accepted by the Company, which may, in its sole discretion, refuse to
accept any subscription for Units, in whole or in part, for any reason
whatsoever. After a subscription is accepted and proper payment received, the
Company shall not cancel such subscription unless all accepted subscriptions are
canceled. Unless otherwise agreed by the Company, all subscription amounts must
be paid in United States currency by check, bank draft or money order payable to
"IBBF, FOR FLORIDA BUSINESS BANCGROUP, INC." A subscription will be accepted in
writing by the Company only in the Form of Acceptance attached to this
Prospectus.
USE OF PROCEEDS
The gross proceeds from the sale of the minimum number of Units offered by
the Company are estimated to be $7,000,000. This estimate is based upon the
assumption that the sale of 700,000 Units occurs prior to the expiration of the
Offering Period. However, if 700,000 Units are not sold, prior to the expiration
of the Offering Period, then the Offering will terminate and all funds received
from subscribers, adjusted for any income thereon, will be promptly refunded.
See "TERMS OF THE OFFERING."
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<PAGE> 16
The estimated Organizational and Offering expenses of the Company and the
Bank are as follows:
<TABLE>
<S> <C>
Offering Expenses(1) $ 30,000
Organizational Expenses(2) 370,000
-----------
TOTAL $ 400,000
===========
</TABLE>
- ---------------
(1) Comprised primarily of certain legal fees, marketing costs, registration
fees, accounting fees, escrow fees, printing and mailing costs and other
offering expenditures.
(2) Assuming the Bank opens in late 1998, organizational expenses include,
among other expenditures, application fees, salaries and related
expenditures, legal and other professional costs, temporary rent and
utilities, costs for market analysis, pre-opening advertising, and certain
capitalized organizational costs to include software to support operations,
computer hardware and furniture fixtures and equipment.
A substantial portion of the proceeds of this Offering ($7,000,000)
assuming the minimum number of Units is sold will be used by the Company for the
purchase of 100% of the issued and outstanding capital stock of the Bank and to
repay the expenses of this Offering and the expenses incurred in the
organization of the Company and the Bank.
A portion of the proceeds of this Offering in excess of the above amounts
will be retained by the Company for the purpose of funding any required future
additions to the capital of the Bank. Since state banks are regulated with
respect to the ratio that their total assets may bear to their total capital, if
the Bank experiences greater growth than anticipated, it may require the
infusion of additional capital to support that growth. Management of the Company
anticipates that the proceeds of the Offering will be sufficient to support the
Bank's immediate capital needs and will seek, if necessary, long and short-term
debt financing to support any additional needs; however, management can give no
assurance that such financing, if needed, will be available or if available will
be on terms acceptable to management.
Gross proceeds from the Offering will be applied as follows:
<TABLE>
<CAPTION>
MAXIMUM PROCEEDS
MINIMUM PROCEEDS ASSUMING SALE OF
ASSUMING SALE % OF NET 1,500,000 % OF NET
700,000 SHARES PROCEEDS SHARES PROCEEDS
---------------- -------- ----------------- ---------
<S> <C> <C> <C> <C>
Purchase of capital stock of the Bank . . . $6,300,000 90.0% $13,000,000 86.7%
Organizational and Offering expenses of the
Company . . . . . . . . . . . . . . . . . . 100,000 1.4% 100,000 .6%
Working capital and funds available for
expansion of banking and banking-related
services. . . . . . . . . . . . . . . . . . 600,000 8.6% 1,900,000 12.7%
---------- ------ ----------- ------
Proceeds. . . . . . . . . . . . . . . . . . $7,000,000 100.0% $15,000,000 100.0%
========== ====== =========== ======
</TABLE>
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<PAGE> 17
The following table is a schedule of estimated expenditures to be made by
Bay Cities Bank out of the proceeds from the sale of its capital stock to the
Bank at minimum proceeds.
<TABLE>
<S> <C>
Organizational expenses of Bay Cities Bank, including application, legal and
consulting fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,000
Pre-opening expenses of Bay Cities Bank, including salaries, occupancy and
other expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270,000
Furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . . 384,000
Cash, investments and other assets. . . . . . . . . . . . . . . . . . . . . . . 5,616,000
----------
Total uses of capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,300,000
==========
</TABLE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1998, and as adjusted to give effect to the sale of a minimum of
700,000 shares and a maximum of 1,500,000 shares of common stock offered hereby,
at an assumed public offering price of $10.00 per share, net of estimated
offering expenses.
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED AS ADJUSTED FOR
SEPTEMBER 30, FOR MINIMUM MAXIMUM
1998 OFFERING OFFERING
------------- ----------- ----------------
(Dollars in Thousands)
<S> <C> <C> <C>
Stockholders' equity:
Preferred Stock, $0.01 par value, authorized and
unissued 2,000,000 shares $90 $ 390 $ 390
Common Stock, $.01 par value, 8,000,000 shares
authorized, none issued
(700,000 shares at the minimum offering and
1,500,000 shares at the maximum offering) - 7 15
Additional paid-in capital - 6,993 14,985
Accumulated deficit (72) (72) (72)
--- ------ -------
Total capitalization $18 $7,318 $15,318
=== ====== =======
</TABLE>
DIVIDEND POLICY
As the Company and the Bank are both start-up operations, it will be the
policy of the Board of Directors of the Company to reinvest earnings for such
period of time as is necessary to ensure the successful operations of the
Company and of the Bank. There are no current plans to initiate payment of cash
dividends, and future dividend policy will depend on the Bank's earnings,
capital requirements, financial condition and other factors considered relevant
by the Board of Directors of the Company.
The Bank will be restricted in its ability to pay dividends under Florida
banking laws and by regulations of the Department. Pursuant to Section 658.37,
Florida Statutes, a state bank may not pay dividends from its capital. All
dividends must be paid out of current net profits then on hand plus retained net
profits of the preceding two years, after deducting bad debts, depreciation and
other worthless assets, and after making provision for reasonably anticipated
future losses on loans and other assets. Payments of dividends out of net
profits is further limited by Section 658.37, which prohibits a bank from
declaring a dividend on its shares of common stock until its surplus equals its
stated capital, unless there has been transferred to surplus not less than 20%
of a bank's net profits for the preceding year (in the case of an annual
dividend). Finally, a state bank may not declare a dividend which would cause
the capital accounts of a
15
<PAGE> 18
bank to fall below the minimum amount required by law, regulation, order or any
written agreement with the Department or any Federal regulatory agency.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is still in the development stage, and will remain in that
state until the Offering of the Company's Common Stock is complete. The
Organizers initially advanced $90,000 to the Company. The Company's obligation
to repay these advances to the Organizers has been extinguished in exchange for
the issuance of 900 shares of redeemable preferred stock from the Company at a
price of $100 per share. Through September 30, 1998, the Company has expended
$72,471 for organizational costs including attorney fees, employee compensation
and filing fees. The remaining funds will be used to fund costs and expenses
during the Offering Period. Subscription funds during the Offering Period
contemplated herein will be placed in the Subscription Escrow Account and
invested in direct obligations of the United States Government, in short-term
insured certificates of deposits and/or money market Management trusts for
short-term obligations of the United States Government, with maturities not to
exceed 90 days.
On September 3, 1998, the Company entered into a lease agreement with
NovaCare, Inc. to lease the Bank's temporary quarters until the permanent
quarters becomes available. The Company has given a good faith deposit in the
amount of $4,054.66.
Management of the Company believes that the proceeds of $7,000,000 from the
Offering will satisfy the cash requirements of the Company and the Bank for
their respective first years of operation. It is not anticipated that the
Company will find it necessary to raise additional funds to meet expenditures
required to operate the business of the Company and the Bank over the next 12
months. All anticipated material expenditures for such period have been
identified and provided for out of the proceeds of this Offering. See "USE OF
PROCEEDS."
NEED FOR TECHNOLOGICAL CHANGE; YEAR 2000 COMPLIANCE
The banking industry is undergoing rapid technological changes with
frequent introductions of new technology-driven products and services. In
addition to better serving customers, the effective use of technology increases
efficiency and enables financial institutions to reduce costs. The Company's
future success will depend in part on its ability to address the needs of its
clients by using technology to provide products and services that will satisfy
client demands for convenience as well as to create additional efficiencies in
the Bank's operations. Many of the Bank's competitors have substantially greater
resources to invest in technological improvements. There can be no assurance
that the Bank will be able to effectively implement new technology-driven
products and services or be successful in marketing such products and services
to its clients.
The Company is acutely aware of the many areas affected by the Year 2000
computer issue, as addressed by the Federal Financial Institutions Examination
Council ("FFIEC") in its interagency statement which provided an outline for
institutions to effectively manage the Year 2000 challenges. Management is in
the process of completing a Year 2000 plan which will be approved by the Board
of Directors and will include multiple phases, tasks to be completed, and target
dates for completion. Issues addressed will include awareness, assessment,
renovation, validation, implementation, testing, and contingency planning.
The Company's main service provider has completed testing of its mission
critical application software and item processing software; the test results,
which have been documented and validated, are deemed to be Year 2000 compliant.
FFIEC guidance on testing Year 2000 compliance of service providers states that
proxy tests are acceptable compliance tests. In proxy testing, the service
provider tests with a representative sample of financial institutions that use a
particular service, with the results of such testing shared with all similarly
situated clients of the service provider. The Company has authorized the
acceptance of proxy testing since the proxy tests have been conducted with
financial institutions that are similar in type and complexity to its own, using
the same version of the Year 2000 ready software and the same hardware operating
systems.
The Company also recognizes the importance of determining that its
potential loan customer's will face the Year 2000 problem in a timely manner to
avoid deterioration of the loan portfolio solely due to this issue. The Company
plans to identify any borrower having high Year 2000 risk exposure and taking
such exposure into consideration in underwriting any loan to such borrowers. To
such the extent the Bank identifies a year 2000 exposure associated with a
proposed borrower but determines to make a loan to such borrower, the Bank will
work on a one-to-one basis with the borrower to resolve the exposure.
Accordingly, management does not believe that the Company has incurred or
will incur material costs associated with the Year 2000 issue. Yet, there can be
no assurances that all hardware and software that the Company will use will be
Year 2000 compliant. Management cannot predict the amount of financial
difficulties it may incur due to customers and vendors inability to perform
according to their agreements with the Company or the effects that other third
parties may cause as a result of this issue. Therefore, there can be no
assurance that the failure or delay of others to address the issue or that the
costs involved in such process will not have a material adverse effect on the
Company's business financial condition, and results of operations.
The Company's contingency plans relative to Year 2000 issues have not been
finalized - these plans are evolving as the Bank prepares to open. During the
organizational phase management will determine if it is necessary to develop a
"worst case scenario" contingency plan. Based on vendor representation to date
(as noted above), the Company's mission critical systems are expected to be Year
2000 compliant when the Bank opens or shortly thereafter, and, therefore a
contingency plan has not been developed with respect to those systems. With
regards to non-mission critical internal systems, the Company's plans are to
acquire only those systems that are vendor certified as being Year 2000
compliant. Alternatively, some systems could be handled manually on an interim
basis. Should outside service providers not be able to provide compliant
systems, the Company will terminate those relationships and transfer to other
vendors.
BUSINESS OF THE COMPANY
GENERAL
The Company was incorporated under the laws of the State of Florida on May
18, 1998 for the purpose of organizing the Bank and purchasing 100% of the
outstanding capital stock of the Bank. The Company has been organized as a
mechanism to enhance the Bank's ability to serve its future customers'
requirements for financial services. The holding company structure will also
provide flexibility for expansion of the Company's banking business through
acquisition of other financial institutions and provision of additional
banking-related services which the traditional commercial bank may not provide
under present laws. Finally, banking regulations require that the Bank maintain
a minimum ratio of capital to assets. In the event that the Bank's growth is
such that this minimum ratio is not maintained, the Company may borrow funds,
subject to the capital adequacy guidelines of the Federal Reserve, and
contribute them to the capital of the Bank and otherwise raise capital in a
manner which is unavailable to the Bank under existing banking regulations.
The Company has no present plans to acquire any operating subsidiaries
other than the Bank; however, the Company may make additional acquisitions in
the event that such acquisitions are deemed to be in the best interest of the
Company and its shareholders. Such acquisitions, if any, will be subject to
certain regulatory approvals and requirements. See " SUPERVISION AND
REGULATION."
PREMISES
The Bank's permanent headquarters will be located at the northwest corner
of the intersection of N. Westshore Boulevard and Spruce Street in a new 6-story
office building to be developed by Crescent Resources (a subsidiary of Duke
Energy Corp.). The Bank will occupy approximately 8,000 square feet on the
ground floor. The building is scheduled for occupancy in September, 1999.
16
<PAGE> 19
BUSINESS OF THE BANK
GENERAL
Bay Cities Bank (the "Bank") seeks to be one of the premier community-based
financial institution in its market area by providing exceptional personalized
bank products and traditional bank services to individuals, small to
medium-sized businesses, professionals and other local organizations in its
market area; and by providing a maximum return to shareholders.
The Bank will emphasize personal contacts by the officers, directors and
employees of the Bank. Loan participations will be arranged for customers whose
loan demands exceed the Bank's lending limits. Generally, customers will have
one account officer to serve all of their banking needs and will have access to
senior management when necessary. The Bank will provide a full range of
competitive banking services; however, the marketing emphasis will be on the way
services are delivered, more than on which services are provided. Management of
the Bank intends to focus its efforts on filling the void caused by the
dwindling service provided by larger banks.
Bay Cities Bank will focus and rely on its base of local directors,
stockholders, management and employees for business development, as other banks
in this market continue to merge, consolidate and grow outside the area.
Policies and procedures will be tailored to the local market rather than to the
regional and statewide markets of other financial institutions. Local directors
and management know the people in its market area and understand their
businesses. Management will actively promote the Bank within the market due
through their established reputations and banking relationships in the local
community. Customers will be derived from Bank directors, stockholders, their
friends, relatives and business associates and others within the community who
desire superior personalized banking services unavailable from the regional and
statewide financial institutions. The bank is committed to being locally owned
and managed.
The high turnover and more rigid style of large regional banks have created
segments of the marketplace that are ready to change their banking
relationships. Additionally, growth in residential and commercial activity in
the market area and surrounding counties creates opportunities for the Bank to
establish new banking relationships.
Profitable banking relationships are those with high deposit balances,
infrequent transactions and low distribution requirements. Bay Cities Bank will
be well positioned to establish these relationships with commercial and consumer
customers through the active marketing efforts of the directors, management, and
employees of the Bank and the opportunities created by the growth of the market
area and recent mergers.
The Bank intends to concentrate its advertising message on the advantages
of local ownership and management, as well as, fiscal responsibility, personal
service and customer relations at the local level. Particular emphasis will be
placed on newspaper and radio advertising, and direct mail on a selective basis.
THE MARKET AREA
The Bank's primary market is the Tampa Bay Metropolitan Statistical Area
("Tampa Bay MSA") with a population of 2,240,000. The Tampa Bay MSA is comprised
of four counties:
1. HILLSBOROUGH COUNTY
Hillsborough County had a population of 918,800 as of 1996 per the Sales
and Marketing Management, Demographics USA 1997. Hillsborough County is the
business center for the region, has as its center Tampa International
Airport which boarded 13.0 million passengers in 1996 up from 10.6 million
in 1990.
2. PINELLAS COUNTY
Pinellas County, with a population of 884,000, is the most densely
populated county in the state, has 125 different municipalities, and was at
one time, primarily residential, retirement and tourist-oriented. Today, it
has five well-defined business centers and has become a popular relocation
and startup location for high-tech, software and computer service
companies. Pinellas County is home to 24 public companies.
3. PASCO COUNTY
Pasco County, formerly possessing a split personality...retired, Republican
and residential on the west side and agricultural, Democratic and rural on
the east side, has now unified into a residential-commuter district feeding
17
<PAGE> 20
into Hillsborough and Pinellas county businesses. In time, there will be
business relocations and startups in Pasco. Two of the top ten residential
communities in Tampa Bay MSA are in the south Pasco region. It is 23 miles
from the West Shore Business District and accessible by the Veterans
Expressway, a new toll road which opened in 1996, and Interstate 75. Pasco
County had a population of 315,100 at that time.
4. HERNANDO COUNTY
Hernando County, to the north of Pasco, is 35 miles from the West Shore
Business District, has been agricultural and rural and is now enjoying a
residential-commuter boom. With a population of 122,300 in 1996, Hernando
County has seen a 173% population increase since 1980.
According to the Tampa Tribune Market Guide - 1998, the Tampa Bay MSA is a
growth market, where year after year the population size is among the top 25
MSAs nationally. The Tampa Bay MSA ranks second in population size and total
number of households among Southeastern metropolitan areas. Only Atlanta has a
larger population. The Tampa Bay MSA has the largest population and the most
households in Florida, ahead of Miami, Ft. Lauderdale and Orlando. Tampa Bay
also ranks high in other vital statistics such as effective buying income and
retail activity, not only in Florida, but in the Southeast and the United
States. The following tables set forth the details on these demographic
statistics:
[Tables Follow This Page]
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<PAGE> 21
TABLE I - TAMPA BAY RANKINGS 1996
<TABLE>
<CAPTION>
TAMPA BAY MSA NATIONAL SOUTHEAST FLORIDA
------------- -------- --------- -------
<S> <C> <C> <C> <C>
Population 2,240,000 22 2 1
Households 933,100 17 2 1
Effective Buying Inc. $36.3 billion 24 2 1
Total Retail Sales $24.6 billion 15 2 1
Food Store Sales $ 3.7 billion 20 2 1
Eating & Drinking $ $ 2.4 billion 18 2 1
General Merchandise $ 2.4 billion 26 2 1
Apparel & Accessories $ .8 billion 34 5 5
Furniture/Home Furnishing Appliances $ 1.3 billion 22 3 2
Building Materials & Hardware $ 1.1 billion 22 2 1
Drug Store Sales $ 1.0 billion 14 3 2
Automotive Dealer Sales $ 6.5 billion 16 3 2
</TABLE>
Source: Sales and Marketing, Demographics USA 1997
TABLE II - SOUTHEASTERN POPULOUS METROS - 1996
<TABLE>
<CAPTION>
POPULATION NATIONAL RANK
---------- -------------
<S> <C> <C> <C>
1. Atlanta 3,582,200 9
2. Tampa Bay 2,240,200 22
3. Miami 2,100,200 24
4. Orlando 1,460,200 37
5. Fort Lauderdale 1,452,700 39
</TABLE>
Source: Sales and Marketing, Demographics USA 1997
TABLE III - SOUTHEASTERN HOUSING METROS - 1996
<TABLE>
<CAPTION>
HOUSEHOLDS NATIONAL RANK
---------- -------------
<S> <C> <C> <C>
1. Atlanta 1,330,200 9
2. Tampa Bay 933,100 17
3. Miami 737,100 25
4. Fort Lauderdale 608,700 30
5. Orlando 551,500 37
</TABLE>
Source: Sales and Marketing, Demographics USA 1997
19
<PAGE> 22
The Bank will be located in the West Shore Business District of Tampa. The
West Shore Business District is the geographic center of the Tampa Bay MSA and
is adjacent to the Tampa International Airport. The West Shore Business District
has more than 4,000 businesses and 70,000 employees according to the Economic
and Market Update of the Florida Research Group dated June 1998. It is located
within a ten to forty mile drive of the Tampa Bay MSA's ten largest residential
communities. Approximately 9.3 million square feet of office space, half of
Hillsborough county's office space, is in the West Shore Business District.
According to the Update, the success of this business district is based on its
geographically central location, its close proximity to the airport, the nearby
executive and employee housing, extensive retail amenities and its numerous
nearby hotel facilities.
The Bank will extend loans throughout the Tampa Bay MSA, but the
concentration will be in Hillsborough and Pinellas counties. The businesses in
the MSA will be served by the Bank's courier service. The organizers believe
that a business-oriented bank with a single office serving small and
intermediate-sized firms with loan needs of between $500,000 and $2.5 million
will fill a well-defined need in the area at this time.
COMPETITION
Competition among financial institutions in the Bank's primary market is
intense. As of December 31, 1997, there were 59 financial institutions in
Hillsborough and Pinellas Counties with deposits of $20.72 billion. Although
the deposits for both counties decreased from $20.95 billion at the end of
1996, a 1% decrease on an annualized basis, the deposits for banks in
Hillsborough County increased $380 million from December 31, 1996 through
December 31, 1997, an increase of 4.5% on an annualized basis. Further, during
the same time period, the independent banks in Hillsborough County experienced
an increase in deposits from $1.4 billion to $1.6 billion, an annual rate of
13.8%, while independent banks in Pinellas County also experienced an increase
in deposits from $2.2 billion to $2.5 billion or 14.0%.
Thus the independent banks in Hillsborough and Pinellas Counties increased
their overall market share from 17.0% to 19.1% of the deposit base. Independent
banks should have further increased their share of deposits in these counties
since the summer of 1998 because of large divestitures resulting from
Barnett-NationsBank merger. This region had the greatest overlap between the two
banks and the regulators have required substantial deposit divestitures by
NationsBank. A clear picture of the deposit mix between regional banks and
independent banks will not be available until the first quarter of 1999.
Financial institutions primarily compete with one another for deposits. In
turn, a bank's deposit base directly affects such bank's loan activities and
general growth. Primary methods of competition include interest rates on
deposits and loans, service charges on deposit accounts and the availability of
unique financial services products. The Bank will be competing with financial
institutions which have much greater financial resources than the Bank, and
which may be able to offer more services and possibly better terms to their
customers. The Organizers, however, believe that the Bank will be able to
attract sufficient deposits to enable the Bank to compete effectively with other
area financial institutions.
The Bank will be in competition with existing area financial institutions
other than commercial banks and thrift institutions, including insurance
companies, consumer finance companies, brokerage houses, credit unions and other
business entities which target traditional banking markets. Due to the growth of
the Tampa area, it can be anticipated that additional competition will continue
from existing institutions, as well, new entrants to the market.
The following tables provide details of the history of Bank and Thrift
(S&L) deposits in Hillsborough and Pinellas Counties:
[Tables to Follow This Page]
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<PAGE> 23
BANK AND S&L DEPOSITS - HILLSBOROUGH COUNTY
<TABLE>
<CAPTION>
1996 1997
REGIONAL BANKS #OFFICES $MILLIONS %COUNTY #OFFICES $MILLIONS %COUNTY
<S> <C> <C> <C> <C> <C> <C>
Barnett (36) $ 2,342.5 28.7% (35) $ 2,450.8 28.7%
First Union (18) 1,070.6 13.1% (18) 1,029.6 12.1%
Fortune/AmSou (4) 101.6 1.3% (7) 204.5 2.5%
Ft. Bro./Colonial (8) 185.5 2.3% (8) 189.9 2.2%
NationsBank (35) 1,694.9 20.8% (37) 1,634.0 19.2%
SouthTrust (8) 227.9 2.8% (8) 232.7 2.7%
SunTrust (23) 972.3 11.9% (23) 1,020.8 12.0%
Terrace/Villages/Regions (4) 171.1 1.2% (4) 190.8 2.3%
TOTAL (136) $ 6,766.4 83.0% (140) $ 6,953.1 81.5%
INDEPENDENT BANKS
Anchor/Beneficial (1) $ 8.0 .1% (1) $ 5.5 .0%
Bank of Tampa (5) 223.8 2.7% (5) 251.0 2.9%
Bay Financial (1) 102.2 1.5% (1) 124.2 1.5%
Carteret/Hamilton (1) 125.0 1.5% (1) 140.6 1.6%
Central Bank (4) 134.5 1.7% (5) 134.6 1.6%
City First (3) 61.0 .8% (3) 69.5 .8%
Columbia Bank (5) 56.0 .7% (5) 56.6 .7%
First of America (2) 9.2 .1% (2) 13.6 .1%
First Commercial (1) 37.5 .5% (1) 47.2 .6%
FNB Tampa (1) 45.9 .6% (1) 45.5 .5%
FNB Cent. Fla (7) 20.3 .3% (7) 21.1 .3%
Gulf West (2) 28.3 .4% (2) 32.2 .4%
Manufacturers (1) 90.9 1.1% (1) 124.8 1.5%
Northern Trust -- -- -- (1) 17.3 .2%
Northside (2) 44.8 .6% (2) 61.5 .7%
Partners (1) 33.1 .4% (1) 31.0 .4%
Provident (3) 36.7 .5% (3) 51.5 .5%
Southern Commerce (1) 46.5 .6% (1) 53.1 .6%
Southern Exchange (2) 80.7 1.0% (2) 73.4 .9%
Sunshine State (5) 103.4 1.3% (5) 104.5 1.2%
University/Terrace (2) 56.2 .7% (3) 65.3 .8%
Valrico State (1) 42.2 .5% (4) 55.2 .6%
TOTAL (51) $ 1,386.2 17.0% (57) $ 1,579.2 18.5%
TOTAL COUNTY (187) $ 8,152.6 100.0% (197) $ 8,532.3 100.0%
</TABLE>
Source: Florida Bankers Association
21
<PAGE> 24
BANK AND S&L DEPOSITS - PINELLAS COUNTY
<TABLE>
<CAPTION>
1996 1997
REGIONAL BANKS #OFFICE $MILLIONS %COUNT #OFFICE $MILLIONS %COUNT
<S> <C> <C> <C> <C> <C> <C>
AmSouth (30) $ 1,550.0 12.1% (29) $ 987.1 8.1%
Barnett (48) 2,828.1 22.1% (58) 2,779.1 22.8%
First Union (40) 2,336.6 18.2% (38) 2,257.9 18.5%
NationsBank (38) 2,001.0 15.6% (38) 1,846.6 15.1%
SouthTrust (21) 1,010.2 7.9% (19) 1,021.8 8.4%
SunTrust (17) 725.9 5.7% (17) 726.6 6.0%
World Federal (4) 179.2 1.4% (4) 97.2 .8%
TOTAL (198) $ 10,631.0 83.1% (203) $ 9,716.3 79.8%
INDEPENDENT BANKS
Anchor Savings (4) $ 142.9 1.1% (4) $ 142.7 1.2%
Bank of St. Petersburg (1) 29.0 .2% (1) 32.5 .3%
Citizens Bank & Trust (6) 86.8 .9% (6) 100.3 .8%
Crown FSB (1) 113.1 1.0% (1) 114.2 0.9%
First Central Bank (1) 44.6 .4% (1) 52.1 .4%
First State Bank (3) 36.7 .3% (3) 36.3 .3%
First of America (14) 178.9 1.4% (13) 134.6 1.1%
First Nationwide (3) 220.4 1.7% (3) 244.2 2.0%
Florida Bancgroup (2) 21.1 .2% (2) 26.7 .2%
Gulf West (6) 121.4 1.0% (7) 137.1 1.1%
Indian Rocks State (3) 61.6 .5% (3) 72.6 .6%
Invest Bank (4) 94.4 .7% (5) 132.4 1.1%
Madison Bank (2) 118.6 .9% (2) 117.4 1.0%
Marine Bank (1) 47.2 .4% (1) 45.9 .4%
Northern Trust (1) 34.5 .3% (1) 56.8 .5%
Peoples Bank (4) 68.0 .5% (4) 84.2 .7%
Pinellas Community (3) 77.5 .6% (3) 86.3 .7%
Republic Bancshares (20) 535.8 4.2% (20) 642.0 5.3%
Southern Exchange (2) 33.7 .3%
Tarpon Financial (1) 17.1 .1% (1) 16.8 .1%
United Bank & Trust (4) 108.4 .9% (4) 130.9 1.1%
Village Bank (1) 5.5 .0% (2) 14.7 .1%
TOTAL (85) $ 2,163.5 16.9% (89) $ 2,454.4 20.2%
TOTAL COUNTY (283) $ 12,794.5 100.0% (292) $ 100.0%
</TABLE>
Source: Florida Bankers Association
<PAGE> 25
BOARD OF DIRECTORS AND BOARD COMMITTEES
The Bank believes that its board is composed of high quality, knowledgeable
and proven business and banking professionals. Initially there will be 9 members
on the Bank's board of directors. Additional high quality directors may be added
when and as deemed necessary. In order to fulfill their responsibilities to the
customers and shareholders of the Bank, it is anticipated that the board of
directors will meet on a monthly basis, or more often as needed, to review the
operations of the Bank and provide appropriate direction to management.
It is anticipated that a more extensive oversight of particular aspects of
the Bank's operations will be conducted by committees of the board of directors.
These committees will consist of the Executive Committee, Executive Loan
Committee, Asset/Liability and Investment Committee, Audit Committee and
Compensation Committee.
The Executive Committee will be responsible for defining and implementing
the overall strategy and policies of the Bank. It will also be responsible for
monitoring the financial performance of the Bank. The committee will review and
recommend marketing plans, capital plans, major capital expenditures and bank
expansion plans.
The Executive Loan Committee will be responsible for ensuring the soundness
of the Bank's credit policy; conformance to lending policies and compliance with
applicable laws, rules and regulations. To fulfill these responsibilities, the
Executive Loan Committee will review the adequacy of the credit policy on at
least an annual basis, review all large loans and monitor the performance of the
loan portfolio on an ongoing basis.
The Asset/Liability and Investment Committee will be responsible for
ensuring the soundness of the Bank's investment policy and asset/liability
management policy; conformance to these policies and compliance with applicable
laws, rules and regulations. To fulfill these responsibilities, the committee
will review the adequacy of the investment and asset/liability management
policies on at least an annual basis. The committee will also monitor
performance of the investment portfolio, the Bank's liquidity position and the
interest rate sensitivity position.
The Audit Committee will consist solely of outside directors and will be
responsible for ensuring that an adequate audit program exists and that Bank
personnel are operating in conformance with all applicable laws, rules and
regulations. All auditors employed or engaged by the Bank will report directly
to the Audit Committee. The Audit Committee will recommend the selection of
auditors, review the audit program on at least an annual basis to ensure the
adequacy of its scope, and review all reports of auditors and examiners as well
as management's responses to such reports to ensure the effectiveness of
internal controls and the implementation of remedial action. The Audit committee
will also be responsible for the integrity of the internal loan review system.
The Compensation Committee will be responsible for ensuring that the
Bank's compensation policy is effectively meeting its objectives. Compensation
will be reviewed on an annual basis, or more frequently if necessary.
DEPOSITS
The Bank will offer a wide range of interest-bearing and
noninterest-bearing deposit accounts, including commercial and retail checking
accounts, money market accounts, individual retirement accounts, regular
interest-bearing statement savings accounts and certificates of deposit with
fixed and variable rates and a range of maturity date options. The sources of
deposits will be residents, businesses and employees of businesses within the
Bank's market area, obtained through the personal solicitation of the Bank's
officers and directors, direct mail solicitation and advertisements published in
the local media. The Bank intends to pay competitive interest rates on time and
savings deposits up to the maximum permitted by law or regulation. In addition,
the Bank will implement a service charge fee schedule competitive with other
financial institutions in the Bank's market area covering such matters as
maintenance fees on checking accounts, per item processing fees on checking
accounts and returned check charges.
LOAN PORTFOLIO
The Bank will provide for the financing needs of the community it serves by
offering a variety of loans. Commercial loans will include both collateralized
and uncollateralized loans for working capital (including inventory and
receivables), business expansion (including real estate acquisitions and
improvements), and purchase of equipment and machinery. The Bank will originate
a variety of residential real estate loans, including conventional mortgages
collateralized by first mortgage liens to enable borrowers to purchase,
refinance, construct upon or improve real property. Consumer loans will include
collateralized and uncollateralized loans for financing automobiles, boats, home
22
<PAGE> 26
improvements, and personal investments. The Bank will primarily enter into
lending arrangements for its portfolio loans with individuals who are familiar
to the Bank and are residents of the Bank's primary market and surrounding area.
It is anticipated that 20-25% of the loans will come from outside the Banks
market area.
The bank's commercial loans primarily will be underwritten in the Bank's
market area on the basis of the borrowers' ability to service such debt from
income. As a general practice, the Bank will take as collateral a security
interest in any available real estate, equipment, or other chattel. Such loans,
however, may also be made on an uncollateralized basis. Collateralized working
capital loans will be primarily collateralized by short term assets whereas term
loans will be primarily collateralized by long term assets.
Unlike residential mortgage loans, which generally are made on the basis of
the borrowers' ability to make repayment from his employment and other income,
and which are collateralized by real property whose value tends to be easily
ascertainable, commercial loans typically will be underwritten on the basis of
the borrower's ability to make repayment from the cash flow of the business and
generally will be collateralized by business assets, such as accounts
receivable, equipment and inventory.
A portion of the Bank's lending activities will consist of the origination
of single family residential mortgage loans collateralized by owner-occupied
property located in the Bank's market area and surrounding areas. The Bank will
also offer adjustable rate mortgages (ARMs) and will maintain these ARMs in its
portfolio or may sell the ARMs in the secondary market. The ability to retain
ARMs in the portfolio will allow the Bank the opportunity to originate loans to
borrowers who may not meet the underwriting criteria of strict secondary market
standards but are still quality credit risks.
Fixed and adjustable rate mortgage loans collateralized by single family
residential real estate generally will be generated in amounts of no more than
85% of appraised value. The Bank may, however, lend up to 95% of the value of
the property collateralizing the loan, but if such loans are required to be made
in excess of 85% of the value of the property, they must be insured by private
or federally guaranteed mortgage insurance. In the case of mortgage loans, the
Bank will require mortgagees title insurance to protect against defects in its
lien on the property which may collateralize the loan. The Bank in most cases
will require title, fire and extended casualty insurance to be obtained by the
borrower. Where required by applicable regulations, the bank will also require
flood insurance. The Bank will maintain its own errors and omissions insurance
policy to protect against loss in the event of failure of a mortgagor to pay
premiums on fire and other hazard insurance policies.
The Bank will originate residential construction loans to contractors to
finance the construction of single family dwellings, but most of the residential
construction loans will be made to individuals who intend to erect
owner-occupied housing on a purchased parcel of real estate. The Bank's
construction loans to individuals will typically range in size from $50,000 to
$200,000. Construction loans to contractors will be generally offered on the
same basis as other residential real estate loans except that a larger
percentage down payment will typically be required.
The Bank will finance the construction of individual, owner-occupied houses
on the basis of written underwriting and construction loan management
guidelines. Construction loans will be structured either to be converted to
permanent loans with the Bank at the end of the construction phase or to be paid
off upon receiving financing from another financial institution. Construction
loans on residential properties will be generally made in amounts up to 95%
(along with mortgage insurance) of appraised value. Construction loans to
contractors will generally have terms of up to 12 months. The maximum loan
amounts for construction loans will be based on the lessor of the current
appraised value or the purchase price.
Consumer loans made by the Bank will include the financing of automobiles,
recreation vehicles, boats, second mortgages, home improvement loans, home
equity lines of credit, personal (collateralized and uncollateralized) and
deposit account collateralized loans. Consumer loans will be made at fixed and
variable interest rates and may be made based on up to a 10-year amortization
schedule but which become due and payable in full and are generally refinanced
in 36 to 60 months. Consumer loans will be attractive to the Bank because they
typically have a shorter term and carry higher interest rates than that charged
on other types of loans.
The Bank recognizes that credit losses will be experienced and the risk of
loss will vary with, among other things, the type of loan being made, the
creditworthiness of the borrower over the term of the loan and, in the case of
a collateralized loan, the quality of the collateral for the loan as well as the
general economic conditions. Management will maintain an adequate allowance for
loan losses based on, among other things, industry standards, management's
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experience, the Bank's historical loan loss experience, evaluation of economic
conditions and regular reviews of delinquencies and loan portfolio quality.
The Bank intends to follow a conservative lending policy, but one which
permits prudent risks to assist businesses and consumers in the market area. The
lending area is expected to be generally the immediate Hillsborough County and
the counties contiguous to Hillsborough County. It is not expected that loan
participations will be purchased from correspondent banks. However,
participations will likely be sold, particularly with regard to real estate
lending. Interest rates will vary depending on the cost of funds to the Bank,
the loan maturity, and the degree of risk. Whenever possible, interest rates
will be adjustable with fluctuations in the "prime" rate. The long-term target
loan-to-deposit ratio will be approximately seventy-five (75%) percent. This
ratio is expected to meet the credit needs of customers while allowing prudent
liquidity through the investment portfolio. The Directors believe that this
positive, community-oriented lending philosophy will be translated into a
sustainable volume of quality loans into the foreseeable future.
Loan quality will be enhanced through the staffing of the Bank with
experienced, well-trained lending officers capable of soliciting loan business.
The officers will also have the ability to recognize and appreciate the
importance of exercising care and good judgment in underwriting loans, thus
insuring the safety and profitability of the Bank.
OTHER PRODUCTS AND SERVICES
COURIER SERVICES. The Bank intends to offer a courier service to its
commercial customers. This service, which will either be provided directly or
through a third party, will allow the Bank to deliver convenience through the
scheduled pickup of deposits.
TELEPHONE AND PC BANKING. The Bank believes there is strong demand within
the market for telephone and PC banking. These services allow customers to
access account information, execute certain transactions and pay invoices
electronically. Both of these services will be provided through a third-party
vendor.
AUTOMATIC TELLER MACHINES ("ATMS"). The Bank does not intend to establish
an ATM network, as it believes its capital can be more efficiently deployed
elsewhere. However, the Bank does intend to make certain existing ATM networks
available to its customers and to offer customers a certain number of free
transactions each month.
The Bank intends to continually evaluate other financial services such as
trust services, insurance services, investment services, brokerage services and
all other permissible activities.
INVESTMENTS
The Bank's primary objective will be to construct an investment portfolio
comprised of a mixture of investments which will earn an acceptable rate of
return while meeting the liquidity requirements of the Bank. This will be
accomplished by matching the maturity of assets with liabilities to the greatest
extent possible.
The Bank intends to invest primarily in U.S. obligations guaranteed as to
principal and interest. The Bank will also enter into federal funds transactions
with its principal correspondent banks and anticipates that it will be a net
seller of funds. All investments with a maturity in excess of one year will be
readily salable on the open market.
ASSET/LIABILITY MANAGEMENT
It will be the objective of the Bank to manage assets and liabilities to
provide a satisfactory, consistent level of profitability within the framework
of established cash management, loan, investment, borrowing and capital
policies. Designated Officers of the Bank will be responsible for monitoring
policies and procedures that are designed to ensure acceptable composition of
the asset-liability mix, stability and leverage of all sources of funds while
adhering to prudent banking practices. It is the overall philosophy of
management to support asset growth primarily through growth of core deposits,
which include deposits of all categories made by individuals, partnerships and
corporations. Management of the Bank will seek to invest the largest portion of
the Bank's assets in commercial, consumer and real estate loans. The Bank's
asset/liability mix will likely be monitored on a daily basis with a monthly
report reflecting interest-sensitive assets and interest-sensitive liabilities
being prepared and presented to the Bank's board of directors. The objective of
this policy is to control interest-sensitive assets and liabilities so as to
minimize the impact of substantial movements in interest rates on the Bank's
earnings.
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CORRESPONDENT BANKING
The Bank intends to purchase certain services from correspondent bank. Such
services are available on a statewide or regional basis from commercial banks,
banker's banks, the Federal Reserve Bank of Atlanta and the Atlanta Federal Home
Loan Bank. The Bank will determine the availability of such services and
evaluate the quality and pricing of the services available and based upon the
above will select one or more providers for the services the Bank will require.
The Bank will then purchase from time to time, correspondent services offered by
such banks, including some of the following: check collections, purchase or sale
of Federal Funds, security safekeeping, investment services, coin and currency
supplies, overline and liquidity loan participations and sales of loans to or
participations with correspondent banks.
The Bank anticipates that it will sell loan participations to
correspondent banks with respect to loans which exceed the Bank's lending
limit. As compensation for services provided by a correspondent, the Bank may
maintain certain balances with such correspondents in non-interest bearing
accounts, or may elect to pay for such fees directly.
DATA PROCESSING
The Bank has entered into a data processing servicing agreement with an
outside service bureau, M&I Data Services. This servicing agreement provides for
the Bank to receive a full range of data processing services, including an
automated general ledger, deposit accounting, commercial, real estate and
installment loan processing, payroll, central information file and ATM
processing and investment portfolio accounting. The servicing agreement is for a
term of seven years with an option for the Bank to renew for an additional term
of one year. The servicing agreement provides for installation and set up,
limited training, and consultation services necessary for the Bank to commence
using the data processing services, as well as a license to use the computer
software necessary for the services. The initial cost to the Bank for these
items will be $132,150. Thereafter, the Bank will be charged $8,000 per month
plus fees for certain services, as used. It is estimated that the total monthly
fees will be approximately $12,000.
STAFFING
It is the goal of the Bank to maintain a competently trained staff of local
bankers. A primary complaint about large regional banks is the constant turnover
of personnel. This prevents building long-term personal relationships with local
customers. The Bank intends to employ competent individuals who are already
living in the community or who commit to live in the community on a permanent
basis.
Management recognizes that the success of the Bank is directly related to
the people it is able to attract and maintain as employees. The Bank recognizes
that such employees deserve to share in that success. There will be numerous
opportunities for advancement resulting from the Bank's projected growth, and
personnel will be encouraged to enroll in various banking courses and other
seminars to improve their overall knowledge.
The Bank intends to commence operations with a staff of fewer than 15
full-time equivalent employees. Management anticipates that the Bank will
increase its staff to 21 full-time equivalent employees during the second year
of operation in order to provide for anticipated growth.
MONETARY POLICIES
The results of operations of the Bank will be affected by credit policies
of monetary authorities, particularly the Federal Reserve. The instruments of
monetary policy employed by the Federal Reserve include open market operations
in U.S. Government securities, changes in the discount rate on member bank
borrowings, changes in reserve requirements against member bank deposits and
limitations on interest rates which member banks may pay on time and savings
deposits. In view of changing conditions in the national economy and in the
money markets, as well as the effect of action by monetary and fiscal
authorities, including the Federal Reserve, no accurate prediction can be made
as to possible future changes in interest rates, deposit levels, loan demand or
the business and earnings of the Bank.
REGULATION AND SUPERVISION
GENERAL
As a one-bank holding company registered under the BHC Act, the Company
will be subject to regulation and supervision by the Federal Reserve. Under the
BHC Act, the Company's activities and those of its Bank subsidiary are limited
to banking, managing or controlling banks, furnishing services to or performing
services for its subsidiaries or engaging in any other activity that the Federal
Reserve determines to be so closely related to banking or managing or
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controlling banks as to be a proper incident thereto. As a state-chartered
commercial bank, the Bank will be subject to extensive regulation by the Florida
Department of Banking and Finance ("Department") and the FDIC.
The Company and the Bank will be required to file reports with the Federal
Reserve, the Department and the FDIC concerning their activities and financial
condition, in addition to obtaining regulatory approvals prior to entering into
certain transactions such as mergers with or acquisitions of other financial
institutions. Periodic examinations are performed by the Federal Reserve, the
Department and the FDIC to monitor the Company's and the Bank's compliance with
the various regulatory requirements. The Bank's deposits will be insured up to
the applicable limits by the FDIC under the Bank Insurance Fund ("BIF"). The
Bank will be subject to regulation by the Federal Reserve and the Department
with respect to reserves required to be maintained against transaction deposit
accounts and certain other matters.
REGULATION OF THE COMPANY
GENERAL. The BHC Act prohibits the Company from acquiring direct or
indirect control of more than 5% of any class of outstanding voting stock or
acquiring substantially all of the assets of any bank or merging or
consolidating with another bank holding company without prior approval of the
Federal Reserve. The BHC Act also prohibits the Company from acquiring control
of any bank operating outside the State of Florida, unless such action is
specifically authorized by the statutes of the state where the bank to be
acquired is located. Additionally, the BHC Act prohibits the Company from
engaging in or from acquiring ownership or control of more than 5% of the
outstanding voting stock of any company engaged in a non-banking business,
unless such business is determined by the Federal Reserve to be so closely
related to banking or managing or controlling banks as to be properly incident
thereto. The BHC Act generally does not place territorial restrictions on the
activities of such non-banking related activities.
TRANSACTIONS BETWEEN THE COMPANY AND THE BANK. The Company's authority to
engage in transactions with related parties or "affiliates," or to make loans to
certain insiders, is limited by certain provisions of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ("FIRREA"). Specifically, Sections
23A and 23B of the Federal Reserve Act apply to all transactions by an
insured-state nonmember bank or a holding company with any affiliate. Sections
23A and 23B generally define an "affiliate" as any company that controls or is
under common control with an institution. Subsidiaries of a financial
institution, however, are generally exempted from the definition of "affiliate."
Section 23A limits the aggregate amount of transactions with any individual
affiliate to 10% of the capital and surplus of the Company and also limits the
aggregate amount of transactions with all affiliates to 20% of the Company's
capital and surplus. Certain transactions with affiliates, such as loans to
affiliates or guarantees, acceptances and letters of credit issued on behalf of
affiliates, are required to be collateralized by collateral in an amount and of
a type described in the statute. The purchase of low quality assets from
affiliates is generally prohibited. Section 23B provides that certain
transactions with affiliates, including loans and asset purchases, must be on
terms and under circumstances, including credit standards, that are
substantially the same or at least as favorable to the institution as those
prevailing at the time for comparable transactions with nonaffiliated companies.
In the absence of comparable transactions, such transactions may only occur
under terms and circumstances, including credit standards, that in good faith
would be offered to or would apply to nonaffiliated companies. The Company does
not expect these provisions will have any effect on its proposed operations.
SUPPORT OF SUBSIDIARY DEPOSITORY INSTITUTIONS. In accordance with Federal
Reserve policy, the Company is expected to act as a source of financial strength
and to commit resources to support the Bank. This support may be required at
times when the Company might not be inclined to provide such support. Such
support would include the infusion of additional capital into an under
capitalized bank subsidiary in situations where an additional investment in a
troubled bank might not ordinarily be made by a prudent investor. In addition,
any capital loans by a bank holding company to any of its subsidiary banks must
be subordinate in right of payment to deposits and to certain other indebtedness
of such subsidiary banks. In the event of bankruptcy, any commitment by a bank
holding company to a federal bank regulatory agency to maintain the capital of
its subsidiary bank will be assumed by the bankruptcy trustee and will be
entitled to a priority of payment.
Under the Federal Deposit Insurance Act ("FDIA") a subsidiary bank of a
bank holding company, can be held liable for any loss incurred by, or reasonably
expected to be incurred by the FDIC in connection with (i) the default of a
commonly controlled FDIC-insured depository institution or (ii) any assistance
provided by the FDIC to any commonly controlled FDIC insured depository
institution "in danger of default." "Default" is defined generally as the
appointment of a conservator or a receiver and "in danger of default" is defined
generally as the existence of certain conditions indicating that a default is
likely to occur in the absence of regulatory assistance.
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CONTROL OF A BANK HOLDING COMPANY. FRB Regulation Y, adopted pursuant to
Section 225.41 of 12 U.S.C. Section 1817(j), requires persons acting directly or
indirectly or in concert with one or more persons to give the Board of Governors
of the Federal Reserve 60 days advanced written notice before acquiring control
of a bank holding company. Under the Regulation, control is defined as the
ownership or control with the power to vote 25 % or more of any class of voting
securities of the Holding Company. The Regulation also provides for a
presumption of control if a person owns, controls, or holds with the power to
vote 10 % or more (but less than 25 %) of any class of voting securities, and
if: (i) the Holding Company's securities are registered securities under Section
12 of the Securities Exchange Act of 1934; or (ii) no other person owns a
greater percentage of that class of voting securities. It is not anticipated
that any purchaser of the securities offered herein, including any of the
Organizers, will acquire 10% of more of the Company's Common Stock.
LEGISLATION AND REGULATIONS OF THE BANK
GENERAL. From time to time, various bills are introduced in the United
States Congress with respect to the regulation of financial institutions. Recent
banking legislation, particularly the FIRREA and the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), has broadened the regulatory
powers of the federal bank regulatory agencies and restructured the nation's
banking system. The following is a brief discussion of certain portions of these
laws and how they would affect the Company or the Bank.
The FDICIA revised sections of the FDIA affecting bank regulation, deposit
insurance and provisions for funding of the BIF administered by the FDIC. The
FDICIA also revised bank regulatory structures embodied in several other federal
banking statutes, strengthened the bank regulators' authority to intervene in
cases of deterioration of a bank's capital level, placed limits on real estate
lending and imposes detailed audit requirements.
PROMPT AND CORRECTIVE ACTION. The FDICIA required the federal banking
regulatory agencies to set certain capital and other criteria which would define
the category under which a particular financial institution would be classified.
The FDICIA imposes progressively more restrictive constraints on operations,
management, and capital distributions depending on the category in which an
institution is classified. Pursuant to the FDICIA, undercapitalized institutions
must submit recapitalization plans to their respective federal banking
regulatory agencies, and a company controlling a failing institution must
guarantee such institution's compliance with its plan in order for the plan to
be accepted.
The FDIC's prompt and corrective action regulations define, among other
things, the relevant capital measures for the five capital categories. For
example, a bank is deemed to be "well-capitalized" if it has a total risk-based
capital ratio (total capital to risk-weighted assets) of 10% or greater, a Tier
1 risk-based capital ratio (Tier 1 capital to risk-weighted assets) of 6% or
greater, and a Tier 1 leverage capital ratio (Tier 1 capital to adjusted total
assets) of 5% or greater, and is not subject to a regulatory order, agreement or
directive to meet and maintain a specific capital level for any capital measure.
A bank is deemed to be "adequately capitalized" if it has a total risk-based
capital ratio of 8% or greater, and (generally) a Tier 1 leverage capital ratio
of 4% or greater, and the bank does not meet the definition of a
"well-capitalized" institution. A bank is deemed to be "critically
undercapitalized" if it has a ratio of tangible equity (as defined in the
regulations) to total assets that is equal to or less than 2%. In addition, the
FDIC is authorized effectively to downgrade a bank to a lower capital category
than the bank's capital ratios would otherwise indicate, based upon safety and
soundness considerations (such as when the bank has received a less than
satisfactory examination rating for any of the CAMELS rating categories other
than capital: i.e. Asset Quality, Management, Earnings or Liquidity). As a bank
drops to lower capital levels, the extent of action to be taken by the
appropriate regulator increases, restricting the types of transactions in which
the bank may engage. The new capital standards are designed to bolster and
protect the deposit insurance fund. Based upon its proposed capital, the Bank
would be considered to be well capitalized.
INSURANCE ON DEPOSIT ACCOUNTS. In response to the requirements of the
FDICIA, the FDIC established a risk-based assessment system for insured
depository institutions that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. The FDIC
assigns a financial institution to one of three capital categories based on the
institution's financial information, as of the reporting period ending seven
months before the assessment period. These categories consist of well
capitalized, adequately capitalized or undercapitalized, and one of three
supervisory subcategories within each capital group. The supervisory subgroup to
which an institution is assigned is based on a supervisory evaluation provided
to the FDIC by the financial institution's primary regulator, in the Bank's case
the Department, and information which the FDIC determines to be relevant to the
institution's financial condition and the risk posed to the deposit insurance
funds. A financial institution's assessment rate depends on the capital
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category and supervisory category to which it is assigned. There are nine
assessment risk classifications (i.e., combinations of capital groups and
supervisory subgroups) to which different assessment rates are applied. BIF
assessment rates range from 0 basis points on deposits for a financial
institution in the highest category (i.e.. well-capitalized and financially
sound with only a few minor weaknesses) to 31 basis points on deposits for an
institution in the lowest category (i.e., undercapitalized and posing a
substantial probability of loss to the BIF, unless effective corrective action
is taken). The Bank does not expect any assessment for its first year of
operation.
STANDARDS FOR SAFETY AND SOUNDNESS. The FDICIA requires each federal
banking agency to prescribe for all insured depository institutions and their
holding companies standards relating to internal controls, information systems
and audit systems, loan documentation, credit underwriting, interest rate risk
exposure, asset growth, compensation, fees and benefits and such other
operational and managerial standards as the agency deems appropriate. In
addition, the federal banking regulatory agencies are required to prescribe by
regulation standards specifying: (i) maximum classified assets to capital
ratios; (ii) minimum earnings sufficient to absorb losses without impairing
capital; (iii) to the extent feasible, a minimum ratio of market value to book
value for publicly traded shares of depository institutions or the depository
institution holding companies; and (iv) such other standards relating to asset
quality, earnings and valuation as the agency deems appropriate. Finally, each
federal banking agency is required to prescribe standards for employment
contracts and other compensation arrangements of executive officers, employees,
directors and principal shareholders of insured depository institutions that
would prohibit compensation and benefits and other arrangements that are
excessive or that could lead to a material financial loss for the institution.
If an insured depository institution or its holding company fails to meet any of
its standards described above, it will be required to submit to the appropriate
federal banking agency a plan specifying the steps that will be taken to cure
the deficiency. If an institution fails to submit an acceptable plan or fails to
implement the plan, the appropriate federal banking agency will require the
institution or holding company, to correct the deficiency and until corrected,
may impose restrictions on the institution or the holding company including any
of the restrictions applicable under the prompt corrective action provisions of
the FDICIA.
The FDICIA also requires each appropriate federal banking agency to adopt
uniform regulations prescribing standards for extensions of credit secured by
real estate or made for the purpose of financing the construction of
improvements on real estate. In prescribing these standards, the banking
agencies must consider the risk posed to the deposit insurance funds by real
estate loans, the need for safe and sound operation of insured depository
institutions and the availability of credit.
CAPITAL REQUIREMENTS. The Federal Reserve and the FDIC have adopted capital
regulations which establishes a Tier 1 core capital definition and a minimum 3%
leverage capital ratio requirement for the most highly-rated banks and holding
companies (i.e., those banks and holding companies with a composite CAMELS
rating of 1 under the Uniform Financial Institutions Rating System established
by the Federal Financial Institutions Examination Council) that are not
anticipating or experiencing significant growth. All other state nonmember banks
are required to meet a minimum leverage ratio that is at least 100 to 200 basis
points above 3%. A holding company or bank that is not in the highest-rated
category or that is anticipating or experiencing significant growth will have to
meet a minimum leverage ratio of at least 4%. The minimum capital with which the
Bank will be permitted to open is $6 million.
Under the Federal Reserve's and the FDIC's risk-based regulations, a
holding company or bank must classify its assets and certain off-balance sheet
activities into categories and maintain specified levels of capital for each
category. The least capital is required for the category deemed by the Federal
Reserve and the FDIC to have the least risk, and the most capital is required
for the category deemed by the Federal Reserve and the FDIC to have the greatest
risk. The regulations require a holding company or bank to have a total risk
based capital ratio of 8% and a Tier 1 risk based capital ratio of 4%. Under the
statement of policy, certain assets are required to be deducted from risk-based
capital. Such assets include intangible assets, unconsolidated banking and
finance subsidiaries, investments in securities subsidiaries, ineligible equity
investments and reciprocal holding of capital instruments with other banks. In
addition, the Federal Reserve or the FDIC may consider deducting other assets on
a case-by-case basis or investments in other subsidiaries on a case-by-case
basis or based on the general characteristics or functional nature of the
subsidiaries.
LOANS TO ONE BORROWER. Florida law allows a state bank to extend credit to
any one borrower in an amount up to 25% of its capital accounts, which are
defined as unimpaired capital, surplus and undivided profits, provided that the
unsecured portion may not exceed 15% of the capital accounts of the bank. The
law permits exemptions for loans collateralized by accounts maintained with the
Bank and for loans guaranteed by the Small Business Administration, the Federal
Housing Administration and the Veterans Administration. The Bank will be subject
to these limits.
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PAYMENT OF DIVIDENDS. While not the only source of income, the primary
source of income to the Company will be dividends from the Bank. A Florida
chartered commercial bank may not pay cash dividends that would cause the bank's
capital to fall below the minimum amount required by federal or Florida law.
Otherwise, a commercial bank may pay a dividend out of the total of current net
profits plus retained net profits of the preceding two years to the extent it
deems expedient, except as described below. Twenty percent of the net profits in
the preceding two year period may not be paid in dividends, but must be retained
to increase capital surplus until such surplus equals the amount of common and
preferred stock issued and outstanding. In addition, no bank may pay a dividend
at any time that net income in the current year when combined with retained net
income from the preceding two years produces a loss. The ability of the Bank to
pay dividends to the Company will depend in part on the FDIC capital
requirements in effect at such time and the ability of the Bank to comply with
such requirements.
BROKERED DEPOSITS. In accordance with the FDICIA, the FDIC has implemented
restrictions on the acceptance of brokered deposits. In general, an
"undercapitalized" institution may not accept, renew or roll over any brokered
deposits. "Adequately capitalized" institutions may request a waiver from the
FDIC to do so, while "well-capitalized" institutions may accept, renew or roll
over such deposits without restriction. The rule requires registration of
deposit brokers and imposes certain recordkeeping requirements. Institutions
that are not "well-capitalized" (even if meeting minimum capital requirements)
are subject to limits on rates of interest they may pay on brokered and other
deposits. The Bank does not expect to acquire any brokered deposits.
LIQUIDITY. A state-chartered commercial bank is required under Florida law
to maintain a liquidity reserve of at least 15% of its total transaction
accounts and 8% of its total nontransaction accounts subject to certain
restrictions. This reserve may consist of cash-on-hand, demand deposits due from
correspondent banks, and other investments and short-term marketable securities.
The Bank will be subject to these requirements.
COMMUNITY REINVESTMENT. Under the Community Reinvestment Act ("CRA"), as
implemented by Federal Reserve and FDIC regulations, holding companies and state
nonmember banks have a continuing and affirmative obligation consistent with
their safe and sound operation to help meet the credit needs of their entire
community, including low- and moderate-income neighborhoods. The CRA does not
establish specific lending requirements or programs for financial institutions
nor does it limit an institution's discretion to develop the types of products
and services that it believes are best suited to its particular community,
consistent with the CRA. The CRA requires the Federal Reserve and the FDIC, in
connection with their examination of holding companies or state nonmember banks,
to assess the Company's record of meeting the credit needs of their communities
and to take such record into account in its evaluation of certain applications
by such institution. The FIRREA amended the CRA to require public disclosure of
an institution's CRA rating and to require that the Federal Reserve and the FDIC
provide a written evaluation of an institution's CRA performance utilizing a
four-tiered descriptive rating system in lieu of the then existing five-tiered
numerical rating system. The Company and the Bank will be subject to these
regulations.
DEPOSIT INSURANCE FUNDS ACT OF 1996. On September 30, 1996, Congress passed
and the President signed in to law the Deposit Insurance Funds Act of 1996
("DIFA"). Among other things, the DIFA, and rules promulgated thereunder by the
FDIC, provide for banks and thrifts to share the annual interest expense for the
Finance Corp. Bonds which were issued in the late 1980s to help pay the costs of
the savings and loan industry restructuring. The approximate annual interest
expense is $780 million of which BIF insured banks are expected to pay
approximately $322 million or 41%, while SAIF insured thrifts will pay
approximately $458 million or 59% of the interest expense. It is estimated that
the annual assessment for BIF insured institutions will be approximately 1.2
cents per $100 of deposits, while SAIF insured institutions will pay 6.5 cents
per $100 of deposits. These payments are to begin in 1997 and run through 1999.
Beginning in the year 2000 and continuing through the year 2017, banks and
thrifts will each pay 2.43 cents per $100 of deposits. These assessments will be
in addition to any regular deposit insurance assessments imposed by the FDIC
under FDICIA. See REGULATION AND SUPERVISION - Insurance on Deposit Accounts.
INTERSTATE BANKING. Under the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994, existing restrictions on interstate acquisitions of
banks by bank holding companies were repealed on September 29, 1995, such that
the Company and any other bank holding company would be able to acquire any
Florida-based bank, subject to certain deposit percentage and other
restrictions. The legislation also provides that, unless an individual state
elects beforehand either (i) to accelerate the effective date or (ii) to
prohibit out-of-state banks from operating interstate branches within its
territory, on or after June 1, 1997, adequately capitalized and managed bank
holding companies will be able to consolidate. De novo branching by an
out-of-state bank would be permitted only if it is expressly permitted by the
laws of the host state. The authority of a bank to establish and operate
branches within a state will continue to
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be subject to applicable state branching laws. Florida has adopted legislation
which will permit interstate acquisitions and interstate branching effective
June 1, 1997. Florida law prohibits de novo branching by out of state banks.
DEPARTMENT ASSESSMENT. State-chartered commercial banks are required by
Department regulation to pay assessments to the Department to fund the
operations of the Department. The general assessment, to be paid semiannually,
is computed upon a bank's total assets, including consolidated subsidiaries, as
reported in the bank's latest quarterly call report. The Bank will be required
to pay such assessments semi-annually.
THE FEDERAL RESERVE SYSTEM
The Federal Reserve regulations require banks to maintain non
interest-earning reserves against their transaction accounts (primarily NOW and
regular checking accounts). The Federal Reserve regulations generally require
that reserves of 3% must be maintained against aggregate transaction accounts of
$49.3 million or less (subject to adjustment by the Federal Reserve) plus 10%
(subject to adjustment by the Federal Reserve between 8% and 14%) against that
portion of total transaction accounts in excess of $49.3 million. The first $4.4
million of otherwise reservable balances (subject to adjustments by the Federal
Reserve) are exempted from the reserve requirements. The balances maintained to
meet the reserve requirements imposed by the Federal Reserve may be used to
satisfy liquidity requirements. Because required reserves must be maintained in
the form of either vault cash, a noninterest-bearing account at a Federal
Reserve Bank or a pass-through account as defined by the Federal Reserve,
interest-earning assets of the Bank are reduced. The Company and the Bank will
be subject to these requirements.
ORGANIZERS AND PRINCIPAL SHAREHOLDERS
The following persons are Organizers of both the Company and Bank: John C.
Bierley, Monroe E. Berkman, Troy A. Brown, Jr., Frank G. Cisneros, Lawrence H.
Dimmitt, III, Timothy A. McGuire, Eric M. Newman, Chris A. Peifer, and A.
Bronson Thayer. The Organizers, as a group, intend to subscribe for 305,000
Units in the Offering which will equal 43.57% of the 700,000 minimum Units
required to be sold in order to release funds from the Subscription Escrow
Agreement. In addition to the subscriptions committed to by the Organizers, the
Organizers have indicated that they may be willing to subscribe for up to an
additional 10% of the Units sold in the Offering. In any event, total purchases
by the Organizers will not exceed 335,500 Units in the aggregate, which would
equal 47.93% of the 700,000 minimum Units required to be sold in order to
release funds from the Subscription Escrow Account.
Mr. Timothy A. McGuire will be granted, at no cost to him, incentive stock
options to purchase a minimum of 34,444 shares of the Company's common stock.
Mr. McGuire may also be granted additional options under the Incentive Plans.
All such options will have a minimum exercise price of $10.00 per share,
exercisable at any time after the applicable vesting period, for ten years from
the date of grant. See "MANAGEMENT - Executive Compensation."
In order to provide funds for the payment of initial organizational and
pre-opening expenses, the Organizers initially advanced $90,000 to the Company.
The Company's obligation to repay these advances to the Organizers have been
extinguished in exchange for the issuance of 900 shares of redeemable preferred
stock from the Company at a price of $100 per share. The Company has issued an
additional 3,000 shares of redeemable preferred stock to organizers at a price
of $100,000 per share. The preferred stock is redeemable by the Company for the
purchase price at any time after the release of funds by the escrow agent and
will not mandate the payment of any dividend, but will have a distribution
preference above common stock in the event of a dissolution of the Company. The
preferred stock pays a dividend at the sole discretion of the Company. The
Company intends to declare a dividend of 2% of the purchase price of the
preferred stock within 30 days of the closing of the Offering.
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<PAGE> 34
Each of the Organizers intend to purchase the number of Units set forth in
the following Table. The table also specifies the percentage of Common Stock to
be owned by the Organizers after completion of the Offering Period including the
shares to be acquired by exercise of warrants and options.
<TABLE>
<CAPTION>
MINIMUM
NUMBER OF
BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER NUMBER OF SHARES(1) SHARES(2) MINIMUM(3) PERCENT OF MAXIMUM(4)
- ------------------------ ------------------- ---------- ---------- ---------------------
<S> <C> <C> <C> <C>
Monroe E. Berkman 50,000 107,694 14.21% 6.91%
John C. Bierley 40,000 87,694 11.73% 5.67%
Troy A. Brown, Jr. 30,000 67,694 9.18% 4.40%
Frank G. Cisneros 50,000 107,694 14.21% 6.91%
Lawrence H. Dimmitt, III 30,000 67,694 9.18% 4.40%
Timothy A. McGuire 10,000 54,444 7.31% 3.53%
Eric M. Newman 25,000 57,694 7.87% 3.76%
Chris A. Peifer 20,000 47,694 6.55% 3.12%
A. Bronson Thayer 50,000 107,694 14.21% 6.91%
------- ------- --------- -----
TOTAL(5) 305,000 705,996 64.12%(5) 37.14%(6)
======= ======= ========= =====
</TABLE>
- ------------
(1) Number of Shares to be purchased in the Offering.
(2) Includes shares purchased, as well as Warrants for the Shares to be issued
in connection with the proposed purchase, as well as the proposed options
pursuant to the Directors' Stock Option Plan and the Incentive Stock Option
Plan.
(3) Individual minimum percentages based upon 700,000 Shares outstanding, plus
individual Warrants for the Shares to be issued in connection with the
proposed purchase, as well as individual proposed options pursuant to the
Directors' Stock Option Plan and the Incentive Stock Option Plan.
(4) Individual maximum percentages based upon 1,500,000 Shares outstanding,
plus individual Warrants for the Shares to be issued in connection with the
proposed purchase, as well as individual proposed options pursuant to the
Directors' Stock Option Plan and the Incentive Stock Option Plan.
(5) Total minimum percentage based upon 700,000 Shares outstanding, plus all
Warrants to be acquired by Organizers and all Shares under the proposed
Directors' Stock Option Plan and the Incentive Stock Option Plan. No
assurances can be given that any Warrants will be exercised, and therefore,
that any of the 700,000 Shares will ever be issued.
(6) Total maximum percentage based upon 1,500,000 Shares outstanding, plus all
Warrants to be acquired by Organizers and all Shares under the proposed
Directors' Stock Option Plan and the Incentive Stock Option Plan. No
assurances can be given that any Warrants will be exercised, and therefore,
that any of the 1,500,000 Shares will ever be issued.
Each of the Organizers will acquire their Units during the Offering Period
and, therefore, will acquire both Common Stock and Warrants exercisable in
accordance with the terms set forth herein. While there can be no assurance that
the Organizers will exercise their Warrant rights, it can be assumed that most
or all will exercise such rights and will therefore acquire additional Common
Stock during the 36-month period following the Effective Date of registration.
See, "RISK FACTORS, Possible Dilution Resulting From Warrants."
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<PAGE> 35
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY AND THE BANK
The proposed directors and executive officers for the Company and the Bank
are as follows:
<TABLE>
<CAPTION>
NAME POSITION WITH COMPANY POSITION WITH BANK
---- --------------------- ------------------
<S> <C> <C>
Monroe E. Berkman Director Director
John E. Bierley Director Director
Troy A. Brown, Jr. Director Director
Frank G. Cisneros Director Director
Lawrence H. Dimmitt, III Director Director
Timothy A. McGuire President President and CEO
Eric M. Newman Director Director
Chris A. Peifer Director Director
A. Bronson Thayer Chairman and CEO Chairman
</TABLE>
COMPANY. Each of the above persons has been a director of the Company or a
proposed director of the Bank since July 1, 1998. The initial Board of Directors
of the Company consists of nine directors. The directors will be divided into
three classes, designated Class I, Class II and Class III. Each class will
consist, as nearly as may be possible, of one-third of the total number of
directors constituting the entire Board of Directors. The term of the Company's
initial directors will expire at the first meeting of shareholders at which
directors are elected. It is expected that the Company will hold an
organizational meeting of the shareholders shortly after the Bank commences
operations at which time the shareholders will be asked to elect Directors.
Following the subsequent election of the Company's directors, the term of the
Company's Class I directors will expire at the Company's next annual meeting of
shareholders; the term of the Company's Class II directors will expire at the
Company's second annual meeting of shareholders; and the term of the Company's
Class III directors will expire at the Company's third annual meeting of
shareholders. At each annual meeting of shareholders, successors to the class of
directors whose term expires at the annual meeting will be elected for a
three-year term. If the number of directors is changed, an increase or decrease
will be apportioned among the classes so as to maintain the number of directors
in each class as nearly equal as possible, and any additional director of any
class elected to fill a vacancy resulting from an increase in such class will
hold office for a term that will coincide with the remaining term of that class,
but in no event will a decrease in the number of directors shorten the term of
any incumbent director. Any director elected to fill a vacancy not resulting in
an increase in the number of directors will have the same remaining term as that
of his predecessor. Except in the case of removal from office, any vacancy on
the Board of Directors will be filled by a majority vote of the remaining
directors then in office. The effect of the classified Board of Directors is to
make it more difficult for a person, entity or group to effect a change in
control of the Company through the acquisition of a large block of the Company's
voting stock.
Any director may be removed, with or without cause, at any regular or
special meeting of shareholders called for that purpose, and the position filled
by another person nominated and elected for that purpose by the affirmative vote
of the holders of at least 66% of the outstanding shares of the Company's Common
Stock. The Company's officers are appointed by the Board of Directors and hold
office at the will of the Board.
BANK. Each of the Bank's proposed directors will, upon approval of the
Department, serve until the Bank's first annual shareholders meeting, which
meeting will be held shortly after the Bank commences operations. It is
anticipated that each interim director will be nominated to serve as director of
the Bank at that meeting. After the first shareholders meeting, directors of the
Bank will serve for a term of one year and will be elected each year at the
Bank's annual meeting. The Bank's officers will be appointed by its Board of
Directors and will hold office at the will of the Board.
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<PAGE> 36
INITIAL DIRECTORS AND OFFICERS. The following is a brief description of
the business, civic and educational experience of the initial Directors and
Officers:
MONROE E. BERKMAN, AGE 58: Mr. Berkman has been with The Associated Group,
Inc. and its predecessor, Associated Communications Corporation, Inc.,
since 1979 and currently holds the title of Vice President. Additionally,
he serves as President of W. SOL Tampa Bay, Inc. and the Monroe E. &
Suzette M. Berkman Foundation.
Mr. Berkman is a graduate of the University of Pennsylvania. He currently
serves as a Trustee for Berkeley Preparatory School and The Tampa Museum of
Art and is a member of the Board of Directors of The Tampa Marine
Institute. Mr. Berkman has been a resident of Hillsborough County, Florida
since 1973.
JOHN C. BIERLEY, AGE 61: Mr. Bierley has been practicing law for over 30
years. He is a founding partner in the firm of Smith, Clark, Delesie,
Bierley, Mueller & Kadyk, specializing in international law. Mr. Bierley
received his B.A. and J.D. degrees from the University of Florida. He is
admitted to practice by The Florida Bar and the United States Supreme
Court.
Mr. Bierley was a director of Gulf Bay Bank of Florida from 1988 to 1992
and SouthTrust Bank of West Florida from 1992 to 1995, and has been a
director of Cayman National Bank, Ltd. since 1973. He currently serves as
Chairman, Tampa Bay Area Committee on Foreign Relations, Inter-American Bar
Association and the University of Florida Foundation. Mr. Bierley has been
a resident of Hillsborough County, Florida since 1963.
TROY A. BROWN, JR., AGE 64: Mr. Brown is President of RayBro/CED and has
held that position since 1991. Prior to that position, Mr. Brown served as
President and Director of RayBro Electric Supplies, Inc.
Mr. Brown is a graduate of Harvard College and received his J.D. degree
from the University of North Carolina Law School. He is currently a member
of the Florida Bar Association. He has been a past director of First
Florida Bank, First Florida Banks, Inc., Exchange Bank of Tampa, Exchange
Bank of Temple Terrace, Smally Transportation Co., Greater Tampa Chamber of
Commerce and the National Association of Electrical Distributing. Mr. Brown
is a lifetime resident of Hillsborough County, Florida.
FRANK G. CISNEROS, AGE 56: Mr. Cisneros has been President and Chief
Executive Officer of Marman USA, Inc. since 1983. He also currently serves
as President of Westshore Holdings, Inc. Prior to these positions, Mr.
Cisneros served as Chairman of the Board of Micro-Flo Co., Inc.
Mr. Cisneros attended the University of Villanova, Havana, Cuba, and is a
graduate of the University of Tampa. He was a former director of the Gulf
Bay Bank of Tampa and SouthTrust Bank of West Florida, and served as the
director of the Society of International Business Fellows. He has also
served on the Board of Governors of the Greater Tampa Chamber of Commerce,
as a Board member of the United Way of Tampa, the American Red Cross, and
the Jesuit High School Foundation. Mr. Cisneros currently serves as Trustee
for the Academy of the Holy Names Foundation, University of Tampa, Museum
of Science and Industries (MOSI), the Henry B. Plant Museum, and is King
XVII of the Krewe of the Knights of Saint Yago. Mr. Cisneros has been a
resident of Hillsborough County, Florida since 1961.
LAWRENCE H. DIMMITT, III, AGE 51: The Dimmitt family has been in the
automobile dealership business in Clearwater, Florida, for over 75 years.
Mr. Dimmitt has been involved as owner and operator of Dimmitt Chevrolet
since 1972. He received his undergraduate degree from The University of the
South and has attended graduate school at Emory University.
Mr. Dimmitt serves on the Chevrolet National Dealer Council and has served
as Past President of the Clearwater Auto Dealer's Association. He was a
past director of the Northeast Bank of Clearwater from 1981 to 1982, Bank
of Clearwater during 1983 and First Florida Bank of Clearwater from 1984 to
1989. Mr. Dimmitt is a lifetime resident of Pinellas County, Florida.
TIMOTHY A. MCGUIRE, AGE 49: Mr. McGuire has 25 years of broad-based
commercial banking and bank management experience. From 1973 through 1981,
he held various positions with Indiana
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<PAGE> 37
National Bank, including Vice President and European Representative,
London, England. Subsequently, in 1983 Mr. McGuire joined Barnett Bank
where he held various management positions throughout the Barnett system,
including Vice President-Commercial Lending (Tampa), Vice President-U.S.
Banking (Jacksonville), Senior Vice President & Manager-Commercial Lending
(Jacksonville), Senior Vice President & Credit Manager (Atlanta, GA),
Executive Vice President & Senior Loan Officer and Executive Vice President
& Senior Credit Officer (Atlanta, GA). Most recently, Mr. McGuire
participated in the successful establishment of First of America Bank as a
commercial bank in West Central Florida, and served as the Senior Vice
President and Senior Loan Officer from September, 1994 until First of
America was acquired by South Trust in January, 1998.
Mr. McGuire received his Bachelor of Arts degree from Purdue University and
his Masters of Science in Management from the Krammert Graduate School,
Purdue University. Mr. McGuire has been a resident of Hillsborough County,
Florida since 1994.
ERIC M. NEWMAN, AGE 50: Mr. Newman is President of J.C. Newman Cigar
Company and has been with the company for over 25 years. Mr. Newman
actively serves in the community as President, Rotary Club of Tampa, Board
of Trustees, Congregation Schaarai Zedek, Board of Directors, Merchants
Association of Florida, Board of Directors, University Club of Tampa and
Board of Directors, Cigar Association of America. Mr. Newman was also
selected as Community Hero to carry 1996 Olympic torch.
Mr. Newman received his Bachelor of Arts degree from the University of the
South, and his M.B.A. degree from Emory University. Mr. Newman also has
business interest in the Luis Martinez Cigar Company and SERCO Company. Mr.
Newman has been a resident of Hillsborough County, Florida since 1954.
CHRIS A. PEIFER, AGE 50: Mr. Peifer is President of Tice Financial
Services, Tampa, Florida and has held that position since 1987. Mr. Peifer
was also a director of the Commercial Bank of Georgia from 1987 until 1995.
Since 1997, Mr. Peifer has served as a director of The Medical Manager
following its public offering on the Nasdaq. He also served on the Board of
PrimeSource of Dallas, Texas for a period of nine years. From 1990 to 1994,
Mr. Peifer served as a Board Member of the Tampa Preparatory School and as
Board President from 1994 to 1997. Additionally, he has served on the Board
of The Metropolitan Ministry from 1994 to 1997.
Mr. Peifer received his Bachelor of Arts degree from Denison University and
his Masters in Business Administration from Northwestern University. Mr.
Peifer has been a resident of Hillsborough County, Florida since 1987.
A. BRONSON THAYER, AGE 58: Mr. Thayer is Managing director of The
Investment Counsel Company. Prior to that position, Mr. Thayer was
Chairman and Chief Executive Officer of First Florida Banks, Inc. He has
also served as Executive Vice President and Chief Financial Officer of
Lykes Bros., Inc. and as Vice President of Dominick & Dominick, Inc.
Mr. Thayer is a graduate of Harvard College and received his MBA from New
York University. He currently serves as a director of Lykes Bros., Inc.
Mr. Thayer has also served on the boards of the Jacksonville Branch of the
Federal Reserve Bank of Atlanta, LTV Corp., American Ship Building and
Enron Corporation. Mr. Thayer has been a resident of Hillsborough County,
Florida since 1972.
EXECUTIVE COMPENSATION
The Organizers entered into an employment agreement with Timothy A. McGuire
in September of 1998, to assist the Organizers with the formation of the Company
and the Bank. Under the terms of the Agreement, Timothy A. McGuire will serve as
a Director and President of the Company and is being paid a salary of $6,667 per
month, plus a mileage allowance of $0.315 per mile for business use during the
Bank's organizational phase. The understanding between the Organizers and Mr.
McGuire is that Mr. McGuire will be employed by the Company as its President,
and by the Bank as its President and Chief Executive Officer at an initial
annual base salary of $120,000. The Agreement which initially is for a term of
one year, also contains a commitment to grant, at no cost to him, an option to
purchase a minimum of 34,444 Shares of Company Common Stock at $10.00 per Share.
Such option would vest at the rate of 20% per year over five years, would expire
10 years from the grant date and would be subject to the terms of a qualified
stock option plan adopted by the Company's Board of Directors and approved by
its shareholders. Mr. McGuire will participate in such other benefit plans
which the Bank makes available generally to all employees. The Bank may
terminate Mr. McGuire for any reason upon majority vote of the Board of
Directors. If, however, the termination is
34
<PAGE> 38
without cause, Mr. McGuire will be entitled to severance pay in an amount not to
exceed the remainder due on his contract plus any incentive compensation which
he may have been entitled to. The Board of Directors must review Mr. McGuire's
performance annually, and determine whether to extend the Agreement for a
one-year period. In the event of Mr. McGuire's termination for any reason, Mr.
McGuire agrees not to become employed with any business enterprise who competes
or intends to compete, directly or indirectly, with any office of the Company
located in Hillsborough County for a period of 12 months following such
termination.
TRANSACTIONS WITH AFFILIATES
Mr. Timothy A. McGuire is the only Organizer or proposed director of the
Company who has received any cash compensation for services rendered on behalf
of the Company. See "MANAGEMENT - Executive Compensation." Once the Bank opens
for business, it is anticipated that it will extend loans to the Bank's and/or
the Company's Directors, their associates or members of their immediate
families. Such loans will be made on substantially the same terms and
conditions, including interest rates, collateral and credit underwriting
procedures as those prevailing at the time for comparable transactions by the
Bank with other similarly qualified persons.
STOCK OPTION PLANS
INCENTIVE STOCK OPTION PLAN. The Company's Board of Directors has adopted
an Incentive Stock Option Plan ("Plan"), subject to shareholder approval, for
employees who are contributing significantly to the management or operation of
the business of the Company or its subsidiaries as determined by the committee
administering the Plan. The Plan is contingent upon approval by the Company's
shareholders. The Plan provides for the grant of options at the discretion of a
committee designated by the Board of Directors to administer the Plan. No person
may serve as a member of the committee who is then eligible for a grant of
options under the Plan or has been so eligible for a period of one year prior to
his service on the committee. The option exercise price must be at least 100%
(110% in the case of a holder of 10% or more of the Common Stock) of the fair
market value of the stock on the date the option is granted, but in no case will
the exercise price be less than the offering price contained herein. The options
are exercisable by the holder thereof in full at any time following a vesting
period and prior to their expiration in accordance with the terms of the Plan.
Stock options granted pursuant to the Plan will expire on or before (i) the date
which is the tenth anniversary of the date the option is granted, or (ii) the
date which is the fifth anniversary of the date the option is granted in the
event that the option is granted to a key employee who owns more than 10% of the
total combined voting power of all classes of stock of the Company or any
subsidiary of the Company. The Company intends to grant to Mr. McGuire, at no
cost to him, an option to purchase a minimum of 34,444 shares of the Company's
common stock. See "MANAGEMENT - Executive Compensation."
The Committee may grant a Limited Right simultaneously with the grant of
any stock option, with respect to all or some of the Shares covered under the
Plan. A Limited Right may not be exercised before six months from the date of
the grant and may be exercised only if: (i) there is a change in control of the
Company; (ii) the underlying option is eligible to be exercised; and (iii) the
fair market value of the underlying Shares on the day of the exercise is greater
than the exercise price of the related option. A Limited Right permits the
holder to obtain cash value of the difference between the exercise price of the
stock option and the fair market value of the common stock to which the holder
would be entitled, if the holder exercised the underlying stock option, without
exercising the stock option.
DIRECTORS STOCK OPTION PLAN. The Company has adopted a non-qualified
Directors Stock Option Plan ("Directors' Plan"), subject to shareholder
approval. The Company intends to grant to each of the proposed Organizing
directors options to purchase a minimum of 7,694 shares of common stock under
the Directors Plan. The stock options, granted pursuant to the Directors' Plan
at no cost to the Directors, will bear an exercise price of $10.00 per share.
The Directors' Plan will be designed to provide incentive compensation to
directors in the event that the Company's common stock increases in value during
the term of such options. The Directors' Plan is subject to shareholder approval
following the Bank's commencement of business. See "ORGANIZERS AND PRINCIPAL
SHAREHOLDERS."
KEY-MAN LIFE INSURANCE
The Company has purchased "key-man" life insurance policy ("Policy")
insuring the life of Mr. McGuire in the amount of $250,000. Should Mr. McGuire
die during the organizational process the Company may elect to terminate the
Offering and refund all subscription proceeds to the Subscribers or the Company
may seek a qualified replacement which would delay the commencement of
operations and increase pre-opening expenses.
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<PAGE> 39
ARTICLES OF INCORPORATION - SUMMARY
GENERAL
The authorized capital stock of the Company is 10,000,000 shares of Common
Stock, par value, $0.01 per share, of which no shares are presently outstanding
and 2,000,000 shares of preferred stock, of which 3,900 shares are presently
held by organizers. See "ORGANIZERS AND PRINCIPAL SHAREHOLDERS."
COMMON STOCK
The holders of Common Stock are entitled to elect the members of the Board
of Directors of the Company and such holders are entitled to vote as a class on
all matters required or permitted to be submitted to the shareholders of the
Company. No holder of any class of stock of the Company has preemptive rights
with respect to the issuance of shares of that or any other class of stock and
the Common Stock is not entitled to cumulative voting rights with respect to the
election of directors.
The holders of Common Stock are entitled to dividends and other
distributions if, as, and when declared by the Board of Directors out of assets
legally available therefore. Upon the liquidation, dissolution or winding up of
the Company, the holder of each share of Common Stock will be entitled to share
equally in the distribution of the Company's assets. The holders of Common Stock
are not entitled to the benefit of any sinking fund provision. The shares of
Common Stock of the Company are not subject to any redemption provisions, nor
are they convertible into any other security or property of the Company. All
shares of Common Stock outstanding upon completion of this Offering will be,
fully paid and nonassessable.
SPECIAL MEETING OF SHAREHOLDERS
A special meeting of the shareholders may be called by a resolution adopted
by a majority of the Board of Directors, the Chairman of the Board or the
President of the Company, or by shareholders holding at least 20% of the
outstanding shares of the Company.
INDEMNIFICATION
The Company's Articles provide for the indemnification of directors and
executive officers to the maximum extent permitted by Florida law.
PREFERRED STOCK
The Board of Directors has the authority to provide for the issuance of
Preferred Stock in series and to determine the number of shares of each series
and the designation, powers, preferences and rights of each series. The Board of
Directors has provided for the issuance of Class A preferred stock for the
purpose of funding pre-opening expenses. Class A Preferred Stock is non-voting
stock which pay no mandatory dividend. The Company has issued an additional
3,000 shares of redeemable preferred stock to organizers at a price of $100.00
per share. The preferred stock is redeemable by the Company for the purchase at
any time after the release of funds by the escrow agent and will not mandate the
payment of any dividend, but will have a distribution preference above common
stock in the event of a dissolution of the Company. The preferred stock pays a
dividend at the sole discretion of the Company. The Company intends to declare a
dividend of 2% of the purchase price of the preferred stock within 30 days of
the closing of the Offering. In the event of a dissolution, the Class A
Preferred Stock will have a distribution preference over Common Stock.
The Company will require the payment of a $10.00 transfer fee with regard
to all requests for cancellation and re-issue of the Company's shares after the
initial issue of share certificates. No such fee will be required for shares
originally issued, or issued in exchange for Warrants.
ANTI-TAKEOVER PROVISIONS
The following sets forth a general summary of certain provisions of the
Company's Articles which may be deemed to have an "anti-takeover effect or
otherwise restrict sales of the Company's Common Stock." Despite the belief of
the Board of Directors of the Company that these restrictive provisions are in
the best interest of the shareholders, these provisions may have the effect of
discouraging a future takeover attempt which would not be
36
<PAGE> 40
approved by the Company's Board of Directors, but pursuant to which shareholders
might receive a premium for their Common Stock over current market prices or the
effect of precluding other corporate action that a majority of the shareholders
felt were in their best interest. As a result, shareholders who might desire to
participate in such a transaction may not have any opportunity to do so. Such
provisions may also render the removal of the Board of Directors of the Company
and management more difficult. Finally, certain restrictive provisions might
make it difficult or impossible to sell Common Stock to persons other than
existing shareholder or the Company or might delay such a sale to such an extent
as to cause a substantial hardship on the selling shareholder.
AUTHORIZED SHARES. The authorized shares of Common Stock were authorized in
an amount greater than that to be issued in this Offering to provide the
Company's Board of Directors with as much flexibility as possible to effect,
among other things, financing, acquisitions, stock dividends, stock splits and
employee stock option transactions. However, these additional authorized shares
may also be used by the Board of Directors consistent with its fiduciary duty to
deter future attempts to gain control of the Company. The Company's Board
currently has no plans for the issuance of any additional Preferred Common Stock
other than the issuance of shares of Common Stock in this Offering.
DIRECTORS. The Company's directors are divided into three classes, with the
term of office of the first class (Class I) to expire at the 1999 Annual Meeting
of Shareholders, the term of office of the second class (Class II) to expire at
the 2000 Annual Meeting, and the term of office of the third class (Class III)
to expire at the 2001 Annual Meeting. Any director, or the entire Board of
Directors, may be removed from office by the affirmative vote of the holders of
at least 60% of the voting power of all of the then outstanding shares of
capital stock of the Company entitled to vote generally in the election of
directors, voting together as a single class.
BUSINESS COMBINATIONS. The Articles require the affirmative vote or consent
of the holders of at least 66% of the shares of voting stock, voting together as
a single class, to approve any merger, consolidation, disposition of all or a
substantial part of the assets of the Company or a subsidiary of the Company,
exchange of securities requiring shareholder approval or liquidation of the
Company.
The Board of Directors of the Company, when evaluating any offer of another
"Person" (as defined in the Articles) to: (i) make a tender or exchange offer
for any equity security of the Company; (ii) merge or consolidate the Company
with another corporation or entity; or (iii) purchase or otherwise acquire all
or substantially all of the properties and assets of the Company, shall, in
connection with the exercise of its judgement in determining what is in the best
interest of the Company and its shareholders, give due consideration to all
relevant factors, including, without limitation: (1) the social and economic
effect of acceptance of such offer on the Company's present and future customers
and employees and those of its subsidiaries in the communities in which its
subsidiaries operate or are located; (2) on the ability of the Company to
fulfill its corporate objectives as a financial bank holding company; and (3) on
the ability of its subsidiary financial banks to fulfill the objectives of such
banks under applicable statutes and regulations.
AMENDMENT OF THE ARTICLES. Generally, amendments to the Articles must be
approved by a majority affirmative vote of its Board of Directors and also by a
majority of the outstanding shares of its voting stock. However, the affirmative
vote of 66% of the outstanding shares held by shareholders entitled to vote is
required to amend sections of the Articles which deal with Special Meetings of
Shareholders and Business Combinations.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or the
proposed Bank is a party or of which any of their properties are subject; nor
are there material proceedings known to the Company contemplated by any
governmental authority; nor are there material proceedings known to the Company,
pending or contemplated, in which any director, officer or affiliate or any
proposed principal security holder of the Company, or any associate of any of
the foregoing is a party or has an interest adverse to the Company or the Bank.
LEGAL MATTERS
Certain legal matters in connection with the shares of Common Stock offered
hereby will be passed upon for the Company by Igler & Dougherty, P.A., Park
Tower - Suite 2625, 400 North Tampa Street, Florida 32602, counsel to the
Company.
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<PAGE> 41
EXPERTS
The financial statements of the Company for the period from May 18, 1998
(date of incorporation) to June 30, 1998 and as of June 30, 1998, included
elsewhere in the Registration Statement have been included in reliance upon the
reports of Hacker, Johnson, Cohen & Grieb, PA, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing matters.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission, 450
Fifth Street Northwest, Washington, D.C. 20549, a Form SB-2 Registration
Statement (herein, together with all amendments thereto, called the
"Registration Statement") under the 33 Act, as amended, with respect to the
shares of Common Stock offered hereby. This filing was made electronically
through EDGAR. This Prospectus does not contain all of the information included
in the Registration Statement. For further information with respect to the
Company and the Common Stock, reference is hereby made to the Registration
Statement and the exhibits and schedules thereto. A complete copy of the
document may be obtained at the Securities and Exchange Commission's web site
located at http://www.sec.gov.
[Financial Statements Follow This Page]
38
<PAGE> 42
FLORIDA BUSINESS BANCGROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report....................................................... F-2
Balance Sheet at September 30, 1998 (unaudited) and June 30, 1998.................. F-3
Statements of Operations for the three months ended September 30, 1998
(unaudited), for the Period from May 18, 1998 (Date of
Incorporation) to June 30, 1998 and for the Period from May 18,
1998 (Date of Incorporation) to September 30, 1998 (unaudited)............ F-4
Statement of Stockholders' Equity for the Period from May 18, 1998 (Date of
Incorporation) to September 30, 1998 (unaudited).......................... F-5
Statements of Cash Flows for the three months ended September 30, 1998
(unaudited), for the Period from May 18, 1998 (Date of
Incorporation) to June 30, 1998 and for the Period from May 18,
1998 (Date of Incorporation) to September 30, 1998 (unaudited)............ F-6
Notes to Financial Statements as of June 30, 1998 and September 30, 1998
(unaudited) and for the three months ended September 30, 1998
(unaudited), for the Period from May 18, 1998 (Date of
Incorporation) to June 30, 1998 and for the Period from May 18,
1998 (Date of Incorporation) to September 30, 1998 (unaudited)............ F-7 - F-8
</TABLE>
All schedules have been omitted because of the absence of the conditions under
which they are required or because the required information is included in the
financial statements and related notes.
F-1
<PAGE> 43
INDEPENDENT AUDITORS' REPORT
Board of Directors
Florida Business BancGroup, Inc.
Tampa, Florida:
We have audited the accompanying balance sheet of Florida Business BancGroup,
Inc. (a development stage company) (the "Company") at June 30, 1998, and the
related statements of operations, and cash flows for the period from May 18,
1998 (Date of Incorporation) to June 30, 1998. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company at June 30, 1998,
and the results of its operations and its cash flows for the period from May 18,
1998 (Date of Incorporation) to June 30, 1998, in conformity with generally
accepted accounting principles.
HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
September 29, 1998
F-2
<PAGE> 44
FLORIDA BUSINESS BANCGROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1998 1998
-------------- ---------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash......................................................... $ 13,474 51,637
Deposit...................................................... 4,055 -
-------- --------
Total................................................ $ 17,529 51,637
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Advances from organizers..................................... - 80,000
-------- --------
Stockholders' equity (deficit):
Preferred stock:
Designated Series A, $0.01 par value, redeemable at $100
per share, 1,000 shares, 900 issued and outstanding.... 90,000 -
Nondesignated, no par value, 1,999,000 shares authorized,
none issued or outstanding............................. - -
Common Stock, $0.01 par value 10,000,000 shares authorized,
none issued or outstanding............................... - -
Accumulated deficit........................................ (72,471) (28,363)
-------- --------
Total stockholders' equity (deficit).................... 17,529 (28,363)
-------- --------
Total................................................... $ 17,529 51,637
======== ========
</TABLE>
See Accompanying Notes to Financial Statements.
F-3
<PAGE> 45
FLORIDA BUSINESS BANCGROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM MAY 18, PERIOD FROM MAY 18,
1998 (DATE OF 1998 (DATE OF
THREE MONTHS ENDED INCORPORATION) TO INCORPORATION) TO
SEPTEMBER 30, 1998 JUNE 30, 1998 SEPTEMBER 30, 1998
------------------ -------------------- -------------------
(UNAUDITED) (UNAUDITED) -
<S> <C> <C> <C>
Income........................... $ - - -
--------- -------- --------
Salaries and employee benefits 19,483 14,353 33,836
Organizational costs............. 23,350 13,500 36,850
Other expenses................... 1,275 510 1,785
--------- -------- --------
Total expenses............. 44,108 28,363 72,471
--------- -------- --------
Net loss................... $ (44,108) (28,363) (72,471)
========= ======== ========
</TABLE>
See Accompanying Notes to Financial Statements.
F-4
<PAGE> 46
FLORIDA BUSINESS BANCGROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS EQUITY
FOR THE PERIOD FROM MAY 18, 1998 (DATE OF INCORPORATION)
TO SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
DESIGNATED
SERIES A PREFERRED STOCK TOTAL STOCKHOLDERS'
------------------------ ACCUMULATED EQUITY
SHARES AMOUNT DEFICIT (DEFICIT)
------ ------ ----------- -------------------
<S> <C> <C> <C> <C>
Balance at May 18, 1998 (date of
incorporation)....................... - $ - - -
Net loss for the period ended
June 30, 1998........................ - - (28,363) (28,363)
--- ------- -------- --------
Balance at June 30, 1998............... - - (28,363) (28,363)
Conversion of advances from organizers
to 900 shares of designated Series A
preferred stock (unaudited).......... 900 90,000 - 90,000
Net loss for the three months ended
September 30, 1998 (unaudited)....... - - (44,108) (44,108)
--- ------- -------- --------
Balance at September 30, 1998
(unaudited).......................... 900 $90,000 (72,471) 17,529
=== ======= ======== ========
</TABLE>
See Accompanying Notes to Financial Statements.
F-5
<PAGE> 47
FLORIDA BUSINESS BANCGROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from May 18, Period from May 18,
1998 (Date of 1998 (Date of
Three Months Ended Incorporation) to Incorporation) to
September 30, 1998 June 30, 1998 September 30, 1998
------------------ ------------------- -------------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Cash flows used in administrative activities during the
development stage:
Net loss........................................... $(44,108) (28,363) (72,471)
--------- -------- --------
Cash flows from operating activities -
Increase in deposit................................ (4,055) - (4,055)
--------- -------- --------
Cash flows from financing activities -
Advances from organizers........................... 10,000 80,000 90,000
--------- -------- --------
Net increase in cash................................... (38,163) 51,637 13,474
Cash at beginning of period............................ 51,637 - -
--------- -------- --------
Cash at end of period.................................. $ 13,474 51,637 13,474
========= ======== ========
Supplemental disclosures of noncash investing
activities:
Conversion of advances from organizers
to 900 shares of designated Series A
preferred stock................................. 90,000 - 90,000
========= ======== ========
</TABLE>
See Accompanying Notes to Financial Statements.
F-6
<PAGE> 48
FLORIDA BUSINESS BANCGROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 1998 AND SEPTEMBER 30, 1998 (UNAUDITED) AND FOR THE THREE
MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED), FOR THE PERIOD FROM
MAY 18, 1998 (DATE OF INCORPORATION) TO JUNE 30, 1998 AND FOR THE
PERIOD FROM MAY 18, 1998 (DATE OF INCORPORATION) TO
SEPTEMBER 30, 1998 (UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL. Florida Business BancGroup, Inc. (the "Company") was incorporated
on May 18, 1998 in the State of Florida for the purpose of operating as a
bank holding company. The Company and its planned subsidiary Bay Cities
Bank (the "Bank") will be located in Tampa, Florida. As of June 30, 1998,
neither the Company nor the Bank has commenced business operations, and
neither will do so until the Offering Period is completed and the
requisite approvals of the Florida Department of Banking and Finance
("Department"), the Federal Deposit Insurance Corporation ("FDIC") and
the Board of Governors of the Federal Reserve System ("Federal Reserve")
are obtained. Therefore, with the exception of organizational costs,
accounting policies have not been established. All organizational costs
have been expensed as incurred. The Company has adopted a fiscal year end
of December 31.
ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
(2) RELATED PARTIES
The Company has appointed one of its Organizers as the President and Chief
Executive Officer of the Company.
(3) ADVANCES FROM ORGANIZERS
To provide an initial source of funds with which to pay organizational and
pre-opening expenses, Organizers have made contributions of $80,000 as of
June 30, 1998. On September 29, 1998, these advances and an additional
$10,000 advance were converted into 900 shares of the Company's Series A
preferred stock.
(4) SALE OF COMMON SHARES
The Company plans to offer a minimum of 700,000 units and a maximum of
1,500,000 units in a public offering. The units will be offered at $10
each and will include one common share and one warrant. The Company
expects to incur expenses of approximately $30,000 in offering costs
related to this offering.
(5) WARRANTS
The Company has adopted a warrant plan which provides for up to 1,500,000
warrants to be issued in conjunction with the sale of the Company's
common stock. Each warrant will entitle the holder to purchase one share
of common stock for $10 anytime during a thirty-six month period,
however, the Company has the option to accelerate the warrant exercise
period.
(6) SUBSEQUENT EVENTS
ESTABLISHMENT OF LINE OF CREDIT. On September 22, 1998, the Company obtained
a commitment for a line of credit from a bank to fund additional
organizational and preopening expenses. The line will be for $300,000,
will bear interest at prime less 1%, will be due in one year and will be
guaranteed by the Company's Organizers.
LEASE ON TEMPORARY OFFICE SPACE. On September 3, 1998, the Company entered
into an agreement to lease temporary office space. The lease term is
eleven months and provides for a monthly rental of $4,045. The Company is
negotiating the lease on its permanent office facilities.
F-7
<PAGE> 49
APPENDIX A
ARTICLES OF INCORPORATION
AND
AMENDED ARTICLES OF INCORPORATION
<PAGE> 50
ARTICLES OF INCORPORATION
OF
FLORIDA BUSINESS BANCGROUP, INC.
In compliance with the requirements of Chapter 607, Florida Statutes,
the undersigned, being a natural person, does hereby act as an incorporator in
adopting and filing the following Articles of Incorporation for the purpose of
organizing a business corporation.
ARTICLE I - NAME
The name of the corporation is Florida Business BancGroup, Inc.
("Corporation"). The initial street address of the principal office of the
Corporation is Park Tower, 400 N. Tampa Street, Suite 2625, Tampa, Florida 33602
or at such other place within the State of Florida as the Board of Directors may
designate.
ARTICLE II - NATURE OF BUSINESS
The Corporation may engage in or transact any or all lawful
activities or business permitted under the laws of the United States and the
State of Florida, or any other state, country, territory or nation.
ARTICLE III - CAPITAL STOCK
The maximum number of shares this Corporation is authorized to issue
is 10,000,000, all of which shall be common shares (Common Shares). All Common
Shares shall be identical with each other in every respect and the holders of
Common Shares shall be entitled to one vote for each share on all matters on
which shareholders have the right to vote.
ARTICLE IV - INITIAL REGISTERED AGENT AND STREET ADDRESS
The name of the registered agent is Igler & Dougherty, P.A., 1501
Park Avenue East, Tallahassee, Florida 32301, which address is also the address
of the Registered Office of the Corporation.
ARTICLE V - DIRECTORS
The initial Board of Directors shall consist of five (5) members. The
names and address of the person who will serve on the initial Board of Directors
is:
NAME ADDRESS
---- -------
Timothy A. McGuire Park Tower, 400 N. Tampa Street, Suite 2625
Tampa, Florida 33602
<PAGE> 51
ARTICLE VI - INCORPORATORS
The names and street addresses of the persons signing these Articles
of Incorporation are:
NAME ADDRESS
---- -------
Herbert D. Haughton Igler & Dougherty, P.A.
1501 Park Avenue East
Tallahassee, Florida 32301
ARTICLE VII - INDEMNIFICATION
The Corporation shall indemnify its directors, officers, employees,
and agents to the fullest extent permitted by Florida law.
ARTICLE XIII - AMENDMENT
The Corporation reserves the right to amend or repeal any provision
contained in these Articles of Incorporation in the manner prescribed by Chapter
607, Florida Statutes, and all rights conferred upon shareholders are granted
subject to this reservation;
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 7th day of May, 1998.
/s/ Herbert D. Haughton
--------------------------------
Herbert D. Haughton
Incorporator/General Counsel
<PAGE> 52
CERTIFICATE OF DESIGNATION OF
REGISTERED AGENT/REGISTERED OFFICE
PURSUANT TO THE PROVISIONS OF SECTION 607.0501, FLORIDA STATUTES, THE
UNDERSIGNED CORPORATION, ORGANIZED UNDER THE LAWS OF THE STATE OF FLORIDA,
SUBMITS THE FOLLOWING STATEMENT IN DESIGNATING THE REGISTERED THE REGISTERED
OFFICE/REGISTERED AGENT, IN THE STATE OF FLORIDA.
1. The name of the corporation is Florida Business BancGroup, Inc.
2. The name and address of the registered agent and office is:
Igler & Dougherty, P.A.
1501 Park Avenue East
Tallahassee, Florida 32301
Having been named as registered agent and to accept service of process for the
above stated corporation at the place designated in this certificate, I hereby
accept the appointment as registered agent and agree to act in this capacity. I
further agree to comply with the provisions of all statutes relating to the
proper and complete performance of my duties, and I am familiar with and accept
the obligations of my position as registered agent.
IGLER & DOUGHERTY, P.A.
By: /s/ Herbert D. Haughton May 7, 1998
----------------------------------- --------------------
Herbert D. Haughton, Secretary Date
<PAGE> 53
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
FLORIDA BUSINESS BANCGROUP, INC.
Pursuant to Section 607.1005, Florida Statutes, Florida Business
BancGroup, Inc. ("Corporation") adopts the following Articles of Amendment to
its Articles of Incorporation dated May 18, 1998.
ARTICLE I
Article III is hereby amended to read:
ARTICLE III - CAPITAL STOCK.
SECTION 1 - CLASSES OF STOCK: The total number of shares of all
classes of capital stock which the Corporation shall have authority to issue is
12,000,000, consisting of:
A. 2,000,000 shares of preferred stock ("Preferred Stock"); and
B. 10,000,000 shares of common stock, par value one cent
($0.01) per share ("Common Stock").
SECTION 2 - COMMON STOCK: There shall be one class of Common Stock.
Each share of Common Stock shall have the same relative rights and be identical
in all respects with every other share of Common Stock. The holders of Common
Stock are entitled to elect the members of the Board of Directors of the Company
and such holders are entitled to vote as a class on all matters required or
permitted to be submitted to the shareholders of the Company. Each holder of
Common Stock is entitled to one vote per share. No holder of any class of stock
of the Company has preemptive rights with respect to the issuance of shares of
that or any other class of stock and the Common Stock is not entitled to
cumulative voting rights with respect to the election of directors.
SECTION 3 - PREFERRED STOCK: The Board of Directors is authorized,
subject to any limitations prescribed by law, to provide for the issuance of the
shares of Preferred Stock in series, and by filing a certificate pursuant to the
applicable laws of the State of Florida (such certificate being hereinafter
referred to as a "Preferred Stock Designation"), to establish from time to time
the number of shares to be included in each such series and to fix the slated
value, designation, powers, preferences and right of the shares of each such
series and any qualifications, limitations or restrictions thereof. The number
of authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares then outstanding) by the affirmative vote of the
holders of a majority of the Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such holders is
required pursuant to the terms of any Preferred Stock Designation.
<PAGE> 54
ARTICLE II
Article V is hereby amended to read:
ARTICLE V - MANAGEMENT OF THE BUSINESS OF THE COMPANY.
SECTION 1 - AUTHORITY OF THE BOARD: The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors. In addition to the powers and authority expressly conferred upon them
by the Florida Statutes or by these Articles of Incorporation or the Bylaws of
the Corporation, the directors are hereby empowered to exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation.
SECTION 2 - ACTION BY SHAREHOLDERS: Any action required or permitted
to be taken by the shareholders of the Corporation must be effected at a duly
called Annual or Special Meeting of Shareholders of the Corporation and may not
be effected by any consent in writing by such shareholders.
SECTION 3 - SPECIAL MEETING OF SHAREHOLDERS: Special Meeting of
shareholders of the Corporation may be called by the Board of Directors pursuant
to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board for
adoption), the Chairman of the Board or the President of the Corporation, or by
shareholders holding at least 20% of the outstanding shares of the Corporation.
ARTICLE III
Article VI is hereby amended to read:
ARTICLE VI - DIRECTORS.
SECTION 1 - NUMBER OF DIRECTORS: The Board of Directors of the
Corporation shall be comprised of not less than three (3) nor more than fifteen
(15) directors and shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the Full Board as
set forth in the Corporation's Bylaws. The Board of Directors is authorized to
increase the number of directors by no more than two and to immediately appoint
persons to fill the new director positions until the next Annual Meeting of
Shareholders, at which meeting the new director positions shall be filled by
persons elected by the shareholders of the voting power of all the
then-outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class.
SECTION 2 - ELECTION AND TERM: Directors shall be elected by a
plurality of the votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present. The term of the initial directors of the
Corporation expires at the first shareholders' meeting at which directors are
elected.
2
<PAGE> 55
SECTION 3 - CLASSES: The Directors shall be divided into three
classes, as nearly equal in number as reasonably possible, with the term of
office of the first class (Class I) to expire at the 1999 Annual Meeting of the
Shareholders, the term of office of the second class (Class II) to expire at the
2000 Annual Meeting of Shareholders and the term of office of the third class
(Class III) to expire at the 2001 Annual Meeting of Shareholders. At each Annual
Meeting of Shareholders following such initial classification and election,
directors elected to succeed those directors whose terms expire shall be elected
for a term of office to expire at the third succeeding Annual meeting of
Shareholders after their election.
SECTION 4 - VACANCIES: Subject to the rights of the holders of any
series of Preferred Stock then outstanding, newly created directorships
resulting from any increase in the authorized number of directors of any
vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
only by a majority vote of the directors then in office, though less than a
quorum. Directors so chosen shall hold office for a term expiring at the next
Annual Meeting of Shareholders. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
SECTION 5 - NOTICE: Advance notice of shareholder nominations for the
election of directors and of business to be brought by shareholders before any
meeting of the shareholders of the Corporation shall be given in the manner
provided in the Bylaws of the Corporation.
SECTION 6 - REMOVAL BY SHAREHOLDERS: Subject to the rights of the
holders of any series of Preferred Stock then outstanding, any director, or the
entire Board of Directors, may be removed from office at any time by the
affirmative vote of the holders of at least 66% of the voting power of all of
the then-outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class.
ARTICLE IV
The following Article VIII is hereby adopted and incorporated into
the Articles of Incorporation:
ARTICLE VIII - ACQUISITION OFFERS.
The Corporation shall not be merged or consolidated with another
corporation or entity and the Corporation shall not sell or otherwise dispose of
all or substantially all of the properties or assets of the Corporation unless
such merger, consolidation, sale or disposition is approved by a vote of at
least 66% of the outstanding shares of common stock of the Corporation.
The Board of Directors of the Corporation, when evaluating any offer
of another Person to: (i) make a tender or exchange offer for any equity
security of the Corporation, (ii) merge or consolidate the Corporation with
another corporation or entity, or (iii) purchase or otherwise acquire all or
substantially all of the properties and assets of the Corporation, shall, in
connection with the exercise of its judgment in determining what is in the best
interest of the Corporation and its
3
<PAGE> 56
shareholders, give due consideration to all relevant factors including, without
limitation, the social and economic effect of acceptance of such offer on the
Corporation's present and future customers and employees and those of its
Subsidiaries; on the communities in which the Corporation and its Subsidiaries
operate or are located; on the ability of the Corporation to fulfill its
corporate objectives as a financial institution holding company and on the
ability of its subsidiary financial institutions to fulfill the objectives of
such institutions under applicable statutes and regulations.
ARTICLE V
Articles XIII is hereby amended to read:
ARTICLE IX - AMENDMENTS.
The Corporation reserves the right to amend or repeal any provision
contained in these Articles of Incorporation in the manner prescribed by Chapter
607, Florida Statutes, and all rights conferred upon shareholders are granted
subject to this reservation; however, an affirmative vote of at least 66% of the
outstanding common stock of the Corporation shall be necessary to amend Articles
VIII and Article V, Section 6 of these Articles.
ARTICLES VI
These amendments were adopted by the Incorporators without
shareholder action prior to the issuance of any shares of the Corporation and
shareholder action was, therefore, not required.
ARTICLE VII
The date of each amendment adopted is the date of the execution of
these Articles.
IN WITNESS WHEREOF, the undersigned Incorporator has executed these
Articles of Amendment to the Articles of Incorporation of Florida Business
Bancgroup, Inc. this 28th day of September, 1998.
/s/ Herbert D. Haughton
-------------------------------------
Herbert D. Haughton
Incorporator/General Counsel
4
<PAGE> 57
APPENDIX B
ESCROW AGREEMENT
<PAGE> 58
INDEPENDENT BANKERS' BANK OF FLORIDA
ESCROW AGREEMENT
This Escrow Agreement is entered into and effective this ____ day of
_______, 1998, by and between Florida Business Bancgroup, Inc., a Florida
corporation (the "Company") and the Independent Bankers' Bank of Florida
("Escrow Agent" or "Agent").
W I T N E S S E T H:
WHEREAS, the Company, proposes to offer for sale up to 1,500,000 shares of
its $ 0.01 par value common stock (the "Common Stock"), which shares shall be
registered under the Securities Act of 1933, as amended, at a price of $10.00
each, in minimum subscriptions of 1,000 shares ("Offering"); and
WHEREAS, the Company has requested the Escrow Agent to serve as the
depository for the payment of subscription proceeds ("Subscription Payment(s) or
Funds") received by the Company from investor(s) who are subscribing to purchase
shares of Common Stock in the Company pursuant to, and in accordance with, the
terms and conditions contained in the Company's Prospectus dated _________, 1998
and an executed Unit Order Form and Certification ("Unit Order Form"); and
WHEREAS, the Offering will terminate at 5:00 P.M., Local Time, 90 Days
after the Effective Date of the Company's Registration Statement, unless
extended by the Company for up to an additional 90 days ("Offering Period").
NOW THEREFORE, in consideration of the premises and understandings contained
herein, the parties agree as follows:
(1) The Company hereby appoints and designates the Escrow Agent for the
purposes set forth herein. The Escrow Agent acknowledges and accepts said
appointment and designation. The Company understands that the Escrow Agent, by
accepting said appointment and designation, in no way endorses the merits of the
offering of the shares described herein. The Company agrees to notify any person
acting on its behalf that the position of Escrow Agent does not constitute such
an endorsement, and to prohibit said persons from the use of the Agent's name as
an endorser of such offering. The Company further agrees to allow the Escrow
Agent to review any sales literature in which the Agent's name appears and which
is used in connection with such offering.
(2) The Company shall deliver all Subscription Payments received to the
Escrow Agent (Independent Bankers' Bank of Florida, Attn: Customer Service
Group) in the form in which they are received by noon of the fifth (5th)
business day after their receipt by the Company, and the Company shall deliver
to the Escrow Agent within fifteen (15) calendar days after receipt, copies of
written acceptances of the Company for shares in the Company for which the
Subscription Funds represent payment. Upon receipt, the Escrow Agent shall
immediately deposit such funds into the escrow account. The Company shall also
deliver to the Escrow Agent completed copies of Unit Order Forms for each
subscriber, along with such subscriber's name, address, number of shares
subscribed and social security or taxpayer identification number.
Page 1 of 6
<PAGE> 59
(3) Subscription Funds shall be held and disbursed by the Escrow Agent in
accordance with the terms of this Agreement.
(4) In the event any Subscription Payment is dishonored for payment for
any reason, the Escrow Agent agrees to orally notify the Company thereof as soon
as practicable and to confirm same in writing and to return the dishonored
Subscription Funds to the Company in the form in which they were delivered.
(5) Should the Company elect to accept a subscription for less than the
number of shares shown in the purchaser's Unit Order Form, by indicating such
lesser number of shares on the written acceptance of the Company transmitted to
the Escrow Agent, the Escrow Agent shall, upon separate instruction from the
Company, remit within ten (10) days to such subscriber at the address shown in
his Unit Order Form that amount of his Subscription Payment in excess of the
amount which constitutes full payment for the number of subscribed shares
accepted by the Company as shown in the Company's written acceptance, without
interest or diminution. Said address shall be provided by the Company to the
Escrow Agent as requested.
(6) Definitions as used herein:
(a) "Total Receipts" shall mean the sum of all Subscription Payments
delivered to the Escrow Agent pursuant to Paragraph (3) hereof, less: (i) all
Subscription Funds returned pursuant to Paragraphs (4) and (5) hereof; and (ii)
all Subscription Funds which have not been paid by the financial institution
upon which they are drawn.
(b) "Expiration Date" shall mean 5:00 P.M., Local Time, 90 days after
the Effective Date of the Company's Registration Statement dated _____________,
1998; provided, however, in the event that the Escrow Agent is given oral
notification followed in writing, by the Company that it has elected to extend
the offering to a date not later than 90 additional days, then the Expiration
Date shall mean 5:00 P.M., Local Time, on the date to which the offering has
been extended. The Company will notify the Escrow Agent of the effective date of
the Prospectus as soon as practicable after such date has been determined.
(c) "Closing Date" shall mean the business day on which the Company,
after determining that all of the Offering conditions have been met, selects in
its sole discretion. The Closing Date shall be confirmed to the Escrow Agent in
writing by the Company.
(d) "Escrow Release Conditions" shall mean that (i) the Company has
not canceled the Offering, and (ii) that the Company has received preliminary
approval from the appropriate regulatory entity to charter the Bank as well as
preliminary approval for deposit insurance from the FDIC.
(7) If, on or before the Expiration Date, (i) the Total Receipts held by
the Escrow Agent equal or exceed $7,000,000 and (ii) the Company has certified
to the Agent that, upon receipt of the net proceeds of the offering (after the
deduction of all fees, commissions, and other expenses of the offering): (a) the
Company will have stockholders' equity of at least $6,000,000; and (b) the
Escrow Release Conditions have been consummated, the Escrow Agent shall:
(a) No later than 10:00 A.M., Local Time, one day prior to Closing
Date (as that term is defined herein), deliver to the Company all Subscription
Documents provided to the Escrow Agent; and
Page 2 of 6
<PAGE> 60
(b) On the Closing Date, no later than 10:00 o'clock A.M., Local
Time, upon receipt of 24-hour written instructions from the Company, remit all
amounts representing Subscription Funds, plus any profits or earnings, held by
the Escrow Agent pursuant hereto to the Company in accordance with such
instructions.
(8) If (i) the Escrow Release Conditions are not met by the Expiration
Date, or (ii) the offering is canceled by the company at any time prior to the
Expiration Date, then the Escrow Agent shall promptly remit to each subscriber
at the address set forth in his Unit Order Form an amount equal to the amount of
his Subscription Payments thereunder, plus any profits or earnings thereon to
the extent that such profits or earnings are not payable to the Company under
paragraph (9) of this Escrow Agreement. The earnings accruing to any individual
subscriber under this paragraph shall be a prorated share of the gross earnings
on all funds under escrow, weighted by the amount and the duration of the funds
tendered for the individual subscription. Under no circumstances will earnings
accrue to any subscription canceled for any reason other than those provided for
in this paragraph.
(9) Pending disposition of the Subscription Funds under this Agreement,
the Escrow Agent will invest collected Subscription Funds, in $1,000 increments
above a maintained balance of $50,000, in overnight repurchase agreements
collateralized at 102% with obligations of the United States Treasury or United
States Government Agencies. These repurchase agreement transactions will earn
interest at a rate of 35 basis points below the daily Overnight Fed Funds Sold
rate. The Escrow Agent shall pay such investment interest to the Company upon
written instruction from the Company for the purpose of paying or reimbursing
the Company for pre-opening or organizing expenses.
(10) The obligations as Escrow Agent hereunder shall terminate upon the
Agents transferring all funds held hereunder pursuant to the terms of Paragraphs
(7) or (8) herein, as applicable.
(11) The Escrow Agent shall be protected in acting upon any written
notice, request, waiver, consent, certificate, receipt, authorization, or other
paper or document which the Agent believes to be genuine and what it purports to
be.
(12) The Escrow Agent shall not be liable for anything which the Agent may
do or refrain from doing in connection with this Escrow Agreement, except for
the Agent's own gross negligence or willful misconduct.
(13) The Escrow Agent may confer with legal counsel in the event of any
dispute or questions as to the construction of any of the provisions hereof, or
the Agent's duties hereunder, and shall incur no liability and shall be fully
protected in acting in accordance with the opinions and instructions of such
counsel. Any and all expenses and legal fees in this regard will be paid by the
Company.
(14) In the event of any disagreement between the Company and any other
person resulting in adverse claims and demands being made in connection with any
Subscription Funds involved herein or affected hereby, the Agent shall be
entitled to refuse to comply with any such claims or demands as long as such
disagreement may continue, and in so refusing, shall make no delivery or other
disposition of any Subscription Funds then held under this Agreement which are
the subject of such disagreement, and in so doing shall be entitled to continue
to refrain from acting until (a) the right of adverse claimants shall have been
finally settled by binding arbitration or finally adjudicated in a court in
Orange County, Florida assuming and having jurisdiction of the Subscription
Funds involved herein or affected hereby or (b) all differences shall have been
adjusted by agreement and the Agent shall have been notified in writing of such
agreement signed by the parties hereto. In the event of such disagreement, the
Agent may, but need not, tender into the
Page 3 of 6
<PAGE> 61
registry or custody of any court of competent jurisdiction in Orange County,
Florida all money or property in the Agent's hands under the terms of this
Agreement, together with such legal proceedings as the Agent deems appropriate
and thereupon to be discharged from all further duties under this Agreement. The
filing of any such legal proceeding shall not deprive the Agent of compensation
earned prior to such filing. The Escrow Agent shall have no obligation to take
any legal action in connection with this Agreement or towards its enforcement,
or to appear in, prosecute or defend any action or legal proceeding which would
or might involve the Agent in any cost, expense, loss or liability unless
indemnification shall be furnished.
(15) The Escrow Agent may resign for any reason, upon thirty (30) days
written notice to the Company. Upon the expiration of such thirty (30) day
notice period, the Escrow Agent may deliver all Subscription Funds and Unit
Order Forms in possession under this Escrow Agreement to any successor Escrow
Agent appointed by the Company, or if no successor Escrow Agent has been
appointed, to any court of competent jurisdiction. Upon either such delivery,
the Escrow Agent shall be released from any and all liability under this Escrow
Agreement. A termination under this paragraph shall in no way change the terms
of Paragraphs (14) and (16) affecting reimbursement of expenses, indemnity and
fees.
(16) The Escrow Agent will charge the Company for services hereunder a fee
of $1,500, plus an additional fee of $5.00 for each check issued, $10.00 for
each wire and $.50 for each photo copy necessitated in the performance of
duties, with total fees for services not to exceed $2,500. All actual expenses
and costs incurred by the Agent in performing obligations under this Escrow
Agreement will be paid by the Company. All fees and expenses shall be paid on
the Closing Date by the Company. Any subsequent fees and expenses will be paid
by the Company upon receipt of invoice.
(17) All notices and communications hereunder shall be in writing and
shall be deemed to be duly given if sent by registered or certified mail, return
receipt requested, to the respective addresses set forth herein. The Escrow
Agent shall not be charged with knowledge of any fact, including but not limited
to performance or non-performance of any condition, unless the Escrow Agent has
actually received written notice thereof from the Company or its authorized
representative clearly referring to this Escrow Agreement.
(18) The rights created by this Escrow Agreement shall inure to the
benefit of, and the obligations created hereby shall be binding upon the
successors and assigns of the Escrow Agent and the parties hereto.
(19) This Escrow Agreement shall be construed and enforced according to
the laws of the State of Florida.
(20) This Escrow Agreement shall terminate and the Escrow Agent shall be
discharged of all responsibility hereunder at such time as the Escrow Agent
shall have completed all duties hereunder.
(21) This Escrow Agreement may be executed in several counterparts, which
taken together shall constitute a single document.
(22) This Escrow Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the transactions described
herein and supersedes all prior agreements or understandings, written or oral,
between the parties with respect thereto.
Page 4 of 6
<PAGE> 62
(23) If any provision of this Escrow Agreement is declared by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way.
(24) The Company shall provide the Escrow Agent with its Employer
Identification Number as assigned by the Internal Revenue Service. Additionally,
the Company shall complete and return to the Escrow Agent any and all tax forms
or reports required to be maintained or obtained by the Escrow Agent.
(25) The authorized signature of the Escrow Agent hereto is consent that a
signed copy hereof may be filed with the various regulatory authorities of the
State of Florida and with any Federal regulatory authorities.
IN AGREEMENT AND ACCEPTANCE OF THE INDEPENDENT BANKERS' BANK OF FLORIDA ESCROW
AGREEMENT BETWEEN FLORIDA BUSINESS BANCGROUP, INC. (COMPANY), FOR THE PURPOSE OF
ORGANIZING A FINANCIAL INSTITUTION TO BE KNOWN AS BAY CITIES BANK, AND THE
INDEPENDENT BANKERS' BANK OF FLORIDA (ESCROW AGENT).
FLORIDA BUSINESS BANCGROUP, INC.
Address: 500 N. Westshore Boulevard,
Suite 1000
Tampa, Florida 33609
Phone: (813) 282-7242
ATTEST:
By: By:
------------------------------- -------------------------------
Authorized Signature
Title: Title:
------------------------------- ------------------------------
(Type Name and Title) (Type Name and Title)
ATTEST: ADDITIONAL AUTHORIZED SIGNER
By: By:
------------------------------- -------------------------------
Authorized Signature
Title: Title:
------------------------------- ------------------------------
(Type Name and Title) (Type Name and Title)
(CORPORATE SEAL)
Page 5 of 6
<PAGE> 63
IN AGREEMENT AND ACCEPTANCE OF THE INDEPENDENT BANKERS' BANK OF FLORIDA ESCROW
AGREEMENT BETWEEN FLORIDA BUSINESS BANCGROUP, INC. (COMPANY), FOR THE PURPOSE OF
ORGANIZING A FINANCIAL INSTITUTION TO BE KNOWN AS BAY CITIES BANK, AND THE
INDEPENDENT BANKERS' BANK OF FLORIDA (ESCROW AGENT).
INDEPENDENT BANKERS' BANK OF FLORIDA
Address: 109 E. Church Street
Suite BB
P.O. Box 4998
Orlando, FL 32802-4998
Phone: (407) 423-2002
Fax: (407) 843-4817
ATTEST:
<TABLE>
<S> <C> <C> <C>
By: By:
------------------------------- -----------------------------------------
Authorized Signature
Title: Title: James H. McKillop, Senior Vice President
------------------------------- ----------------------------------------
(Type Name and Title) (Type Name and Title)
ATTEST: ADDITIONAL AUTHORIZED SIGNER
By: By:
------------------------------- -----------------------------------------
Authorized Signature
Title: Title:
------------------------------- ----------------------------------------
(Type Name and Title) (Type Name and Title)
(CORPORATE SEAL)
</TABLE>
Page 6 of 6
<PAGE> 64
APPENDIX C
UNIT ORDER FORM
<PAGE> 65
UNIT ORDER FORM & FLORIDA BUSINESS BANCGROUP, INC.
CERTIFICATION
(Holding Company for Bay Cities Bank)
(OFFERING ORDER FORM)
Note: Please read the Stock Order Form Guide and Instructions on the back of
this form before completion
- --------------------------------------------------------------------------------
DEADLINE: The Offering began __________, 1998. A condition of the Offering is
that the Minimum Offering (sale of 700,000 Units, each Unit consisting of one
(1) share of Common Stock and one (1) Warrant to purchase one (1) additional
share of Common Stock for $10.00, must be completed on or before ______________,
1999, or the Offering will be terminated. If the minimum offering is
consummated, the Offering will continue so long as shares remain available or
until 5:00 p.m. Local Time, on November __, 1999, whichever occurs first, unless
terminated by the Company beforehand.
- --------------------------------------------------------------------------------
NUMBER OF UNITS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
(1) Number of Units Price Per Unit (2) Total Amount Due
------------------- ----------------
x $10.00 = $
------------------- ----------------
</TABLE>
The minimum number of Units that may be subscribed for is 1,000. The maximum any
individual and their Related Party may subscribe for in the Offering is 148,500
Units or 9.9% of the total number of shares outstanding following the completion
of the Offering. See the Section entitled "THE OFFERING - General" on page 10 of
the Prospectus dated __________, 1998.
- --------------------------------------------------------------------------------
METHOD OF PAYMENT AND PURCHASER INFORMATION
- --------------------------------------------------------------------------------
(3) [ ] Enclosed is a check, bank draft or money order payable to INDEPENDENT
BANKERS' BANK OF FLORIDA FBO FBBI of $___________.
(4) [ ] Check here if you are a director or employee of FBBI or a member of such
person's immediate family.
- --------------------------------------------------------------------------------
STOCK REGISTRATION
- --------------------------------------------------------------------------------
(5) Form of stock ownership
<TABLE>
<S> <C> <C>
[ ] Individual [ ] Uniform Transfer to Minors [ ] Partnership
[ ] Joint Tenants [ ] Uniform Gift to Minors [ ] Individual Retirement Account
[ ] Tenants in Common [ ] Corporation [ ] Fiduciary/Trust (Under Agreement Dated ________)
</TABLE>
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------------------------- --------------------------------------------
Name Social Security or Tax I.D.
----------------------------------------------------------------------------- --------------------------------------------
Name Daytime Telephone
-------------------------------------------------------- -----------------------------------------------------------------
Street Address Evening Telephone
----------------------------------------------------------------------------- --------------------------------------------
City State Zip Code State of Residence
----------------------------------------------------------------------------- --------------------------------------------
</TABLE>
NOTE: THE UNIT ORDER FORM AND CERTIFICATION WILL CONSTITUTE A BINDING
SUBSCRIPTION FOR THE PURCHASE OF COMMON STOCK OF FLORIDA BUSINESS
BANCGROUP, INC. ACCORDING TO ITS TERMS AND THE TERMS SET FORTH IN THE FORM
OF ACCEPTANCE.
================================================================================
OFFICE USE Batch # _______
Date Rec'd ___/____/____ Order # ____________
Check # _____________ Category ____________
Amount $____________ Initials ____________
================================================================================
<PAGE> 66
- --------------------------------------------------------------------------------
NASD AFFILIATION (This section only applies to those individuals who meet the
delineated criteria)
- --------------------------------------------------------------------------------
[ ] Check here if you are a member of the National Association of Securities
Dealers, Inc. ("NASD"), a person associated with an NASD member, a member of the
immediate family of any such person to whose support such person contributes,
directly or indirectly, or the holder of an account in which an NASD member or
person associated with an NASD member has a beneficial interest. To comply with
conditions under which an exemption from the NASD's Interpretation with Respect
to Free-Riding and Withholding is available, you agree, if you have checked the
NASD affiliation box: (1) not to sell, transfer or hypothecate the shares
subscribed for herein for a period of three months following the issuance, and
(2) to report this subscription in writing to the applicable NASD member within
one day of the payment therefor.
- --------------------------------------------------------------------------------
ACKNOWLEDGMENTS
- --------------------------------------------------------------------------------
1. By signing below, I acknowledge receipt of the Prospectus dated November
__, 1998, and that I have reviewed all provisions therein. I understand
that I may not change or revoke my order once it is received by FBBI. I
also certify that this stock order is for my account and there is no
agreement or understanding regarding any further sale or transfer of these
shares.
2. Under penalties of perjury, I further certify that:
(i) the social security number or taxpayer identification number given
above is correct; and
(ii) I am not subject to backup withholding.
If you have been notified by the Internal Revenue Service that you are
subject to backup withholding because of under-reporting interest or
dividends on your tax return, you must cross out Item (ii) above.
3. By signing below, I also acknowledge that I have not waived any rights
under the Securities Act of 1933 and the Securities Exchange Act of 1934.
4 By signing below, I hereby represent to FBBI that the purchase of shares
subscribed for complies with the "Purchase Limitation" set forth in the
Prospectus dated __________, 1998.
5. By signing below, I certify that before purchasing the Common Stock of FBBI
that I received a copy of the Prospectus dated, November __, 1998, which
discloses the nature of the Common Stock being offered thereby and
describes certain risks involved in an investment in the Common Stock under
the heading "Risk Factors" beginning on page 6 of the Prospectus.
- --------------------------------------------------------------------------------
SIGNATURE
- --------------------------------------------------------------------------------
THIS FORM MUST BE SIGNED AND DATED. THIS ORDER IS NOT VALID IF THE UNIT ORDER
FORM IS NOT SIGNED. YOUR ORDER WILL BE FILLED IN ACCORDANCE WITH THE PROVISIONS
OF THE PROSPECTUS.
When purchasing as a custodian, corporate officer, etc.; include your full
title. An additional signature is required only if payment is by withdrawal from
an account that requires more than one signature to withdraw funds.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Signature Title (if applicable) Date
- --------------------------------------------------------------------------------
<S> <C> <C>
1.
- --------------------------------------------------------------------------------
2.
- --------------------------------------------------------------------------------
3.
- --------------------------------------------------------------------------------
</TABLE>
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
RETURN THIS FORM TO: Florida Business BancGroup, Inc.
Attn: Stock Sales Center
500 North Westshore Boulevard, Suite 1000
Tampa, Florida 33622
<PAGE> 67
FLORIDA
BUSINESS UNIT ORDER FORM GUIDE
BANCGROUP, INC. AND INSTRUCTIONS
- --------------------------------------------------------------------------------
INSTRUCTIONS
- --------------------------------------------------------------------------------
ITEMS 1 AND 2 - Fill in the number of Units that you wish to purchase and the
total payment due. The amount due is determined by multiplying the number of
Units by the Subscription Price of $10.00 per share. The minimum purchase is
1,000 Units. With the exception of the Organizers, the maximum amount any
participant may purchase in the Offering is 148,500 Units in the Offering, or
9.9% of the total number of shares outstanding following the completion of the
Offering, whichever is greater.
FBBI has reserved the right to reject any subscription received in the Offering,
if any, in whole or in part.
ITEM 3 - Payment for shares may be made by check, bank draft or money order made
payable to "INDEPENDENT BANKERS' BANK OF FLORIDA FBO FBBI." DO NOT MAIL CASH.
Your funds will be returned promptly with interest if the Offering is
terminated.
ITEM 5 - The stock transfer industry has developed a uniform system of
shareholder registrations that we will use in the issuance of FBBI common stock.
Print the name(s) in which you want the shares registered and the mailing
address of the registration. Include the first name, middle initial and last
name of the shareholder. Avoid the use of two initials. Please omit the words
that do not affect ownership rights, such as "Mrs.," "Mr.," "Dr.," "special
account," etc.
SEE YOUR LEGAL OR FINANCIAL ADVISOR IF YOU ARE UNSURE ABOUT THE CORRECT
REGISTRATION OF YOUR STOCK AND WARRANTS.
INDIVIDUAL - The shares and warrants are to be registered in an individual's
name only. You may not list beneficiaries for this ownership.
TENANTS IN COMMON - Tenants in common may also identify two or more owners. When
shares/warrants are held by tenants in common, upon the death of one co-tenant,
ownership of the shares/warrants will be held by the surviving co-tenant(s) and
by the heirs of the deceased co-tenant. All parties must agree to the transfer
or sale of shares held by tenants in common. You may not list beneficiaries for
this ownership.
INDIVIDUAL RETIREMENT ACCOUNT - Individual Retirement Account ("IRA") holders
may make unit purchases from their deposits through a pre-arranged
"trustee-to-trustee" transfer. Shares may only be held in a self-directed IRA.
Bay Cities Bank does not offer a self-directed IRA. Please contact the Stock
Sales Center if you have any questions about your IRA account. There will be no
early withdrawal or IRS penalties incurred in these transactions.
UNIFORM GIFT TO MINORS - For residents of many states, shares/warrants may be
held in the name of a custodian for the benefit of a minor under the Uniform
Transfers to Minors Act. For residents in other states, shares may be held in a
similar type of ownership under the Uniform Gift to Minors Act of the individual
states. For either type of ownership, the minor is the actual owner of the
shares with the adult custodian being responsible for the investment until the
child reaches legal age.
On the first line, print the first name, middle initial and last name of the
custodian, with the abbreviation "CUST" and "Unif Tran Min Act" or "Unif Gift
Min Act" after the name. Print the first name, middle initial and last name of
the minor on the second "NAME" line. Standard U.S. Postal Service state
abbreviations should be used to describe the appropriate state. For example,
shares held by John Doe as custodian for Susan Doe under the Ohio Transfer to
Minors Act will be abbreviated John Doe, CUST Susan Doe Unif Tran Min Act. OH.
USE THE MINOR'S SOCIAL SECURITY NUMBER. Only one custodian and one minor may be
designated.
(Front)
<PAGE> 68
JOINT TENANTS - Joint Tenants with right of survivorship identifies two or more
owners. When shares/warrants are held by joint tenants with rights of
survivorship, ownership automatically passes to the surviving joint tenant(s)
upon the death of any joint tenant. You may not list beneficiaries for this
ownership.
CORPORATION/PARTNERSHIP - Corporations/Partnerships may purchase Units. Please
provide the Corporation's/Partnership's legal name and Tax I.D.
FIDUCIARY/TRUST - Generally, fiduciary relationships (such as trusts, estates,
guardianships, etc.) are established under a form of trust agreement or pursuant
to a court order. Without a legal document establishing a fiduciary
relationship, your shares/warrants may not be registered in a fiduciary
capacity.
On the first "NAME" line, print the first name, middle initial and last name of
the fiduciary if the fiduciary is an individual. If the fiduciary is a
corporation, list the corporate title on the first "NAME" line. Following the
name, print the fiduciary "title" such as trustee, executor, personal
representative, etc.
On the second "NAME" line, print either the name of the maker, donor or testator
OR the name of the beneficiary. Following the name, indicate the type of legal
document establishing the fiduciary relationship (agreement, court order, etc.).
In the blank after "Under Agreement Dated," fill in the date of the document
governing the relationship. The date of the document need not be provided for a
trust created by a will.
An example of fiduciary ownership of stock in the case of a trust is: "John D.
Smith, Trustee for Thomas A. Smith Trust Under Agreement Dated June 9, 1987."
- --------------------------------------------------------------------------------
DEFINITION OF ASSOCIATE
- --------------------------------------------------------------------------------
A person's Associates consist of the following: (a) any corporation or other
organization (other than Florida Business BancGroup, Inc. ["FBBI"], Bay Cities
Bank ["Bank"], or a majority owned subsidiary of the Bank) of which such person
is a director, officer or partner or is directly or indirectly the beneficial
owner of 10% or more of any class of equity securities; (b) any trust or other
estate in which such person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary capacity, provided,
however, that such term shall not in include any tax-qualified employee stock
benefit plan of FBBI or the Bank in which such person has a substantial
beneficial interest or serves as a trustee or in a similar fiduciary capacity;
and (c) any relative or spouse of such person, or any relative of such person,
who either has the same home as such person or who is a director or officer of
FBBI or the Bank or any of their subsidiaries.
- --------------------------------------------------------------------------------
NON-TRANSFERABILITY OF RIGHTS
- --------------------------------------------------------------------------------
Subscription rights are not transferable. If you are a qualified shareholder, to
protect your priority over other purchasers as described in the Prospectus, you
must take ownership in at least one of the account holder's names. Enter the
Social Security or Tax I.D. number of one registered owner. This registered
owner must be listed on the first "NAME" line. BE SURE TO INCLUDE YOUR TELEPHONE
NUMBER BECAUSE WE WILL NEED TO CONTACT YOU IF WE CANNOT EXECUTE YOUR ORDER AS
GIVEN. Review the Stock Ownership Guide and refer to the instructions for
Uniform Gift to Minors/Uniform Transfer to Minors and Fiduciaries.
<PAGE> 69
STOCK AND WARRANT CERTIFICATE REGISTRATION
INSTRUCTIONS
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
Additional Name if Tenant in Common, Joint Tenant or Tenants by the Entireties
(see below): _________________
- --------------------------------------------------------------------------------
Mailing Address:
----------------------------------------------------------------
----------------------------------------------------------------
Social Security Number or other Taxpayer Identification Number:
----------------
Number of Shares to be registered in above name(s):
-----------------------------
Legal form of ownership:
___ Individual ___ Joint Tenants with Rights of Survivorship
___ Tenants in Common ___ Uniform Gift to Minors
___ Tenants by the Entirety ___ Other ______________________
(Husband and wife only)
INFORMATION AS TO BANKING INTERESTS
1. As a prospective shareholder I would be interested in the following services
checked below:
<TABLE>
<CAPTION>
PERSONAL BUSINESS
<S> <C> <C>
(a) Checking Account ___ ___
(b) Savings Account ___ ___
(c) Certificates of Deposit ___ ___
(d) Individual Retirement Accounts ___ ___
(e) Checking Account Overdraft Protection ___ ___
(f) Commercial Cash Management Services ___
(g) Consumer Loans (Auto, etc.) ___ ___
(h) Commercial Loans ___
(i) Equity Line of Credit ___ ___
(j) Commercial Mortgage Loans ___
(k) Residential Mortgage Loans ___ ___
(l) Revolving personal Credit Line ___ ___
(m) Safe Deposit Box ___ ___
(n) Automatic Teller Machines (ATM's) ___ ___
(o) Debit Card ___ ___
(p) Visa/MasterCard ___ ___
(q) Future Trust Services ___ ___
</TABLE>
2. I would like our new bank to provide the following additional services:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
<PAGE> 70
FORM OF ACCEPTANCE
FLORIDA BUSINESS BANCGROUP, INC.
500 N. WESTSHORE BOULEVARD
SUITE 1000
TAMPA, FLORIDA 33609
Dear Subscriber:
Florida Business BancGroup, Inc. ("Company"), acknowledges receipt of your
order for _______ Units, each consisting of one Share of its $0.01 par value
Common Stock and one Warrant to purchase one share of Common Stock and your
check in the amount of $________________.
The Company hereby accepts your order for the purchase of _________ Units,
for an aggregate amount of $______________, effective as of the date of this
letter.
YOUR STOCK CERTIFICATE(S) REPRESENTING SHARES OF COMMON STOCK DULY
AUTHORIZED AND FULLY PAID ALONG WITH YOUR WARRANT CERTIFICATE WILL BE ISSUED TO
YOU AS SOON AS PRACTICABLE AFTER ALL SUBSCRIPTION FUNDS ARE RELEASED TO THE
COMPANY FROM THE SUBSCRIPTION ESCROW ACCOUNT, AS DESCRIBED IN THE UNIT ORDER
FORM EXECUTED BY YOU AND IN THE PROSPECTUS WHICH YOU HAVE BEEN FURNISHED. IN THE
EVENT THAT: (I) THE OFFERING IS CANCELED; OR (II) THE MINIMUM NUMBER OF
SUBSCRIPTIONS (700,000 UNITS) IS NOT OBTAINED; OR (III) THE COMPANY SHALL NOT
HAVE RECEIVED APPROVAL FROM THE FEDERAL RESERVE TO BECOME A BANK HOLDING
COMPANY; OR (IV) THE BANK SHALL NOT HAVE RECEIVED FINAL CHARTER APPROVAL FROM
THE FLORIDA COMPTROLLER AND APPROVAL FOR DEPOSIT INSURANCE FROM THE FEDERAL
DEPOSIT INSURANCE CORPORATION, YOUR SUBSCRIPTION FUNDS WILL BE RETURNED TO YOU,
TOGETHER WITH ANY PRO RATA PORTION OF INTEREST EARNED THEREON, IF ANY, AS
DESCRIBED IN THE PROSPECTUS.
If this acceptance is for a lesser number of Units than that number
ordered by you as indicated in your Unit Order Form, your payment for Units in
excess of the number of Units accepted hereby will be refunded to you by mail,
without interest, within ten (10) days of the date hereof.
Very truly yours,
FLORIDA BUSINESS BANCGROUP, INC.
By:
-----------------------------------
President & Chief Executive Officer
<PAGE> 71
<TABLE>
<S> <C>
======================================= =======================================
NO DEALER, SALESPERSON OR OTHER
PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE MINIMUM 700,000 UNITS
CONTAINED IN THIS PROSPECTUS, AND, IF MAXIMUM 1,500,000 UNITS
GIVEN OR MADE, SUCH OTHER INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR AN
OFFER TO BUY, ANY SECURITIES OTHER
THAN THE UNITS TO WHICH IT RELATES, LOGO
OR ANY OFFER OF SUCH UNITS TO ANY
PERSON IN ANY STATE OR OTHER
JURISDICTION IN WHICH SUCH OFFER IS
UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ANY OF THE DATES AS OF
OFFERS OR SALES ARE BEING MADE
HEREUNDER, THE COMPANY IS REQUIRED TO
UPDATE THE PROSPECTUS TO REFLECT ANY
FACTS OR EVENTS ARISING AFTER THE
EFFECTIVE DATE OF THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION WHICH REPRESENT
A FUNDAMENTAL CHANGE IN THE INFORMATION
SET FORTH IN THE REGISTRATION STATEMENT.
UNTIL 1999, ALL
DEALERS EFFECTING TRANSACTIONS IN THE
UNITS, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS
DELIVERY REQUIREMENT IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR FLORIDA BUSINESS BANCGROUP, INC.
SUBSCRIPTIONS. a proposed Bank Holding Company for
- -------------------------------------- Bay Cities Bank, Tampa, Florida
(a proposed State-Chartered Bank)
TABLE OF CONTENTS
PROSPECTUS SUMMARY....................
RISK FACTORS..........................
THE COMPANY...........................
TERMS OF THE OFFERING................. EACH UNIT CONSISTS OF ONE SHARE OF
USE OF PROCEEDS....................... COMMON STOCK AND ONE
DIVIDEND POLICY....................... WARRANT TO PURCHASE
MANAGEMENT'S DISCUSSION AND ANALYSIS ADDITIONAL COMMON STOCK
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.....................
BUSINESS OF THE COMPANY...............
BUSINESS OF THE BANK..................
REGULATION AND SUPERVISION............
ORGANIZERS AND PRINCIPAL SHAREHOLDERS.
MANAGEMENT............................
ARTICLES OF INCORPORATION - SUMMARY...
LEGAL PROCEEDINGS.....................
LEGAL MATTERS.........................
EXPERTS...............................
ADDITIONAL INFORMATION................
INDEX TO FINANCIAL STATEMENTS.........
------------------
APPENDIX A - ARTICLES OF INCORPORATION PROSPECTUS
APPENDIX B - ESCROW AGREEMENT ------------------
APPENDIX C - STOCK ORDER FORM
December ___, 1998
======================================= =======================================
</TABLE>
<PAGE> 72
PART-II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24: INDEMNIFICATION OF DIRECTORS AND OFFICERS
As provided under Florida law, the Company's Directors shall not be
personally liable to the Company or its stockholders for monetary damages for
breach of duty of care or any other duty owed to the Company as a director,
unless the breach of or failure to perform those duties constitutes: (i) a
violation of criminal law, unless the director had reasonable cause to believe
his conduct was lawful, or had no reasonable cause to believe his conduct was
unlawful; (ii) a transaction from which the director received an improper
personal benefit; (iii) for unlawful corporate distributions; or (iv) an act or
omission which involves a conscious disregard for the best interests of the
Corporation or which involves willful misconduct; or (v) an act of recklessness
or an act or omission which was committed in bad faith or with malicious purpose
or in a manner exhibiting wanton and willful disregard of human rights, safety,
or property.
Article VII of the Company's Articles of Incorporation provides that the
Company shall indemnify its directors, officers, employees, and agents to the
fullest extent permitted by Florida law.
<PAGE> 73
ITEM 25: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses expected to be incurred in
connection with the issuance and distribution of the securities being
registered, other than the underwriting discounts and commissions, if any. All
of the amounts shown are estimated except for the registration fees of the SEC.
<TABLE>
<S> <C>
SEC Registration Fees ....................................... $8,850
Blue Sky Registration Fees & Expenses ....................... 5,000
Legal fees and expenses ..................................... 20,000
Accounting Fees ............................................. 2,000
Printing and Engraving expenses ............................. 2,700
Miscellaneous ............................................... 5,000
-------
Total .................................. $43,550
=======
</TABLE>
ITEM 26: RECENT SALES OF UNREGISTERED SECURITIES.
During the organizational phase of the Company, and in order to meet the
net worth requirements of a Florida issuer, the Company issued 3,900 shares of
Preferred Stock in a private Offering to its directors for $100.00 per share.
<PAGE> 74
ITEM 27: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Numbered Page
-------- --------------
<S> <C>
+* 3.1 Articles of Incorporation and Amended Articles of
Incorporation of Florida Business BancGroup, Inc.
* 3.2 By-Laws of Florida Business BancGroup, Inc.
* 4.1 Specimen Common Stock Certificate.
* 4.2 Specimen Warrant Certificate.
++* 4.3 Escrow Agreement with Independent Bankers'
Bank of Florida.
* 4.4 Warrant Plan.
* 5.1 Opinion of Igler & Dougherty, P.A., regarding
legality of shares.
*10.1 Employment Agreement between the Company
and Timothy A. McGuire.
*10.2 Lease Agreement for Temporary Office.
10.3 Outsourcing Agreement by and Between Bay Cities Bank and
M&I Data Services
*21.0 Subsidiaries of Florida Business BancGroup, Inc.
*23.1 Consent of Igler & Dougherty, P.A.
23.2 Consent of Hacker, Johnson, Cohen & Grieb
*24 Power of Attorney
*27 Financial Data Schedule
*99.1 Letter to Prospective Investor
+++*99.2 Unit Order Form
</TABLE>
* Denotes previously EDGAR filed as part of this Registration Statement,
File No. 333-62101.
+ (Incorporated within as Appendix A of Prospectus)
++ (Incorporated within as Appendix B of Prospectus)
+++ (Incorporated within as Appendix C of Prospectus)
<PAGE> 75
ITEM 28. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) (Section 230.424[b] of this
chapter) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(c) The undersigned registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set forth the
results of the subscription offer, the transactions by the underwriters during
the subscription period, the amount of unsubscribed securities to be purchased
by the underwriters, and the terms of any subsequent reoffering thereof. If any
public offering by the underwriters is to be made on terms different from those
set forth on the cover page of the prospectus, a post-effective amendment will
be filed to set forth the terms of such offering.
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE> 76
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 2 to Form SB-2 Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, on this 9th
day of December, 1998.
FLORIDA BUSINESS BANCGROUP, INC
By: /s/ * Timothy A. McGuire
---------------------------------------------------
Timothy A. McGuire
Director, President and Principal Financial Officer
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to Form SB-2 Registration Statement has been signed by the following
persons in the capacities and as of the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------ --------------------------- -----------------
<S> <C> <C>
/s/ * Timothy A. McGuire Chairman of the Board and December 9, 1998
- ------------------------ Chief Executive Officer
A. Bronson Thayer
/s/ * Timothy A. McGuire Director, President, and December 9, 1998
- ------------------------ Principal Financial Officer
Timothy A. McGuire
/s/ * Timothy A. McGuire Director December 9, 1998
- ------------------------
Monroe E. Berkman
/s/ * Timothy A. McGuire Director December 9, 1998
- ------------------------
John C. Bierley
/s/ * Timothy A. McGuire Director December 9, 1998
- ------------------------
Troy A. Brown, Jr.
Director December _, 1998
- ------------------------
Frank G. Cisneros
Director December _, 1998
- ------------------------
Lawrence H. Dimmitt, III
/s/ * Timothy A. McGuire Director December 9, 1998
- ------------------------
Eric M. Newman
Director December _, 1998
- ------------------------
Chris A. Peifer
</TABLE>
* Pursuant to Power of Attorney filed September 30, 1998, authorizing
A. Bronson Thayer and Timothy A. McGuire, or either of them, as the true
and lawful attorneys-in-fact to sign all amendments to the Form SB-2
Registration Statement.
<PAGE> 77
EXHIBIT INDEX
FORM SB-2
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Numbered Page
-------- --------------
<S> <C>
+* 3.1 Articles of Incorporation and Amended Articles of
Incorporation of Florida Business BancGroup, Inc.
* 3.2 By-Laws of Florida Business BancGroup, Inc.
* 4.1 Specimen Common Stock Certificate.
* 4.2 Specimen Warrant Certificate.
++* 4.3 Escrow Agreement with Independent Bankers'
Bank of Florida.
* 4.4 Warrant Plan.
* 5.1 Opinion of Igler & Dougherty, P.A., regarding
legality of shares.
*10.1 Employment Agreement between the Company
and Timothy A. McGuire.
*10.2 Lease Agreement for Temporary Office.
10.3 Outsourcing Agreement by and Between Bay Cities Bank and
M&I Data Services
*21.0 Subsidiaries of Florida Business BancGroup, Inc.
*23.1 Consent of Igler & Dougherty, P.A.
23.2 Consent of Hacker, Johnson, Cohen & Grieb
*24 Power of Attorney
*27 Financial Data Schedule
*99.1 Letter to Prospective Investor
+++*99.2 Unit Order Form
</TABLE>
- ---------------------
* Denotes previously EDGAR filed as part of this Registration Statement,
File No. 333-62101.
+ (Incorporated within as Appendix A of Prospectus)
++ (Incorporated within as Appendix B of Prospectus)
+++ (Incorporated within as Appendix C of Prospectus)
<PAGE> 1
EXHIBIT 10.3
OUTSOURCING AGREEMENT
BY AND BETWEEN
BAY CITIES BANK
and
MARSHALL & ILSLEY CORPORATION
acting through its division
M&I DATA SERVICES
DATED AS OF
NOVEMBER 30, 1998
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
<TABLE>
<CAPTION>
<S><C> <C>
1. DEFINITIONS.................................................1
1.1 Background..............................................1
1.2 Definitions.............................................1
1.3 References..............................................6
1.4 Interpretation..........................................6
2. TERM........................................................7
2.1 Initial Term............................................7
2.2 Extensions..............................................7
3. APPOINTMENT.................................................7
3.1 Performance by M&I Affiliates or Subcontractors.........7
3.2 Third Party Products/Services...........................7
3.3 Proper Instructions.....................................8
4. CONVERSION..................................................8
4.1 Banking Applications....................................8
4.2 Development of Conversion Plan..........................8
4.3 Conversion Resources....................................8
4.4 Conversion Milestones...................................9
5. BANKING APPLICATIONS SERVICES...............................9
5.1 ADP Services............................................9
5.2 New Services............................................9
5.3 Automated Clearing House Services......................10
5.4 EFD Services...........................................10
5.5 Item Processing Services...............................10
6. RETAIL DELIVERY SYSTEMS AND SERVICES.......................10
6.1 Home Banking Services..................................10
6.2 Branch Automation Systems..............................11
7. BANKCARD PROCESSING FEES...................................11
8. FEES.......................................................11
8.1 Fee Structure..........................................11
8.2 Conversion.............................................11
8.3 Pricing and Operational Assumptions....................12
8.4 EFD Services...........................................12
8.5 Training and Education.................................12
8.6 Excluded Costs.........................................12
8.7 Disputed Amounts.......................................13
8.8 Terms of Payment.......................................13
8.9 Modifications of Terms and Pricing.....................13
9. PERFORMANCE STANDARDS......................................14
9.1 General................................................14
9.2 Service Deficiencies...................................14
9.3 Exclusive Remedy.......................................14
10.MODIFICATION OR PARTIAL TERMINATION........................15
10.1 Modifications to Services.............................15
10.2 Partial Termination by M&I............................15
10.3 Partial Termination by Customer.......................15
10.4 Development of Custom Software........................15
10.5 Millennium Modifications..............................16
11.TERMINATION................................................16
11.1 For Convenience of Default By Customer................16
11.2 For Cause.............................................16
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
11.3 For Insolvency.....................................16
12. SERVICES FOLLOWING TERMINATION..........................17
12.1 Termination Assistance.............................17
12.2 Continuation of Services...........................17
13. DAMAGES.................................................18
13.1 Direct Damages.....................................18
13.2 No Consequential Damages...........................18
13.3 Equitable Relief...................................18
13.4 Limitation of Liability............................18
13.5 Liquidated Damages.................................18
14. INSURANCE AND INDEMNITY.................................19
14.1 Insurance..........................................19
14.2 Indemnity..........................................19
14.3 Indemnification Procedures.........................20
15. DISPUTE RESOLUTION......................................21
15.1 Representatives of Parties.........................21
15.2 Continuity of Performance..........................21
16. REPRESENTATIONS AND WARRANTIES..........................22
16.1 By M&I.............................................22
16.2 By Customer........................................22
17. CONFIDENTIALITY AND OWNERSHIP...........................23
17.1 Customer Data......................................23
17.2 M&I Systems........................................23
17.3 Confidential Information...........................23
17.4 Obligations of the Parties.........................24
17.5 Security...........................................24
18. MANAGEMENT OF PROJECT...................................24
18.1 Account Representatives............................24
18.2 Reporting and Meetings.............................25
18.3 Development Projects and Technical Support.........25
19. REGULATORY COMPLIANCE...................................25
20. DISASTER RECOVERY.......................................26
20.1 Services Continuity Plan...........................26
20.2 Relocation.........................................26
20.3 Resumption of Services.............................27
20.4 Annual Test........................................27
21. GENERAL TERMS AND CONDITIONS............................27
21.1 Transmission of Data...............................27
21.2 Equipment and Network..............................27
21.3 Reliance on Data...................................27
21.4 Data Backup........................................28
21.5 Balancing and Controls.............................28
21.6 Use of Services....................................28
21.7 Regulatory Assurances..............................28
21.8 IRS Filing.........................................29
21.9 Affiliates.........................................30
21.10 Future Acquisitions...............................30
22. MISCELLANEOUS PROVISIONS................................31
22.1 Governing Law......................................31
22.2 Venue and Jurisdiction.............................31
22.3 Entire Agreement; Amendments.......................31
22.4 Assignment.........................................32
22.5 Relationship of Parties............................32
22.6 Notices............................................32
22.7 Headings...........................................33
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
22.8 Counterparts.................................................... 33
22.9 Waiver.......................................................... 33
22.10 Severability.................................................... 33
22.11 Attorneys' Fees and Costs....................................... 33
22.12 Financial Statements............................................ 34
22.13 Publicity....................................................... 34
22.14 Solicitation.................................................... 34
22.15 No Third Party Beneficiaries.................................... 34
22.16 Construction.................................................... 34
22.17 Acquisition/Creation of a Financial Institution................. 34
22.18 Force Majeure................................................... 35
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Schedules
- ---------
<S> <C>
1.2 Customer Affiliates
4.2 Conversion Plan
5.1 ADP Services Schedule
5.3 ACH Services Terms and Conditions
5.4 EFD Services
6.1 DirectPC Services
8.1 Fee Schedule
9.1 ADP Performance Standards
11.1 Termination Fee
</TABLE>
<TABLE>
<CAPTION>
Exhibits
- --------
<S> <C>
A ACH Authorization Agreement
B Attorney-in-Fact Appointment
C Affidavit
</TABLE>
iv
<PAGE> 6
OUTSOURCING AGREEMENT
This Outsourcing Agreement ("Agreement") is made as of the ___ day of
November, 1998, by and between Bay Cities Bank, a ________ Corporation
("Customer") and Marshall & Ilsley Corporation, a Wisconsin corporation, acting
through its division, M&I Data Services ("M&I"). "Customer" shall include all
Affiliates receiving Services under this Agreement from M&I.
In consideration of the payments to be made and services to be performed
hereunder, the parties agree as follows:
1. DEFINITIONS
1.1 BACKGROUND.
This Agreement is being made and entered into with reference to the
following facts:
A. Customer provides systems development and operations, data
processing, telecommunications and other information technology services for
itself, and on behalf of its customers.
B. M&I is a provider of data processing, systems development and
operations, corporate support and item processing, home banking, internet
banking, retail delivery services, trust data processing, and other services.
M&I desires to perform for Customer the outsourcing services described in this
Agreement.
C. In reliance on its own independent analysis, and after careful
evaluation of M&I's proposal and other alternatives, Customer has selected M&I
to provide the Services (as defined in Section 1.2) to Customer. This Agreement
documents the terms and conditions under which Customer agrees to purchase and
M&I agrees to provide the Services.
1.2 DEFINITIONS.
The following terms shall have the meaning ascribed to them in this
Section 1.2:
1
<PAGE> 7
A. "Account Representative" shall have the meaning set forth in
Section 18.1.
B. "ADP Services" shall mean the Accounts Data Processing Services
set forth in attached Schedule 5.1.
C. "Additional Term" shall mean any period of extension or renewal
of this Agreement established after the Initial Term pursuant to Section 2.2 of
this Agreement.
D. "Affiliate" shall mean, with respect to a party, any entity at
any time Controlling, Controlled by or under common Control with, such party.
Schedule 1.2 attached hereto identifies those Affiliates of Customer for whom
M&I shall provide Services under this Agreement, as of the Effective Date.
E. "Branch Automation Agreement" shall mean the Branch Automation
Agreement of even date herewith between M&I and Customer relating to the
license and implementation of M&I's proprietary branch automation software.
F. "Change in Control" shall mean any event or series of events by
which (i) any person or entity or group of persons or entities shall acquire
Control of another person or entity or (ii) in the case of a corporation,
during any period of 12 consecutive months commencing before or after the date
hereof, individuals who at the beginning of such 12-month period were directors
of such corporation shall cease for any reason to constitute a majority of the
board of directors of such corporation.
G. "Commencement Date" shall mean the date on which Conversion for
Customer and all Affiliates identified on Schedule 1.2 has been completed.
H. "Confidential Information" shall have the meaning set forth in
Section 17.3 of this Agreement.
I. "Contract Year" shall mean a period commencing on the first day
of the month in which the Commencement Date occurs (and each anniversary
thereof) and terminating on the last date of the preceding month occurring one
(1) year thereafter.
2
<PAGE> 8
J. "Control" shall mean the direct or indirect ownership of over
50% of the capital stock (or other ownership interest, if not a corporation) or
any entity or the possession, directly or indirectly, of the power to direct
the management and policies of such entity by ownership of voting securities,
by contract or otherwise. "Controlling" shall mean having Control of any entity
and "Controlled" shall mean being the subject of Control by another entity.
K. "Conversion" shall mean (i) the transfer of Customer's data
processing and other information technology services to the M&I systems (ii)
completion of upgrades, enhancements and software modifications as set forth in
this Agreement; and (iii) completion of all interfaces set forth in this
Agreement and full integration thereof such that Customer is able to receive
the Services in a live operating environment.
L. "Conversion Data" shall mean the date on which Conversion for
Customer or a particular Affiliate has been completed. Schedule 1.2 identifies
the Conversion Date for Customer and each Affiliate identified therein.
M. "Conversion Period" shall mean that portion of the Term
beginning on the Effective Date and ending on the Conversion Date.
N. "Core Services" shall mean services provided by M&I's Deposit
System, Loan System and Customer Information System.
O. "Customer Data" shall have the meaning set forth in Section 17.1
of this Agreement.
P. "Damages" shall mean all direct, actual and verifiable losses,
liabilities, damages and claims and related costs and expenses (including
reasonable attorneys' fees and court costs, costs of investigation, litigation,
settlement, judgment interest and penalties) but excluding any and all
consequential, incidental, punitive and exemplary damages.
Q. "Effective Date" shall mean the date first set forth above.
3
<PAGE> 9
R. "Effective Date of Termination" shall mean the last day on which
M&I provides the Services to Customer (excluding any Termination Assistance)
following delivery of a notice of termination.
S. "Entity" means a corporation, partnership, sole proprietorship,
limited liability company, joint venture or other form of organization, and
includes the parties hereto.
T. "Estimated Remaining Value" shall mean the number of calendar
months remaining between the Effective Date of Termination and the last day of
the Term, multiplied by the average of the three (3) highest monthly Fees (but
in any event no less than the Monthly Base Fee) payable by Customer during the
twelve (12) month period prior to the event giving rise to termination rights
under this Agreement. In the event the Effective Date of Termination occurs
prior to the First Contract Year, the estimated monthly fees set forth in the
Fee Schedule shall be substituted for the average monthly fees described in the
preceding sentence.
U. "Expenses" shall mean any and all direct, pass through expenses
incurred by M&I for any postage, supplies, materials, travel and lodging
provided to or on behalf of Customer under this Agreement.
V. "Federal Regulator" shall have the meaning set forth in Section
21.7.
W. "Initial Services" shall mean those Services requested by
Customer from M&I under this Agreement prior to the Conversion Date. The
Services requested as of the Effective Date are set forth in the schedules
attached hereto, which shall be modified to include Services requested by
Customer during the Conversion Period.
X. "M&I software" shall mean the software owned by M&I and used to
provide the Services.
Y. "Millennium Ready" shall mean the ability of the M&I Software to
accurately process date/time data (including calculating, compare and sequence)
from, into and between the years 1999 and 2000, including leap year
calculations, to the extent that other information
4
<PAGE> 10
technology, used in combination therewith, properly exchanges date/time data
with the M&I Software.
Z. "Monthly Base Fee" shall mean the minimum monthly fees payable
by Customer to M&I for those Services identified in the ADP Services Schedule
or the Fee Schedule as being included in the Monthly Base Fee.
AA. "New Services" shall mean any services which are identified in
M&I's standard price list but not included in the Initial Services, as well as
any future services developed by M&I. Upon Customer's election to receive the
same New Services shall be included in the term "Services."
BB. "Operations Center" shall mean the datacenter used by M&I to
provide the Services under this Agreement.
CC. "Performance Standards" shall mean those service levels set
forth in Schedule 9.1 for the provision of ADP Services.
DD. "Proper Instructions" shall mean those instructions sent to M&I
in accordance with Section 3.3 below.
EE. "Services" shall mean the services, functions and
responsibilities described in this Agreement to be performed by M&I during the
Term.
FF. "Taxes" shall mean any manufacturers, sales, use, gross receipts,
excise personal property or similar tax or duty assessed by any governmental or
quasi-governmental authority upon or as a result of the execution or
performance of any service pursuant to this Agreement or materials furnished
with respect to this Agreement, except any income, franchise, privilege or like
tax on or measured by M&I's net income, capital stock or net worth.
GG. "Term" shall mean the Initial Term and any extension thereof,
unless this Agreement is earlier terminated in accordance with its provisions.
HH. "Third party" shall mean any Entity other than the parties or
any Affiliates of the parties.
5
<PAGE> 11
II. "User Manuals" shall mean the documentation provided by M&I to
Customer which describes the features and functionalities of each of the ADP
Services as modified and updated by the customer bulletins distributed by M&I
from time to time.
1.3. References. In this Agreement and the schedules and exhibits
attached hereto, which are hereby incorporated and deemed a part of this
Agreement, references and mention of the word "include" and "including" shall
mean "includes, with limitation" and "including, without limitation", as
applicable.
1.4 Interpretation. In the event of a conflict between this Agreement
and the terms of any exhibits and schedules attached hereto, the terms of the
schedules and exhibits shall prevail and control the interpretation of the
Agreement. The exhibits and schedules together with the Agreement shall be
interpreted as a single document.
6
<PAGE> 12
2. TERM
2.1 Initial Term. This Agreement shall commence on the Effective Date
and end of the seventh (7th) anniversary of the last date of the month in which
the Commencement Date occurs ("Initial Term").
2.2 Extensions. Unless this Agreement has been earlier terminated, at
least one (1) year prior to the expiration of the Initial Term, M&I shall
submit to Customer a written proposal for renewal of this Agreement. Customer
will respond to such proposal within three (3) months following receipt and
inform M&I in writing whether or not Customer desires to renew this Agreement.
If M&I and Customer are unable to agree upon the terms for renewal of this
Agreement at least six (6) months prior to the expiration of the Initial Term,
then Customer may, at its option, renew this Agreement for one (1) twelve-month
period at M&I's then-current standard prices. Customer shall exercise its
option, if at all, by delivering written notice to M&I at least five (5) months
prior to expiration of the Initial Term.
3. APPOINTMENT
3.1 Performance by M&I Affiliates or Subcontractors. Customer understands
and agrees that Marshall & Ilsley Corporation is a bank holding company and
that the actual performance of the Services may be made by the divisions,
subsidiaries and/or Affiliates of Marshall & Ilsley Corporation or its
subcontractors. For purposes of this Agreement, performance of the Services by
any division, subsidiary or Affiliate of Marshall & Ilsley Corporation or its
subcontractors shall be deemed performance by Marshall & Ilsley Corporation
itself.
3.2 Third party Products/Services. The parties acknowledge that certain
services and products necessary for the performance of the Services are being,
and in the future may be, provided by Third Parties who will contract directly
with Customer. M&I shall have no liability to Customer for information and
products supplied by, or services performed by, such Third Parties in
conjunction with the Services.
7
<PAGE> 13
3.3 Proper Instructions. "Proper Instructions shall mean those
instructions sent to M&I by letter, memorandum, telegram, cable, telex,
telecopy facsimile, computer terminal, e-mail or other "on line" system or
similar means of communication or given orally over the telephone or given in
person by one or more of the person(s) whose name(s) and signature(s) are
listed on the most recent certificate delivered by Customer to M&I which lists
those persons authorized to give orders, corrections and instructions in the
name of and on behalf of Customer. Proper Instructions shall specify the
action requested to be taken or omitted.
4. CONVERSION
4.1 Banking Applications. The parties agree to use their best efforts to
perform the Conversion(s) such that the Commencement Date occurs on or before
February 15, 1999.
4.2 Development of Conversion Plan. M&I has, in consultation with
Customer, developed a detailed, customized plan for the Conversion (the
"Conversion Plan"). The Conversion Plan includes (i) a description of the tasks
to be performed for the Conversion; (ii) allocation of responsibility for each
of such tasks; and (iii) the schedule on which each task is to be performed.
The Conversion project leaders for each party shall regularly communicate on
the progress of the Conversion, the feasibility of the Conversion Dates
specified in the Conversion Plan, and such other matters which may affect the
smooth transition of the Services. Customer agrees to maintain an adequate
staff of persons who are knowledgeable about the banking, data processing and
information technology systems currently used by Customer. Customer further
agrees to provide such services and to perform such obligations as are
specified as Customer's responsibility in the Conversion Plan and as necessary
for Customer to timely and adequately meet the scheduled dates set forth
therein. Each party shall cooperate fully with all reasonable requests of the
other party made necessary to effect the Conversion in a timely and efficient
manner. The Conversion Plan is attached hereto as Schedule 4.2 and may be
amended by mutual agreement of the parties.
4.3 Conversion Resources. M&I and Customer will provide a team of
qualified individuals to assist in the
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Conversion effort. The anticipated team and description of their
responsibilities is set forth in the Conversion Plan.
4.4 Conversion Milestones. During each Conversion process, M&I will
analyze Customer's products, the setup of bank control, analyze and verify
Customer's test data, analyze Customer's training needs and perform workflow
analysis. During the next phase, Customer shall verify the converted test data
and identify and changes to the Conversion programs. A review ("Readiness
Review") will then be performed as a dress rehearsal to ensure that M&I and
Customer are prepared to proceed with the Conversion. M&I and Customer shall
mutually agree to and sign off on the Readiness Review assuring that each
Entity is prepared to proceed with the Conversion. The stabilization phase
takes place approximately three (3) to four (4) weeks prior to Conversion,
during which time software programs, bank control and interface tables are
completed and stabilized. Changes, if any, are managed and required approval of
both M&I and Customer. Finally, the Conversion phase includes the Conversion
weekend and Conversion week support. The M&I project team manages the
Conversion weekend, working with Customer's existing processors to meet
targeted deadlines. During the Conversion week, M&I will provide support on
site for Customer. On a daily basis, M&I and Customer will have status update
meetings to understand levels of self sufficiency and areas requiring
attention.
5. BANKING APPLICATION SERVICES
5.1 ADP Services. M&I agrees to provide Customer with the ADP Services
set forth on Schedule 5.1 ("ADP Services Schedule") in accordance with the
applicable User Manuals.
5.2 New Services. If Customer wishes to receive any New Service which is
identified on M&I's then-current standard price list, Customer shall notify M&I
and the parties shall implement the same in accordance with a mutually
acceptable schedule. If the New Service is not identified on M&I's then-current
standard price list, Customer shall submit a written request to M&I in
accordance with Section 18.3 of this Agreement. Nothing contained herein shall
obligate M&I to develop a New Service for Customer.
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5.3 Automated Clearing House Services. The automated clearing house
services ("ACH Services") included in the ADP Services Schedule shall be
subject to the terms and conditions set forth on attached Schedule 5.3.
5.4 EFD Services. The electronic funds delivery services ("EFD
Services") shall be provided by M&I subject to the terms and conditions set
forth on attached Schedule 5.4.
5.5. Item Processing Services.
A. M&I shall perform for Customer those certain Item Processing
Services described in Schedule 5.5 for which Customer agrees to pay M&I in
accordance with the fees specified in the Fee Schedule.
B. M&I and Customer agree to perform their respective
responsibilities associated with Item Processing Service in accordance with the
procedures established by M&I as modified from time to time. A copy of M&I's
procedure has been or will be provided to Customer.
C. M&I agrees that solely with respect to the Item Processing
Services provided under Schedule 5.5, such Item Processing Services shall be
performed in a commercially reasonable manner and no other or higher degree of
care. M&I assumes no other obligation as to performance or quality of the Item
Processing Services provided. M&I shall not be responsible for any loss or
damage to Customer arising as a result of any action or inaction on the part of
M&I including, but not limited to, indirect, incidental, or consequential
damages, lost profits, or business operation loss. In the event of errors
resulting from M&I provision of the Item Processing Services, M&I's sole
obligation and Customer's sole remedy, shall be for M&I to correct such errors,
if possible, and to review its systems and procedures for the purpose of
implementing changes to prevent a future occurrence of a similar error.
6. RETAIL DELIVERY SYSTEMS AND SERVICES
6.1 Home Banking Services. M&I agrees to provide Customer with the
account accessiblility, fund transfer,
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account balance inquiry, bill payment and other remote access banking services,
via telephone or personal computer ("DirectPC Services") or via the Internet
("DirectNet Services") as set forth on attached Schedule 6.1.
6.2 Branch Automation Systems. M&I agrees to provide the licenses,
products, interfaces and network management associated with the automation of
Customer's branch offices, in accordance with the Branch Automation Agreement.
7. BANKCARD PROCESSING SERVICES INTENTIONALLY OMITTED
8. FEES
8.1 Fee Structure. Schedule 8.1 attached hereto (the "Fee Schedule") sets
forth the costs and charges for the ADP Services and Customer agrees to pay M&I
the fees specified in the Fee Schedule for the ADP Services rendered by M&I.
These costs and charges are included in one or more of the following categories:
(i) one-time fees associated with the Conversion;
(ii) the Monthly Base Fee, a minimum monthly fee, for certain bundled
data processing Services based on data processing volume;
increases in actual volumes shall result in additional charges as
further described in the Fee Schedule;
(iii) an hourly or daily fee for programming, training and related
Services requested by Customer; and
(vi) optional fees based on M&I's then current published price list
for New Services not included in the foregoing categories.
8.2 Conversion. Customer agrees to pay M&I the fees relating to the
Conversion on the terms and conditions set forth on the Fee Schedule
("Conversion Fees"). In addition to the Conversion Fees, Customer agrees to
reimburse M&I (i) for all Expenses reasonably incurred in connection with the
Conversion; (ii) for all Conversion charges of accounts or
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products not identified by Customer in the Conversion Plan as of the Effective
Date; (iii) for M&I personnel or any independent contractors who perform
Conversion or related services which are identified as the responsibility of
the Customer in the Conversion Plan; and (iv) for Conversion related charges
which may arise after the Conversion.
8.3 Pricing and Operational Assumptions. The Fee Schedule sets forth the
operational and pricing assumptions made by M&I following completion of its
preliminary due diligence of Customer's requirements and its evaluation of
information provided by Customer. If the parties determine that one or more of
the pricing or operational assumptions listed in the Fee Schedule is inaccurate
or incomplete in any material respect, the parties will negotiate in good faith
regarding an equitable adjustment to any materially and adversely impacted
provisions of this Agreement.
8.4 EFD Services. In addition to the charges specified on the Fee
Schedule, Customer shall be responsible for all interchange and network
provider fees and all dues, fees and assessments established by and owed to
Visa and/or MasterCard for the processing of Customer's transactions, and for
all costs and fees associated with changes to ATM ("ATM") protocol caused by
Customer's use of the EFD Services.
8.5 Training and Education.
A. M&I shall provide training in accordance with the training
schedule developed pursuant to the Conversion Plan. The sessions shall be held
at an M&I datacenter location to be determined by M&I. Customer shall be
responsible for all Expenses incurred by the participants and M&I's trainers in
connection with such education and training.
B. M&I will provide to Customer, at no charge, one set of each of
the User Manuals. When the User Manuals are updated, M&I will provide the
updates to Customer at no additional charge. Additional sets of the User Manuals
may be purchased by Customer at M&I's then current published price list.
8.6 Excluded Costs. The fees set forth in the Fee Schedule do not include
shipping and courier costs,
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telecommunication charges, Expenses, Third Party pass-through charges, workshop
fees, training fees, late fees or charges and Taxes.
8.7 Disputed Amounts. If Customer disputes any charge or amount on any
invoice and such dispute cannot be resolved promptly through good faith
discussions between the parties, Customer shall pay the amounts due under this
Agreement less the disputed amount, and the parties shall diligently proceed to
resolve such disputed amount. An amount will be considered disputed in good
faith if (i) Customer delivers a written statement to M&I on or before the due
date of the invoice, describing in detail the basis of the dispute and the
amount being withheld by Customer, (ii) such written statement represents that
the amount in dispute has been determined after due investigation of the facts
and that such disputed amount has been determined in good faith, (iii) such
dispute has been submitted by Customer for resolution, and (iv) all other
amounts due from Customer that are not in dispute have been paid in accordance
with the terms of this Agreement.
8.8 Terms of Payment. All "one-time" fees shall be paid to M&I as set
forth in the Fee Schedule. Customer shall pay the Monthly Base Fee in advance on
the first day of the calendar month in which the Services are to be performed.
To effect payment, Customer hereby authorizes M&I to initiate debit entries
from and, if necessary, initiate credit entries and adjustments to Customer's
account at the depository institution designated in the ACH Authorization
Agreement attached hereto as Exhibit A, which shall be executed by Customer
contemporaneously with the execution of this Agreement. All other amounts due
hereunder shall be paid within thirty (30) days of invoice, unless otherwise
provided in the Fee Schedule. Customer shall also pay any collection fees and
Damages incurred by M&I in collecting payment of the charges and any other
amounts for which Customer is liable under the terms and conditions of this
Agreement.
8.9 Modification of Terms and Pricing.
A. Following any Event of Default by Customer and pending completion
of the dispute resolution procedures set forth in Article 15, Customer agrees
that all charges for Services shall be computed using M&I then-current
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standard published prices, paid in advance. Upon Customer's cure of all such
defaults, the pricing terms shall revert to that which were in place prior to
the defaults.
B. All charges for Services shall be subject to the annual
adjustments set forth in the Fee Schedule.
9. PERFORMANCE STANDARDS
9.1 General. Except as otherwise specified in this Agreement, M&I agrees
to perform the Services in a commercially reasonable manner and with no other or
higher degree of care. Subject to the nonoccurrence of an event of force majeure
and the performance of Customer's obligations essential to M&I's performance of
its obligations, M&I agrees that during the Term, M&I will perform the ADP
Services in accordance with the Performance Standards set forth on attached
Schedule 9.1.
9.2 Service Deficiencies. If Customer is aware that any defect exists in
the Services, Customer shall be responsible for making whatever appropriate
adjustments may thereafter be necessary to mitigate adverse effects on Customer
until M&I corrects the defect and, if requested by Customer, M&I will, at M&I's
expense, assist Customer in making such corrections through the most
cost-effective means, whether manual, by system reruns or program modifications.
M&I will, where reasonable, make every effort to correct any known material
defect as soon as commercially reasonable at M&I's expense.
9.3 Exclusive Remedy. Customer will notify M&I in writing if the
Performance Standards are not achieved, and M&I shall have ninety (90) days to
meet the Performance Standards. If after ninety (90) days the Performance
Standards still have not been met, the Customer may terminate the Agreement
without penalty or payment of any Termination Fee upon giving M&I at least
thirty (30) days' prior written notice after the expiration of the ninety
(90) day cure period.
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10. MODIFICATION OR PARTIAL TERMINATION
10.1 Modifications to Services. M&I may modify, amend, enhance, update,
or provide an appropriate replacement for the software used to provide the
Services, or any element of its systems at any time to: (i) improve the Services
or (ii) facilitate the continued economic provision of the Services to Customer
or M&I, provided that the functionality of the Services is not materially
adversely affected.
10.2 Partial Termination by M&I. M&I may, at any time, withdraw any of
the Services (other than the Core Services) upon providing ninety (90) days'
prior written notice to Customer. M&I may also terminate any of the Services
immediately upon any final regulatory, legislative, or judicial determination
that providing such Services is inconsistent with applicable law or regulation
or upon imposition by any such authority of restrictions or conditions which
would detract from the economic or other benefits to M&I or Customer to any
element of the Services. In the event a Service included as a material part of
the Monthly Base Fee is terminated by M&I, the parties agree to negotiate in
good faith an appropriate reduction in the Monthly Base Fee. If M&I terminates
any Service which is part of the Initial Services, M&I agrees to assist
Customer, without additional charge, in identifying an alternate provider of
such terminated Service.
10.3 Partial Termination by Customer.
A. Customer agrees that, during the Term, Customer shall obtain
exclusively from M&I all of its data processing requirements covered by the
Initial Services. If Customer breaches the foregoing covenant, Customer shall
pay M&I a Termination Fee for the discontinued Service, as liquidated damages
and not as a penalty, in accordance with Schedule 11.1.
B. For all New Services, Customer may terminate the same upon ninety
(90) days prior written notice to M&I, without payment of any Termination Fee,
except that in the event of termination of all Services under the Agreement,
the provisions of Article 11 shall apply.
10.4 Development of Custom Software. M&I reserves the right to determine
the programming (whether hardware or software) utilized by M&I with the
equipment used in fulfilling its duties under this Agreement. All programs
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(including ideas and know-how and concepts) developed by M&I are and shall
remain M&I's sole property. Any writing or work of authorship created by M&I in
the course of performing the Services under this Agreement, even if paid for by
Customer, shall be the property of M&I ("Developed Software"). M&I may make
such Developed Software available to any of its other customers; provided,
however, if Customer has paid for such Developed Software and M&I offers, as
part of M&I's standard price list, a separate service resulting exclusively
from such Developed Software, M&I will refund, or credit, to Customer a portion
of any amounts paid for such Developed Software on terms and conditions agreed
to by the parties prior to commencement of work on the Developed Software.
10.5 Millennium Modifications. The M&I Software shall be modified to be
Millennium Ready on or before December 31, 1998. Any modification to the M&I
Software to make it Millennium Ready shall be made by M&I at no additional
charge to Customer, provided, however, that any testing requirements imposed on
Customer by any Federal Regulator shall be performed by M&I at Customer's sole
cost and expense at M&I's then-current standard rates.
11. TERMINATION
11.1 For Convenience or Default By Customer. The terms and conditions set
forth in attached Schedule 11.1 shall govern the early termination of this
Agreement (or any Service which is part of the Initial Services) by Customer for
convenience, or termination for cause by M&I pursuant to Sections 11.2 or 11.3
below.
11.2 For Cause. If either party fails to perform any of its material
obligations under this Agreement and does not cure such failure within thirty
(30) days after being given notice specifying the nature of the failure, then
the non-defaulting party may, by giving notice to the other party, terminate
this Agreement as of the date specified in such notice of termination.
11.3 For Insolvency. In addition to the termination rights set forth in
Sections 11.1 and 11.2, subject to the provisions of Title 11, United States
Code, if either party becomes or is declared insolvent or bankrupt, is the
subject
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to any proceedings relating to its liquidation, insolvency or for the
appointment of a receiver or similar officer for it, makes an assignment for
the benefit of all or substantially all of its creditors, or enters into an
agreement for the composition, extension, or readjustment of all or
substantially all of its obligations, then the other party, by giving written
notice to such party, may terminate this Agreement as of a date specified in
such notice of termination.
12. SERVICES FOLLOWING TERMINATION
12.1 Termination Assistance. Commencing six (6) months prior to the
expiration of the Term of this Agreement, or upon any termination of this
Agreement for any reason, M&I shall provide Customer, at Customer's expense,
all necessary assistance to facilitate the orderly transition of Services to
Customer or its designee ("Termination Assistance"). As part of the Termination
Assistance, M&I shall assist Customer to develop a plan for the transition of
all data processing services from M&I to Customer or its designee on a
reasonable schedule developed by Customer. Prior to providing any Termination
Assistance, M&I shall deliver to Customer a good faith estimate of all such
Expenses and charges including, without limitation, charges for custom
programming services. Customer understands and agrees that all Expenses and
charges for Termination Assistance shall be computed in accordance with M&I's
then-current rates for such products, materials and services. Nothing contained
herein shall obligate Customer to receive Termination Assistance from M&I.
12.2 Continuation Of Services. If Customer terminates this Agreement for
convenience, upon at least ninety (90) days' prior written request of Customer,
M&I may, at its discretion, continue to provide Customer all data processing
related Services at M&I's then-current standard prices, for a maximum period of
six (6) months following the Effective Date of Termination.
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13. DAMAGES
13.1 Direct Damages. Each party shall be liable to the other party solely
for Damages arising out of or relating to their respective performance or
failure to perform under this Agreement.
13.2 No Consequential Damages. Neither Customer nor M&I shall be liable
for, nor will the measure of any damages in any event include, any indirect,
incidental, punitive, special or consequential damages or amounts for loss of
income, profits or savings arising out of or relating to performance or failure
to perform under this Agreement, even if such party has been advised of the
possibility of such losses or damages.
13.3 Equitable Relief. Either party may seek equitable remedies, including
specific performance and injunctive relief, for a breach of the other party's
obligations under Section 17 of this Agreement, prior to commencing the dispute
resolution procedure set forth in Section 15.1 below.
13.4 Limitation of Liability. Notwithstanding any provision in this
Agreement, M&I's total liability under this Agreement shall not exceed payments
made to M&I by Customer under this Agreement during the three (3) months prior
to the event. No lawsuit or other action may be brought by either party hereto,
or on any claim or controversy based upon or arising in any way out of this
Agreement be brought, after one (1) year from the date on which the cause of
action arose; provided, however, the foregoing limitation shall not apply to
the collection of any amounts due under this Agreement.
13.5 Liquidated Damages. Customer acknowledges that M&I shall suffer a
material adverse impact on its business if this Agreement is terminated prior
to expiration of the Term, and that the resulting damages may not be
susceptible of precise determination. Customer acknowledges that the
Termination Fee is a reasonable approximation of such damages and shall be
deemed to be liquidated damages and not a penalty.
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14. INSURANCE AND INDEMNITY
14.1 Insurance. Throughout the Term of this Agreement, M&I shall
maintain at all times at its own cost and expense:
1. Commercial General Liability Insurance covering its premises,
including bodily injury, property damage, broad form contractual liability and
independent contractors, with primary limits of not less than two million
dollars ($2,000,000).
2. Fidelity Insurance covering employee dishonesty with respect
to all aspects of the Services, in an amount not less than ten million dollars
($10,000,000).
3. Workers' Compensation Insurance as mandated or allowed by
the state in which the Services are being performed, including at least five
hundred thousand dollars ($500,000) coverage for Employer's Liability.
4. All Risk Property Insurance in an amount adequate to cover
the cost of replacement of all equipment, improvements, and betterments at M&I
locations in the event of loss or damage.
14.2 Indemnity. The following obligations shall apply to claims made by
Third Parties arising out of the events described in this Section 14.2:
A. By Customer. Customer shall indemnify M&I from, defend M&I
against, and pay any final judgments awarded against M&I, in connection with
(i) the inaccuracy or untruthfulness of any representation or warranty made by
Customer to M&I, (ii) Customer's violation of Federal, state, or other laws or
regulations, (iii) work-related injury or death caused by Customer or its
employees or agents, (iv) tangible personal or real property damage or
financial or monetary loss incurred by M&I resulting from Customer's acts or
omissions, or those of its employees or agents, (v) the data, information
and/or instructions furnished by Customer and any inaccuracy or inadequacy
therein as set forth in Section 21.3, (vi) Customers failure to maintain
adequate records as set forth in Section 21.4, (vii) Customer's failure to
comply with TIN requirements under Section 21.8, and (viii) those matters
included in attached Schedule 6.1. Customer shall be responsible for
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any costs and Expenses incurred by M&I in connection with the enforcement of
this Paragraph A.
B. By M&I. M&I shall indemnify Customer from, defend Customer
against, and pay any final judgment awarded against Customer, in connection
with: (i) any claim by a Third Party that the Services or M&I's software
infringe upon any patent, copyright or trademark of a Third Party under the
laws of the United States; (ii) the inaccuracy or untruthfulness of any
representation or warranty made by M&I to Customer; (iii) M&I's violation of
Federal, state, or other laws or regulations; (iv) work-related injury or death
caused by M&I, its employees, or agents; and (v) tangible personal or real
property damage resulting from M&I's acts or omissions. M&I shall be
responsible for any costs and Expenses incurred by Customer in connection with
the enforcement of this Paragraph B.
14.3 Indemnification Procedures. If any Third Party makes a claim
covered by this Section against an indemnitee with respect to which such
indemnitee intends to seek indemnification under this Section, such indemnitee
shall give notice of such claim to the indemnifying party, including a brief
description of the amount and basis therefor, if known. Upon giving such
notice, the indemnifying party shall be obligated to defend such indemnitee
against such claim, and shall be entitled to assume control of the defense of
the claim with counsel chosen by the indemnifying party, reasonably
satisfactory to the indemnitee. Indemnitee shall cooperate fully with, and
assist, the indemnifying party in its defense against such claim in all
reasonable respects. The indemnifying party shall keep the indemnitee fully
apprised at all times as to the status of the defense. Notwithstanding the
foregoing, the indemnitee shall have the right to employ its own separate
counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such indemnitee. Neither the indemnifying party nor any
indemnitee shall be liable for any settlement of action or claim effected
without its consent. Notwithstanding the foregoing, the indemnitee shall
retain, assume, or reassume sole control over all expenses relating to every
aspect of the defense that it believes is not the subject of the
indemnification provided for in this section. Until both (a) the indemnitee
receives notice from indemnifying party that it will defend, and (b) the
indemnifying party assumes
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such defense, the indemnitee may, at any time after ten (10) days from the date
notice of claim is given to the indemnifying party by the indemnitee, resist or
otherwise defend the claim or, after consultation with and consent of the
indemnifying party, settle or otherwise compromise or pay the claim. The
indemnifying party shall pay all costs of indemnity arising out of or relating
to that defense and any such settlement, compromise, or payment. The
indemnitee shall keep the indemnifying party fully apprised at all times as to
the status of the defense. Following indemnification as provided in this
Section, the indemnifying party shall be subrogated to all rights of the
indemnitee with respect to the matters for which indemnification has been made.
15. DISPUTE RESOLUTION
15.1 Representatives of Parties. All disputes arising under or in
connection with this Agreement shall initially be referred to the Account
Representatives. If the Account Representatives are unable to resolve the
dispute within five (5) business days after referral of the matter to them, the
managers of the Account Representatives shall attempt to resolve the dispute.
If, after five (5) days they are unable to resolve the dispute, senior
executives of the parties shall attempt to resolve the dispute. If, after five
(5) days they are unable to resolve the dispute, the parties shall submit the
dispute to the chief executive officers of the parties for resolution. Neither
party shall commence legal proceedings with regard to a dispute until
completion of the dispute resolution procedures set forth in this Section 15.1,
except to the extent necessary to preserve its rights or maintain a superior
position.
15.2 Continuity of Performance. During the pendency of the dispute
resolution proceedings described in this Article 15, M&I shall continue to
provide the Services so long as Customer shall continue to pay all undisputed
amounts to M&I in a timely manner.
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16. REPRESENTATIONS AND WARRANTIES
16.1 By M&I. M&I represents and warrants that:
A. Capability of Computer Systems and Software. M&I's computer systems
(hardware and software) are capable of performing the Services in accordance
with the provisions of this Agreement.
B. User Manuals. The reports made available to Customer shall be in
substantial conformity with the User Manuals, as amended from time to time,
copies of which have been, or will be, provided to Customer.
C. Rights. M&I has the right to provide the Services hereunder,
using all computer software required for that purpose.
D. Organization and Approvals. M&I is a validly organized corporate
entity with valid authority to enter into this Agreement. This Agreement has
been duly authorized by all necessary corporate action.
E. Disclaimer of Warranties. EXCEPT AS SPECIFICALLY SET FORTH IN
THIS SECTION 16.1, M&I DISCLAIMS ALL OTHER WARRANTIES, WHETHER WRITTEN, ORAL,
EXPRESSED OR IMPLIED INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
16.2 By Customer. Customer represents and warrants that:
A. Organization. It is a corporation validly existing and in good
standing under the laws of the state of its incorporation;
B. Authority. It has all the requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement, the
execution, delivery and performance of this Agreement has been duly authorized
by Customer and this Agreement is enforceable in accordance with its terms
against Customer; and
C. Approvals. No approval, authorization or consent of any
governmental or regulatory authorities
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required to be obtained or made by Customer in order for Customer to enter into
and perform its obligations under this Agreement.
17. CONFIDENTIALITY AND OWNERSHIP
17.1 Customer Data. Customer shall remain the sole and exclusive owner of
all Customer Data and other Confidential Information (as hereinafter defined),
regardless of whether such data is maintained on magnetic tape, magnetic disk,
or any other storage or processing device. All such Customer Data and other
Confidential Information shall, however, be subject to regulation and
examination by the appropriate auditors and regulatory agencies to the same
extent as if such information were on Customer's premises. "Customer Data"
means any and all data and information of any kind or nature submitted to M&I
by Customer, or received by M&I on behalf of Customer, in connection with the
Services.
17.2 M&I Systems. Customer acknowledges that it has no rights in any
software, systems, documentation, guidelines, procedures and similar related
materials or any modifications thereof provided by M&I, except with respect to
Customer's use of the same during the Term to process its data.
17.3 Confidential Information. "Confidential Information" of a party
shall mean all confidential or proprietary information and documentation of
such party, whether or not marked as such, including without limitation with
respect to Customer, all Customer Data. Confidential Information shall not
include: (i) information which is or becomes publicly available (other than by
the person or entity having the obligation of confidentiality) without breach
of this Agreement; (ii) information independently developed by the receiving
party; (iii) information received from a third party not under a
confidentiality obligation to the disclosing party; or (iv) information already
in the possession of the receiving party without obligation of confidence of
the time first disclosed by the disclosing party. The parties acknowledge and
agree that the substance of the negotiations of this Agreement and the terms of
this Agreement are considered Confidential Information subject to the
restrictions contained herein. Neither party shall use, copy, sell, transfer,
publish, disclose, display, or
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otherwise make any of the other party's Confidential Information available to
any third party without the prior written consent of the other.
17.4 Obligations of the Parties. M&I and Customer shall hold the
Confidential Information of the other party in confidence and shall not
disclose or use such Confidential Information other than for the purposes
contemplated by this Agreement, and shall instruct their employees, agents,
and contractors to use the same care and discretion with respect to the
Confidential Information of the other party or of any third party utilized
hereunder that M&I and Customer each require with respect to their own most
confidential information, but in no event less than a reasonable standard of
care, including but not limited to, the utilization of security devices or
procedures designed to prevent unauthorized access to such materials. Each
party shall instruct its employees, agents, and contractors of its
confidentiality obligations hereunder and not to attempt to circumvent any such
security procedures and devices. Each party's obligation under the preceding
sentence may be satisfied by the use of its standard form of confidentiality
agreement, if the same reasonably accomplishes the purposes here intended. All
such Confidential Information shall be distributed only to persons having a
need to know such information to perform their duties in conjunction with this
Agreement.
17.5 Security. M&I shall be responsible for, and shall establish and
maintain safeguards against, a disaster, loss or alteration of the Customer
Data in the possession of M&I. Such safeguards shall be no less rigorous than
that M&I uses to protect its own data of a similar nature.
18. MANAGEMENT OF PROJECT
18.1 Account Representatives. Each party shall cause an individual to be
assigned ("Account Representative") to devote time and effort to management of
the Services under this Agreement following the Conversion. Neither party shall
reassign or replace its Account Representative during the first six (6) months
of his or her assignment without the consent of the other party, except if such
individual voluntarily resigns, is dismissed for cause, or is unable to work
due to his or her death or disability.
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18.2 Reporting and Meetings. Within sixty (60) days after the Effective
Date, the parties shall mutually agree upon (a) an appropriate set of periodic
reports to be issued by M&I to Customer during the Conversion Period and during
the remainder of the Term; and (b) an appropriate set of periodic meetings to be
held between the Account Representatives during the Conversion Period and the
remainder of the Term; and (b) an appropriate set of periodic meetings to be
held between the Account Representatives during the Conversion Period and the
remainder of the Term. Meetings shall be held to review performance, changes,
resource utilization and such other matter as appropriate.
18.3 Development Projects and Technical Support. Upon Customer's written
request, M&I will develop and provide to Customer a good faith estimate of any
additional charges which Customer may incur in connection with the operation of
any new software, major modification or enhancements developed by M&I or the
acquisition of Third Party software. Customer agrees that M&I will have the
opportunity to bid on and be considered for all software development,
maintenance and other technology projects related to the Services that Customer
wishes to implement. Nothing contained herein shall obligate M&I to develop
enhancements requested by Customer.
19. REGULATORY COMPLIANCE
A. Customer shall be solely responsible for monitoring and interpreting
(and for complying with, to the extent such compliance requires no action by
M&I) the federal and state laws, rules and regulations pertaining to Customer's
business (the "Legal Requirements"). Customer shall be responsible for
selecting the processing parameter settings, features and options
(collectively, the "Parameters") within M&I's system that will apply to
Customer and for determining that such selections are consistent with the Legal
Requirements and with the terms and conditions of any agreements between
Customer and its clients. In making such determinations, Customer may rely
upon the written descriptions of such Parameters contained in the User Manuals.
M&I shall perform system processing in accordance with the Parameters selected
by the Customer.
B. Subject to the foregoing, M&I shall perform an ongoing review of
federal regulations, M&I shall maintain the features and functions set forth in
the User Manuals for each of the Services in accordance with all changes in
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<PAGE> 31
federal laws and regulations applicable to such features and functions, in a
non-custom environment. For any new federal laws and regulations, M&I will
perform a business review, with input from M&I's customers and user groups. If
M&I elects to support a new federal law or regulation through changes to M&I's
service bureau software, M&I shall develop and implement modifications to the
Services to enable Customer to comply with such new federal laws and
regulation. In all other circumstances relating to regulatory compliance of the
Services, including state laws and regulation, the provisions of Section 5.2
above (New Services) shall apply.
C. In any event, M&I shall work with Customer in developing and
implementing a suitable procedure or direction to enable Customer to comply with
federal and state laws and regulations applicable to the Services being provided
by M&I to Customer, including in those instances when M&I has elected to, but it
is not commercially practicable to, modify M&I's service bureau software prior
to the regulatory deadline for compliance.
20. DISASTER RECOVERY
20.1 Services Continuity Plan. M&I shall maintain throughout the Term
of the Agreement a Services Continuity Plan (the "Plan") in compliance with all
regulatory requirements. "Disaster" shall have the meaning set forth in the
Plan. Review and acceptance of Plan as may be required by any applicable
regulatory agency shall be the responsibility of Customer. M&I shall cooperate
with Customer in conducting such reviews as such regulatory agency may from time
to time reasonably request. A detailed Executive Summary of the Services
Continuity Plan has been provided to Customer. Updates to the Plan shall be
provided to Customer without charge.
20.2 Relocation. If appropriate, M&I shall relocate all affected
Services to an alternate disaster recovery site as expeditiously as possible
after declaration of a Disaster, and shall coordinate with Customer all
requisite telecommunications modifications necessary to achieve full
connectivity to the disaster recovery site, in material compliance with all
regulatory requirements.
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20.3 Resumption of Services. The Plan provides that, in the event of a
Disaster, M&I will be able to resume the Services in accordance therewith
within the time periods specified in the Plan. In the event M&I is unable to
resume the Services to Customer within the time periods specified in the Plan,
Customer shall have the right to terminate this Agreement without penalty upon
written notice to M&I delivered within forty-five (45) days after declaration
of such Disaster.
20.4 Annual Test. M&I shall test its Plan by conducting one (1) test
annually and shall provide Customer with a description of the test results in
accordance with applicable laws and regulations.
21. GENERAL TERMS AND CONDITIONS
21.1 Transmission of Data. The responsibility and expense for
transportation and transmission of, and the risk of loss for, data and media
transmitted between M&I and Customer shall be borne by Customer. Data lost by
M&I following processing, including loss of data transmission, shall either be
restored by M&I from its backup media or shall be reprocessed from Customer's
backup media at no charge.
21.2 Equipment and Network. Customer shall obtain and maintain at its
own expense its own data processing and communications equipment as may be
necessary or appropriate to facilitate the proper use and receipt of the
Services. Customer shall pay all installation, monthly, and other charges
relating to the installation and use of communications lines between Customer's
datacenter and the Operations Center. M&I maintains and will continue to
maintain a network control center with diagnostic capability to monitor
reliability and availability of the communication lines but M&I shall not be
responsible for the continued availability or reliability of such
communications lines.
21.3 Reliance on Data. M&I will perform the Services described in this
Agreement on the basis of information furnished by Customer. M&I shall be
entitled to rely upon any such data, information, or instructions as provided
by Customer. If any error results from incorrect input supplied by Customer,
Customer shall be responsible for
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discovering and reporting such error and supplying the data necessary to
correct such error to M&I for processing at the earliest possible time.
21.4 Data Backup. Customer shall maintain adequate records for at least
ten (10) business days including (i) microfilm images of items being
transported to M&I or (ii) backup on magnetic tape or other electronic media
where transactions are being transmitted to M&I, from which reconstruction of
lost or damaged items or data can be made. Customer assumes all responsibility
and liability for any loss or damage resulting from failure to maintain such
records.
21.5 Balancing and Controls. Customer shall (a) on a daily basis,
review all input and output, controls, reports, and documentation, to ensure
the integrity of data processed by M&I; and (b) on a daily basis, check
exception reports to verify that all file maintenance entries and nondollar
transactions were correctly entered. Customer shall be responsible for
initiating timely remedial action to correct any improperly processed data
which these reviews disclose.
21.6 Use of Services. Customer assumes exclusive responsibility for the
consequences of any Proper Instructions Customer may give M&I, for Customer's
failure to properly access the Services in the manner prescribed by M&I, and
for Customer's failure to supply accurate input information; Customer agrees
that, except as otherwise permitted in this Agreement or in writing by M&I,
Customer will use the Services only for its own internal business purposes to
service its banking customers and clients and will not sell or otherwise
provide, directly or indirectly, any of the Services or any portion thereof to
any Third Party.
21.7 Regulatory Assurances. M&I and Customer acknowledge and agree that
the performance of these Services will be subject to regulation and examination
by Customer's regulatory agencies to the same extent as if such Services were
being performed by Customer. Upon request, M&I agrees to provide any
appropriate assurances to such agency and agrees to subject itself to any
required examination or regulation. Customer agrees to reimburse M&I for
reasonable costs actually incurred due to any such examination or
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regulation that is performed solely for the purpose of examining Services used
by Customer.
A. Notice Requirements. Customer shall be responsible for complying with
all applicable governmental agency, which shall include providing timely and
adequate notice to the Chief Examiner of the Federal Home Loan Bank Board, the
Office of Thrift Supervision, the Office of the Comptroller of the Currency,
The Federal Deposit Insurance Corporation, the Federal Reserve Board, or their
successors, as applicable (collectively, the "Federal Regulators"), as of the
Effective Date of this Agreement, identifying those records to which this
Agreement shall apply and the location at which such Services are to be
performed.
B. Examination of Records. The parties agree that the records maintained
and produced under this Agreement shall, at all times, be available at the
Operations Center for examination and audit by governmental agencies having
jurisdiction over the Customer's business, including any Federal Regulator. The
Director of Examinations of any Federal Regulator or his or her designated
representative shall have the right to ask for and to receive directly from M&I
any reports, summaries, or information contained in or derived from data in the
possession of M&I related to the Customer. M&I shall notify Customer as soon as
reasonably possible of any formal request by any authorized governmental agency
to examine Customer's records maintained by M&I, if M&I is permitted to make
such a disclosure to Customer under applicable law or regulations. Customer
agrees that M&I is authorized to provide all such described records when
formally required to do so by a Federal Regulator.
C. Audits. M&I shall cause a Third Party review of the Operations Center
and related internal controls, to be conducted annually by its independent
auditors. M&I shall provide to Customer, upon written request, one copy of the
audit report resulting from such review.
21.8 IRS Filing. Customer represents it has complied with all laws,
regulations, procedures, and requirements in attempting to secure correct tax
identification numbers (TINs) for Customer's payees and customers and agrees to
attest to this compliance by an affidavit provided annually.
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Customer authorizes M&I to act as Customer's agent and sign on Customer's
behalf the Affidavit required by the Internal Revenue Service on Form 4804, or
any successor form. Exhibit B (Attorney-in-Fact Appointment) and Exhibit C
(Affidavit) shall be executed by Customer contemporaneously with the execution
of this Agreement. Customer acknowledges that M&I's execution of the Form 4804
Affidavit on Customer's behalf does not relieve Customer of responsibility to
provide accurate TINs or liability for any penalties which may be assessed for
failure to comply with TIN requirements.
21.9 Affiliates. Customer agrees that it is responsible for assuring
compliance with this Agreement by those Affiliates receiving Services under this
Agreement. Customer agrees to be responsible for the submission of its
Affiliates' data to M&I for processing and for the transmission to Customer's
Affiliates of such data processed by and received from M&I. Customer agrees to
pay any and all fees owed under this Agreement for Services rendered to its
Affiliates.
21.10 Future Acquisitions. Customer acknowledges that M&I has established
the Fee Schedule and enters into this Agreement on the basis of M&I's
understanding of the Customer's current need for Services and Customer's
anticipated future need for Services as a result of internally generated
expansion of its customer base. If the Customer expands its operations by
acquiring Control of additional financial institutions or the Customer
experiences a Change in Control (as hereinafter defined), the following
provisions shall apply:
A. Acquisition of Additional Entities. If Customer acquires Control after
the date hereof of one or more bank holding companies, banks, savings and loan
associations or other financial institutions that are not currently Affiliates,
M&I agrees to provide Services for such new Affiliates and such Affiliates shall
automatically be included in the definition of "Customer"; provided that (a) the
Conversion of each new Affiliate must be scheduled at a mutually agreeable time
(taking into account, among other things, the availability of M&I Conversion
resources) and must be completed before M&I has any obligation to provide
Services to such new Affiliate; (b) the Customer will be liable for any and all
Expenses in connection with
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the Conversion of such new Affiliate; and (c) Customer shall pay Conversion
Fees in an amount to be mutually agreed upon with respect to each new Affiliate.
B. Change in Control of Customer. If a Change in Control occurs with
respect to Customer, M&I agrees to continue to provide Services under this
Agreement; provided that (a) M&I's obligation to provide Services shall be
limited to the entities comprising the Customer prior to such Change in Control
and (b) M&I's obligation to provide Services shall be limited in any and all
circumstances to the number of accounts and items processed in the 3-month
period prior to such Change in Control occurring plus 25%.
22. MISCELLANEOUS PROVISIONS
22.1 Governing Law. The validity, construction and interpretation of this
Agreement and the rights and duties of the parties hereto shall be governed by
the internal laws of the State of Wisconsin, excluding its principles of
conflict of laws.
22.2 Venue and Jurisdiction. In the event of litigation to enforce the
terms of this Agreement, the parties consent to venue in an exclusive
jurisdiction of the courts of Milwaukee County, Wisconsin and the Federal
District Court for the Eastern District of Wisconsin. The parties further
consent to the jurisdiction of any federal or state court located within a
district which encompasses assets of a party against which a judgment has been
rendered, either through arbitration or litigation, for the enforcement of such
judgment or award against such party or the assets of such party.
22.3 Entire Agreement; Amendments. This Agreement, together with the
exhibits and schedules hereto, constitutes the entire agreement between M&I and
the Customer with respect to the subject matter hereof. There are no
restrictions, promises, warranties, covenants or undertakings other than those
expressly set forth herein and therein. This Agreement supersedes all prior
negotiations, agreements, and undertakings between the parties with respect to
such matter. This Agreement, including the exhibits and schedules hereto, may
be amended only by an
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instrument in writing executed by the parties or their permitted assignees.
22.4 Assignment. This Agreement may not be assigned by either party, by
operation of law or otherwise, without the prior written consent of the other
party, which consent shall not be unreasonably withheld, provided that (a)
M&I's consent need not be obtained in connection with the assignment of this
Agreement pursuant to a merger in which Customer is a party and as a result of
which the surviving Entity becomes an Affiliate of another bank holding
company, bank, savings and loan association or other financial institution
having a capital and surplus, so long as the provisions of Section 21.10 are
complied with; and (b) M&I may freely assign this Agreement (i) in connection
with a merger, corporate reorganization or sale of all or substantially all of
its assets, stock or securities, or (ii) to any entity which is a successor to
the assets or the business of the M&I Data Services division of M&I.
22.5 Relationship of Parties. The performance by M&I of its duties and
obligations under this Agreement shall be that of an independent contractor and
nothing contained in this Agreement shall create or imply an agency's
relationship between Customer and M&I, nor shall this Agreement be deemed to
constitute a joint venture or partnership between Customer and M&I.
22.6 Notices. Except as otherwise specified in the Agreement, all
notices, requests, approvals, consents and other communications required or
permitted under this Agreement shall be in writing and shall be personally
delivered or sent by (i) first class U.S. mail, registered or certified, return
receipt requested, postage pre-paid; or (ii) U.S. express mail, or other,
similar overnight courier service to the address specified below. Notices shall
be deemed given on the day actually received by the party to whom the notice
is addressed.
In the case of Customer: Bay Cities Bank
500 North Westshore Blvd.,
Suite 1000
Tampa FL 33634
Attn: Timothy A. McGuire
President
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For Billing Purposes:
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
In the case of M&I: M&I Data Services
4900 West Brown Deer Road
Brown Deer WI 53223
Attn: Thomas R. Mezera
Vice President
Sales & Marketing
Norrie J. Daroga
Vice President and
General Counsel
22.7 Headings. Headings in this Agreement are for reference purposes
only and shall not effect the interpretation or meaning of this Agreement.
22.8 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original but all of
which together constitute one and the same agreement.
22.9 Waiver. No delay or omission by either party to exercise any right
or power it has under this Agreement shall impair or be construed as a waiver of
such right or power. A waiver by any party of any breach or covenant shall not
be construed to be a waiver of any succeeding breach or any other covenant. All
waivers must be in writing and signed by the party waiving its rights.
22.10 Severability. If any provision of this Agreement is held by court
or arbitrator of competent jurisdiction to be contrary to law, then the
remaining provisions of this Agreement will remain in full force and effect.
Articles 11, 13 and 17 shall survive the expiration or earlier termination of
this Agreement for any reason.
22.11 Attorneys' Fees and Costs. If any legal action is commenced in
connection with the enforcement of this Agreement or any instrument or
agreement required under this Agreement, the prevailing party shall be
entitled to costs, attorneys' fees actually incurred, and necessary
disbursements incurred in connection with such action, as determined by the
court.
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22.12 Financial Statements. M&I agrees to furnish to the Customer copies
of the then-current annual report for the Marshall & Ilsley Corporation, within
45 days after such document is made publicly available.
22.13 Publicity. Neither party shall use the other parties' name or
trademark or refer to the other party directly or indirectly in any media
release, public announcement or public disclosure relating to this Agreement or
its subject matter, in any promotional or marketing materials, lists or business
presentations, without consent from the other party for each such use or
release. Customer agrees that neither it, its directors, officers, employees or
agents shall disclose this Agreement or any of the terms or provisions of this
Agreement to any other party.
22.14. Solicitation. Neither party shall solicit the employees of the
other party during the Term of this Agreement, for any reason.
22.15 No Third Party Beneficiaries. Each party intends that this
Agreement shall not benefit, or create any right or cause of action in or on
behalf of, any person or entity other than the Customer and M&I.
22.16 Construction. M&I and Customer each acknowledge that the
limitations and exclusions contained in this Agreement have been the subject of
active and complete negotiation between the parties and represent the parties'
agreement based upon the level of risk to Customer and M&I associated with
their respective obligations under this Agreement and the payments to be made
to M&I and the charges to be incurred by M&I pursuant to this Agreement. The
parties agree that the terms and conditions of this Agreement shall not be
construed in favor of or against any party by reason of the extent to which any
party or its professional advisors participated in the preparation of this
document.
22.17 Acquisition/Creation of a Financial Institution. This Agreement
shall terminate immediately in the event Customer fails to create a de novo,
or acquire an existing, financial institution, whose data is to be processed
under this Agreement by June 30, 1999 and neither party shall have any further
liability to the other
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hereunder, provided Customer will pay M&I for all costs actually incurred by
M&I related to this Agreement through February 28, 1999, not to exceed sixty
five thousand dollars ($65,000), which shall be exclusive of the amounts paid
by Customer upon execution of this Agreement as provided for in the Fee
Schedule.
22.1B Force Majeure. Notwithstanding any provision contained in this
Agreement, neither party shall be liable to the other to the extent fulfillment
or performance if any terms or provisions of this Agreement is delayed or
prevented by revolution or other civil disorders; wars; acts of enemies;
strikes; lack of available resources from persons other than parties to this
Agreement; labor disputes; electrical equipment or availability failure; fires;
floods; acts of God; federal, state or municipal action; statute; ordinance or
regulation; or, without limiting the foregoing, any other causes not within its
control, and which by the exercise of reasonable diligence it is unable to
prevent, whether of the class of causes hereinbefore enumerated or not. This
clause shall not apply to the payment of any sums due under this Agreement by
either party to the other.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in their names as of the date first above written.
MARSHALL & ILSLEY CORPORATION ("M&I")
4900 W. Brown Deer Road
Brown Deer, WI 53223
By:
---------------------------------
Name: Patrick C. Foy
Title: President, Outsourcing Business
Group
By:
---------------------------------
Name: Thomas R. Mezera
Title: Vice President, Sales & Marketing
BAY CITIES BANK ("Customer")
500 North Westshore Blvd., Suite 1000
Suite 1000
By: /s/ Timothy A. McGuire
--------------------------
Name: Timothy A. McGuire
Title: President
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EXHIBIT A
AUTHORIZATION AGREEMENT
The undersigned ("Customer") hereby authorizes M&I Data Services, a
division of the Marshall & Ilsley Corporation, ("M&I") to initiate debit
entries and to initiate, if necessary, credit entries and adjustments for any
excess debit entries or debit entries made in error, to Customer's account
indicated below and the depository named below, to debit and/or credit the same
such account.
This authority is to remain in full force and effect for the period coinciding
with the term (and any renewals thereof) of the Outsourcing Agreement made the
___ day of November 1998, and any addenda thereto (the "Agreement"), pursuant
to the terms and conditions specified in the Agreement.
DEPOSITORY NAME: -------------------------------------
ADDRESS: -------------------------------------
CITY/STATE/ZIP: -------------------------------------
TELEPHONE NUMBER: -------------------------------------
ROUTING TRANSIT NUMBER: -------------------------------------
ACCOUNT NUMBER: -------------------------------------
BAY CITIES BANK ("Customer")
By: /s/ TIMOTHY A. MCGUIRE
--------------------------------
Name: Timothy A. McGuire
Title: President
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EXHIBIT B
ATTORNEY-IN-FACT APPOINTMENT
Customer hereby appoints M&I Data Services, a division of the Marshall &
Ilsley Corporation ("M&I") as: (1) customer's attorney-in-fact and empowers M&I
to authorize the Internal Revenue Service (IRS) to release information return
documents supplied to the IRS by M&I to states which participate in the
"Combined Federal/State Program"; and (2) Customer's agent to sign on Customer's
behalf the Affidavit required by the Internal Revenue Service on Form 4804, or
any successor form.
BAY CITIES BANK
("Customer")
By: /s/ Timothy A. McGuire
------------------------------
Name: Timothy A. McGuire
Title: President
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EXHIBIT C
AFFIDAVIT
STATE OF FLORIDA )
)SS.
COUNTY OF HILLSBOROUGH)
I, Timothy A. McGuire, being first duly sworn, on oath, depose and say:
1. I am an employee of Bay Cities Bank. I have personal knowledge of my
employer's practices with regard to procuring and reporting tax identification
numbers (TINs) and authority to execute this Affidavit on my employer's behalf.
2. Bay Cities Bank has complied with all laws, regulations, procedures,
and requirements in attempting to secure correct TINs for its payees. This
compliance has been pursued with due diligence, and any failure to secure
correct TINs is due to reasonable cause.
/s/ Timothy A. McGuire
-------------------------
Customer's Representative
Subscribed and sworn to before me
this 30th day of November, 1998.
Hillsborough County Notary Public
My Commission expires: 6/1/02
[NOTARY SEAL]
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SCHEDULE 1.2
AFFILIATES
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<PAGE> 46
SCHEDULE 4.2
CONVERSION PLAN
The schedule listed below has been developed based on the information provided
to date. Time frames and activities are subject to change as the project is
further defined.
Weeks Prior
To Conversion Event
- --------------------------------------------------------------------------------
8 Weeks Project Kickoff Meeting
A kickoff meeting is held at the bank to introduce M&I Conversion
Project Management to the bank's project team. The overall
conversion process will be reviewed. Specific details will be
discussed regarding project scope, roles and responsibilities,
conversion major events, and critical success factors.
8 Weeks Equipment/Network Plan Development
Based on the Equipment/Network Assessment, an Equipment/Network
Plan with a network design and hardware/software requirements
will be developed.
7 Weeks Product Mapping
Meetings will be conducted with M&I product support
representatives to review the business processes supported by the
bank based on the product knowledge of bank personnel, current
application documentation, and conversion file record layouts.
Each field will be discussed for clarification and determination
of the corresponding use on the M&I System. All backroom support
will be reviewed, a general training plan will be developed, and
enhancements will be identified.
6 Weeks Train The Trainer
Key individuals from the bank will attend application training at
M&I to help with conversion analysis and to prepare to train
others at the bank.
The network to support all bank locations will be installed. As a
general rule, one terminal will be installed at each location in
preparation for Readiness Review. The remainder of the equipment
will be installed during the last few days before the conversion.
1 Week Readiness Review
This is a three-day test of our preparedness for the live
conversion with M&I project staff on-site for support. Test
scripts will be distributed to bank personnel at each location
for data entry on the training bank. Nightly posting will be run
with item capture test files as input, reports will be produced,
and the test bank will be balanced each day. Bank personnel will
be asked to support all functions of this test using operational
procedures from data entry to balancing. This will give bank
staff a chance to practice using the system and gain confidence
before dealing with their customers in a production environment.
It also will serve to validate network configuration, interface
processes, staff training, and operational procedures. Issues
will be identified and addressed.
2 Weeks Staff Training
The end user training completed by key individuals from the bank
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0 Weeks Conversion Support On-Site
The M&I project manager and product support representatives will
be on-site the week following conversion to support bank
personnel.
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SCHEDULE 5.1
ADP SERVICES
Deposit Services (5,500 Accounts) IRS Reporting Services
- --------------------------------- ----------------------
- Accounts IRS Government Reporting System
- Demand - Base Fee
- Money Market - On-line Transactions
- Savings - Tax Payer Information Services
- NOW Accounts
- Line of Credit Accounts Currency Transaction Reporting
- Time Deposit Accounts ------------------------------
- Transactions - Base Fee
- Check Ordering - On-line (Deluxe - CTR Forms 4789 (22 forms)
Chex Systems)
- Custom Statement Formatter - Safe Deposit
Deposit Statement Plus (one of four ------------
standard statement formats) - Base Fee
- Exception Processing - On-line - Boxes (100)
- Integrated Funds Management
System (IFMS) - Deposit to Loan Services (1,500 Notes)
Deposit, Deposit to other M&I ---------------------------
Applications - Loans (Commercial, installment,
- Transaction Retention (60 days) mortgage, floor plan, revolving
- Retirement Account Reporting credit)
- Miscellaneous Features (items not - Checks
included in price book; supplied at no - Collateral Processing (2,500
charge to customer) items)
- Employee Security - Coupon Book Orders
- Overdraft Protection - Escrow Analysis
- User Defined Notices - Escrow (Tax/Insurance)
- Statement Messages - Investor Reporting (FNMA or
- Kiting Suspect Detection FHLMC)
- Escheatment Suspect Processing - Customer Notices
- Relationship Service Charging - Tape/Transmission Processing -
Credit Bureau Tapes
On-line Services - Miscellaneous Features (items
- ---------------- not included in price book;
On-Line Teller supplied at no charge to
- Base Fee customer)
- Accounts - Charge-off Processing
- Deposit Live Log Transactions - Loan Form Messages
- No Book Transactions - Commitment Processing
- Tellerlink - Insurance Reserves
- Participations
- Customer Notices
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On-line Collections/Queuing Customer Information System (CIS)
- Active/Inactive Accounts (25) (7,600 Accounts)
Letter Writer - Base Fee
- Nightly Batch Printed Letters - Customers
- Print Immediate Letters - Accounts
- Combined Statement Processing
Tickler System - Base Fee
- Base Fee - Account Fee (250)
- Tickler Items
Account Analysis
On-line Inquiry Generator - Account Processing (50)
- Custom Screens - (10) - Statement Processing
- CSF Statement Processing Premium
User-Defined Security
- Protected Functions Customer Profitability
- Accounts(100)
Financial Control (General Ledger)
(500 Accounts) Information Desktop
- Base Fee - InFormatter Report Production (100
- Detail Accounts deposit reports and 100 loan reports)
- Transactions
- Application Interface
- Base Fee
- Tables for Interface
- Financial Control On-line
- On-line Account Inquiry
- On-line Report Inquiry
- On-line Transaction History
- Standard Descriptions
- Transaction Journal Daily (Snapshot)
Automated Clearinghouse (ACH)
Originating
- NACHA Format Mainframe
Transmission (1)
- Transmissions Transactions (15)
Automated Clearinghouse (ACH)
Receiving
- Base Fee
- Transactions (500)
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Services Schedule 5.1
ADP Services Not included in the Monthly Base Fee
Additional Services
EFT Services
- Network Administration Fee
- Terminal Support for 1 terminal
- Transaction Switching/Routing (1,500 transactions per month)
- Cardbase Management
-Base Fee
-Cardholders (500 cardholders)
- Transaction Authorization (On-Us);
Positive Balance Authorization (1,500 per month)
- PIN Production/Mailing (10 cards per month)
- Card Production
- Mailed direct to cardholder
(10 cards per month)
VISA Check Card
- Cardholders (500)
- Transactions Authorized/Settlement
(2,790 transactions authorized)
- Lost/Stolen Cards Reported (2)
- VISA Compliance Fee
Information Services
- Management Date Warehouse
- Report Edge (Ad Hoc Reports)
- Data Solution
- Call Report Interface
- Asset/Liability Interface
- Report Edge CPU Usage (estimated at 2,500 CPU seconds)
Home Banking Services
Telephone Banking
- DirectVoice Shared VRU (3,000 transfers and inquiries)
PC Banking/Direct Business
- Monthly Minimum
Communications Maintenance
Branch Automation Maintenance
Account Reconciliation
- Plan 3
- Base Fee (1 Account)
- First 1,000 Items
- Transmission Output(1)
CFI Laser Pro Interface Maintenance
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SCHEDULE 5.3
ACH SERVICES
A. Definitions. The following terms, as referenced from the NACHA
Rules, shall have the following meanings for the purposes of the Agreement:
1. "Applicable Law" means the NACHA Rules, the rules of local ACH
Associations, the rules of any and all ACH Operators, and other applicable law.
2. "Automated Clearing House Operator" or "ACH Operator" means the
central clearing facility, operated by a Federal Reserve Bank ("FRB") or a
private organization, which receives entries from the ODFI or the Third Party
processor acting as an agent for the ODFI, and distributes entries to the
appropriate RDFI or the Third Party processor acting as an agent for the RDFI,
and performs the settlement functions for the affected financial institutions.
3. "Originating Depository Financial Institution" or "ODFI" means
the institution that receives the payment instructions from the Originators and
forwards the entries to the ACH Operator.
4. "Originator" means a person that has authorized an ODFI to
transmit a credit or debit entry to the deposit account of an RDFI.
5. "Receiving Depository Financial Institution" or "RDFI" means the
institution that receives ACH entries from the ACH Operator and posts them to
the accounts of its depositors.
B. General. Customer hereby authorizes M&I to initiate and receive
automated clearing house debit and credit entries, adjustments to debit entries
and credit entries to Customer's account to be set up during the Conversion
Period, to credit and/or debit the same to such account, and to provide various
ACH services, as described below, to Customer pursuant to the terms and
conditions specified in this Schedule 5.3. The ACH entries covered shall
hereinafter be referred to as the "ACH Entries." Except as otherwise provided
herein, the terms used in this
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Schedule 5.3 shall have the same meanings as ascribed to such terms in the
Operating Rules of the National Automated Clearing House Association, as in
effect from time to time (the "NACHA Rules").
C. ACH Services.
1. M&I shall act as Customer's agent for initiating and transmitting
ACH Entries to the appropriate ACH Operator. In addition, M&I shall act as
Customer's agent for receiving ACH Entries from an ACH Operator. For all ACH
Entries initiated by M&I pursuant to this Agreement, Customer, and not M&I,
shall be the ODFI when M&I receives payment instructions directed to Customer's
routing number from an Originator, or the RDFI when M&I receives ACH Entries
directed to Customer's routing number from an ACH Operator.
2. M&I shall transmit ACH Entries in accordance with the format
requirements of the NACHA Rules to an ACH Operator using Customer's Routing
Number. M&I shall receive ACH Entries on behalf of Customer that are transmitted
to M&I by an ACH Operator. M&I shall provide reports to Customer, as described
in the ACH User Manual. If agreed to between Customer and M&I, M&I shall provide
for the posting of ACH Entries to Customer deposit accounts.
3. All warranties of an ODFI or RDFI prescribed under Applicable Law
shall be in effect and applicable to Customer, and not M&I, with respect to all
ACH Entries.
4. M&I may provide additional ACH Services as requested by Customer
and agreed to by M&I in writing.
D. M&I PC ACH Services. Customer may provide its business depositors with
personal computer access to M&I's ACH Services in accordance with the ACH User
Manual (the "PC ACH Service"). Customer shall be responsible for informing M&I
prior to permitting a new depositor to begin using the PC ACH Service. Customer
also shall inform M&I whether any credit limit shall apply to the ACH Entries of
a depositor utilizing the PC ACH Service.
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E. Customer Depositor Inquiries; Erroneous or Rejected ACH Entries.
1. Customer shall be responsible for handling all inquiries of its
depositors regarding ACH Entries, including inquiries regarding credits or
debits to a depositor's account resulting from an ACH Entry. M&I agrees to
reasonably assist Customer in responding to such inquiries by providing
information to Customer concerning ACH Entries.
2. As described in the ACH User Manual, M&I shall provide reports
to Customer showing errors and rejections resulting from ACH Entries
transmitted on behalf of Customer during a particular day. It shall be
Customer's responsibility to research and correct such ACH Entries.
F. Credit Limits.
1. Customer may from time to time establish one or more credit
limits applicable to ACH Entries involving a particular depositor or all
depositors of Customer. Such credit limits shall be established by written
notice from Customer and shall be implemented by M&I as soon as reasonably
practicable.
2. In the event that an ACH Entry exceeds a credit limit
communicated to M&I by Customer, M&I shall promptly give oral or written notice
to Customer. Customer may either approve the ACH Entry as an exception to the
credit limit, request that it be held over to the next day, or reject such ACH
Entry provided, however, that any exception to the credit limit must be
approved in writing by Customer.
G. User Manuals.
1. M&I shall provide Customer with a copy of the ACH User Manual
and any updates to such manual. Customer agrees to comply with the requirements
of such manual.
2. It shall be Customer's responsibility, and Customer is
authorized, to forward a copy of the applicable portion of the ACH User Manual,
and any updates
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<PAGE> 54
thereto, to Customer's depositors that utilize the PC ACH Service.
H. NACHA Rules. Prior to providing ACH origination services, Customer
shall enter into an agreement with the Originator in compliance with the NACHA
Rules, including but not limited to the requirement of the NACHA Rules that
such agreement include a provision whereby the Originator agrees to be bound by
the NACHA Rules. M&I shall have no responsibility for ensuring that the
Originators have entered into such agreements.
I. Limitation On Liability.
1. M&I is acting solely in its capacity as agent for Customer in
connection with the initiation, transmission and receipt of ACH Entries on
behalf of Customer. As agent, M&I shall be under no obligation to provide funds
to any party to settle for any ACH Entry received or initiated by M&I. Upon
notification from Customer of the occurrence of an error or omission with
respect to an ACH Entry, M&I shall promptly furnish corrected ACH Entry(ies)
to an ACH Operator, unless the NACHA Rules prohibit the processing of the
correct ACH Entry(ies). Notwithstanding any provision in the Agreement to the
contrary, M&I's liability to Customer for claims arising out of the ACH
Services performed by M&I pursuant to this Schedule 5.3 shall be limited to the
extent of errors and omissions which are caused by M&I's gross negligence or
willful misconduct and which cannot be remedied through the processing of
appropriate corrected ACH Entry(ies).
2. M&I shall make reasonable efforts to deliver ACH Entries to
Customer or to an ACH Operator, as appropriate, prior to any applicable
deadline for such delivery. M&I does not guarantee timely delivery. M&I shall
have no liability to Customer as a result of any late delivery, except to the
extent such late delivery is (i) caused by the gross negligence or willful
misconduct of M&I and (ii) made more than 24 hours after its scheduled
deadline.
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SCHEDULE 5.4
EFD SERVICES
A. Definitions. The following terms, as referenced from the NACHA
Rules, shall have the following meanings for the purposes of the Agreement:
1. "Account" shall mean any account maintained by Customer's
depositors and includes a checking, savings, NOW, money market or other asset
account or credit card account or any one of the various loan accounts or lease
accounts.
2. "ATM" shall mean the cash disbursement automated teller machines
and/or script dispenser or other similar device which conforms to M&I's
standards.
3. "Card" shall mean a plastic card issued by or on behalf of
Customer to Customer's Cardholders for use in effecting Transactions at
Terminals.
4. "Cardholder" shall mean any person who has, or is authorized to
use, an Account with Customer and to whom a Card and/or PIN is issued for use
in originating Transactions.
5. "Credit Card" means any Card that primarily accesses an account
which is an asset of the Customer or a Third Party for whom Customer is an
agent and who issues the Card.
6. "Debit Card" shall mean any Card that primarily accesses an
Account which is a liability of the Customer.
7. "EFD Services" shall mean the electronic funds delivery Services
set forth in this Schedule 5.4.
8. "Item" means any electronic message which communicates and
effects a Transaction between Customer and its depositors through a Terminal
and which includes the date, type and amount of such Transaction,
identification of the depositor, the Customer, the Terminal, the location of
the Terminal, the PIN and authorization codes.
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9. "MasterCard" shall mean MasterCard International, Inc.
10. "Network" shall mean a shared electronic funds transfer system
operating under a common name whereby financial institutions are available to
route, process and settle certain financial Transactions.
11. "PIN" shall mean a Cardholder's personal identification number
which is used by the Cardholder at the Terminals as one means of identification
of such Cardholder.
12. "POS" means point of sale.
13. "Terminal" means an ATM, a POS device, or any other device
which directly or indirectly is supported by M&I and meets the specifications
of M&I.
14. "Transaction" shall mean any function supported by M&I and
attempted by Cardholders or others at a Terminal and includes: (a) cash
withdrawals from an Account; (b) deposit to an Account; (c) balance inquiries
regarding an Account; (d) transfer from one Account to another Account; (e)
payment enclosed for Credit Cards and loans; and (f) POS authorizations and
settlement.
15. "Visa" shall mean VISA U.S.A., Inc.
B. Customer shall execute applications for membership in Visa and/or
MasterCard. M&I agrees to assist Customer in obtaining sponsorship by an
appropriate bank, if necessary. Customer shall provide M&I with copies of its
fully executed Visa and/or MasterCard membership agreements promptly after
receipt by Customer.
C. Customer shall comply with the articles, bylaws, operating
regulations, rules, procedures and policies of Visa and/or MasterCard and shall
be solely responsible, as between Customer and M&I, for any claims, liabilities,
lawsuits and expenses arising out of or caused by Customer's failure to comply
with the same. Customer agrees to maintain an account with a bank approved by
M&I and Customer hereby authorizes M&I to charge any amounts due to M&I, for
EFD Services, against any credits due to Customer to Customer's account whether
or not such charges
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create overdrafts.
D. Customer understands and agrees that M&I may terminate EFD services
immediately in the event M&I's access to any Network is terminated by the
Network provider.
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SCHEDULE 5.5
ITEM PROCESSING SERVICES
1. Bulkfile - Pull daily exception items based on customers decisions from
exception file, maintain inventory control, perform monthly statement sort,
daily fine sort GL, cash and savings items if required by customer, retain
truncated items 90 days, repair DDA debit rejected items.
2. Inclearings - Receive and capture for posting on-us items from FRBJAX.
Microfilm checks during item capture.
3. Mail Services - Meter all USPS out going mail and make available for
pre-sort vendor pick-up. Track and invoice customer for postage and
pre-sort expense used.
4. Microfiche - Produce fiche of item processing reports on a daily basis,
POD and Inclearing capture runs.
5. Outgoing Return - Receive return decision from customer, based on their
policy. Pull items identified by the customer for return, mark them
accordingly, and prepare items for return.
6. Proof Encoding - Receive proof work from customer location, Debit first
transaction sequence, MICR encode items for high speed sorter processing,
prepare proof corrections according to customer guidelines.
7. Research - Perform research request per instruction loaded on M&I A.S.I.
System.
8. Incoming Returns - Receive and process according to customer provided
policy incoming return items. Create return item notices and forward items
and notices to the Bank.
9. Statement Rendering - Fold, insert items and/or marketing fliers and meter
statements within time frames. Process special handling accounts, (e.g.
serial sort and special instruction statements), distribute accordingly,
insert missing/extra item notice when applicable.
10. Item Capture - Capture POD/inclearings on high-speed sorter, balance, and
produce transit cash letters.
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SCHEDULE 6.1
DIRECTPC SERVICES
Definitions
In addition to terms defined in the Agreement, the following terms shall
have the respective meanings set forth below:
"ACH" shall mean automated clearing house services.
"Billable Account" shall mean a DDA account to which M&I shall make ACH
debit or credit entries for the M&I DirectPC Services.
"Business Day" shall mean Monday through Friday, excluding Federal banking
holidays.
"Depositor" shall mean any individual or small business depositor
maintaining a DDA account with Customer.
"Depositor Services" shall mean the services provided to Users which are
the responsibility of Customer to provide, as summarized in the
Implementation Guide.
"Depositor Services System" shall mean the procedures, systems, and
software M&I has developed to coordinate the enrollment of Depositors on,
and their use of, the M&I Home Banking System, as set forth in the
Implementation Guide.
"DDA Account" shall mean a demand deposit account.
"IVR (Interactive Voice Response) Systems" shall mean the IVR hardware and
software, if any, provided by M&I pursuant to this Agreement for the
purpose of enabling Users to utilize touch-tone telephones to access the
M&I Home Banking System and receive the M&I DirectPC Services.
"Implementation Guide" shall be the documentation provided by M&I to
Customer relating to the M&I
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DirectPC Services, as well as any updates and revisions thereto.
"M&I Banking Software" shall mean the personal computer ("PC") software
provided by M&I pursuant to this Agreement and residing on the User's PC, for
the purpose of enabling Users to access the M&I Home Banking System and receive
M&I DirectPC Services.
"M&I DirectPC Services" shall mean the combination of account accessibility,
fund transfers, account balance inquiry and transaction summary services, as
well as bill payment services, all of which are identified in Exhibit A
attached hereto and described in greater detail in the Implementation Guide.
"M&I Home Banking System" shall mean the electronic banking and information
system which enables the Customer to provide, through M&I, the M&I DirectPC
Services to its Depositors.
"M&I Software" shall mean the M&I proprietary software residing and operating
on M&I's computers which are part of the M&I Home Banking System.
"Multiple Access" shall mean the ability of Users to use a touch tone telephone
or a PC, or both to access the M&I Home Banking System and receive the M&I
DirectPC Services.
"PIN" shall mean the personal identification number assigned to each User in
addition to the Password, to enable such User to access and receive the M&I
DirectPC Services, if such option is selected by Customer.
"Password" shall mean the personal identification number assigned to each User
and authorized by M&I, to enable such User to access and receive the M&I
DirectPC Services by use of a touch tone telephone.
"Service Levels" shall mean the standards set forth in Exhibit B attached
hereto.
"Trial" shall mean the one-month period following the Commencement Date during
which the Customer fully tests
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the M&I DirectPC Services and finalizes the processes, procedures, employee
training, and marketing programs. During the Trial, the minimum monthly
fees shall be as set forth in Exhibit C attached hereto.
"User" shall mean a Depositor who is authorized by Customer to access the
M&I DirectPC Services through a PC or IVR and uses his or her assigned PIN
or Password to access and utilize the M&I Home Banking System.
"User Data" means any and all data and information of any kind or nature
relating to any Depositor or User submitted to or learned by M&I in
connection with the M&I DirectPC Services including, but not limited to,
bill payment data.
Business Relationship
M&I's Responsibilities
M&I shall provide to Customer the M&I DirectPC Services in accordance with
the Implementation Guide and the Service Levels. The M&I Direct PC Services
shall be implemented by Customer in accordance with the implementation
schedule (the "Implementation Schedule") set forth in the Implementation
Guide. As to any individual User, such services shall be commenced pursuant
to the User Set-Up and Withdrawal Procedures set forth in the
Implementation Guide.
Customer Responsibilities
Customer shall pay for the Services in accordance with Exhibit C,
commencing on the Commencement Date. If Customer fails to implement the M&I
DirectPC Services on or prior to the Commencement Date, Customer shall
nevertheless pay M&I the minimum monthly fees commencing on the
Commencement Date. Customer shall arrange for distribution of the M&I
Banking Software and Customer will provide Users with the User License
Agreement set forth on Exhibit D attached hereto, and all disclosures
required under all applicable federal, state and local laws, rules and
regulations
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("Applicable Law") necessary to have Multiple Access to the M&I DirectPC
Services.
Grant Of Licenses
Service Marks And Trademarks
While the Agreement is in effect, Customer grants to M&I a non-exclusive,
non-transferable license to use mutually agreed upon service marks and
trademarks of Customer in connection with private labeling the M&I DirectPC
Services to Depositors.
M&I Banking Software/M&I Software
While the Amendment is in effect, M&I grants to Customer a non-assignable,
non-transferable license to provide the M&I Banking Software to Users for
the User's use and to permit the Users to use the M&I Software solely to
receive the M&I DirectPC Services.
Marketing Rights
While the Agreement is in effect, M&I grants to Customer a non-assignable,
non-transferable right to market the M&I DirectPC Services to Depositors.
Warranties
Warranties By M&I:
M&I represents and warrants to Customer follows:
a. Customer Service Marks and Trademarks. M&I shall not use any of
Customer's service marks and trademarks except for the purpose of
identifying the M&I DirectPC Service to Users.
b. Ownership. M&I has the right to offer the M&I DirectPC Services to
Customer as provided herein; the M&I Banking Software does not violate
any patent, copyright, trademark or other proprietary
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right or interest of any Third Party under United States law.
c. No Viruses. The M&I Banking Software, at the time it leaves M&I's
custody and control, shall be free of viruses, worms, time bombs,
logic bombs, trap doors, Trojan horses, or similar malicious
instructions, techniques, or devices capable of disrupting, disabling,
damaging, or shutting down a computer system or software or hardware
component thereof.
d. Performance. The M&I DirectPC Services shall be performed in a
professional and competent manner in accordance with the provisions of
this Schedule.
e. Year 2000. The M&I Banking Software shall be Millennium Ready.
f. Disclaimer. EXCEPT AS SPECIFICALLY SET FORTH IN THIS SECTION, M&I
DISCLAIMS ALL OTHER WARRANTIES, WHETHER WRITTEN, ORAL, EXPRESSED OR
IMPLIED INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Warranties by Customer:
Customer Represents and Warrants to M&I as follows:
Approvals. No approval, authorization or consent of any governmental
or regulatory authorities is required to be obtained or made by
Customer in order for Customer to enter into and perform its
obligations under this Schedule.
Problem Resolution Procedures/Compliance
The Implementation Guide sets forth the problem resolution procedures for
Users and Customer to follow in resolving issues, to the extent mandated
under federal banking and consumer protection laws. M&I shall make
available to Customer summary reports from M&I's call center, logging calls
received from the
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Users. If such reports are not sufficient in detail or in frequency to
meet Customer's requirements, M&I agrees to customize such reports at
M&I's then current rates for such services, following an estimate and
written approval and payment of such estimate by Customer.
Service Levels
Throughout the Term, M&I and its subcontractors, if any, shall provide the
M&I DirectPC Services in accordance with the Service Levels. Problems with
the Services shall be handled by M&I (or its subcontractors) pursuant to
the Problem Resolution Procedures. Upon receipt of a notice from Customer
or a User pursuant to the Problem Resolution Procedures with respect to any
failure to provide any M&I DirectPC Service in accordance with the
applicable Service Level, M&I shall commence to: (a) perform a root-cause
analysis to identify the cause of such failure; (b) provide Customer with a
report detailing the cause of, and procedure for correcting, such failure;
and (c) correct such failure. M&I or its subcontractors shall be
responsible for late charges and/or penalties incurred by a User due to a
failure to perform by M&I or its subcontractors in accordance with the
Guidelines set forth in the table in Exhibit B.
Indemnification
The following shall be added to Customer's indemnities under Section
14.2(B) of the Agreement: (a) failure of Customer to provide Users with
all disclosures as set forth in Section 2.2 above; (b) tortious acts or
omissions by the Users; (c) any unauthorized transactions conducted by
Users; (d) insufficient funds in any User's DDA Account to cover bill
payments initiated by such User; and (e) any breach by a User of the User
License Agreement included in the User Kit delivered to the User.
Third-Parties
Subcontracting
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Customer acknowledges that M&I may subcontract the bill payment portion of the
M&I DirectPC Services to be provided hereunder to Travelers Express Company,
Inc., a Minnesota Corporation ("TECI"). All M&I DirectPC Services performed by
TECI and any other Third-Party subcontractor of M&I shall be deemed to have
been performed by M&I, and M&I shall be fully responsible and fully liable to
Customer for all such services performed by TECI and any other Third-Party
subcontractor of M&I, in accordance with the provisions of this Agreement.
Settlement Of Funds
Customer understands that it is fully responsible for the availability of good
funds necessary to settle the bill payment activities of its Users initiated
through the use of the M&I DirectPC Services. M&I shall initiate debit ACH
entries against each User's DDA Account for bill payment activities initiated
by the User.
Third-Party Products
Customer understands and agrees that M&I may use Third-Party products in
connection with the M&I DirectPC services offered hereunder. These products may
include firewall security, web server software and encryption software. The
Third-Party software used by M&I as of the Effective Date is set forth on
Exhibit D attached hereto. Customer agrees that M&I shall not have financial
responsibility or legal liability to Customer in connection with the
performance or non-performance or such Third-Party software. The foregoing
limitations shall not affect M&I's obligation to meet the Service Levels set
forth on this Agreement.
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EXHIBIT A
TO
SCHEDULE 6.1
DESCRIPTION OF M&I DIRECTPC SERVICES
Account Accessibility
Users will be able to retrieve information regarding all accounts that are
linked to the Customer's primary CIS numbers. Users can access their accounts
via PC software.
Bill Payments
Users shall be able to pay any merchant currently on the M&I Home Banking System
and to add merchants to the system.
- - Users shall be able to schedule payments up to 364 days in the future.
- - Users shall be able to schedule bill payments to occur on a regular basis:
weekly, monthly, quarterly, semi-annually or annually.
- - Users shall be able to review, change, and cancel scheduled future or
recurring payments
Funds Transfer
- - Users shall be able to designate accounts on which they may perform transfers.
- - Users shall be able to transfer funds between any of Customer's accounts which
have been set up on M&I's Integrated Funds Management System (IFMS).
Transactions Summary
Users shall be able to obtain an interim statement that shall include all
account activity to date (up to 90 days), provided Customer sets up its "bank
control" features under the M&I Home Banking System to provide such account
activity.
Implementation and Project Management
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- - M&I will assign an Account Manager who will be responsible for deploying M&I
personnel for systems implementation.
- - Implementation shall be conducted by the parties pursuant to the terms of the
Implementation Guide and the Implementation Schedule together which describe
and establish milestone dates for all of the steps involved in setting up,
testing, and launching the agreed-upon services at Customer. It provides
guidelines to help Customer establish the M&I Direct PC Service features that
Customer will offer, provides points of contact at M&I, and such other
information as necessary for Customer to start the implementation process, and
provides a vehicle for Customer to provide to M&I the information M&I requires
to implement and support the M&I DirectPC Services.
Account Management Services
The Account Manager will be responsible for overseeing the systems
implementation process, Customer's pilot test, launch, and ongoing service
offering as set forth in the Implementation Guide and the Implementation
Schedule. The Account Manager will also be responsible for M&I's ongoing
relationship with Customer and serve as the primary point of contact for
Customer's product and senior management.
Training Services
M&I shall provide such training services for Customer employees at M&I's
facilities in Milwaukee, Wisconsin sufficient to enable such trainees to
administer for Customer the services provided by M&I and its approved
subcontractor hereunder, as well as to enable such trainees to train other
Customer employees in such administration. Customer shall reimburse M&I for all
reasonable travel and living expenses associated with such training, pursuant
to a mutually agreed to budget.
Diskette Production
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Pursuant to the terms of the Implementation Guide, M&I shall create
Customer-branded diskette labels and carriers for the software for the fees set
forth in Exhibit C.
MIS Reports
M&I shall provide usage reports monthly to Customer to assist Customer in
monitoring product performance and Service Levels.
Fulfillment Services
M&I shall perform fulfillment services for Customer for such fees as are set
forth in Exhibit C. These services shall include at a minimum:
- - Maintaining inventory of each of Customer's User Kit fulfillment materials
(including welcome letters, User terms and conditions, Customer branded
manuals, and software), which materials shall be updated by Customer from time
to time pursuant to the terms of the Implementation Guide.
- - Collating and packaging all User Kit materials
- - Mailing User Kit packages (postage paid for by M&I and reimbursed by Customer)
- - Creating and mailing secure passwords
- - Mailing additional material, such as replacement software if required, and
information updates requested by users or deemed appropriate by Customer, or
by M&I with Customer's reasonable approval.
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EXHIBIT B
TO
SCHEDULE 6.1
SERVICE LEVELS
1. Debit to User Account
Current Payment: Debit User DDA within 2 Business Days after the User
submits the request for payment (as predicated by the current ACH process).
Future and Recurring Payments: Debit User's DDA within 2 Business
Days after the payment date entered (User must set up the future and recurring
payment as at least 5 days prior to the actual due date).
2. Credit to vendor (payee) sent the next Business Day after the User
submits request for payment (as stated above for current, future and
recurring). Average length of time from User payment request and posting of
credit by payee is as follows:
Check: 5 business days (subject to U.S. Postal Service)
Electronic: 1 business day
3. User Kits sent no later than 5 Business Days after M&I or its
subcontractor receives User authorization information. Server will be updated
with user information by the day the User Kit is mailed.
4. File server will be available to Users with not less than 98% up
time.
5. 95% of all bill payment customer service calls will be answered
within one minute.
6. User service calls will be returned within one Business Day. M&I or
its subcontractor will use all reasonable efforts to resolve an issue within 3
Business Days. If any issue is reported orally, M&I or its subcontractor may
require that the User sends the complaint or question in writing within 10
Business Days. Results of investigation will be communicated within 10 Business
Days after M&I or its subcontractor hears from the User and M&I
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will correct errors promptly. If M&I needs more time, M&I may take up to 45
days to investigate the complaint or question. If M&I needs to do this, it will
recredit the User's DDA Account within 10 Business Days for the amount the User
believes is in error. If M&I asks the User to put the complaint or question in
writing and it does not receive it within 10 Business Days, M&I may not
recredit the DDA Account. If M&I determines there was no error, it will send a
written explanation within three Business Days after the investigation is
finished.
7. M&I or its subcontractor must hear from the User no later than 60 days
after they receive the FIRST statement on which the problem or error is
reported.
8. Technical support help-line hours:
24 hours 7 days/week
9. Technical support service levels:
- Average call queue time of less than 60 seconds
- Average call abandonment rate of less than 5%
- Average first call resolution rate of 75%
- Average initial call resolution rate 12 minutes
- One hour response time to voice messages (messages left after hours
will be returned the next Business Day)
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Late Charges And Penalty Guidelines
The parties agree the responsibility for paying any late charges and/or
penalties incurred due to a late payment to a vendor (payee) shall be as
follows:
<TABLE>
<CAPTION>
Responsibilities For
Paying Late
Reason For Late Payment Charges/Penalties
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
M&I CUSTOMER USER
Lost, Cannot Determine Reason X
Not Sent as Scheduled X
Sent to Wrong Location X
U.S. Mail Delay X
Delay by Merchant X
Failure of Customer to Maintain X
Database
Intervention by Customer X
Incorrect Entry by Customer X
Scheduled Incorrect Number of Days X
before Due Date
Scheduled Incorrectly X
Incorrect Account Information X
Supplied by User
</TABLE>
A late payment to a vendor (payee) is defined as a payment that has not arrived
at the vendor (payee) within the allowable number of days stated in the
Implementation Guide at the time the User scheduled the payment.
Late Charges
M&I or its subcontractor will reimburse any payee-imposed late fees, up to
$50.00, incurred by any User which is not waived or reversed by the payee,
provided the payment resulting in such a late fee was scheduled and initiated
by the User in accordance with approved payment timelines, as shown in M&I's
product literature and support materials, and furthermore if M&I is the
responsible party under the above-mentioned Guidelines.
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EXHIBIT C
TO
SCHEDULE 6.1
DIRECTPC/DIRECTBUSINESS
FEE SCHEDULE
Implementation Fees
* $40,000 Implementation Fee
* $ 10.00 New User Set Up Fee per User
Monthly Fees
* $ 5.00 per User Fee - includes 24x7 customer service
* $ .35 Per bill payment
Monthly Minimum Fee
* $2,000
Miscellaneous Fees
* $15.00 Return Item Fee - per occurrence (bill payment)
* $15.00 Stop Payment Fee - per stop payment request (bill payment)
* $ 6.25 Per transmission - batch files
* $ 2.00 Per User Kit - User kit fulfillment (optional)
* $ .08 Per minute - adjusted based on current carrier's published
fee schedule
Notes:
* Telecommunications fees are the responsibility of the Financial Institution
* Prices are subject to change on an annual basis per the terms stated in the
Outsourcing Agreement
* Customization and branding of diskettes is included in the above pricing
* Depositor logo bit map must meet the following standards:
* File Extension: *.bmp
* File Size: Not to exceed 48.OKB
* Bit Map Dimensions: Not to exceed 6" x 7"
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* Colors: Any
* Format PC (Mac version not supported)
If the above requirements are not met and M&I needs to make adjustments to the
bit map, the time involved will be billed to the Customer at M&I's then-current
standard rate.
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EXHIBIT D
to
SCHEDULE 6.1
DIRECTPC/DIRECTBUSINESS
USER LICENSE AGREEMENT
IF YOU OPEN THE USER KIT, YOU AGREE TO THESE TERMS AND CONDITIONS FOR THE
PRODUCT INCLUDED IN THE KIT.
The Product is licensed, not sold. M&I Data Services, a division of
Marshall & Ilsley Corporation ("M&I") grants you a year license for use of the
Product only in the United States of America. You obtain no rights other than
those granted to you under this Agreement.
"Product" means the original and all copies of it, including modified
copies or portions merged into other programs. M&I retains title to the Product
and M&I owns all copyrights in the Product. The user kit contains additional
documentation and information on the Product.
I. Grant Of License. M&I hereby grants you the license to:
- - Use the Product on only one machine at any one time,
- - Copy the Product for backup or archival purposes only, and
- - Transfer possession of the Product to another party.
If you transfer the Product, you must transfer a copy of this Agreement,
the user kit, and all documentation and at least one complete, unaltered copy of
the Product to the other party. At the same time, you must destroy all other
copies of the Product in your possession. At such time, your license will be
terminated and the other party agrees to the terms and conditions contained in
this Agreement in order to use the Product. You must also reproduce any
copyright notices on each copy of the Product.
This license expressly does not permit you to: use, copy, modify, merge, or
transfer copies of the Product except as provided in this Agreement;
- - Reverse assemble or reverse compile the Product; or
- - Sublicense, lease, rent or assign the Product to any other person or entity.
II. No Warranty.
This Product is provided to you in "AS IS" condition without any warranty
of any kind. If the media on which the Product is delivered to you is defective,
M&I will replace the media if the defective media is returned to M&I within ten
(10) days after receipt by you. This replacement obligation does not apply to
any media which is damaged, altered or abused.
THE FOREGOING MEDIA WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES OR
CONDITIONS, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY INTO FITNESS FOR A PARTICULAR PURPOSE.
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SCHEDULE 8.1
FEE SCHEDULE
Pricing Summary
A. Monthly Base Fee
<TABLE>
<CAPTION>
Account Volume Tiers Monthly Base Fee
<S> <C>
CIS Accounts 0 - 7,600 $8,000
Deposit Accounts 0-5,500
Loan Notes 0 - 1,500
General Ledger Accounts 0 - 500
* "Account Volume" is defined as the
aggregate of total open Deposit
Accounts, open Loan Notes, CIS and
General Ledger Accounts. Unless
otherwise stated, those services listed
on the Summary of Services, are included
in the monthly base fee for the duration
of the contract. A monthly fee adjustment
will be made for each account, within each
application over the initial volume shown
according to the following schedule:
</TABLE>
<TABLE>
<CAPTION>
Account Volume Tier 2 Monthly Base Plus Per Account
Fee Price/Per Month
<S> <C> <C>
CIS Accounts 7,601 and over $8,000 $ .026
Deposit Accounts 5,501 and over $ .57
Loan Notes 1,501 and over $ .86
General Ledger Accounts 501 and over $ .38
</TABLE>
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B. Estimate of Monthly Fees for Additional Items
Information Services
<TABLE>
<S> <C> <C>
- 1 Information Desktop Maintenance Fee $ 125
- 1 Asset Liability Download Fee $ 100
- 1 Call Report Download Fee $ 125
- CPU usage for this pricing has been $ 250
estimated at 2,500 seconds at the current
rate of $.10 per CPU second and is
controlled by bank usage. CPU seconds will
be invoiced at the then current standard
published price list.
- Data load of accounts into the warehouse $ 321
has been currently estimated at 11,450 at
the current rate of $0.028 and is subject
to growth. Additional volumes of accounts,
customers, sessions, etc. will be invoiced
at the then current standard published price
list for all records in excess of 11,450.
EFT Services
Network Administration Fee, Terminal Support $ 630
for 1 terminal, 500 Cardholders, 1,500
Transaction Switching/routing, 1,500 On-us
Positive Balance Authorizations, 10 Cards
Issued, 10 PINs
VISA Check Card
500 Cardholders, 2,790 Transactions $ 416
Authorized/Settled, 2 Lost/Stolen Cards
Reported, VISA Compliance Fees
Account Reconciliation
1 Account, 1,000 Items $ 45
Home Delivery Services
Voice Response (Shared Unit) - 3,000 $ 180
Transfers and Inquiries - $18 monthly
minimum
PC Banking - Direct PC and Direct Business $ 2,000
Monthly minimum months 6-84
CFI Laser Pro Interface
Monthly Maintenance Fee $ 100
Telecommunications
Connection and Maintenance Fee $ TBD
-------
Total Monthly Fee
Monthly Base Fee plus Additional Services $12,292
(excluding TBDs) =======
Branch Automation - See Branch Automation Agreement
</TABLE>
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C. Pricing Assumptions
- - Services and related costs included in the proposed business solution were
determined by business requirements expressed by, or volumes provided by,
Customer. M&I may revise its proposal depending upon the extent of required
changes in volumes, products or services.
- - All Variable Services are based on actual usage.
- - Customer's current core account volumes are as follows:
<TABLE>
<S> <C>
Deposit Accounts 0
Loan Notes 0
General Ledger Accounts 0
CIS Accounts 0
--------------------------------
Total Core Accounts 0
</TABLE>
- - The annual increase in the monthly processing fee will be calculated using
"CPIU all items urban index", adjusted each year and not to exceed 5% and
no less than 3%. The first annual increase will be one year from the
anniversary date of the conversion.
- - PC Banking - Direct PC and Direct monthly minimums will be billed as
follows:
<TABLE>
<S> <C>
Month 1 $200
Month 2 $400
Month 3 $600
Month 4 $800
Month 5 $1,000
Month 6-84 $2,000
</TABLE>
- - All other products and services not previously listed or identified
elsewhere in this proposal will be at M&I's then current standard published
price list.
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- Pricing for the Information Desktop product which includes InFormatter
and Report Edge includes 1 workstation at $1,300 per workstation.
Customer will receive 100 loan and 100 deposit InFormatter reports.
Estimated accounts loaded to the Data Warehouse is 11,450. CPU second
usage has been estimate and priced at 2,500 CPU seconds. Training will
include 2 InFormatter classes and 2 Report Edge classes and is charged at
$600 per class per person attending each class.
- The tiered pricing reflects discounted pricing proposed by M&I as
Customer grows to larger levels of usage.
- Interfaces that have been included are identified in Schedule 5.1
- It has been assumed that M&I will be providing a daily download file of
report information to a certified third party optical storage system.
- Customer will provide the training to all of the Customer Bank employees.
A core group of trainers from Customer will attend train-the-trainer
courses in Brown Deer, Wisconsin. An Education Services lead trainer will
assist the customer trainers in developing course material and consult on
the development of a training schedule.
- Customer and M&I will each dedicate a team to provide continuity in the
conversion process. This team will consist of an expert in Loans,
Deposits, General Ledger, Customer Information, and Branch Operations.
E. Summary Of One-Time Conversion Costs
The following is a summary of the cost to establish customer to M&I's
Systems. These estimates are based on the number of bank locations,
estimated account and transaction volumes, and third party time and
materials required to execute a successful start up.
Set-Up Programming And Product Support
Subtotal $ 65,000
Set-Up Cost Estimates
Telecommunications Equipment & Installation $ TBD
Set-Up Travel $ Billed at actual
Set-Up Education $ Included
EFT/VISA Check Card Start Up $ 8,900
1 ATM set up @ $200
EFT Processing set up - 1 institution @
$300, 1 cardbase @ $400
1 Network @ $4,000
VISA interface to M&I @ $1,500
VISA interface fee paid directly to VISA
$1,500
VISA product support @ $1,000
Shared Voice Response Unit Set Up Fee $ 15,000
CFI Laser Pro Interface Setup/Consulting Fee $ 3,000
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IPS Accounts Payable, Fixed Assets Software and General $ 8,550
Ledger Interface
PC Banking - Direct PC and Direct Business Set-up fee and $ 25,000
training for 1 user
- Information Desktop License (1 workstation) - $1,300 $ 6,700
- Introduction to InFormatter - 2 day class - 2 students -
$1,200
- Introduction to Report Edge - 2 day class - 2 students -
$1,200
- 2 days on-site Call Report Consulting (does not include
T&E) - $3,000
Subtotal excluding TBD's $132,150
Branch Automation - See Branch Automation Agreement
- - All out of pocket/pass through fees such as travel and third party fees are
Customer's responsibility.
- - Total one-time conversion costs, including travel, are to be paid in the
following manner: $25,000 due upon contract execution and the remaining due
upon the Commencement Date. If bank fails to open, Bay Cities Bank (I.O.),
will be responsible for all costs incurred by M&I Data Services in the start
up effort.
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SCHEDULE 9.1
PERFORMANCE STANDARDS
A. Batch Processing. M&I will initiate batch processing and have bank
operations reports available for transmission to Customer or make the processed
item and reports available, within five (5) hours on all processing days in a
calendar month [fifteen (15) hours at year-end] provided M&I receives all input
data from Customer at the Operations Center by 1:00 a.m. (local time of the
Operations Center). Performance Standard: M&I shall not miss the deliverable
identified above more than twice in any calendar month.
B. On-line Availability. M&I will ensure that its on-line computing
facilities are available for the processing of Customer's on-line transactions
at a minimum of ninety-seven point five percent (97.5%) of the time, as
prescribed by Customer, measured over a calendar month at the point of
departure from M&I's communications controller. The time prescribed by Customer
for each banking day for which on-line computing facilities shall be made
available for each product or service is set forth below. "Availability" for
purposes of this paragraph shall be expressed as a percentage for each calendar
month and shall be the number 100 less the ratio of (i) time period of
unscheduled outages over (ii) total time prescribed less the time period of
scheduled outages.
Service Availability
ATM(1)
Monday-Thursday 12:01 a.m. - 12:00 midnight
Friday 12:01 a.m. - 12:00 midnight
Saturday 12:01 a.m. - 12:00 midnight
Sunday 12:01 a.m. - 12:00 midnight
Cardbase Management System
Monday - Thursday 7:00 a.m. - 10:00 p.m.
Friday 7:00 a.m. - 10:00 p.m.
Saturday 7:00 a.m. - 10:00 p.m.
Sunday 7:00 a.m. - 10:00 p.m.
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CIS & Deposit System
Monday - Thursday 7:00 a.m. - 10:00 p.m.
Friday 7:00 a.m. - 10:00 p.m.
Saturday 7:00 a.m. - 10:00 p.m.
Sunday 7:00 a.m. - 10:00 p.m.
Loan System
Monday - Thursday 7:00 a.m. - 10:00 p.m.
Friday 7:00 a.m. - 10:00 p.m.
Saturday 7:00 a.m. - 10:00 p.m.
Sunday 7:00 a.m. - 10:00 p.m.
Information Desktop
Monday - Thursday 7:00 a.m. - 10:00 p.m.
Friday 7:00 a.m. - 10:00 p.m.
Saturday 7:00 a.m. - 10:00 p.m.
Sunday 7:00 a.m. - 10:00 p.m.
Teller System
Monday - Thursday 6:45 a.m. - 10:00 p.m.
Friday 6:45 a.m. - 10:00 p.m.
Saturday 6:45 a.m. - 10:00 p.m.
Sunday 6:45 a.m. - 10:00 p.m.
IRS Government Reporting System
Monday - Thursday 7:00 a.m. - 10:00 p.m.
Friday 7:00 a.m. - 10:00 p.m.
Saturday 7:00 a.m. - 10:00 p.m.
Sunday 7:00 a.m. - 10:00 p.m.
Account Analysis
Monday - Thursday 7:00 a.m. - 10:00 p.m.
Friday 7:00 a.m. - 10:00 p.m.
Saturday 7:00 a.m. - 10:00 p.m.
Sunday 7:00 a.m. - 10:00 p.m.
Safe Box
Monday - Thursday 7:00 a.m. - 10:00 p.m.
Friday 7:00 a.m. - 10:00 p.m.
Saturday - Sunday 7:00 a.m. - 10:00 p.m.
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<TABLE>
<S> <C> <C> <C>
VRU (Money Talks)(1)
Monday -- Thursday 12:01 a.m. -- 12:00 midnight
Friday 12:01 a.m. -- 12:00 midnight
Saturday 12:01 a.m. -- 12:00 midnight
Sunday 12:01 a.m. -- 12:00 midnight
Bank Control
Monday -- Thursday 7:00 a.m. -- 10:00 p.m.
Friday 7:00 a.m. -- 10:00 p.m.
Saturday 7:00 a.m. -- 10:00 p.m.
Sunday 7:00 a.m. -- 10:00 p.m.
Account Reconciliation
Monday -- Thursday 7:00 a.m. -- 6:45 p.m.
Friday 7:00 a.m. -- 9:30 p.m.
Saturday 7:00 a.m. -- 4:30 p.m.
Deposit Teller(1)
Monday -- Thursday 12:01 a.m. -- 12:00 midnight
Friday 12:01 a.m. -- 12:00 midnight
Saturday 12:01 a.m. -- 12:00 midnight
Sunday 12:01 a.m. -- 12:00 midnight
</TABLE>
- -------------------------
(1) M&I's objective is to provide 24 x 7 hour availability for these
systems. M&I does, however, need to perform regular technical maintenance
(e.g., NCP maintenance), CPU IPLs, DASD installs, IHS gens, etc.). This type of
maintenance is performed between 2:00 a.m. and 6:00 a.m., CST/CDT. These
activities may result in system downtime during this window.
C. Processing Time. M&I will process transactions in an average of 2.5
seconds for teller transactions (not to exceed six (6) seconds for five percent
(5%) of all transactions per month) and in an average of three point five (3.5)
seconds (not to exceed seven (7) seconds for five percent (5%) of all
transactions per month) for bank operations CRT transactions as measured over a
calendar month, from the time the transaction is sent by the Customer's
controller or gateway to the time the processed data is returned to the
Customer's controller or gateway. Should M&I not be able to perform in
accordance with the Performance Standards because Customer failed to acquire
network or equipment recommended by M&I, or such additional
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network or equipment as may be reasonably necessary based on the circumstances,
M&I shall notify Customer in writing and Customer shall either acquire such
network and/or equipment or accept the response time that is achieved.
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SCHEDULE 11.1
TERMINATION FEE
This Agreement may be terminated by (a) M&I pursuant to Section 11.2 of
this Agreement, or (b) by Customer for convenience upon at least six (6) months'
prior written notice to M&I; provided that in either case, Customer shall pay
M&I an early termination fee ("Termination Fee") in an amount equal to sixty
percent (60%) of the Estimated Remaining Value. Customer shall not deliver
notice of termination for convenience to M&I prior to expiration of the first
Contract Year. The Termination Fee shall apply to any early termination of this
Agreement (or termination by Customer of any Service included in the Initial
Services) other than termination of this Agreement by Customer pursuant to
Sections 11.2 or 11.3 of this Agreement. In the case of (b) above, fifty percent
of the Termination Fee shall be paid to M&I within thirty (30) days following
the date of Customer's notice and the remaining 50% shall be paid to M&I within
thirty (30) days prior to the Effective Date of Termination. In the case of (a)
above, the entire Termination Fee shall be paid at least sixty (60) days prior
to the Effective Date of Termination. In addition to the foregoing, Customer
shall pay to M&I any unamortized fees and all reasonable Expenses in connection
with the disposition of equipment, facilities and contracts related to M&I's
performance of the Services on behalf of Customer. The Termination Fee shall not
be subject to the limitations set forth in Section 13.4 of this Agreement.
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Exhibit 23.2
ACCOUNTANTS' CONSENT
Board of Directors
Florida Business BancGroup, Inc.
Tampa, Florida:
We consent to the use of our report dated September 29, 1998 relating to the
balance sheet as of June 30, 1998 and the related consolidated statements of
operations and cash flows for the period from May 18, 1998 (date of
incorporation) to June 30, 1998 and to the reference to our firm under the
caption "experts" in the Form SB-2 of Florida Business BancGroup, Inc.
/s/ Hacker, Johnson, Cohen & Grieb PA
- --------------------------------------
HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
December 17, 1998
