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As filed with the Securities and Exchange Commission on March 25, 1999
Registration Statement No. 333-
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COASTAL BHC, INC.
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(Name of Small Business Issuer in its Charter)
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FLORIDA 6712 65-0867286
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(State or other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction ) Classification Code Number Identification No.)
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255 PALM AVENUE
MIAMI BEACH, FLORIDA 33139
(305) 673-9442
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(Address and Telephone Number of Principal Executive Offices)
255 PALM AVENUE
MIAMI BEACH, FLORIDA 33139
(305) 673-9442
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(Address of Principal Place of Business or Intended Principal
Place of Business)
RICHARD J. BISCHOFF, ESQ.
GUNSTER, YOAKLEY, VALDES-FAULI & STEWART, P.A.
ONE BISCAYNE TOWER, TWO SOUTH BISCAYNE BLVD., SUITE 3400
MIAMI, FLORIDA 33131 - 1897
(305) 376-6016 PHONE (305) 376-6010 FACSIMILE
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(Name, Address, and Telephone Number of Agent for Service)
Copies to:
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Matthew W. Stevens, Esq. Robert J. Ahrenholz, Esq.
GUNSTER, YOAKLEY, VALDES-FAULI & STEWART, P.A. KUTAK ROCK
One Biscayne Tower, Two South Biscayne Blvd., Suite 3400 717 17 Street, Suite 2900
Miami, Florida 33131 Denver, Colorado 80202
(305) 376-6083 (303) 297-2400
(ATTORNEY FOR REGISTRANT) (ATTORNEY FOR MANAGING DEALER)
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Approximate date of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Each Class Amount Maximum Maximum Amount of
of Securities to be Offering Price Aggregate Registration
to be Registered Registered Per Unit Offering Price Fee
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Common Stock $.01 1,000,000 $10.00 $10,000,000 $2,780
Par Value Per Share Per Share
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Total 1,000,000 $10.00 $10,000,000 $2,780
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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, as amended, or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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COASTAL BHC, INC.
Cross Reference Sheet
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ITEMS OF FORM SB-2 PROSPECTUS CAPTION OR LOCATION
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PART I - INFORMATION REQUIRED IN
PROSPECTUS
1. Front of Registration Statement and Outside
Front Cover Page of Prospectus ...................... Facing Page of Registration
Statement; Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus........................................ Inside Front Cover Page;
AVAILABLE INFORMATION;
TABLE OF CONTENTS
3. Summary Information and Risk Factors ................ PROSPECTUS SUMMARY;
RISK FACTORS
4. Use of Proceeds ..................................... USE OF PROCEEDS
5. Determination of Offering Price...................... PLAN OF DISTRIBUTION
6. Dilution............................................. Not Applicable
7. Selling Security Holders............................. Not Applicable
8. Plan of Distribution................................. PLAN OF DISTRIBUTION; CERTAIN
TRANSACTIONS
9. Legal Proceedings.................................... Not Applicable
10. Directors, Executive Officers, Promoters and MANAGEMENT
Control Persons......................................
11. Security Ownership of Certain Beneficial MANAGEMENT
Owners and Management................................
12. Description of Securities............................ DESCRIPTION OF CAPITAL STOCK
13. Interest of Named Experts and Counsel................ Not Applicable
14. Disclosure of Commission Position On
Indemnification for Securities Act Liabilities....... DESCRIPTION OF CAPITAL STOCK -
- Certain Anti-takeover, Indemnification
and Limited Liability Provisions
15. Organization Within Last Five Years.................. CERTAIN TRANSACTIONS
16. Description of Business.............................. BUSINESS; SUPERVISION AND
REGULATION; AVAILABLE
INFORMATION
17. Management's Discussion and Analysis or
Plan of Operation.................................... MANAGEMENT'S DISCUSSION AND
ANALYSIS
18. Description of Property.............................. BUSINESS -- Bank Premises
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19. Certain Relationships and Related
Transactions ........................................ MANAGEMENT; CERTAIN
TRANSACTIONS
20. Market for Common Equity and Related
Stockholder Matters.................................. SHARES ELIGIBLE FOR FUTURE
SALE; PLAN OF DISTRIBUTION
21. Executive Compensation............................... MANAGEMENT -- Employment
Agreements; Incentive Stock Option
Plan
22. Financial Statements................................. FINANCIAL STATEMENTS
23. Changes in and Disagreements With
Accountants On Accounting and Financial
Disclosure........................................... Not Applicable
Part II - INFORMATION NOT REQUIRED IN Page II - 1
PROSPECTUS
24. Indemnification of Officers and Directors Page II - 1
25. Other Expenses of Issuance and Distribution Page II - 1
26. Recent Sales of Unregistered Securities Page II - 1
27. Exhibits Page II - 2
28. Undertakings Page II - 2
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SUBJECT TO COMPLETION, DATED MARCH 25, 1999
INITIAL PUBLIC OFFERING
PROSPECTUS
COASTAL BHC, INC.
COMMON STOCK
MINIMUM: 900,000 SHARES------ MAXIMUM: 1,000,000 SHARES
$10.00 PER SHARE
We are offering shares of our Common Stock to fund the start-up of a
new commercial bank named Coastal Community Bank. We will be the sole owner of
the Bank which will have its executive offices in Miami, Florida. The Bank will
offer a full range of commercial and consumer banking services.
PER SHARE MINIMUM MAXIMUM
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Price to Public $10.00 $9,000,000 $10,000,000
Maximum Offering Commissions $0.95 $855,000 $950,000
Proceeds to Company $9.05 $8,145,000 $9,050,000
Unless otherwise waived by the Company, shares of Common Stock will be sold only
in minimum lots of 250 shares ($2,500) and any one investor will be permitted to
purchase a maximum of 50,000 shares ($500,000). See "Plan of Distribution" for a
discussion of the factors considered in determining the initial offering price.
This is our initial public offering, and no public market currently exists for
our shares. The offering price may not reflect the market price of our shares
after the offering.
Proposed Trading Symbol: OTC Bulletin Board(R) - ______
The Common Stock offered by this Prospectus involves a high degree of risk. You
should purchase shares only if you can afford a complete loss. SEE "RISK
FACTORS" BEGINNING ON PAGE 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The shares of common stock offered hereby are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, any other
governmental agency or otherwise.
The information in this Prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell these securities and we are not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
COAST PARTNERS SECURITIES, INC.
__________, 1999
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AVAILABLE INFORMATION
We intend to give to our shareholders annual reports containing financial
statements audited and reported upon by our independent public accounting firm
and we intend to make available quarterly reports for the first three quarters
of each year containing unaudited interim financial information.
We have filed a Registration Statement, as amended, with the SEC under the
Securities Act with respect to the Common Stock offered hereby. As permitted by
the rules and regulations of the SEC, this Prospectus does not contain all the
information set forth in the Registration Statement and can be examined without
charge at the public reference facilities of the SEC located at Judiciary Plaza,
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at the Northeast
Regional Office of the Commission at 7 World Trade Center, Suite 1300, New York,
New York 10048; the Midwest Regional Office of the Commission, Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661; or at the Pacific
Regional Office of the Commission at 5670 Wilshire Blvd., 11th Floor, Los
Angeles, CA 90036, at prescribed rates. In addition, the SEC maintains a web
site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC, including the Company. We will provide, without charge and upon
request, a copy of the information that is incorporated by reference in the
Prospectus. The statements contained in this Prospectus as to the contents of
any contract or other document filed as an exhibit to the Registration Statement
summarize the provisions of such contract or other document which are deemed
material. However, such summaries are, of necessity, brief descriptions and are
not necessarily complete; each such statement is qualified by reference to such
contract or document.
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PROSPECTUS SUMMARY
THIS SUMMARY PROVIDES AN OVERVIEW OF CERTAIN INFORMATION CONTAINED
ELSEWHERE IN THIS PROSPECTUS AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT
YOU SHOULD COnSIDER OR THAT MAY BE IMPORTANT TO YoU. YOU SHOULD READ THE ENTIRE
PROSPECTUS CAREFULLY TO FULLY UNDERSTAND THE OFFERING. UNLESS THE CONTEXT
CLEARLY SUGGESTS OTHERWISE, REFERENCES IN THIS PROSPECTUS TO THE COMPANY INCLUDE
THE BANK. EXCEPT AS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS
ASSUMES THAT THE MINIMUM NUMBER OF SHARES IS SOLD.
THE COMPANY AND THE BANK
The Company was formed as a bank holding company and was organized on
October 6, 1998, as a Florida corporation. We will operate as a bank holding
company under the Federal Bank Holding Company Act of 1956, as amended, and will
own all of the common stock of the Bank. The Bank is organized as a Florida
state chartered commercial bank with depository accounts to be insured by the
Federal Deposit Insurance Corporation (the "FDIC") to the extent permitted by
law. We intend to offer a full range of commercial and consumer banking services
primarily in the communities of Miami-Dade County, Florida. We have filed or
will, at the appropriate time, file applications with the Florida Department of
Banking and Finance (the "FDBF"), the FDIC, and the Federal Reserve Bank of
Atlanta ("FRBA") and plan to start business in the second quarter of 1999. This
starting date depends upon timely approval of the applications and the
successful completion of this offering. We currently have our temporary offices
at 255 Palm Avenue, Miami Beach, Florida 33139. We will lease our main facility
and have signed an option to lease space for our operations. The Bank's address
will be 8700 North Kendall Drive, Miami, Florida. The Bank and the Company's
temporary phone number is (305) 673-9442.
OUR PLANS FOR THE BANK
We seek to create a customer-driven bank which provides high value to
clients by delivering products and services matched directly to their needs. We
believe that such a bank can attract clients who prefer to conduct business with
a locally-managed bank that takes an active interest in their business and
personal affairs.
We believe that the Bank will be able to generate competitively priced
loans and deposits with an experienced staff providing a specialized level of
personalized service. We anticipate that the staff will use current data
processing systems selected to deliver high-quality products and provide
responsive customer service. We anticipate that the Bank will enter into
agreements with other companies to provide customers with convenient electronic
access to their accounts and other bank products through debit cards, voice
response and home banking. Our use of these other companies should allow the
Bank to use current technology while minimizing the costs. We expect customers
to appreciate a "high touch-high tech" approach, which combines personal contact
with the latest high technology. We expect that customers will prefer this
approach to the depersonalized environment of the Bank's larger competitors. SEE
"Business - Business Strategy."
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THE BANK'S MARKET AREA
The Bank's primary market area for its banking services, known as the
"Primary Service Area" in bank regulatory terminology ("PSA") will be the
Kendall area of Miami, Florida. This area is covered by postal zip codes 33143,
33156, 33176, and 33173. It is bounded by Miller Road to the North, SW 104th
Street to the South, Biscayne Bay to the East, and SW 107th Avenue to the West.
The extended market area will comprise Miami-Dade County, Florida.
OUR BANKING LOCATION
We have entered into an option to lease commercial office space at 8700
North Kendall Drive, Miami, Florida in one of three buildings in the Lennar
Medical Center office complex. The building is located on the corner of 87th
Avenue and North Kendall Drive which is a busy intersection in an area of
medical offices and private homes.
We anticipate that the Bank will consist of approximately 4,000 square feet
of office space on the first floor of the building. The other occupants of the
building are physicians and other medical and dental service providers. We
expect to open for business in the second quarter of 1999.
MANAGEMENT
We have hired Hans C. Mueller to serve as Chairman, President, and Chief
Executive Officer of the Company and the Bank. Mr. Mueller has 25 years of
experience serving the banking industry both as an executive and as a service
professional. Mr. Mueller most recently served as President of PanAmerican Bank
from 1996 to 1998. PanAmerican Bank is a small community bank with less than
$100,000,000 in assets, located in Miami, Florida. Previously Mr. Mueller was
President of Trade National Bank in Miami, Florida.
We also expect to assemble an experienced senior management team and board
of directors who share a common vision and commitment to the success of the
Bank. Certain of the officers and directors of the Company and the Bank have
significant experience and familiarity with our primary service area, having
previously worked with banks serving the South Florida community.
The other directors are business people who have lived in the Miami-Dade
County area for many years or have otherwise had significant business interests
in the community or extensive banking experience. These directors have developed
a number of business and personal relationships in Miami-Dade County which they
believe will add to our success. The directors believe that their long standing
ties to the community, coupled with their combined business and banking
experience, give them insight into the area's needs and its desire for a new
independent bank under local control. They believe that the community will react
favorably to this new enterprise.
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DIVIDEND POLICY
We do not anticipate paying dividends on the Common Stock for the
immediately foreseeable future.
SUMMARY
Securities Offered A maximum of 1,000,000 shares of Common
Stock are being offered. A minimum of
900,000 shares are required to be sold in
this Offering.
Minimum Purchase 250 shares ($2,500)
Maximum Purchase 50,000 shares ($500,000)
Common Stock to be Minimum: 900,500 shares
outstanding after this Maximum: 1,000,500 shares
Offering
Use of proceeds We estimate that the net proceeds to us from
this Offering (assuming the minimum number
of shares is sold) will be $8,045,000 after
deducting the Managing Dealer's discounts
and fees and the estimated offering
expenses. Our Organizers have advanced
$650,000 to us to cover expenses of
organizing the Bank and to partially cover
the expense of this Offering and certain
pre-opening expenses of the Bank. Initially,
prior to approval by the bank regulatory
authorities, we will use part of the net
proceeds to repay with interest the funds
advanced by the Organizers. Additionally, we
will pay expenses to prepare the Bank for
opening, such as construction expenses and
expenses for furniture, fixtures and
equipment. We will invest the balance in
overnight repurchase agreements with
commercial banks secured by United States
Treasury and Agency securities.
Once the Bank obtains regulatory approval,
we will contribute $7.5 million of the net
proceeds, less the amount of the
organizational expenses, to the Bank to
capitalize the Bank by purchasing all of the
Bank's common stock to be issued. The Bank
will use approximately $116,500 to lease and
improve real estate for its main banking
facility site, approximately $250,000 for
the build-out of its main office, and
approximately $200,000 to purchase
furniture, fixtures and equipment and other
necessary assets for the Bank's operations.
We anticipate that the balance of the net
proceeds contributed to the Bank will be
used to fund investments
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in loans and securities and for the payment
of the operating expenses of the Bank.
We will invest the difference between the
net proceeds and the amount contributed to
the Bank (plus any net proceeds as a result
of the sale of more than the minimum number
of shares) in repurchase agreements with the
Bank secured by United States Treasury and
Agency securities. These funds will be held
as working capital for general corporate
purposes and to pay operating expenses as
well as for possible future capital
contributions to the Bank. SEE "Use of
Proceeds."
RISK FACTORS Purchasing securities is risky and you
should purchase our securities only if you
can afford a complete loss. You should read
the "Risk Factors" section before deciding
whether to invest in the Offering. SEE "Risk
Factors."
RISK FACTORS
THE COMMON STOCK IS A RISKY INVESTMENT. IT IS NOT A DEPOSIT OR AN ACCOUNT
INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY. THE FOLLOWING ARE SOME OF
THE POTENTIAL RISKS OF AN INVESTMENT IN THE COMMON STOCK AND YOU SHOULD READ
THEM CAREFULLY BEFORE PURCHASING SHARES OF COMMON STOCK. THE ORDER IN WHICH WE
HAVE LISTED THE RISKS DOES NOT INDICATE THE IMPORTANCE OF THE RISK. THERE MAY
ALsO BE OTHER RISKS THAT WE HAVE NOT DISCUSSED.
WE ARE A NEW BUSINESS WITH NO OPERATING HISTORY AND WE EXPECT SIGNIFICANT LOSSES
FOR AT LEAST TWO YEARS
We are a new business with no operating history. Our business is subject to
the same risks that all new businesses face. We have only recently formed the
Company and have only recently applied for the necessary regulatory approvals to
establish the Bank. Because we have not opened for business as of the date of
this prospectus, you do not have access to all of the information that is
available to the purchasers of securities of a financial institution with a
history of operations. This information may be important to you in assessing
your proposed investment. Our profitability will depend primarily upon the
Bank's operations and there is no assurance that the Bank will ever operate
profitably. Because of the substantial start-up costs that must be incurred by a
new bank, we expect to incur significant operating losses during our initial
years of operations.
WE NEED THE APPROVAL OF STATE AND FEDERAL BANK REGULATORS
This Offering does not depend on either preliminary or final regulatory
approval and investors will not be entitled to a return of their investment if
approval is inordinately delayed or not forthcoming. SEE "Risk Factors - You May
Lose Some of Your Investment" and "Return of Proceeds to Investors if the Bank
Does Not Open for Business." Preliminary approval is granted after the FDBF has
completed its review of the charter application and approved the
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plan to form a de novo bank as stated in the state application for authority to
establish a bank. Final approval is granted after the FDBF has completed its
investigation of the information in the application and has determined that the
Bank is ready to commence business. In addition to approval by the FDBF, the
Bank must receive approval from the FDIC in order to obtain deposit insurance
and approval from the FRBA for membership in the Federal Reserve System. We also
must receive approval from the FRBA to operate as a registered bank holding
company. Although we have applied or will at the appropriate time apply for all
regulatory approvals required to start business, no assurances can be given that
such required final approvals will be granted in a timely manner, if at all.
Preliminary approval by the FDBF may not have been obtained when the closing of
this Offering takes place. We believe that all regulatory approvals will be
obtained after a reasonable period, subject to the satisfaction of certain
conditions. These conditions may include, among other things, the following:
* We raise sufficient capital to invest not less that $7.5 million in the
capital of the Bank;
* We have made no major changes from the operating plan of the Bank
submitted to the FDBF with the application for FDBF Preliminary
Approval; and
* The FDBF receives acceptable background checks on Bank directors and
officers.
We propose to satisfy the Bank's capital requirements by using $7.5 million
of the proceeds from this Offering to purchase all of the capital stock of
the Bank. SEE "Use of Proceeds." While we currently anticipate receiving
bank and bank holding company approvals during the first quarter of 1999,
no assurance can be given that the regulatory authorities will grant these
approvals in a timely manner, if at all. If the regulatory approvals are
substantially delayed, the Company's accumulated deficit will continue to
increase. If the regulatory approvals are not obtained, the Company would
not be able to commence its banking activities. SEE "Risk Factors - We May
be Unable to Open for Business."
YOU MAY LOSE SOME OF YOUR INVESTMENT
If we satisfy the Offering conditions and issue the shares of Common Stock,
but final approval to commence banking operations is not granted within 18
months after the receipt of FDBF Preliminary Approval, or if we are unable to
commence business for some other reason, we will ask the shareholders to approve
the dissolution and liquidation of the Company. If this happens we will return
the shareholder's investment, less all expenses incurred by us, including the
expenses of the offering, the organizational and pre-opening expenses of the
Company and the Bank, and claims of creditors. If there is a dissolution and
liquidation following the issuance of shares of Common Stock, shareholders will
receive only a portion of their investment due to the foregoing expenses. These
expenses may be substantial and may represent a significant loss to investors if
the Bank does not open for business. Expenses and potential losses will increase
if Preliminary Approval and/or the opening of the Bank is delayed. SEE "Return
of Proceeds to Investors if Regulatory Approval is Denied."
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WE MAY BE UNABLE TO OPEN FOR BUSINESS
Although we expect to begin operations in the leased facility in the second
quarter of 1999, there can be no assurance as to when, if at all, this will
occur. Commencement of operations is dependent upon the following factors:
* Occupation of the premises - Although we have an option to lease office
space at our planned location the option is contingent upon the current
tenant leaving the office space. The current tenant intends to relocate
but is not obligated to do so and there can be no assurance that the
current tenant will leave in a timely manner, if at all. If the current
tenant decides to remain, it has told us that it is willing to sublease
office space to us but it is under no obligation to do so and there can
be no assurance that we would be able to enter into such a sublease
arrangement. Additionally, our ability to operate a bank at the planned
location is contingent on the approval of the Miami-Dade County
Planning and Zoning authorities after a required public hearing. There
can be no assurance that the authorities will grant approval.
* Permits for leasehold improvements - Before we undertake the leasehold
improvements and build-out needed to operate a bank, we must obtain
certain building permits and approvals of parking from the Miami-Dade
County Planning and Zoning authorities. Although we do not expect that
the building permit or the review of the parking facilities to meet
with opposition from the County, there can be no assurance that these
permits and approvals will be granted or, if granted, granted on a
timely basis.
* Regulatory approvals - We must receive regulatory approvals from the
FDBF, the FDIC and the FRBA before we can operate as a bank.
Additionally we must receive FRBA approval as a registered bank holding
company. There can be no assurance that any of the regulators will
grant such approvals in a timely fashion, if at all.
* Hiring of bank personnel - In order to operate, the bank must hire
experienced personnel to run the day to day operations of the Bank. The
Bank anticipates that in addition to Mr. Mueller, the Bank will require
a Senior Vice President in charge of lending, a Senior Vice President
in charge of operations, as well as three tellers, three back room and
accounting personnel, and one loan and other operations staff member.
There can be no assurance that the Bank will be able to hire a staff
sufficient to operate the Bank.
DELAYS IN STARTING BUSINESS WILL INCREASE OUR DEFICIT
As of December 31, 1998, our accumulated deficit was $195,574 and we will
continue to incur pre-opening expenses until the Bank opens. Any delay in
opening will increase pre-opening expenses and postpone our receipt of potential
revenues and income. Until we start operating at a profit, our accumulated
deficit will continue to increase (and book value per share decrease) as
operating expenses such as rent on the Bank's proposed premises, salaries and
other administrative expenses continue to be incurred.
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OUR COMPETITORS ARE LARGER AND MORE EXPERIENCED
We will face strong competition for deposits, loans and other financial
services from numerous Florida and out-of-state banks, thrifts, credit unions
and other financial institutions as well as other entities which provide
financial services. Some of the financial institutions and financial services
organizations with which we will compete, such as brokerage firms and credit
unions, are not regulated as heavily as the Bank.
As of December 31, 1998, approximately 12 branch bank offices are located
within the PSA. SEE "Business - General" and "Business -- Market Area." Many of
these financial institutions aggressively compete for business in the PSA. Most
of these competitors have been in business for many years and have established
customer bases. Most are also larger and have substantially higher lending
limits than the Bank. These competitors will be able to offer certain services,
including multiple branches and international banking services, that we can
offer only through corespondents, if at all. In addition, most of these entities
have greater capital resources than the Bank. This may allow them to offer
services at a lower cost to the customer and to provide larger credit facilities
than we could. SEE "Business - Market Area" and "Business - Competition."
Additionally, recently enacted federal and Florida legislation regarding
interstate branching and banking may act to increase competition in the future
from larger out-of-state banks. SEE "Supervision and Regulation - Interstate
Banking."
WE WILL NEED MORE CAPITAL OVER THE NEXT FOUR YEARS
We do not expect to need additional capital in the next 12 months to open
for business. However, we will likely need additional capital (beyond that which
will be provided by this Offering and any amounts likely to be generated by the
Bank's operations over the next four years) before we undertake any significant
acquisitions or other expansion of operations. There can be no assurance that
any funds necessary to finance such acquisitions or expansion will be available.
Regulatory capital requirements and borrowing restrictions may have the effect
of constraining future growth. To the extent that we rely upon the sale of
additional stock to finance future expansion, such sale could result in
significant dilution to the interests of investors purchasing shares in this
Offering.
WE ARE HEAVILY REGULATED BY THE GOVERNMENT AND AFFECTED BY MONETARY POLICY
We will be subject to extensive federal and state government supervision
and regulation. Existing federal and state banking laws will substantially limit
us with respect to loans, purchases of securities, payment of dividends and many
other aspects of its banking business. These laws may be changed and future
legislation or government policy may adversely affect the banking industry or
the operations of the Bank. Federal economic and monetary policy may affect our
ability to attract deposits, make loans and achieve satisfactory interest rate
spreads. SEE "Supervision and Regulation."
WE DEPEND ON HANS C. MUELLER AND HE WOULD BE DIFFICULT TO REPLACE
We are dependent upon the services of Hans C. Mueller, the Chairman of the
Board and Chief Executive Officer of the Company and the Bank. The loss of Mr.
Mueller could adversely
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affect the operations of the Company and the Bank. We have entered into an
employment agreement with Mr. Mueller in an effort to retain his services for an
extended period of time. Our board of directors has adopted a resolution to
obtain a policy of key person life insurance on Mr. Mueller to compensate the
Company for the possible loss of his services. SEE "Business - Employees" and
"Management."
LENDING IS RISKY AND WE ARE SUBJECT TO LENDING LIMITS
The risk that loans will not be repaid is inherent in commercial banking,
and if nonpayment occurs, our earnings and overall financial condition may
suffer and the value of the stock may decrease. We expect to focus on
small-to-medium sized businesses, which may result in a larger concentration by
the Bank of loans to such businesses. As a result, we may assume greater lending
risks than banks which tend to make loans to larger companies. We also expect to
offer short term adjustable rate mortgages with terms of from 3-5 years. The
principal and interest payments on these loans is not completely amortized over
the term of the loan but rather the loan is paid off with a large payment at the
end of the term. While the interest rate risk is low with this type of loan, the
large payment at the end of the term increases the repayment risk. We will
attempt to minimize our credit exposure by carefully monitoring the
concentration of our loans within specific industries and through prudent loan
application and approval procedures, but there can be no assurance that such
monitoring and procedures will reduce lending risks.
Based upon capitalization of $7.5 million, we will be subject to a limit of
15% of capital or $1,125,000 on unsecured loans that it may make to any one
borrower and 25% of capital or $1,875,000 on secured loans that it may make to
any one borrower. The board of directors will establish an "in-house" limit that
will be somewhat lower than our legal lending limit. The board may from time to
time raise or lower the "in-house" limit as it deems appropriate to comply with
safe and sound banking practices and respond to overall economic conditions.
Because of these limits, the size of the loans which we can offer to potential
customers is less than the size of loans that most of our competitors are able
to offer. Initially, this limit may adversely affect our ability to form
relationships with the area's larger businesses. We expect to accommodate loan
volumes larger than our lending limit by selling participations in such loans to
other banks. However, there can be no assurance that we will be successful in
attracting or maintaining customers seeking larger loans or that we will be able
to engage in the sale of participations in such loans on terms favorable to us.
The business economy of the Bank's PSA is largely represented by the health
care industry, including a major hospital, clinics and medical and dental
offices. We may have concentrations of credit extended to this industry group.
Adverse conditions in any one or more of the industries operating in the Bank's
PSA or a slowdown in general economic conditions could have an adverse effect on
us, including our ability to originate and collect loans. SEE "Business --
Market Area."
8
<PAGE> 15
OUR PROFITABILITY DEPENDS ON INTEREST RATES AND GENERAL ECONOMIC CONDITIONS
The profitability of financial institutions, including the Bank, may be
negatively affected by changes in economic conditions, including declines in
real estate market values, rapid changes in interest rates and monetary and
fiscal policies of the federal government. Our profitability is partially
dependent upon the spread between the interest rates earned on investments and
loans and the interest rates paid on deposits and other interest-bearing
liabilities.
In the early 1990's, many banking organizations experienced historically
broad interest rate spreads which increased profit margins. More recently,
interest rate spreads have generally narrowed due to changing market conditions
and competitive pricing pressure. There can be no assurance that broad and
profitable high interest rate spreads will return because market conditions and
pricing pressures may continue to narrow the interest rate spread.
Like most banking institutions, our net interest spread and margin will be
affected by general economic conditions and other factors that influence market
interest rates and our ability to respond to changes in such rates. At any given
time, our assets and liabilities will be affected differently by a given change
in interest rates. As a result, several variables could have a positive or
negative effect on the Bank's net income, capital and liquidity. These include:
* an increase or decrease in interest rates
* the length of loan terms
* the mix of adjustable and fixed rate loans in the Bank's portfolio
There can be no assurance that the positive trends or developments
discussed in this Prospectus will continue or that negative trends or
development will not have a material adverse effect on the Bank.
A DECLINE IN THE LOCAL ECONOMY COULD NEGATIVELY AFFECT US
Substantially all of our loans will be to businesses and individuals in the
Miami-Dade, Florida area and any decline in the economy of this area could have
an adverse impact on us. Although we do not plan to make any foreign loans or
investments, the economy of Miami and Miami Dade County is based in significant
part on international trade and investment and international tourism
particularly with respect to Latin America. The economies and governments of
Latin America have historically been, and continue to be, fragile and volatile.
Any economic downturn or political or economic crisis in the region as a whole,
or in a particular country important to the local market such as Brazil or
Venezuela, would have an adverse effect on the local economy and might
negatively affect the Bank. There can be no assurance that the recent economic
problems in Brazil and in other Latin American countries will be resolved or
that the region will enjoy a period of stable economic growth.
9
<PAGE> 16
WE WILL NEED TO STAY ABREAST OF TECHNOLOGICAL CHANGES TO BE COMPETITIVE
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. Our future
success will depend in part on our ability to address the varying needs of our
customers. We plan to use technology to provide products and services that will
satisfy customer demands for convenience as well as to create additional
efficiencies in our operations. Many of our competitors have substantially
greater resources to invest in technological improvements than we do. There can
be no assurance that we will be able to effectively implement new
technology-driven products and services or be successful in marketing such
products and services to its customers. SEE "Business - Business Strategy."
WE FACE RISKS RELATING TO YEAR 2000 COMPLIANCE
Year 2000 problems arise due to the fact that many computer programs use
only two digits to represent a year. When we enter the year 2000 computers may
interpret "00" as "1900" instead of "2000." As a result, many computers and
computer dependent systems may produce errors or cease to function all together.
We expect to obtain certification from our vendors and suppliers of computer
hardware and software that all of our systems will be Year 2000 compliant. The
Bank will also require representations and warranties from its borrowers of
their Year 2000 compliance. Further, bank regulatory agencies such as the FDIC
and the Federal Reserve have in place Year 2000 compliance programs to protect
the banking industry. There is no reliable forecast of the effect of the Year
2000 problem on the national and global economy or of what other related issues
may arise. There can be no assurance that the Bank's Year 2000 compliance
program will adequately address unforseen and/or large scale national or global
problems or that year 2000 problems will not have a material adverse effect on
the Bank. SEE "Business -- Year 2000."
ANTI-TAKEOVER PROVISIONS REDUCE THE LIKELIHOOD THAT YOU WILL RECEIVE A TAKEOVER
PREMIUM
Federal Banking law contains provisions that will make it more difficult
for anyone to acquire us without our Board of Directors' approval. SEE
"Supervision and Regulation."
Florida law also contains certain provisions which may have the effect of
deterring unsolicited attempts to acquire us. Further, our Articles of
Incorporation divide the Board of Directors into three classes with the term of
office of one class expiring each year. The Articles of Incorporation also
authorize the Board of Directors to issue shares of preferred stock, with such
rights as the directors may determine upon issuance. These provisions may have
the effect of delaying or preventing a change in control of the Company without
action by the shareholders. These provisions along with state and federal law
could make us less attractive to a potential acquirer or cause you to receive
less for your shares than otherwise might be available if there is a change in
control of the company. SEE "Description of Capital Stock - Certain
Anti-Takeover Provisions."
10
<PAGE> 17
WE HAVE NO PLANS TO PAY DIVIDENDS
We do not anticipate paying dividends on the Common Stock for the
immediately foreseeable future. We will likely be largely dependent upon
dividends paid by the Bank for funds to pay dividends on our Common Stock, if
and when such dividends are declared. The Bank does not anticipate paying
dividends during at least the first three years of operations. The ability of a
state bank to pay dividends is subject to its profitability and to government
regulations which limit the aggregate amount of cash dividends based on
then-current income levels. No assurance can be given that future earnings of
the Bank, and any resulting dividends to us, will be sufficient to permit the
legal payment of dividends to you at any time in the future. Even if we may
legally declare dividends, the amount and timing of such dividends will be at
the discretion of our Board of Directors. The board may in its sole discretion
decide not to declare dividends. For a more detailed discussion of other
regulatory limitations on our payment of cash dividends by. SEE "Dividend
Policy."
INDEMNIFICATION OF DIRECTORS AND OFFICERS MIGHT RESULT IN A CHARGE AGAINST
EARNINGS
Our Articles of Incorporation and Bylaws provide for the indemnification of
officers and directors and insulates officers and directors from liability for
certain breaches of the duty of care. Additionally, we have entered into
indemnification agreements with each of our directors. It is possible that the
indemnification obligations imposed under these provisions and agreements could
result in a charge against our earnings and thereby affect the availability of
funds for payment of dividends to you. SEE "Description of Capital Stock -
Indemnification and Limited Liability Provisions."
DETERMINATION OF OFFERING PRICE IS NOT BASED ON EARNINGS OR OPERATING HISTORY
The initial public offering price of $10.00 per share was determined by
negotiation between us and Coast Partners Securities, Inc. the Managing Dealer
of this Offering (the "Managing Dealer"). This price was arbitrarily determined
and is not based upon earnings or any history of operations and should not be
construed to indicate the present or anticipated future value of the Common
Stock. SEE "Plan of Distribution."
CONTROL BY MANAGEMENT COULD PREVENT AN ACQUISITION PREVENTING SHAREHOLDERS FROM
REALIZING A PREMIUM
Although the combined ownership and control over our Common Stock by our
officers and directors is likely to be less than 30% after this Offering, they
will be able to exert a significant measure of control over our affairs and
policies. Such control could be used, for example, to help prevent someone from
acquiring us. This might preclude shareholders from realizing any premium which
may be offered for our Common Stock by a potential acquirer. SEE "Principal
Shareholders."
AS A START-UP COMPANY WE EXPECT A LIMITED TRADING MARKET
Prior to this Offering, there has been no public trading market for our
Common Stock. The offering price of $10 per share has been determined by
negotiations between us and the
11
<PAGE> 18
Managing Dealer and may be greater than the market price for the Common Stock
following this Offering. We expect that the quotations for the Common Stock will
be reported on the OTC Bulletin Board under the symbol "_________." The Managing
Dealer has also advised us that, upon completion of this Offering, it intends to
act as a market maker in the Common Stock, subject to applicable laws and
regulatory requirements. Making a market in securities involves maintaining bid
and ask quotations and being able, as principal, to buy and sell the securities
in reasonable quantities at those quoted prices, subject to various securities
laws and other regulatory requirements.
The development of a public trading market depends, however, upon the
existence of willing buyers and sellers. Neither the Company, the Bank nor any
market maker can control this development. Even with a market maker, factors
such as the limited size of this Offering, the lack of earnings history and the
absence of a reasonable expectation of dividends within the near future mean
that there can be no assurance of the development of an active liquid market for
the Common Stock in the foreseeable future. Even if a market develops, there can
be no assurance that a market will continue, or that you will be able to sell
your shares at or above the offering price of $10 per share.
The Managing Dealer has no obligation to make a market in the Common Stock
and even if it begins to make a market, it may stop at any time. The potential
size of a secondary market for the Common Stock might, at least initially, be
limited to some extent by the requirement of a $2,500 minimum investment imposed
in this Offering. The minimum investment requirement may restrict the number of
shareholders and make subsequent trading of small numbers of shares less likely
even though this $2,500 minimum investment requirement will not apply to trading
subsequent to this Offering. You should carefully consider the potentially
illiquid and long-term nature of your investment in the shares being sold in
this Offering.
RECENT DEVELOPMENTS
Since December 31, 1998, the date of the Company's most recent audited
financial statements, the Company has continued to incur organizational and
offering expenses. As of December 31, 1998, the Company's accumulated deficit
was $195,574. Since December 31, 1998 the Company's accumulated deficit has
increased to approximately $230,000. The expenses incurred relate to salaries,
filing fees, supplies, and legal and other professional fees incurred in the
organization of the Bank, the regulatory application process and in connection
with this Offering. On March 10, 1999 the Company's organizers advanced and
additional $350,000 in the form of a loan under the same terms as the initial
advance of the $300,000 organizational expense fund. These funds will be used to
cover the costs associated with this Offering and certain pre-opening expenses
of the Bank.
TERMS OF THE OFFERING
The Company is offering hereunder up to 1,000,000 Shares of its Common
Stock for cash at a price of $10.00 per share. A minimum purchase of 250 shares
is required for each purchase hereunder. Individual investors, other than the
Organizers, may subscribe for up to a maximum of 50,000 shares in the Initial
Offering Period. The purchase price of $10.00 per
12
<PAGE> 19
share shall be paid in full upon the closing of the Offering. The Company will
offer the shares to the public for a period of 90 days, unless extended by the
Company in its sole discretion (the Offering Period).
The Offering conditions, which may not be waived, are as follows:
(a) Not less than $9,000,000 shall be raised during the Offering Period;
and
(b) The Company shall not have canceled this Offering prior to the closing
of the Offering.
If less than $9,000,000 is raised during the Offering Period, the Offering
will be canceled and all funds shall be returned to investors. If the minimum of
$9,000,000 is raised during the Offering Period but the Bank subsequently fails
to commence business, all remaining funds shall be returned to investors, after
having paid organizational and pre-opening expenses and the costs of the
Offering. SEE Risk Factors - "You May Lose Some of Your Investment" and "Return
of Proceeds to Investors if the Bank Does Not Open for Business." The Company
may cancel this Offering for any reason at any time prior to the closing of this
Offering.
NO ASSURANCE CAN BE GIVEN THAT FUNDS CAN OR WILL BE INVESTED AT THE HIGHEST
RATE OF RETURN AVAILABLE OR THAT ANY INCOME WILL BE REALIZED FROM THE INVESTMENT
OF FUNDS.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the maximum 1,000,000
shares of Common Stock offered hereby are estimated to be $9,050,000 after
deduction of the Managing Dealer's discounts and commissions and $8,959,000
after deducting the offering expenses which are expected to be approximately
$100,000. Such net proceeds have not been reduced by the amount of the Company's
organization and other operating expenses of the Bank and the Company which were
$195,574 as of December 31, 1998. The net proceeds of this Offering, less the
repayment of the $650,000 in advances for organizational, Offering and
pre-opening expenses, will be available for certain organizational and
pre-opening expenses of the Company and the Bank. Under the terms of the
Offering, it is possible that the Company could sell as few as 900,000 shares of
Common Stock. In such event, the minimum net proceeds to the Company would be
approximately $8,145,000 after deduction of the Managing Dealer's discounts and
commissions and $8,045,000 after deducting the offering expenses which are
expected to be approximately $100,000.
Upon receipt of regulatory approval, approximately $7.5 million of the net
proceeds of this Offering will be invested by the Company in shares of Common
Stock of the Bank to provide the Bank's initial capitalization. If regulatory
approval is not obtained, the net proceeds, less organizational and pre-opening
expenses of the Company and the Bank will be returned to investors. SEE Risk
Factors - "You May Lose Some of Your Investment" and "Return of Proceeds to
Investors if the Bank Does Not Open for Business." The Bank expects to use
approximately $550,000 of these funds to lease, improve, furnish and equip the
permanent premises in which the Bank will be located. It is currently
anticipated that the remaining amount
13
<PAGE> 20
will be used by the Bank to fund investments in loans and U.S. government and
agency securities, and for payment of operating expenses.
A total of approximately $650,000 has been advanced by an affiliate of one
of the Organizers to the Company to cover expenses of organizing the Bank and
certain Offering and pre-opening expenses. Under the terms of these advances,
the lender will receive repayment in full plus interest at a rate of prime plus
2%, on or about the closing of this Offering. SEE "Certain Transactions."
The balance of the net proceeds of a complete offering of 1,000,000 shares,
after capitalizing the Bank with $7.5 million, is estimated to be approximately
$1,550,000 ($645,000 if the minimum number of shares is sold). Such amount will
initially be invested by the Company in overnight repurchase agreements with
commercial banks secured by U.S. Treasury and Agency securities and otherwise
will be held by the Company as working capital for general corporate purposes as
well as for possible future capital contributions to the Bank to support asset
growth. Such uses by the Company, however, may be subject to change. The Company
believes that the net proceeds of the Offering will satisfy the Company's cash
requirements for at least the first 12-month period following the opening of the
Bank.
The Company's Organizers also have indicated their present intention to
purchase shares of Common Stock in this Offering. SEE "Principal Shareholders."
The following table sets forth a tabular presentation of the use of
proceeds to the Company alternatively on a minimum and a maximum basis:
SUMMARY TABLE OF USE OF PROCEEDS
================================================================================
A B
--- ---
MIN. MAX.
--- ---
Net Proceeds: $8,045,000 $8,950,000
========== ==========
1) Invested in Bank:
Organizational Expenses 300,000 300,000
Leasehold improvements 250,000 250,000
Furniture, Fixtures & Equip. 200,000 200,000
First year occupancy 100,000 100,000
Loans/Investments/working capital 6,650,000 6,650,000
Total Invested in Bank 7,500,000 7,500,000
---------- ----------
2) Remaining in Company:
Working Capital -post investment 545,000 1,450,000
---------- ----------
Total Net Proceeds $8,045,000 $8,950,000
========== ==========
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<PAGE> 21
RETURN OF PROCEEDS TO INVESTORS IF THE BANK DOES NOT OPEN FOR BUSINESS
We expect to open for business upon receipt of final approval from the FDBF
which we expect to be granted after the FDBF completes its investigation
subsequent to granting preliminary approval on the basis of our application.
Additionally we will need the approval of the FDIC and the FRBA before we will
be able to commence operations. There can be no assurance that the FDBF will
grant either preliminary or final approval or that the approvals of the FDIC or
of the FRBA will be granted. After receipt of preliminary approval, we expect to
complete the build-out of the banking premises in order to be ready to open for
business. There can be no assurance that the build-out will be successfully
completed. If final approval is not granted in a timely manner or if the opening
of the Bank is delayed for other reasons, we expect to make a decision, no later
than 18 months after the receipt of preliminary approval, whether we should
continue in our efforts to establish the Bank. If the Board determines that
continued efforts would be futile, we will ask the shareholders to approve the
dissolution and liquidation of the Company. If this happens we will return
shareholders' investments, less all expenses incurred by us up to that point
including the expenses of the Offering, the organizational and pre-opening
expenses of both the Company and the Bank, and any claims of creditors. After
the Offering and before the Bank receives final approvals from the FDBF and the
FDIC to commence banking operations, the proceeds from this Offering will be
available for organizational and pre-opening expenses of the Company and the
Bank and for the offering expenses. As a result, if we liquidate, investors in
this Offering would receive a return of only a portion of their investment due
to the foregoing expenses and would suffer a significant loss.
We expect to obtain Preliminary Approval on or about April 1, 1999 but
there is no assurance that we will receive such approval at that time or at all.
As of this date the accumulated organizational expenses of the bank are
estimated to be approximately $300,000 This amount includes monies spent for
deposits, salaries, insurance, accounting and legal fees, regulatory filing fees
and other organizational expenses.
We expect that the Managing Dealer's discounts and commissions will be
within a range of between $800,000 to 900,000. The total could be as much as
$950,000 if 1,000,000 shares are sold and if none of these shares is sold to
investors identified by the Company.
In addition, we expect that the offering expenses and expenses incurred in
organizing the Company will total approximately $150,000. These expenses include
legal and accounting fees, financial printing costs, filing fees, and other
expenses associated with the Offering and the initial operations of the Company.
In the period between the time that we obtain Preliminary Approval and the
time when Bank opens for business, we expect to incur pre-opening expenses of
approximately $550,000. These expenses include the expenses for interior
build-out including architect's and design fees, construction costs and
furniture, fixtures and equipment, the cost of the Bank's data processing
system, and the installation of a LAN computer system, rental expense, salaries,
additional legal fees, and other expenses required to allow the Bank to open for
business and operate.
15
<PAGE> 22
If the Bank were unable to obtain final approval or were unable to commence
operations for any other reason, we expect that the approximate total amount
that would be at risk and that would not be returned to investors if the Bank
failed to open would be $1,800,000 or approximately 18% of an expected
investment of $10,000,000. It is possible that the loss to investors could
exceed this estimate.
DIVIDEND POLICY
The Company initially expects that all Company and Bank earnings, if any, will
be retained to finance the growth of the Company and the Bank and that no cash
dividends will be paid for the foreseeable future. If and when dividends are
declared, the Company will probably be largely dependent upon dividends paid by
the Bank for funds to pay dividends on the Common Stock. It is also possible,
however, that the Company will pay dividends in the future generated from
investment income and other activities of the Company. Under Federal regulation,
the Bank will be restricted as to the maximum amount of dividends it may pay on
its common stock. Moreover, the approval of the FDBF is required for the payment
of any dividend if the aggregate amount of all dividends paid by the Bank during
such calendar year would exceed the sum of:
(i) the total net profits of the Bank for that year; and
(ii) the retained net profits of the Bank for the previous two years less
any amounts required to be transferred to surplus.
The FDBF and the FDIC are also authorized under certain circumstances to
prohibit the payment of dividends by the Bank. Under federal law and Federal
Reserve policy, a bank holding company is required to serve as a source of
financial strength to its subsidiary bank and to commit resources to support the
bank. The Federal Reserve has stated that, as a matter of prudent banking, a
bank holding company generally should not pay cash dividends unless the
available net income of the bank holding company is sufficient to fully fund the
dividends, and the prospective rate of earnings retention appears to be
consistent with the company's needs, asset quality and overall financial
condition. For additional information regarding restrictions on payment of
dividends, SEE "Supervision and Regulation - Dividends."
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1998, and as adjusted to reflect the sale of the shares of Common
Stock offered hereby (assuming the maximum number of shares is sold):
16
<PAGE> 23
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------------------
ACTUAL(1) AS ADJUSTED(1)
---------- -------------
<S> <C> <C>
STOCKHOLDERS' EQUITY:
Common Stock; $.01 par value, 10,000,000 shares
authorized; 500 shares issued and outstanding
(1,000,000 shares as adjusted) 5 10,005
Preferred Stock/ $.01 par; 2,000,000
shares authorized; no shares issued or
outstanding -none- -none-
Additional paid-in capital 4,995 9,994,995
Accumulated deficit(2) (195,574) (1,113,000)
-------- ---------
Total stockholders' equity ($190,574) $8,892,000
======== ==========
</TABLE>
(1) Does not include 200,000 shares of Common Stock issuable upon exercise of
outstanding options under the Company's incentive stock option plan and
200,000 shares of Common Stock issuable under certain warrants granted to
the Company's Organizers. SEE "Management - Incentive Stock Option Plan"
and "Management - Organizers' Warrants."
(2) The accumulated deficit as of December 31, 1998, is comprised primarily of
aggregate organizational expenses related to legal and other professional
fees, salaries, filing fees and other costs and expenses incurred in the
regulatory application process and in the creation of the holding company.
The accumulated deficit will continue to increase prior to the start of the
Bank's operations, and will then increase further as the Bank incurs
expected initial operating losses. The Bank will hire additional employees
prior to opening and then will incur further salary expenses and training
costs. The Bank will also incur additional professional fees in connection
with this Offering and other corporate matters.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The Company is still in a development stage and will remain in that stage
until the offering of the Company's Common Stock is completed and the bank
starts operating. The Company has funded its start-up and organization costs
through $650,000 in advances from the Organizers to the Company. Under the terms
of these advances, the Organizers will receive repayment in full plus interest
on or about the closing of this Offering. The net proceeds of the Offering will
be segregated until the Bank receives final approvals from the FDBF and the FDIC
to begin banking operations, but will be available for certain organizational
and pre-opening expenses of the Company and the Bank. The Company believes that
the remaining net
17
<PAGE> 24
proceeds of the Offering will satisfy the Company's cash requirements for at
least the first 12-month period following the opening of the Bank. Accordingly,
the company does not anticipate that it will be necessary to raise additional
funds for the operation of the Company and the Bank over the next 12 months. For
additional information about material expenditures during this period, SEE "Use
of Proceeds." For information about the increase in Company employees following
the opening of the Bank, SEE "Business-Employees." For additional information
about the plan of operations for the Company and the Bank, SEE "Business" and
"Management." For a discussion of Year 2000 issues, SEE "Risk Factors-Year 2000
Compliance" and "Business- Year 2000."
BUSINESS
GENERAL
The Company was incorporated under the laws of the State of Florida on
October 6, 1998 under the name Coastal BHC, Inc. The company was formed to own
all of the common stock of the Bank and to engage in the business of a bank
holding company under the Federal Bank Holding Company Act of 1956, as amended
(the "BHC Act"). The Bank is organizing as a Federal Reserve member Florida
state chartered commercial bank with depository accounts to be insured by the
FDIC to the extent permitted by law. The Bank intends to offer a full range of
commercial and consumer banking services primarily within the Bank's designated
PSA. The PSA includes the Kendall area of Miami, Florida comprising the area
covered by postal zip codes 33143, 33156, 33176, and 33173 and generally
described as the area bounded by Miller Road to the North, SW 104th Street to
the South, Biscayne Bay to the East, and SW 107th Avenue to the West.
The Company and the Bank have applied or will, at the appropriate time,
apply for all necessary regulatory approvals. Assuming that the Bank and the
Company receive the regulatory approvals and successfully complete this
Offering, the Company and the Bank anticipate starting business in the second
quarter of 1999 at 8700 North Kendall Drive, Miami, Florida. The bank expects to
receive FDBF preliminary approval on or about April 1, 1999. This date is only
an estimate and is subject to many factors inherent in the regulatory approval
process. The Bank intends to open for business as soon as reasonably possible
upon completion of the Offering and the satisfaction of any conditions imposed
by the regulatory authorities. Preliminary approval is granted after the FDBF
has completed its review of the charter application and approved the plan to
form a de novo bank as stated in the application. Final approval is granted
after the FDBF has completed its investigation with respect to the information
contained in the application and has determined that the Bank is ready to
commence business. In addition to approval by the FDBF, the Bank must receive
approval from the FDIC in order to obtain deposit insurance and approval from
the FRBA for membership in the Federal Reserve System. The Company also must
receive approval from the FRBA to operate as a registered bank holding company.
SEE "Risk Factors - Governmental Regulation and Monetary Policy." The Company
currently maintains its offices at 255 Palm Avenue, Miami Beach, Florida 33139.
The Company's telephone number is (305) 673-9442.
18
<PAGE> 25
BACKGROUND
Recent changes in Federal and State of Florida interstate banking laws have
allowed interstate banking and branching to take place much more extensively
than was formerly possible. This has led to substantial consolidation of the
banking industry in Florida and the Southeast Florida area. Since the early
1980's, large regional bank holding companies have acquired a substantial number
of the area's locally owned or locally managed financial institutions. Members
of the Board, many of whom have been participants or observers of the local
banking scene for many years, have noticed the need for a locally owned, highly
service-oriented banking organization to fill a void created by this
consolidation in the banking industry. Specifically, the Board believes that the
area could greatly benefit from a financial institution whose focus would be to
serve the business and personal banking needs of local entrepreneurs and local
business owners. The Board also believes that this niche is currently being
under-served by other banks.
In the opinion of the Company's management and Board, this situation has
created a favorable opportunity for a new commercial bank with headquarters in
the Miami-Dade area. Management of the Company believes that such a bank can
attract those customers who prefer to conduct business with a locally-managed
institution that demonstrates an active interest in their businesses and
personal financial affairs. The Company believes that a locally managed
institution will be better able to deliver more timely responses to customer
requests, provide customized financial products or services which address
out-of-the-ordinary matters and offer the personal attention of senior banking
officers. The Bank will seek to take advantage of this opportunity by
emphasizing in its marketing plan the Bank's local management and the Bank's
ties and commitment to the local community.
The Company and the Bank to date have conducted no business other than
organizational matters, including negotiations with additional prospective
executive officers. When this Offering is complete and before the start of
operations, the Bank intends to occupy and furnish its office, hire and train
staff, purchase or lease and install equipment necessary to transact business,
establish correspondent banking relationships and make other arrangements for
necessary services.
BUSINESS STRATEGY
In addition, the Company intends to hire two additional experienced
individuals to serve as Senior Vice Presidents of the Bank. One Vice President
will serve as the Bank's Senior Lending Officer and the second Senior Vice
President will serve as the Bank's Senior Operations Officer. The Senior Lending
Officer will be an individual with experience in that capacity within the Bank's
market area while the Senior Operations Officer will have bank operations
experience with community banks in the Miami-Dade Florida area.
The Bank plans to encourage its employees to be active in the civic,
charitable and social organizations in the local communities. Most of the
Company's directors currently hold, and have held in the past, leadership
positions in a number of community organizations, and intend
19
<PAGE> 26
to continue this active involvement in future years. Other members of the
management team will also be encouraged to volunteer for such positions.
The Company's goal is to create a "customer-driven" organization focused on
providing high value to customers by promptly delivering products and services
matched directly to their needs. The Bank will strive to establish a high
standard of quality in each service it provides and the employees of the Bank
will be expected to emphasize service in their dealings with customers. Because
the Bank intends to begin operations with a staff of fewer than 15 full time
employees, these employees will need to be flexible in the duties they perform
in an effort to satisfy customers. However, management believes that the use of
current technology will permit each employee to devote more time and attention
to personal service, respond more quickly to a customer's requests and deliver
services in the most timely manner possible. Management expects this "high
touch-high tech" manner of operations to be appealing to customers.
When it opens, the Bank plans to undertake a marketing campaign using an
officer calling program and community-based promotions. The campaign will
emphasize the Bank's independence, local management and special focus on
customer service. All employees will be expected to actively market the Bank's
services.
The Bank will be subject to a lending limit of 15% of capital or $1,125,000
on unsecured loans that it may make to any one borrower and 25% of capital or
$1,875,000 on secured loans that it may make to any one borrower. The Board of
Directors will establish an "in-house" limit that will be somewhat lower than
the Bank's legal lending limit. The Board may periodically raise or lower the
"in-house" limit as it sees fit to comply with safe and sound banking practices
and respond to overall economic conditions. Initially, this limit will affect
the ability of the Bank to seek relationships with the area's larger businesses.
However, in light of senior management's previous experience and the
relationships with a number of the region's other financial institutions, the
Bank may originate loan volumes in excess of its lending limit and sell
participations in such loans to other banks. Likewise, it is quite possible that
the Bank will purchase participations from other area institutions. SEE "Risk
Factors - Lending is Risky and We are Subject to Lending Limits."
PRODUCTS AND SERVICES
The Bank's hours of operation will initially be 8:00 a.m. to 4:00 p.m.,
Monday through Thursday and from 8:00 a.m. to 6:00 p.m. on Friday. In addition,
the Bank's employees will be available to customers wishing to make appointments
outside traditional banking hours, either at the Bank or at the customers' homes
or businesses. By providing "appointment banking," the Bank intends to
demonstrate its high level of responsiveness and service to its customers.
The Bank intends to offer a range of deposit services, including checking
accounts, NOW accounts, savings accounts and time deposits of various types. The
transaction accounts and time certificates will be tailored to the principal
market area at rates competitive with those offered in the area. All deposit
accounts will be insured by the FDIC up to the maximum amount permitted by law.
The Bank intends to solicit these accounts from individuals,
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businesses, associations, organizations, financial institutions and government
authorities. It does not intend to accept brokered deposits. The Bank may also
use alternative funding sources as needed, including advances from Federal Home
Loan Banks, conduit financing and the packaging of loans for securitization and
sale.
The Bank will offer a range of short to intermediate term personal and
commercial loans. The Bank intends to make personal loans directly to
individuals for various purposes, including purchases of automobiles, mobile
homes, boats and other recreational vehicles, home improvements, education and
personal investments. The Bank plans to retain substantially all of these loans.
The Bank intends initially to offer only balloon payment and adjustable rate
mortgages. It does not anticipate offering long-term fixed rate mortgage
products, except through an arrangement with outside providers. The Bank expects
that any fixed rate residential mortgage loans it generates will be sold to
third party investors, although the Bank may continue to service some of the
loans for a fee. The Bank plans to make commercial loans primarily to small and
mid-sized businesses. These loans will be both secured and unsecured and will be
available for general operating purposes, acquisition of fixed assets, including
real estate, purchases of equipment and machinery, financing of inventory and
accounts receivable as well as any other purpose considered appropriate.
The Bank currently plans to offer other services, including credit cards,
money orders, traveler's checks, automated teller services with access to one or
more regional or national automated teller networks and safe deposit services.
Although the Bank has been involved in discussions with a number of vendors
regarding the provision of such services, the Bank does not expect to make final
decisions about the service providers until approximately 60 days before it
opens for business. The Bank also intends to establish relationships with
correspondent banks and other financial institutions to provide other services
for its clients. This may include requesting correspondent banks to participate
in loans where the loan amount exceeds the Bank's policies or legal lending
limit.
Many of the data processing services, including on-line teller service,
will be purchased on a contract basis, reducing the number of persons otherwise
required to handle the operations of the Bank. The Bank is in the process of
discussing arrangements with potential data processing companies.
ASSET/LIABILITY MANAGEMENT
Company and the Bank plan to manage assets and liabilities to provide a
satisfactory, consistent level of profitability within the framework of
established cash, loan, investment, borrowing and capital policies. Certain of
the officers of the Bank will be responsible for monitoring the policies and
procedures to insure an acceptable asset/liability mix, and to provide stability
and leverage of all sources of funds while adhering to prudent banking
practices. It also will be the overall philosophy of management to support asset
growth primarily through the growth of 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 its assets in commercial,
consumer and real estate loans. Bank management also will view the Bank's
investment portfolio as a source of liquidity and as a means to balance its
asset/liability mix. The Bank will invest primarily in obligations of the United
States or
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obligations guaranteed as to principal and interest by the Unites States, or
other taxable securities and in certain obligations of states and
municipalities. The Bank also will enter into Federal Funds transactions with
its principal correspondent banks, which represent a short term (generally
overnight) loan from one bank to another, to balance its liquidity needs.
The Bank intends to monitor its asset/liability mix on a daily basis and to
prepare a monthly report reflecting interest-sensitive assets and
interest-sensitive liabilities to be presented to the Bank's Asset and Liability
Management committee. The objective of this policy will be to manage liquidity
and control interest-sensitive assets and liabilities to minimize the impact of
substantial movements in interest rates on the Bank's earnings.
MARKET AREA
The population of Miami-Dade County is currently 2.06 million residents of
whom more than 1 million reside in unincorporated Miami-Dade County with the
balance living in its 29 municipalities. The city of Miami is the largest
municipality with 400,000 residents. Miami-Dade County is part of one of the
fastest growing areas in the country and as the gateway to Latin America and the
Caribbean it is a center for international trade and commerce and tourism. The
population of the County increased from 1990 to 1997 by 6.9%. The largest
industries in Miami-Dade County are tourism, international trade, banking and
finance, film and television, agriculture and manufacturing.
Millions of tourists pass through Miami International Airport each year and
the Port of Miami is the busiest passenger cruise port in the world. The Miami
Free Trade Zone is the first and largest privately owned and operated free trade
zone in the world. Exports processed through U.S. Customs in Miami totaled $12.7
billion in 1997, an increase from 9.2 billion in 1994. Miami-Dade County is a
world financial center with 135 financial institutions and agencies located
here. Film and television production in Miami-Dade County totaled more that $200
million in 1997. In addition, there are nearly 3,000 manufacturing companies
employing approximately 80,000 employees.
The Bank anticipates that the PSA for its services will be the Kendall area
of Miami, Florida which is located in a well established Southeastern portion of
Miami-Dade County. The PSA will comprise the area covered by postal zip codes
33143, 33156, 33176, and 33173 and generally described as the area bounded by
Miller Road to the North, SW 104th Street to the South, Biscayne Bay to the
East, and SW 107th Avenue to the West.
The vast majority of the area consists of residential neighborhoods that
contain single family detached homes with a small number of condominium and
rental apartments. Prices of residences in the PSA range from $225,000 to
$2,500,000. The PSA also contains a low income minority area that consists of
single family homes and rental apartments. Residences in this area range in
value from $65,000 to $125,000.
The PSA also contains various major retail shopping malls and strip
shopping centers. In the central portion of the PSA is located the second
largest retail mall in the State of Florida, Dadeland Mall. Approximately three
miles north, located at Sunset Drive and US 1, there will
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soon open a new mall which will be known as the Shops of Sunset. From the
Northern boundary of the PSA to the Southern boundary of the PSA along US-1 are
situated a high density of retail and commercial enterprises that provide goods
and services to the surrounding residential areas of the PSA.
The PSA also contains three hospitals, Baptist Hospital, South Miami
Hospital and Larkin Hospital. These health care facilities are surrounded by
professional offices that house the health care professionals and their staffs
that serve the hospitals and the community. Baptist Hospital is the largest "not
for profit" hospital in South Florida and is affiliated to South Miami Hospital
which is the fourth largest "not for profit" hospital in South Florida.
Management believes that this diverse growing commercial base provides potential
for business banking services, together with personal banking services for
owners and employees of these enterprises.
The area immediately surrounding the proposed location of the Bank (1.5
mile radius) does not presently contain any type of financial institution
serving the needs of the immediate area. Yet within the same 1.5 mile radius
there are over 800 medical offices and Baptist Hospital. The hospital presently
employs over 2,500 full time staff members and has over 2,500 visitors daily.
The doctors, medical staffs, patients and visitors to the area primarily reside
in the PSA and the areas immediately beyond the boundaries of the PSA. Although
we know of no other bank which plans to establish an office within this 1.5 mile
radius, another bank could be established, subject to regulatory approvals,
within the immediately surrounding 1.5 mile radius and there can be no assurance
that a competing bank will not be established in this area at some time in the
future.
COMPETITION
The Bank's intended market area is highly competitive. There are currently
11 banks and thrifts with 12 offices in the PSA. The Bank will also face
competition from finance companies, insurance companies, mortgage companies,
securities brokerage firms, money market funds, loan production offices and
other providers of financial services. Most of the Bank's competitors have been
in business for many years and have established customer bases. Most are
substantially larger and have substantially larger lending limits than the Bank.
Because of this, the Bank's competitors can offer certain services, including
multiple branches and international banking services, that the Bank will be able
to offer only through correspondent banks, if at all. This may allow them to
offer services at a lower cost to the customer and to provide larger credit
facilities than could the Bank. First Union National Bank, one of the largest
banks in the United States operates a branch approximately 1.5 miles to the east
of the Bank's proposed location. Large regional banks with branches in the PSA
include Sun Trust, Colonial Bank, Union Planters National Bank and Republic
National Bank each of which is a multi-billion dollar bank. All of the banks
within the PSA have operations at more than one location. The proposed Bank will
have only one location when it commences business and this may put the Bank at a
competitive disadvantage with respect to banks with several branches either
locally or regionally. The Company anticipates that the Bank's legal lending
limit of approximately $1,250,000 for unsecured loans to one borrower and
$1,875,000 for secured loans to one borrower will be adequate to satisfy the
credit needs of most of its clients and that the needs of
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its clients in excess of this amount will be met through loan participation
arrangements with correspondent banks and others.
BANK PREMISES
The Company has executed an option to lease its premises at 8700 North
Kendall Drive, Miami, Florida. The option is contingent upon the current tenant
terminating its lease and vacating the premises. Although the current tenant has
indicated that it intends to terminate the lease, it is not obligated to do so.
SEE "Risk Factors -- We May be Unable to Open for Business." The terms of the
lease provide for the lease of 4,000 square feet of space for five years at
$100,000 per year payable monthly at $ 8,333 plus applicable taxes with an
option to renew for five additional years at the then prevailing market rate.
The lease provides for a security deposit of $ 16,666, fixed minimum rent
increases based on the Consumer Price Index, tenant participation in operating
expenses estimated to be $90.00 per month and tenant participation in real
estate taxes based upon the tenant's pro rata share of the amount that such
taxes exceed the real estate taxes for the base tax year of 1998. The banking
facility will include a conference room. The facility will have 3 inside teller
stations and 2 customer service platform stations.
It is anticipated that the estimated cost of improvements and furnishings
will total approximately $450,000 with build-out costs totaling approximately
$250,000 and total costs for equipment and furnishings for the leased premises
totaling approximately $200,000. The Company has not entered into any agreement
with respect to the foregoing expenditures and, accordingly, the amounts
actually incurred by the Company may exceed these estimates.
EMPLOYEES
The Bank intends to open for business with a staff of approximately 10
full-time equivalent employees who will consists of three officers, three
tellers, one new accounts supervisor and three accounting and bookkeeping
employees. Mr. Hans Mueller will serve as the Chairman of the Board and Chief
Executive Officer. At present, Mr. Mueller is the only employee actively
involved in the organization of the Company and the Bank and, commencing in
September 1998, has been receiving a monthly salary of $10,000. SEE
"Compensation of Management." The Company also anticipates that the Bank will
hire two experienced individuals to serve as Senior Vice Presidents of the Bank.
One Vice President will serve as the Bank's Senior Lending Officer and the
second Vice President will serve as the Bank's Senior Operations Officer. The
Company and the Bank anticipate that the Senior Lending Officer will be an
individual with experience in that capacity within the Bank's market area while
the Company and the Bank anticipate that the Senior Operations Officer will have
bank operations experience with community banks in the Miami-Dade Florida area.
There can be no assurance that individuals with this specialized local
experience will be available for employment with the Bank.
The Company does not anticipate a problem in finding qualified employees
due in part to recent bank consolidation which has resulted in additional
experienced personnel seeking
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employment. Company management anticipates that the Company will increase its
staff from 10 to 20 full-time equivalent employees during the second year of its
operations in order to provide for anticipated growth. The Company plans to
employ as officers and employees of the Bank primarily persons from the Bank's
market areas who have experience in banking. The Company intends to pay
competitive salaries to attract and retain such officers and employees.
YEAR 2000
The Company recognizes that despite the Company's and the Bank's efforts to
avoid the possible consequences of Year 2000 issues, those issues may have a
material effect upon the Company and the Bank. The Bank will endeavor to obtain
certification from its data processing provider that of the computer hardware
and software to be provided to the Bank for its operations will be Year 2000
compliant. Additionally, the Bank will endeavor to obtain Year 2000 compliance
certification from its other vendors and suppliers that, to the extent
applicable, the products and services that they supply are Year 2000 compliant.
The Bank will require such certification with respect to all computer hardware
and software comprising information technology systems ("IT") as well as with
respect to non-IT systems and equipment which may be affected by Year 2000
issues due to embedded microcontroller technology such as those in security
devices and telephones. Additionally, the Bank will obtain representations from
borrowers and other customers where applicable, that their businesses are Year
2000 compliant.
The Bank, as a start-up institution does not anticipate incurring any
material costs related to Year 2000 issues because it expects to commence
business in the second quarter of 1999 with new systems and equipment that are
Year 2000 compliant and will not require upgrading or reprogramming.
Although the Company and the Bank believe that their efforts with respect
to Year 2000 compliance are adequate, neither the Bank nor the Company are
certain to what extent the Bank may be affected by any far reaching national or
global effects of Year 2000 issues. Additionally, the Bank, as a financial
institution, is regulated by the FDBF, the FDIC, and the FRBA and may face
supervisory or enforcement actions by one or a combination of these regulators
in the event that the Bank has not achieved the proper level of Year 2000
readiness Moreover it is uncertain to what extent the Bank might be affected by
specific technological problems including but not limited to the following:
* Interruptions in telecommunications and data transmittal services
* Loans affected by the failure of borrowers operating or other systems
or borrowers' failure to comply with debt covenant terms regarding Year
2000 issues
* Losses due to breach of contract by vendors and service providers which
encounter Year 2000 problems and failures
* The failure of Automated Teller Machines
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The Bank expects that due to its small size, the staff will be able to
operate the bank on a manual posting basis in the event of a computer
malfunction due to Year 2000 problems. In the event that such problems occur,
credits and debits will be manually posted for transaction and loan accounts.
The Bank expects to have a written contingency plan in place prior to the
opening of the Bank which will detail the procedures for the manual operation of
the Bank.
SUPERVISION AND REGULATION
Banks and their holding companies, and many of their affiliates, are
extensively regulated under both federal and state law. The following is a brief
summary of certain statutes, rules, and regulations affecting the Company and
the Bank. This summary is qualified in its entirety by reference to the
particular statutory and regulatory provisions referred to below and is not
intended to be an exhaustive description of the statutes or regulations
applicable to the business of the Company and the Bank. Any change in the
applicable law or regulation may have a material effect on the business and
prospects of the Company and the Bank. SEE "Risk Factors - We are Heavily
Regulated by the Government and Affected by Monetary Policy." Supervision,
regulation, and examination of banks by regulatory agencies are intended
primarily for the protection of depositors, rather than shareholders.
BANK HOLDING COMPANY REGULATION
The Company is a bank holding company which will seek to become registered
with the Federal Reserve under the BHC Act and is subject to the supervision,
examination and reporting requirements of the BHC Act and the regulations of the
Federal Reserve. The Company is required to furnish to the Federal Reserve an
annual report of its operations at the end of each fiscal year, and such
additional information as the Federal Reserve may require under the BHC Act. The
BHC Act requires that a bank holding company obtain the prior approval of the
Federal Reserve before:
* acquiring direct or indirect ownership or control of more than 5% of
the voting shares of any bank;
* taking any action that causes a bank to become a subsidiary of the bank
holding company; or
* merging or consolidating with any other bank holding company.
The BHC Act further provides that the Federal Reserve may not approve any
transaction that would result in a monopoly or that would be in furtherance of
any combination or conspiracy to monopolize or attempt to monopolize the
business of banking in any section of the United States. Further, the Federal
Reserve may not approve any transaction that might substantially lessen
competition or to tend to create a monopoly in any section of the country, or
that in any other manner would be in restraint of trade. The Federal Reserve may
approve such transactions if their anti-competitive effects are clearly
outweighed by the public interest in meeting the convenience and needs of the
community to be served. The Federal Reserve is also required to consider the
financial and managerial resources and future prospects of the
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bank holding companies and banks concerned and the convenience and needs of the
community to be served. Consideration of financial resources generally focuses
on capital adequacy and consideration of convenience and needs issues includes
the parties' performance under the Community Reinvestment Act of 1977 (the
"CRA"), both of which are discussed below.
The BHC Act generally prohibits a bank holding company from engaging in
activities other than banking, or managing or controlling banks or other
permissible subsidiaries. Bank holding companies are also generally prohibited
from acquiring or retaining direct or indirect control of any company engaged in
any activities other than those activities determined by the Federal Reserve to
be so closely related to banking or managing or controlling banks as to be a
proper incident thereto. In determining whether a particular activity is
permissible, the Federal Reserve must consider whether the performance of such
an activity can reasonably be expected to produce benefits to the public, such
as greater convenience, increased competition, or gains in efficiency that
outweigh possible adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest, or unsound banking
practices.
Examples of permissible bank holding company activities include factoring
accounts receivable, acquiring or servicing loans, leasing personal property,
conducting securities brokerage activities, performing certain data processing
services, acting as agent or broker in selling credit life insurance and certain
other types of insurance in connection with credit transactions, and certain
insurance underwriting activities have all been determined by regulations of the
Federal Reserve to be permissible activities of bank holding companies. Despite
prior approval, the Federal Reserve has the power to order a holding company or
its subsidiaries to terminate any activity or terminate its ownership or control
of any subsidiary, when it has reasonable cause to believe that continuation of
such activity or such ownership or control constitutes a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company.
Banks are subject to the provisions of the CRA. Under the terms of the CRA,
the appropriate federal bank regulatory agency is required, in connection with
its examination of a bank, to assess the bank's record in meeting the credit
needs of the community served by that bank, including low- and moderate-income
neighborhoods. The regulatory agency's assessment of the bank's record is made
available to the public. Further, such assessment is required of any bank which
has applied to:
* charter a national bank;
* obtain deposit insurance coverage for a newly chartered institution;
* establish a new branch office that will accept deposits;
* relocate an office; or
* merge or consolidate with, or acquire the assets or assume the
liabilities of, a federally regulated financial institution.
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In the case of a bank holding company applying for approval to acquire a
bank or other bank holding company, the Federal Reserve will assess the record
of each subsidiary bank of the applicant bank holding company, and such records
may be the basis for denying the application.
BANK REGULATION
The Bank will seek to be chartered by the FDBF under Florida law and will
seek to be a Federal Reserve member. The Bank's deposits will be insured by the
FDIC to the extent provided by law. The Bank will be subject to comprehensive
regulation, examination and supervision by the FDBF and the Federal Reserve. The
Bank also will be subject to other laws and regulations applicable to banks.
Such regulations include:
* limitations on loans to a single borrower and to its directors,
officers and employees;
* restrictions on the opening and closing of branch offices;
* the maintenance of required capital and liquidity ratios;
* the granting of credit under equal and fair conditions; and
* the disclosure of the costs and terms of such credit.
The Bank will be examined periodically by the FDBF and the Federal Reserve,
to whom the Bank will submit periodic reports regarding its financial condition
and other matters. The Bank will also be subject to examination by the FDIC
which will be provided with the examination data of the other regulators. The
FDBF and the Federal reserve have a broad range of powers to enforce regulations
under their jurisdiction, and to take discretionary actions determined to be for
the protection and safety and soundness of banks. These actions include the
institution of cease and desist orders and the removal of directors and
officers. The FDBF and the Federal reserve also have the authority to approve or
disapprove mergers, consolidations, and similar corporate actions.
Under federal law, federally insured banks are subject, with certain
exceptions, to certain restrictions on any extension of credit to their parent
holding companies or other affiliates, on investment in the stock or other
securities of affiliates, and on the taking of such stock or securities as
collateral from any borrower. In addition, banks are prohibited from engaging in
certain tie-in arrangements in connection with any extension of credit or the
providing of any property or service.
In 1989, the Financial Institutions Reform, Recovery and Enforcement Act of
1989 ("FIRREA") was enacted. FIRREA contains major regulatory reforms, stronger
capital standards for savings and loan associations and stronger civil and
criminal enforcement provisions. FIRREA also provides that a depository
institution insured by the FDIC can be held liable for any loss incurred by, or
reasonably expected to be incurred by, the FDIC after August 9, 1989 in
connection with (i) the default of a commonly controlled FDIC insured
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depository institution, or (ii) any assistance provided by the FDIC to a
commonly controlled FDIC insured institution in danger of default.
In 1991, the FDIC Improvement Act of 1991 ("FDICIA") was enacted. FDICIA
made a number of reforms addressing the safety and soundness of deposit
insurance funds, supervision, accounting, and prompt regulatory action, and also
implemented other regulatory improvements. Annual full-scope, on-site
examinations are required of all insured depository institutions. The cost for
conducting an examination of an institution may be assessed to that institution,
with special consideration given to affiliates and penalties imposed for any
failure to provide information requested. Insured state banks also are precluded
from engaging as principal in any type of activity that is impermissible for a
national bank, including activities relating to insurance and equity
investments. FDICIA also re-codified current law restricting extensions of
credit to insiders under the Federal Reserve Act.
TRANSACTIONS WITH AFFILIATES
There are various legal restrictions on the extent to which the Company and
any future non-bank subsidiaries can borrow or otherwise obtain credit from the
Bank. There also are legal restrictions on the Bank's purchase of or investments
in:
* the securities of and purchases of assets from the Company and any of
its future non-bank subsidiaries;
* the Bank's loans or extensions of credit to third parties
collateralized by the securities or obligations of the Company and any
of its future non-bank subsidiaries;
* the issuance of guarantees, acceptances, and letters of credit on
behalf of the Company and any of its future non-bank subsidiaries; and
* certain bank transactions with the Company and any of its future
non-bank subsidiaries, or with respect to which the Company and
non-bank subsidiaries act as agent, participate or have a financial
interest.
Subject to certain limited exceptions, the Bank may not extend credit to
the Company or to any other affiliate in an amount which exceeds 10% of the
Bank's capital stock and surplus and may not extend credit in the aggregate to
such affiliates in an amount which exceeds 20% of its capital stock and surplus.
Further, there are legal requirements as to the type, amount and quality of
collateral which must secure such extensions of credit transactions between the
Bank and the Company or such other affiliates, and such transactions must be on
terms and under circumstances, including credit standards, that are
substantially the same or at least as favorable to the Bank as those prevailing
at the time for comparable transactions with non-affiliated companies. Also, the
Company and its subsidiaries are prohibited from engaging in certain tie-in
arrangements in connection with any extension of credit, lease or sale of
property or furnishing of services.
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DIVIDENDS
Dividends from the Bank will constitute the primary source of funds for
dividends to be paid by the Company. For additional information, SEE "Risk
Factors - We Have No Plans to Pay Dividends" and "Dividend Policy." There also
are various statutory and contractual limitations on the ability of the Bank to
pay dividends, extend credit, or otherwise supply funds to the Company. As a
Florida state chartered bank, the Bank may not pay dividends from its paid-in
surplus. All dividends must be paid out of undivided profits from the previous
two years then on hand, after deducting expenses, including reserves for losses
and bad debts. With FDBF approval a Florida state chartered bank may declare a
dividend from retained profits which accrued prior to the previous two years In
addition, a Florida state chartered bank is prohibited from declaring a dividend
on its shares of common stock until its surplus equals its stated capital,
unless there has been transferred to surplus no less than twenty percent of the
bank's net profits of the preceding two year period. Florida state chartered
banks are prohibited from declaring dividends in any calendar year where the
total of its net profits for that year combined with its retained net profits
for the preceding two years is a loss or falls below the minimum amount required
by law, regulation, order or any written agreement with the FDBF or a state or
federal regulatory agency. Florida law applicable to companies (including the
Company) provides that dividends may be declared and paid only if, after giving
it effect, (i) the company is able to pay its debts as they become due in the
usual course of business, and (ii) the company's total assets would be greater
than the sum of its total liabilities plus the amount that would be needed if
the company were to be dissolved at the time of the dividend to satisfy the
preferential rights upon dissolution of shareholders whose preferential rights
are superior to those receiving the dividend.
CAPITAL REQUIREMENTS
The federal bank regulatory authorities have adopted risk-based capital
guidelines for banks and bank holding companies that are designed to make
regulatory capital requirements more sensitive to differences in risk profile
among banks and bank holding companies. The resulting capital ratios represent
qualifying capital as a percentage of total risk-weighted assets and off balance
sheet items. The guidelines are minimums, and the federal regulators have noted
that banks and bank holding companies contemplating significant expansion
programs should not allow expansion to diminish their capital ratios and should
maintain all ratios well in excess of the minimums. The current guidelines
require all bank holding companies and federally-regulated banks to maintain a
minimum risk-based total capital ratio equal to 8%, of which at least 4% must be
Tier 1 capital. Tier 1 capital includes common stockholders' equity, qualifying
perpetual preferred stock, and minority interests in equity accounts of
consolidated subsidiaries, but excludes goodwill and most other intangibles and
excludes the allowance for loan and lease losses. Tier 2 capital includes the
excess of any preferred stock not included in Tier 1 capital, mandatory
convertible securities, hybrid capital instruments, subordinated debt and
intermediate term-preferred stock, and general reserves for loan and lease
losses up to 1.25% of risk-weighted assets.
FDICIA contains "prompt corrective action" provisions pursuant to which
banks are to be classified into one of five categories based upon capital
adequacy, ranging from "well
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capitalized" to "critically undercapitalized" and which require (subject to
certain exceptions) the appropriate federal banking agency to take prompt
corrective action with respect to an institution which becomes "significantly
undercapitalized" or "critically undercapitalized."
The Federal Reserve has issued final regulations to implement the "prompt
corrective action" provisions of FDICIA. In general, the regulations define the
five capital categories as follows:
(i) an institution is "well capitalized" if it has a total risk-based
capital ratio of 10% or greater, has a Tier 1 risk-based capital ratio of
6% or greater, has a leverage ratio of 5% or greater and is not subject to
any written capital order or directive to meet and maintain a specific
capital level for any capital measures;
(ii) an institution is "adequately capitalized" if it has a total
risk-based capital ratio of 8% or greater, has a Tier 1 risk-based capital
ratio of 4% or greater, and has a leverage ratio of 4% or greater or a
leverage ratio of 3% or greater if the bank is rated composite 1 under the
CAMELS rating system in the most recent examination of the bank and is not
experiencing or anticipating significant growth;
(iii) an institution is "undercapitalized" if it has a total risk-based
capital ratio of less than 8%, has a Tier 1 risk-based capital ratio that
is less than 4% or has a leverage ratio that is less than 4% or a leverage
ratio of 3% or greater if the bank is rated composite 1 under the CAMELS
rating system in the most recent examination of the bank and is not
experiencing or anticipating significant growth;
(iv) an institution is "significantly undercapitalized" if it has a total
risk-based capital ratio that is less than 6%, a Tier 1 risk-based capital
ratio that is less than 3% or a leverage ratio that is less than 3%; and
(v) an institution is "critically undercapitalized" if its "tangible
equity" is equal to or less than 2% of its total assets.
The Federal Reserve also, after an opportunity for a hearing, has authority
to downgrade an institution from "well capitalized" to "adequately capitalized"
or to subject an "adequately capitalized" or "undercapitalized" institution to
the supervisory actions applicable to the next lower category, for supervisory
concerns. The degree of regulatory scrutiny of a financial institution will
increase, and the permissible activities of the institution will decrease, as it
moves downward through the capital categories. Institutions that fall into one
of the three undercapitalized categories may be required to:
* submit a capital restoration plan;
* raise additional capital;
* restrict their growth, deposit interest rates, and other activities;
* improve their management;
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* eliminate management fees; or
* divest themselves of all or part of their operations.
Bank holding companies controlling financial institutions can be called
upon to boost the institutions' capital and to partially guarantee the
institutions' performance under their capital restoration plans. These capital
guidelines can affect the Company in several ways. After completion of this
Offering, the Company's capital levels will be in excess of those required to be
maintained by a "well capitalized" financial institution. However, rapid growth,
poor loan portfolio performance, or poor earnings performance, or a combination
of these factors, could change the Company's capital position in a relatively
short period of time, making an additional capital infusion necessary.
Additionally, FDICIA requires, among other things, that (i) only a "well
capitalized" depository institution may accept brokered deposits without prior
regulatory approval and (ii) the appropriate federal banking agency annually
examine all insured depository institutions, with some exceptions for small,
"well capitalized" institutions and state-chartered institutions examined by
state regulators. FDICIA also contains a number of consumer banking provisions,
including disclosure requirements and substantive contractual limitations with
respect to deposit accounts.
ENFORCEMENT POWERS
Congress has provided the federal bank regulatory agencies with an array of
powers to enforce laws, rules, regulations and orders. Among other things, the
agencies may require that institutions cease and desist from certain activities,
may preclude persons from participating in the affairs of insured depository
institutions, may suspend or remove deposit insurance, and may impose civil
money penalties against institution-affiliated parties for certain violations.
The State of Florida has provided the FDBF with similar powers.
MAXIMUM LEGAL INTEREST RATES
Like the laws of many states, Florida law contains provisions on interest
rates that may be charged by banks and other lenders on certain types of loans.
Numerous exceptions exist to the general interest limitations imposed by Florida
law. The relative importance of these interest limitation laws to the financial
operations of the Bank will vary from time to time, depending on a number of
factors, including conditions in the money markets, the costs and availability
of funds, and prevailing interest rates.
BANK BRANCHING
Banks in Florida are permitted to branch state wide. Such branch banking by
Florida state chartered banks however, is subject to prior approval by the FDBF.
Any such approval would take into consideration several factors, including the
bank's level of capital, the prospects and economics of the proposed branch
office, and other conditions deemed relevant by the FDBF
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for purposes of determining whether approval should be granted to open a branch
office. For information regarding legislation on interstate branching in
Florida, SEE "Interstate Banking" below.
CHANGE OF CONTROL
Federal law restricts the amount of voting stock of a bank holding company
and a bank that a person may acquire without the prior approval of banking
regulators. The overall effect of such laws is to make it more difficult to
acquire a bank holding company and a bank by tender offer or similar means than
it might be to acquire control of another type of corporation. Consequently,
shareholders of the Company may be less likely to benefit from the rapid
increases in stock prices that may result from tender offers or similar efforts
to acquire control of other companies. Federal law also imposes restrictions on
acquisitions of stock in a bank holding company and a state bank. Under the
federal Change in Bank Control Act and the regulations thereunder, a person or
group must give advance notice to the Federal Reserve before acquiring control
of any bank holding company. Any person or group acquiring a controlling
interest in a Florida state chartered bank must first make application to the
FDBF for a certificate of approval. When they receive notice, the Federal
Reserve or the FDBF, as the case may be, may approve or disapprove the
acquisition. The Change in Bank Control Act creates a rebuttable presumption of
control if a member or group acquires a certain percentage or more of a bank
holding company's or state bank's voting stock, or if one or more other control
factors set forth in the Act are present.
INTERSTATE BANKING
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994,
provides for nationwide interstate banking and branching. Under the law,
interstate acquisitions of banks or bank holding companies in any state by bank
holding companies in any other state are permissible subject to certain
limitations. Florida also has a law that allows out-of-state bank holding
companies (located in states that allow Florida bank holding companies to
acquire banks and bank holding companies in that state) to acquire Florida banks
and Florida bank holding companies. The law essentially provides for
out-of-state entry by acquisition only (and not by de novo interstate branching)
and requires the acquired Florida bank to have been in existence and continuous
operation for at least three years. Interstate branching and consolidation of
existing bank subsidiaries in different states is permissible.
A Florida bank also may establish, maintain, and operate one or more
branches in a state other than Florida by way of an interstate merger
transaction in which the Florida bank is the resulting bank. An interstate
merger transaction resulting in the acquisition by an out-of-state bank of a
Florida bank is not permitted unless the Florida bank has been in existence and
continuously operating, on the date of the acquisition, for more than three
years.
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EFFECT OF GOVERNMENTAL POLICIES
The earnings and businesses of the Company and the Bank are affected by the
policies of various regulatory authorities of the United States, especially the
Federal Reserve. The Federal Reserve, among other things, regulates the supply
of credit and deals with general economic conditions within the United States.
The instruments of monetary policy employed by the Federal Reserve for those
purposes influence in various ways the overall level of investments, loans,
other extensions of credit, and deposits, and the interest rates paid on
liabilities and received on assets.
INDUSTRY RESTRUCTURING
For well over a decade, the banking industry has been undergoing a
restructuring process which is anticipated to continue. The restructuring has
been caused by product and technological innovations in the financial services
industry, deregulation of interest rates, and increased competition from foreign
and nontraditional banking competitors, and has been characterized principally
by the gradual erosion of geographic barriers to intrastate and interstate
banking and the gradual expansion of investment and lending authorities for bank
institutions.
Members of Congress and the administration have indicated their intention
to consider additional legislation designed to institute reforms to promote the
viability of the industry. Certain of the proposals would revise the federal
regulatory structure for insured depository institutions; others would affect
the nature of products, services, and activities that bank holding companies and
their subsidiaries may offer or engage in, and the types of entities that may
control depository institutions. There can be no assurance as to whether or in
what form any such proposed legislation might be enacted, or what impact such
legislation might have upon the Company.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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MANAGEMENT
DIRECTORS AND OFFICERS
The directors and officers of the Company as of the date hereof, are as follows
<TABLE>
<CAPTION>
POSITIONS POSITIONS
NAME AGE WITH THE COMPANY WITH THE BANK
- ---- --- ---------------- -------------
<S> <C> <C> <C>
Hans C. Mueller 48 Chairman of the Board, Chairman of the Board,
President and Chief President and Chief
Executive Officer Executive Officer
Jerome J. Bushman 56 Director Director
Allen M. Voelz 61 Director Director
Alex Soto 50 Director Director
James C. Merrill 48 Director Director
Linda Marraccini, M.D. 45 Director Director
</TABLE>
The Company has a classified Board of Directors, with directors serving
staggered three-year terms. The terms of Messrs. Mueller and Bushman, as Class I
directors, expire in December 2001, the terms of Messrs. Messrs. Voelz and Soto,
as Class II directors, expire in December 2000, and the terms of Mr. Merrill and
Dr. Marraccini as Class III directors, expire in December 1999. There are no
family relationships among any of the company's directors, officers or key
personnel. Officers of the Company and the Bank will be elected annually by
their respective Board of Directors.
DIRECTORS' COMPENSATION
Each director will receive a fee of $250 per board meeting attended
(including telephonic attendance) and $150 per committee meeting. Out-of-town
directors will be reimbursed for business class airfare, hotel accommodations
and mileage at a rate of $0.35 per mile to attend board meetings. Additionally,
each outside (non-employee) director will automatically participate in the
Outside Directors Stock Option Plan.
COMMITTEES OF THE BANK
The Board of Directors will establish various working committees of its members.
Committees will meet routinely and will report directly to the entire Board of
Directors. The Committees of the Board will include:
ASSET - LIABILITY MANAGEMENT COMMITTEE
Responsible for:
* overall investment strategy, including liquidity and risk management;
* monitoring deposit level trends and pricing;
* monitoring asset level trends and pricing;
* portfolio investment decisions; and
* establishing appropriate levels of insurance.
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AUDIT, COMPLIANCE AND CRA COMMITTEE
Responsible for:
* insuring the Board receives objective information regarding policies,
procedures and controls of the Bank including auditing, accounting,
internal accounting controls, financial reporting;
* recommending the appointment of an independent auditor on an annual
basis;
* reviewing independent auditor's report and management's response;
* reviewing all reports from regulatory authorities and management's
response;
* establishing independent review and audits;
* insuring the Bank is in full compliance with all pertinent regulations
and laws;
* establishing an appropriate and independent testing program for
compliance;
* developing a proactive CRA program;
* developing programs to insure compliance with Fair Lending Laws; and
* establishing appropriate levels of insurance.
COMPENSATION COMMITTEE
Responsible for:
* establishing appropriate levels of compensation throughout the Bank;
* analyzing compensation levels on an annual basis;
* recommending overall compensation increases and changes in benefits to
the Board for approval;
* establishing policies with regard to compensation and benefits at the
Bank; and
* recommending all compensation increases, benefit changes and bonuses
for senior officers to the Board for approval.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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LOAN COMMITTEE
Responsible for:
* establishing, in conjunction with management, and approving all major
policies and procedures pertaining to credit;
* establishing a loan approval system;
* reviewing all loans in excess of specific amounts determined in
policies and procedures;
* reviewing all past due reports, rated loan reports, real estate owned,
non-accrual reports, and other indicators of overall loan portfolio
quality;
* assuring adequate funding of the loan loss reserve exists; and
* handling other matters pertaining to the credit function, such as
yields and loan concentrations.
EXPERIENCE OF DIRECTORS AND OFFICERS
DIRECTOR, CHAIRMAN AND CHIEF EXECUTIVE OFFICER - HANS C. MUELLER
Mr. Mueller will serve as the Chairman, President and Chief Executive
Officer for the Company and the Bank. Mr. Mueller, age 48, was born in Miami and
has worked in the Banking Industry there since 1968. Most recently Mr. Mueller
served from 1996 to 1998 as president and CEO of PanAmerican Bank, a state
chartered commercial bank with assets of $50 Million. From 1995 to 1996 Mr.
Mueller was Executive Vice President of Total Bank a state chartered commercial
bank with assets of $200 Million. From 1994 to 1995 Mr. Mueller served as
president and CEO of Trade National Bank, a nationally chartered bank with
assets of $85 Million. Prior to his service with Trade National Bank, Mr.
Mueller spent 1982-1994 as Executive Vice President of Plaza Bank a state
chartered commercial bank with assets of $135 Million.
DIRECTORS
JEROME J. BUSHMAN
Jerome J. Bushman, age 56, a native of Wisconsin, has worked in his
family's various agriculture businesses all of his life. These include,
Bushmans', Inc., a major supplier and packer of agriculture products, primarily
potatoes of which Mr. Bushman has been president since 1974. In addition to the
agriculture business, Mr. Bushman also owns 60% of First Southeastern Banc Group
of Harmont MN which is a bank holding company which holds three community banks.
These banks are all located in smaller rural communities that provide financial
services primarily to the agricultural industry and the owner operator farms.
All three institutions are well run and profitable. Mr. Bushman serves as a
director of F&M Bank Central of Stevens Point, Wisconsin. Mr. Bushman
additionally is a director of Village Bank of Naples, Florida, in which he is
also an investor. Mr. Bushman is currently semi-retired and divides his time
between Wisconsin and Naples, Florida.
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<PAGE> 44
ALLEN M. VOELZ
Allen M. Voelz, age 61, is a native of Wisconsin. Mr. Voelz has been
involved in community banking for his entire career. From 1962 until his
retirement in 1996 Mr. Voelz was employed by Associated Bank North of Wausau,
Wisconsin (formerly Citizens State Bank of Wittenberg and F & M Financial
Services) holding virtually all banking positions from assistant cashier to
president and CEO at the time of his retirement. During his banking career Mr.
Voelz was also an instructor at the University of Wisconsin School of Banking
and also served in various committees and the Board of the Wisconsin Bankers
Association, finally gaining the position of President of the Wisconsin Bankers
Association. Currently Voelz resides in Wisconsin and in Florida. Mr. Voelz is
the owner and operator of numerous small business and a consultant and financial
advisor to small owner operated businesses.
ALEX SOTO
Alex Soto, age 50, is a Cuban-born long time Miami resident. Mr. Soto is
President and CEO of InSource Financial Services Inc., one of the largest
independent property and casualty insurance agency in South Florida. Prior to
joining InSource Financial Services, Inc., Mr. Soto served as President of
Pennekamp & Soto Insurance Agency from 1972 to 1997.
JAMES C. MERRILL
James C. Merrill, age 48, is a native Floridian born in Jacksonville. Mr.
Merrill has spent his entire career working in the family business Merrill
Stevens Dry Dock Company, which is a commercial boatyard and marine outfitter
and the first incorporated business in the State of Florida. Today, Mr. Merrill
is the Chairman of Merrill Stevens Dry Dock Company which was established in
Miami in the early 1930's.
LINDA MARRACCINI, M.D.
Linda Marraccini, M.D. has engaged in the private practice of family
medicine in Miami since 1982. Dr. Marraccini received both her undergraduate
degree and her M.D. from the University of Miami and completed her internship
and residency at Jackson Memorial Hospital in Miami. She also currently serves
as Assistant Professor of Family Medicine at the University of Miami School of
Medicine.
EXECUTIVE OFFICERS OF THE BANK
At this time, the only person hired to become an executive officer of the
Bank is Hans C. Mueller who will be President and CEO.
COMPENSATION OF MANAGEMENT
Current management compensation is limited to the compensation of Mr.
Mueller, President, CEO and Chairman of the Board of the Bank and of the
Company. Mr. Mueller's
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yearly compensation totals $192,840 which includes $170,000 in base salary upon
the opening of the Bank, a monthly allowance of $500 for a car, costs and
expenses of $13,000 with respect to Mr. Mueller's split dollar life insurance
policy and $3840 for health insurance. The Company intends to enter into
employment agreements with a Senior Vice President for Lending and a Senior Vice
President for Lending before the Bank commences operations.
The Company has entered into an employment agreement with Mr. Mueller on
December 9, 1998 for an initial three year term effective on September 1, 1998
and terminating on August 31, 2001. Under this Agreement, the Company pays Mr.
Mueller a monthly salary of $10,000 during the organizational period. At the end
of this period, upon commencement of operations of the Bank, the Company will
pay Mr. Mueller a lump sum amount based upon the differential between an annual
compensation of $120,000 and a base salary of $170,000. This differential is
equal to $4,166 per month and the total lump sum payment is expected to be
$41,666 based upon a June 1, 1999 commencement of operations. The agreement
shall be automatically renewed for successive one year extensions unless the
Company and the Bank or Mr. Mueller gives notice to terminate to the other party
180 days prior to the expiration of the term. After the organizational period,
the employment agreement will provide for:
* base salary of $170,000;
* annual incentive bonus in an amount determined by the Board of
Directors of the Company;
* participation in the Company's health, life, disability, retirement or
any other company employee benefit plans;
* minimum of four weeks annual paid vacation;
* allowances for cellular phone;
* a car allowance of $500 per month;
* the grant of warrants to purchase 50,000 shares of the Company's Common
Stock at $10.00 per share. SEE - "Organizers' Warrants"; and
* the grant of 50,000 non-statutory options to purchase the Company's
Common Stock at $10.00 per share vesting at 10,000 per year at the
opening of the Bank and on each of the next four anniversaries of the
Bank's opening.
Additionally, the employment agreement provides that the Company will
purchase Mr. Mueller's existing $1,000,000 single premium split dollar life
insurance policy for $147,000 (per employment agreement) at the time that the
Bank commences operations. This insurance policy was purchased by a previous
employer pursuant to a deferred compensation agreement with a term of 10 years.
Subsequent employers have continued the agreement by purchasing the insurance
policy. Currently the agreement has 5 years remaining before it terminates.
Prior to the commencement of operations, the Company will pay interest on the
$147,000 at a rate of 1% over prime to Mr. Mueller's former employer,
PanAmerican Bank. Pursuant to its
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<PAGE> 46
agreement with Mr. Mueller, 90 days after Mr. Mueller terminated his employment
with PanAmerican Bank, it booked the $147,000 as a loan secured by the
$1,000,000 death benefit and an assignment of the cash surrender value of
approximately $200,000. When the agreement terminates, Mr. Mueller will
reimburse the Company for the $147,000 it paid for the policy. The cash
surrender value of the policy will secure the $147,000. Mr. Mueller is not
required to pay the Company or the Bank any interest with respect to this
amount.
The employment agreement will be terminable at any time by the Company's
Board of Directors subject to the payment of severance benefits. In addition,
Mr. Mueller may terminate the employment agreement himself for "good reason" as
defined in the employment agreement. "Good reason" includes:
* Purported termination by the Bank without proper notice;
* A change in control of the Bank followed by a determination by Mr.
Mueller that his duties and responsibilities and/or remuneration have
been diminished, his working conditions have materially changed or that
the Bank has breached the employment agreement;
The agreement will provide severance benefits in the event the executive is
terminated "without cause," including severance compensation equal to 100% of
his then current annual salary (including any incentive compensation) paid
during the full year preceding the notice of termination. In addition, the
severance package for termination "without cause" includes unpaid base
compensation through the employment term including accrued but unpaid allowances
and expense reimbursements, any accrued and deferred incentive compensation from
any previous year. The Company may terminate the agreement at any time for
"cause" without incurring any post-termination obligations beyond the payment by
the Bank within 10 days of termination of Mr. Mueller's base compensation
through the thirtieth day following the termination date. In the event that Mr.
Mueller terminates the employment agreement for "good reason" he will receive
the same severance benefits as though he were terminated "without cause" as
described above.
INCENTIVE STOCK OPTION PLAN
The Company's Board of Directors and initial shareholder have adopted an
Incentive Stock Option Plan to promote equity ownership of the Company by
selected officers and employees of the Company and the Bank, to increase their
proprietary interest in the success of the Company and to encourage them to
remain in the employ of the Company.
ADMINISTRATION
The Incentive Stock Option Plan will be administered by the Company's
Compensation Committee (the "Committee"), which is comprised of at least two
non-employee directors appointed by the Company's Board of Directors. The
Committee will have the authority to select the officers and employees to whom
awards may be granted, to determine the terms of each award, to interpret the
provisions of the Incentive Stock Option Plan and to make all other
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determinations that it may deem necessary or advisable for the administration of
the Incentive Stock Option Plan.
The Incentive Stock Option Plan provides for the grant of "incentive stock
options," as defined under Section 422(A) of the Internal Revenue Code of 1986,
as amended. The Board of Directors has reserved 150,000 shares of Common Stock
for issuance under the Incentive Stock Option Plan. In general, if any award
granted under the Incentive Stock Option Plan expires, terminates, is forfeited
or is canceled for any reason, the shares of Common Stock allocable to such
award may again be made subject to an award granted under the Incentive Stock
Option Plan.
AWARDS
Officers and policy-making employees of the Company and the Bank are
eligible to receive grants under the Incentive Stock Option Plan. Awards may be
granted subject to a vesting requirement and in any event will become fully
vested upon a merger or change of control of the Company. The exercise price of
incentive stock options must at least equal the fair market value of the Common
Stock subject to the option (determined as provided in the plan) on the date the
option is granted.
An incentive stock option granted under the Incentive Stock Option Plan to
an employee owning more than 10% of the total combined voting power of all
classes of capital stock of the Company or its parent or any of its subsidiaries
is subject to the further restriction that such option must have an exercise
price of at least 110% of the fair market value of the shares of Common Stock,
issuable upon exercise of the option (determined as of the date the option is
granted) and may not have an exercise term of more than five years. Incentive
stock options are also subject to the further restriction that the aggregate
fair market value (determined as of the date of grant) of Common Stock as to
which any such incentive stock option first becomes exercisable in any calendar
year, is limited to $100,000. To the extent options covering more than $100,000
worth of Common Stock first become exercisable in any one calendar year, the
excess will be non-statutory options. For purposes of determining which, if any,
options have been granted in excess of the $100,000 limit, options will be
considered to become exercisable in the order granted.
Each officer and key employee eligible to participate in the Incentive
Stock Option Plan will be notified by the Committee. To receive an award under
the Incentive Stock Option Plan, an award agreement must be executed which
specifies the type of award to be granted, the number of shares of Common Stock
to which the award relates, the terms and conditions of the award and the date
granted. In the case of an award of options, the award agreement will also
specify the price at which the shares of Common Stock subject to the option may
be purchased, and the date(s) on which the option becomes exercisable.
The full exercise price for all shares of Common Stock purchased upon the
exercise of options granted under the Incentive Stock Option Plan must be paid
by cash, personal check, personal note, award surrender or Common Stock owned at
the time of exercise. Incentive stock options granted to employees under the
Incentive Stock Option Plan may remain outstanding and exercisable for 10 years
from the date of grant or until the expiration of 90 days
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(or such lesser period as the Committee may determine) from the date on which
the person to whom they were granted ceases to be employed by the Company.
Options granted under the Plan are exercisable in increments of 10% per year
commencing on the date of grant.
INCOME TAX
Incentive stock options granted under the Incentive Stock Option Plan have
certain advantageous tax attributes to the recipient under the income tax laws.
No taxable income is recognized by the option holder for income tax purposes at
the time of the grant or exercise of an incentive stock option, although neither
is there any income tax deduction available to the Company as a result of such a
grant or exercise. Any gain or loss recognized by an option holder on the later
disposition of shares of Common Stock acquired pursuant to the exercise of an
incentive stock option generally will be treated as capital gain or loss if such
disposition does not occur prior to one year after the date of exercise of the
option.
AMENDMENT AND TERMINATION
The Incentive Stock Option Plan expires 10 years after its adoption, unless
sooner terminated by the Board of Directors. The Board of Directors has
authority to amend the Plan in such manner as it deems advisable, subject to
certain restrictions set forth in such Plan. The Plan provides for appropriate
adjustment, as determined by the Committee, in the number and kind of shares
subject to unexercised options, in the event of any change in the outstanding
shares of Common Stock by reason of a stock split, stock dividend, combination
or reclassification of shares, recapitalization, merger or similar event.
OUTSIDE DIRECTOR STOCK OPTION PLAN
The Company's Board of Directors and initial shareholder have adopted an
Outside Director Stock Option Plan to promote equity ownership of the Company by
non-employee directors to increase their proprietary interest in the Company and
to encourage them to continue as directors of the Company.
The Outside Director Stock Option Plan is a non-qualified plan under which
outside (non-employee) directors are automatically granted stock options. Each
outside director is granted 3,000 options as an annual award and outside
directors serving on any of the Bank's committees are awarded an addition 1,000
options annually. The exercise price of the options is fair market value as of
the date of the grant. The automatic nature of the awards enables the outside
directors to sit on the compensation committee without any conflict of interest.
The Company has reserved 150,000 shares of Common Stock for the grant of options
under the plan. The first options under this plan will be granted on the first
business day following the annual Stockholders' meeting of the Company
subsequent to the opening of the Bank.
The options granted under the Outside Director Stock Option Plan do not
qualify for special tax treatment under Internal Revenue Code, section 422. This
means that income will be recognized when the option is exercised and that such
recognition of income may not be deferred. Since the options are granted at fair
market value, no income is recognized at the
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time of the grant and there are no tax consequences to the optionee. When the
option is exercised however the recipient of the option is taxed on the
difference between the exercise price and the fair market value of the stock
upon exercise. This amount is taxed as ordinary income and the company is
entitled to a deduction. Upon the sale of the stock by the optionee, the
difference between the amount realized on the sale and the fair market value of
the stock on the date of exercise and is taxed as a capital gain if held for the
requisite time period.
The Outside Director Stock Option Plan expires 10 years after its adoption,
unless sooner terminated by the Board of Directors. The Board of Directors has
authority to amend the Plan in such manner as it deems advisable. The Plan
provides for appropriate adjustment, in the event of any change in the
outstanding shares of Common Stock by reason of a stock split, stock dividend,
combination or reclassification of shares, recapitalization, merger or similar
event.
RESTRICTED NON-QUALIFIED STOCK OPTIONS
The Company's Board of Directors and initial shareholder have adopted a
Restricted Non-Statutory Stock Option Plan to promote equity ownership of the
Company by Mr. Mueller to increase his proprietary interest in the Company.
The Restricted Non-Statutory Stock Option Plan is a non-qualified plan
under which the Company has granted options to purchase 50,000 shares of the
Company's stock. The exercise price of the options is $10.00 per share,
determined by the Company to be equal to fair market value as of December 9,
1998, the date of the grant.
This Plan is limited to the 50,000 options granted to Mr. Mueller. The
options vest beginning on the date of the opening of the Bank for 10,000 shares,
and vest for additional 10,000 share increments on each of the next four
anniversary dates of the Bank's opening.
The options granted under the Restricted Non-Statutory Stock Option Plan do
not qualify for special tax treatment under Internal Revenue Code, section 422
and so do not defer the recognition of income beyond the date upon which the
option is exercised. Since the options are granted at fair market value, no
income is recognized at the time of the grant to the optionee. When the option
is exercised however the recipient of the option is taxed on the difference
between the exercise price and the then fair market value of the stock upon
exercise. This amount is taxed as ordinary income and the Company is entitled to
a deduction. Upon the sale of the stock by the optionee, the difference between
the amount realized on the sale and the fair market value of the stock on the
date of exercise and is taxed as a capital gain.
The Restricted Non-Statutory Stock Option Plan expires 10 years after its
adoption, unless sooner terminated by the Board of Directors. The Board of
Directors has authority to amend the Plan in such manner as it deems advisable;
provided that no amendment, modification or termination of such Plan shall
adversely affect in any manner and option granted and vested under such Plan.
The Plan provides for appropriate adjustment, in the event of any change in the
outstanding shares of Common Stock by reason of a stock split, stock dividend,
combination or reclassification of shares, recapitalization, merger or similar
event.
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ORGANIZERS' WARRANTS
The Company's Board of Directors and its initial shareholders have adopted
a warrant plan to compensate three of the Company's five initial Organizers in
regard for their efforts to establish a strategic plan for the formation of the
Bank and for their efforts in funding of the initial organizational expenses of
the Bank and the Company. Of these three Organizers, Jerome J. Bushman has
caused one of his affiliates to loan the Company $300,000 which allowed an
organizational expense fund to be created and caused a second loan of 350,000 to
be made to cover certain pre-opening expenses and Offering expenses. Both of
these loans have been guaranteed by a second Organizer, Evaldo F. Dupuy. The
Company will act to repay the Organizers prior to the opening of the Bank. The
exercise price of the warrants will be $10 per share (the same price as the
initial offering of the Common Stock). The warrants will be non-transferable,
will vest immediately, will be exercisable on any business day subsequent to the
first anniversary date of the opening of the Bank and will have a term of 10
years from the issuance date at which time they will expire. The Company has
reserved 150,000 shares of its Common Stock for issuance thereunder, 50,000
warrants to each of the Organizers, Evaldo F. Dupuy, Jerome J. Bushman, and Hans
C. Mueller.
PRINCIPAL SHAREHOLDERS
Except for 500 shares issued to Jerome J. Bushman at $10.00 per share for
the sole purpose of incorporating the Company and electing its directors, the
Company has not yet issued any Common Stock. SEE "Description of Capital Stock
Common Stock." The following table sets forth certain information with respect
to the anticipated beneficial ownership of Common Stock after the sale of shares
offered hereby, by:
* each of the current directors and executive officers of the Company;
and
* all such directors and executive officers of the Company as a group.
All share numbers are provided based upon estimates, supplied to the Company by
the persons listed below, of the number of shares of Common Stock expected to be
purchased by such persons. SEE "Certain Transactions Organizational Advances."
[THIS SPACE INTENTIONALLY LEFT BLANK]
44
<PAGE> 51
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY OWNED AFTER OUTSTANDING SHARES
NAME THIS OFFERING (1) OWNED AFTER THIS OFFERING(1)
- ---- ------------------------- ----------------------------
<S> <C> <C>
Hans C. Mueller(2) 1,000 0.1%
Jerome J Bushman(3)(4) 100,000 10%
Allen M. Voelz 10,000 1%
James C. Merrill(5) 10,000 1%
Alex Soto 2,000 0.2%
Linda Marraccini, M.D. 500 .05%
Directors and executive officers as a group
(six individuals) 123,500 12.35%
</TABLE>
(1) The information contained in this column is based upon information
furnished to the Company by the persons named above. The nature of
beneficial ownership for shares shown in this column is sole voting and
investment power. Inclusion of shares shall not constitute an admission
of beneficial ownership or voting or investment power over included
shares.
(2) Does not include 50,000 organizer warrants or 50,000 Restricted
Non-Qualified Stock Options granted to Mr. Mueller.
(3) Does not include 50,000 organizer warrants granted to Mr. Bushman.
(4) Includes sales of shares to Mr. Bushman's affiliates including 50,000
shares to Bushman's, Inc. 401(k) Plan, 10,000 shares to Derrick J.
Bushman, Mr. Bushman's son, and 10,000 shares to Tia Bushman, Mr.
Bushman's daughter.
(5) Includes sales of shares to Mr. Merrill's affiliates.
CERTAIN TRANSACTIONS
ORGANIZATIONAL ADVANCES
Mr. Bushman has caused an affiliate to loan a total of $650,000 in two
separate loan amounts of $300,000 and $350,000 respectively for use in
connection with organizational, pre-opening and capital raising expenses. Mr.
Dupuy has guaranteed the repayment of both of these loans. Both Mr. Bushman and
Mr. Dupuy are organizers of the Bank and of the Company All such amounts
advanced to the Company bear interest at a rate of two percentage point above
the prime rate. Such advances will be repaid on or after the closing of the
Offering. In compensation for their risk and for their efforts in funding of the
organization, of the Company and the Bank, the Company has granted certain
warrants to the three Organizers
45
<PAGE> 52
to purchase Common Stock of the Company for $10 per share. SEE "Principal
Shareholders" and "Management - Organizers' Warrants."
BANKING TRANSACTIONS
It is anticipated that the directors and officers of the Company and the
Bank and the companies with which they are associated will have banking and
other transactions with the Company and the Bank in the ordinary course of
business. All transactions between the Company and affiliated persons, including
5% stockholders, will be on terms no less favorable to the Company than could be
obtained from independent third parties, including the insurance purchases
referred to below. Any loans and commitments to lend to such affiliated persons
or entities included in such transactions will be made in accordance with all
applicable laws and regulations and on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unaffiliated parties of similar creditworthiness.
OTHER TRANSACTIONS WITH DIRECTORS
Proposed director Alex Soto is President of InSource Financial Services
Inc. ("InSource"), one of the largest independent property and casualty
insurance agencies in South Florida. It is anticipated that InSource will
provide the Company and the Bank with insurance products including a Bankers
Blanket Bond, a policy of general liability insurance, directors and officers
liability insurance, and possibly other insurance products. The total yearly
premiums to be paid by the Company and the Bank to InSource are estimated to be
$40,000.
TRANSACTIONS WITH PROMOTERS
Evaldo F. Dupuy, one of the Organizers of the Company and of the Bank, is
the branch manager of the Miami office of Coast Partners Securities, Inc. which
will act as the Managing Dealer in this Offering. Coast Partners Securities,
Inc. will receive Managing Dealer's discounts and commissions of up to $0.95 per
share with respect to this Offering which may total as much as $950,000. In
addition, Mr. Dupuy will be granted 50,000 Organizer's warrants exercisable at
$10.00 per share in recognition of his efforts as organizer and his guaranty of
a $300,000 loan made to the Company to cover organizational expenses and a
$350,000 loan to cover certain Offering and pre-opening expenses.
INDEMNIFICATION
The Articles of Incorporation and Bylaws of the Company provide for the
indemnification of directors and officers of the Company and any person serving
as a director or officer of another corporation at the request of the Company,
including reasonable legal fees, incurred by such directors and officers while
acting for or on behalf of the Company or the Bank as a director, officer,
employee or agent, subject to certain limitations. SEE "Description of Capital
46
<PAGE> 53
Stock - Certain Indemnification and Limited Liability Provisions." Additionally,
the Company has entered into indemnification agreements, adopted by the
shareholder with the directors of the Company which provide a contractual
obligation by the Company to indemnify the directors for liability, including
legal fees that they incur as a result of actions taken on behalf of the
Company. The Bank expects to enter into similar indemnification agreements with
directors of the Bank. The Company expects to purchase directors' and officers'
liability insurance for directors and officers of the Company and the Bank.
Articles of the Bank provide for indemnification of officers and directors
of the Bank. FDIC regulations may prohibit the indemnification of directors
under certain circumstances when a bank has been deemed to be a troubled
institution.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company presently consists of 10,000,000
shares of Common Stock, par value $.01 per share, and 2,000,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock").
COMMON STOCK
As of the date of this Prospectus, there were 500 shares of Common Stock
issued and outstanding all of which are held by Jerome J. Bushman. These shares
were issued at a price of $10.00 per share for the purpose of incorporating the
Company, and for other organizational purposes. All outstanding shares of Common
Stock offered hereby will be fully paid and non-assessable. The holders of
Common Stock are entitled to one vote for each share held of record on all
matters voted upon by stockholders. Subject to preferences that may be
applicable to any outstanding shares of Preferred Stock, each share of
outstanding Common Stock is entitled to participate equally in any distribution
of net assets made to the stockholders in liquidation, dissolution or winding up
the Company and is entitled to participate equally in dividends as and when
declared by the Company's Board of Directors. There are no redemption, sinking
fund, conversion or preemptive rights with respect to the shares of Common
Stock. All shares of Common Stock have equal rights and preferences. The
transfer agent and registrar for the Common Stock is American Stock Transfer &
Trust Co.
PREFERRED STOCK
As of the date of this Prospectus, no shares of Preferred Stock were issued
or outstanding. The Board of Directors is authorized to fix or alter the rights,
preferences, privileges and restrictions of any wholly unissued series of
Preferred Stock, including the dividend rights, original issue price, conversion
rights, voting rights, terms of redemption, liquidation preferences and sinking
fund terms thereof, and the number of shares constituting any such series and
the designation thereof and to increase or decrease the number of shares of such
series subsequent to the issuance of shares of such series (but not below the
number of shares then outstanding). The Board of Directors, without shareholder
approval, can issue Preferred
47
<PAGE> 54
Stock with the voting and conversion rights described above, which could
adversely affect the voting power of the shareholders of Common Stock.
CERTAIN ANTI-TAKEOVER PROVISIONS
The Company's Board of Directors may authorize the issuance of additional
shares of Common Stock or Preferred Stock without further action by the Company
shareholders, unless such action is required in a particular case by applicable
laws or regulation. The authority to issue additional Common Stock or Preferred
Stock provides the Company with the flexibility necessary to meet its future
needs without the delay resulting from seeking shareholder approval. The
unissued Common Stock or Preferred Stock may be issued from time to time for any
corporate purposes, including without limitation, stock splits, stock dividends,
employee benefit and compensation plans, acquisitions and public and private
sales for cash as a means of raising capital. Such shares could be used to
dilute the stock ownership of persons seeking to obtain control of the Company.
In addition, the sale of a substantial number of shares of Common Stock or
Preferred Stock to persons who have an understanding with the Company concerning
the voting of such shares, or the distribution or dividend of Common Stock or
Preferred Stock (or right to receive such shares) to the Company's shareholders,
may have the effect of discouraging or otherwise increasing the cost of
unsolicited attempts to acquire control of the Company. Further, because the
Company's Board has the power to determine the voting, conversion or other
rights of the Preferred Stock, the issuance of a series of Preferred Stock to
persons friendly to management could effectively discourage or preclude
consummation of a change in control transaction or have the effect of
maintaining the position of the Company's incumbent management. The Company does
not currently have any plans or commitments to use its authority to effect any
such issuance, but reserves the right to take any action that the Board of
Directors deems to be in the best interests of the Company and its shareholders.
The Company's Bylaws also contain provisions that provide that the Board of
Directors shall be divided into three classes as nearly equal in number as the
then total number of directors constituting the Board permits, with the total of
office of one class expiring each year. The classification of directors has the
effect of making it more difficult to change the composition of the Board of
Directors. At least two shareholder meetings, instead of one, is required to
effect a change in a majority of the Board. The Board believes that the longer
time required to elect a majority of a classified Board will help to assure the
continuity and stability of the Company's directors and policies in the future,
since a majority of the directors at any given time will have prior experience
as directors of the Company. The classification provision applies for every
election of directors, regardless of whether a change in the Board might
arguably be beneficial to the Company and its shareholders and whether or not a
majority of the Company's shareholders believes that such a change would be
desirable.
The Company is subject to several provisions under Florida law which may
deter or frustrate unsolicited attempts to acquire certain Florida corporations.
These statutes, commonly referred to as the "Control Share Act" and the "Fair
Price Act," apply to most public corporations organized in Florida unless the
corporation has specifically elected to opt out of such
48
<PAGE> 55
provisions. The Company has not elected to opt out of these provisions. The Fair
Price Act generally requires that certain transactions between a public
corporation and an affiliate must be approved by two-thirds of the disinterested
directors or shareholders (not including those shares beneficially owned by an
"interested shareholder"). The Control Share Act generally provides that shares
of a public corporation acquired in excess of certain specified thresholds will
not posses any voting rights unless such voting rights are approved by a
majority vote of the corporation's disinterested shareholders. These
anti-takeover provisions of Florida law could result in the Company being less
attractive to a potential acquirer and/or result in shareholders receiving less
for their shares than might otherwise might be available in the event an
unsolicited takeover attempt.
CERTAIN INDEMNIFICATION AND LIMITED LIABILITY PROVISIONS
The Florida Business Corporation Act authorizes a company to indemnify its
directors and officers in certain instances against certain liabilities which
they may incur by virtue of their relationship with the company. A company may
indemnify any director, officer, employee or agent against judgments, fines,
penalties, amounts paid in settlement, and expenses incurred in any pending,
threatened or completed civil, criminal, administrative, or investigative
proceeding (except an action by the company) against him in his capacity as a
director, officer, employee, or agent of the company, or another company if
serving in such capacity at the company's request if he:
* acted in good faith;
* acted in a manner which he reasonably believed to be in or not opposed
to the best interests of the company; and
* with respect to a criminal action, had no reasonable cause to believe
his conduct was unlawful.
Furthermore, a company may indemnify any director, officer, agent or
employee against expenses incurred in defense or settlement of any proceeding
brought by the company against him in his capacity as a director, officer,
employee or agent of the company, or another company if serving in such capacity
at the company's request, if he:
* acted in good faith;
* acted in a manner which he reasonably believed to be in or not opposed
to the best interests of the company; and
* is not adjudged to be liable to the company (unless the court finds
that he is nevertheless reasonably entitled to indemnity for expenses
which the court deems proper). A company must repay the expenses of any
director, officer, employee or agent who is successful on the merits of
an action against him in his capacity as such.
49
<PAGE> 56
A Florida company is authorized to make any other or further
indemnification or advancement of expenses of any of its directors, officers,
employees, or agents, except for acts or omissions which constitute:
* a violation of the criminal law (unless the individual had reasonable
cause to believe it was lawful);
* a transaction in which the individual derived an improper personal
benefit;
* in the case of a director, a circumstance under which certain liability
provisions of the Florida Business Corporation Act are applicable
(related to payment of dividends or other distributions or repurchases
of shares in violation of such Act); or
* willful misconduct or a conscious disregard for the best interest of
the company in a proceeding by the company, or a company shareholder.
A Florida company also is authorized to purchase and maintain liability
insurance for its directors, officers, employees and agents.
The Company's Articles of Incorporation and Bylaws provide that the Company
shall indemnify each of its directors and officers to the fullest extent
permitted by law, and that the indemnity will include advances for expenses and
costs incurred by such director or officer related to any action in regard to
which indemnity is permitted. The Company expects to purchase directors' and
officers' liability insurance covering its directors and officers against
expenses and liabilities arising from certain actions to which they may become
subject by reason of having served in such role. Such insurance, if obtained, is
subject to the coverage amounts, exceptions, deductibles and other conditions
set forth in the policy. There is no assurance that the Company will obtain or
will be able to maintain liability insurance for its directors and officers.
Ordinarily, such policies do not cover liability arising under the Securities
laws.
The Company has entered into indemnification agreements with each of its
directors. Pursuant to such agreements the Company will indemnify each director
to the full extent allowed, authorized or not prohibited by Florida Statutes
Section 607.0850 covering indemnification of directors, officers, employees and
agents. The agreements are intended to indemnify the directors against liability
arising from their acts or omissions in such capacity in as broad a manner as is
possible under current law.
Florida Statutes Section 607.0831 limits the liability of directors. The
Company's directors shall not be personally liable to the Company or its
stockholders for monetary damages for the breach of the 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 that his conduct was lawful, or had no
reasonable cause to believe that 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
50
<PAGE> 57
committed in bad faith or with malicious purpose or in a manner exhibiting
wanton and willful disregard of human rights, safety, or property.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers, or
controlling persons of the Company pursuant to the above provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering (and assuming the maximum number of shares
is sold), the Company expects to have 1,000,000 shares of its Common Stock
outstanding. The 1,000,000 shares of the Company's Common Stock purchased in
this Offering have been registered with the Securities and Exchange Commission
(the "Commission") under the Securities Act, and may generally be resold without
registration under the Securities Act unless they were acquired by directors,
executive officers, or other affiliates of the Company or the Bank
(collectively, "Affiliates"). Affiliates of the Company may generally only
resell shares of the Common Stock publicly without registration under the
Securities Act pursuant to the Commission's Rule 144.
In general, under Rule 144 as currently in effect, an affiliate (as defined
in Rule 144) of the Company may sell shares of Common Stock within any
three-month period in an amount limited to the greater of 1% of the outstanding
shares of the Company's Common Stock (10,000 shares immediately after the
completion of this Offering) or the average weekly trading volume in the
Company's Common Stock during the four calendar weeks preceding such sale. Sales
under Rule 144 are also subject to certain manner-of-sale provisions, notice
requirements and the availability of current public information about the
Company.
The Company and the directors and officers of the Company and the Bank (who
are expected to hold an aggregate of approximately 123,500 shares after this
Offering), have agreed, or will agree, that they will not issue, offer for sale,
sell, grant any options for the sale of or otherwise dispose of any shares of
Common Stock or any rights to purchase shares of Common Stock, in the open
market or otherwise, without the prior written consent of the Managing Dealer
for a period of 180 days from the date of this Prospectus. Prior to this
Offering, there has been no public trading market for the Common Stock, and no
predictions can be made as to the effect, if any, that sales of shares or the
availability of shares for sale will have on the prevailing market price of the
Common Stock after completion of this Offering. Nevertheless, sales of
substantial amounts of Common Stock in the public market could have an adverse
effect on prevailing market prices.
51
<PAGE> 58
PLAN OF DISTRIBUTION
Subject to the terms and conditions contained in the Placement Agreement,
Coast Partners Securities, Inc., as Managing Dealer, has agreed to use its best
efforts to sell 1,000,000 shares of the Company's Common Stock
The Company has been advised by the Managing Dealer that it proposes to
offer the Common Stock to the public at the public offering price set forth on
the cover page of this Prospectus and to certain selling dealers at such price,
less a concession not in excess of $0.95 per share of which $0.25 represents an
investment banking fee and the remaining $0.70 represents a Managing Dealer fee.
However, no Managing Dealer fee will be assessed with respect to sales to
certain investors identified by the Company to the Managing Dealer, in writing,
prior to the effectiveness of the registration statement of which this
Prospectus is a part, and that the Managing Dealer and such dealers may realize
a concession not in excess of $0.05 per share to other dealers.
Unless waived by the Company, shares of Common Stock will be sold to the
public only in minimum lots of 250 shares ($2,500) and any one investor will be
permitted to purchase a maximum of 50,000 shares ($500,000).
The Managing Dealer has informed the Company that it does not intend to
confirm sales of the shares of Common Stock offered hereby to any accounts over
which it exercises discretionary authority.
The Company, its directors and executive officers and those of the Bank
have agreed or will agree with the Managing Dealer, for a period of 180 days
after the date of this Prospectus, not to issue, sell, offer to sell, grant any
options for the sale of, or otherwise dispose of any shares of Common Stock or
any rights to purchase shares of Common Stock, in the open market or otherwise,
without the prior written consent of the Managing Dealer.
The Managing Dealer has advised the Company that it presently intends to
make a market in the Common Stock after the closing of the Offering, but no
assurance can be made as to the liquidity of the Common Stock or that an active
and liquid trading market will develop or, if developed, that it will be
sustained. The Managing Dealer will have no obligation to make a market in the
Common Stock, however, and may cause market-making activities, if commenced, to
cease at any time.
The Company and the Managing Dealer have agreed to indemnify, or to
contribute to payments made by, each other against civil liabilities, including
civil liabilities under the Securities Act.
There has been no public trading market for the Common Stock. The offering
price of $10 per share was determined by negotiations between the Company and
the Managing Dealer. This price is not based upon earnings or any history of
operations and should not be construed to indicate the present or anticipated
future value of the Common Stock. Several factors were considered in determining
the offering price of the Common Stock, among them the size of the
52
<PAGE> 59
offering, the desire that the security being offered be attractive to
individuals and the Managing Dealer's experience in dealing with initial public
offerings for financial institutions.
LEGAL PROCEEDINGS
Neither the Bank nor the Company is a party to, nor is it aware of, any
pending legal proceeding. Management believes there is no litigation threatened
in which the Company or the Bank faces potential loss or exposure or which will
materially affect stockholders' equity or the Company's business or financial
condition upon completion of this Offering.
LEGAL MATTERS
The legality of the shares of Common Stock being offered hereby will be
passed upon for the Company by Gunster, Yoakley, Valdes-Fauli & Stewart, P.A. of
Miami, Florida which is acting as counsel for the Company.
Certain legal matters will be passed upon for the Managing Dealer by Kutak
Rock, Denver, Colorado.
EXPERTS
The financial statements of the Company included in this Prospectus have
been audited by Morrison, Brown, Argiz & Co. , independent public accountants,
as indicated in their report (included herein) on the Company. These financial
statements have been included in this prospectus and in the Registration
Statement in reliance upon the authority of the accounting firm as experts in
accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement with the Commission in
accordance with the provisions of the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
portions of which have been omitted as permitted by the rules and regulations of
the Commission. For further information pertaining to the shares of Common Stock
offered hereby and to the Company, reference is made to the Registration
Statement, including the Exhibits filed as a part thereof, copies of which can
be inspected at and copied at the prescribed rates at the Public Reference
Section of the Commission Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following Commission's regional offices: Northeast Regional
Office, 7 World Trade Center, Suite 1300, New York, New York 10048; and Midwest
Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. In addition, the Company is required to file electronic versions of
these documents with the Commission through the Commission's Electronic Data
Gathering, Analysis and Retrieval (EDGAR) system. The Commission maintains a
World Wide Web site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.
53
<PAGE> 60
INDEPENDENT AUDITOR'S REPORT
- ----------------------------
To the Board of Directors
Coastal BHC, Inc.
We have audited the accompanying balance sheet of Coastal BHC, Inc. (a
development stage company) (the "Company") as of December 31, 1998, and the
related statement of operations, changes in stockholder's deficit, and cash
flows for the period from October 6, 1998 (date of inception) to December 31,
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 Coastal BHC, Inc. as of
December 31, 1998, and the results of its operations and its cash flows for the
period from October 6, 1998 (date of inception) to December 31, 1998, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in NOTE 1 to the
financial statements, the Company's ability to commence operations is dependent
on obtaining regulatory approval and adequate financial resources through a
contemplated public offering, or otherwise. The Company's ability to achieve the
foregoing elements of its business plan, which may be necessary to permit the
realization of assets and satisfaction of liabilities in the ordinary course of
business, is uncertain. Those conditions raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
MORRISON, BROWN, ARGIZ & COMPANY
Certified Public Accountants
Miami, Florida
January 26, 1999
<PAGE> 61
COASTAL BHC, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
BALANCE SHEET ......................................................... F-2
STATEMENT OF OPERATIONS ............................................... F-3
STATEMENT OF CHANGES IN STOCKHOLDER'S DEFICIT ......................... F-4
STATEMENT OF CASH FLOWS ............................................... F-5
NOTES TO FINANCIAL STATEMENTS ......................................... F-6-F-11
F-1
<PAGE> 62
COASTAL BHC, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Cash $ 161,642
Other 14,106
---------
$ 175,748
=========
LIABILITIES AND STOCKHOLDER'S DEFICIT
LIABILITIES
Accounts payable and accrued expenses $ 58,569
Accrued interest payable - stockholder 7,753
Note payable - stockholder 300,000
---------
TOTAL LIABILITIES 366,322
---------
STOCKHOLDER'S DEFICIT:
Common stock, $.01 par value,
10,000,000 shares authorized;
500 shares issued and outstanding 5
Preferred stock, $.01 par value,
2,000,000 shares authorized;
none issued and outstanding --
Additional paid-in capital 4,995
Deficit accumulated during the development stage (195,574)
---------
TOTAL STOCKHOLDER'S DEFICIT (190,574)
---------
$ 175,748
=========
The accompanying notes are an integral part
of these financial statements.
F-2
<PAGE> 63
COASTAL BHC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
PERIOD FROM OCTOBER 6, 1998 (DATE OF INCEPTION)
TO DECEMBER 31, 1998
INTEREST INCOME $ 2,452
---------
ADMINISTRATIVE EXPENSES (190,273)
INTEREST EXPENSE (7,753)
---------
TOTAL EXPENSES (198,026)
---------
NET LOSS ACCUMULATED DURING
THE DEVELOPMENT STAGE $(195,574)
=========
BASIC AND DILUTED LOSS PER SHARE $ (391.15)
=========
The accompanying notes are an integral part
of these financial statements.
F-3
<PAGE> 64
COASTAL BHC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDER'S DEFICIT
PERIOD FROM OCTOBER 6, 1998 (DATE OF INCEPTION)
TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
Additional Total
Common Paid-In Accumulated Stockholder's
Stock Capital Deficit Deficit
--------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Initial Issuance of
common stock $ 5 $ 4,995 $ -- $ 5,000
Net loss accumulated during
the development stage -- -- (195,574) (195,574)
--------- --------- --------- ---------
Balances - December 31, 1998 $ 5 $ 4,995 $(195,574) $(190,574)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
F-4
<PAGE> 65
COASTAL BHC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM OCTOBER 6, 1998 (DATE OF INCEPTION)
TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(195,574)
----------
Adjustments to reconcile net loss to net cash used by
administrative activities during the development stage:
Change in operating assets and liabilities:
Other assets (14,106)
Accounts payable and accrued expenses 58,569
Accrued interest payable - related party 7,753
---------
TOTAL ADJUSTMENTS 52,216
---------
NET CASH USED IN OPERATING ACTIVITIES (143,358)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Note payable - stockholder 300,000
Proceeds from issuance of common stock 5,000
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 305,000
---------
NET INCREASE IN CASH AND CASH AT END OF PERIOD $ 161,642
=========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
F-5
<PAGE> 66
COASTAL BHC, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) GENERAL
Coastal BHC, Inc. (the "Company") is a development stage
enterprise and was incorporated on October 6, 1998 in the State of
Florida. The Company plans to apply for approval from the Board of
Governors of the Federal Reserve System ("Board of Governors") to
become a one-bank holding company and plans to acquire 100% of the
outstanding shares of Coastal Community Bank (the "Bank"), which
is planned to be incorporated and organized in Tallahassee,
Florida. The operations of the Company, which are intended to
consist solely of the ownership of the Bank, have not commenced as
of December 31, 1998. The accounting policies of the Company are
in accordance with generally accepted accounting principles and
conform to the standards applicable to development stage
companies. The Company has adopted December 31 as its fiscal year
end.
(B) GOING CONCERN
The Company's ability to commence operations is dependent on
obtaining regulatory approval and adequate financial resources
through a contemplated public offering, or otherwise, as described
in NOTE 7. If unsuccessful, the Company may be unable to continue
in its present form. The financial statements do not include any
adjustments relating to the realization, recoverability and
classification of assets or the amount, satisfaction and
classification of liabilities that might result should the Company
be unable to continue as a going concern.
(C) 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.
(D) INCOME TAXES
The Company accounts for income taxes under the method prescribed
by Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes" ("FAS 109"). Under FAS 109, deferred taxes are
recorded based upon differences between the financial statement
and tax bases of assets and liabilities and available tax loss
carryovers.
F-6
<PAGE> 67
COASTAL BHC, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(E) ORGANIZATIONAL EXPENSES
The Company has adopted Statement of Position 98-5 "Reporting on
Costs of Start-Up Activities" ("SOP 98-5"). SOP 98-5 requires the
Company to expense costs of start-up activities, including
organization costs, as incurred.
(F) RECENT PRONOUNCEMENTS
In June, 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 130, "Reporting Comprehensive Income," which
requires companies to report by major components and in total, the
change in its net assets during the period from non-owner sources.
The FASB also issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," which establishes annual
reporting standards for a company's operating segments and related
disclosures about its products, services, geographic areas and
major customers. The adoption of these standards did not have an
effect on the Company's financial position, results of operations
or cash flows.
(G) EARNINGS PER SHARE
The net income (loss) per share is computed by dividing the net
income or loss for the period by the weighted average number of
shares outstanding for the period plus the dilutive effect of
outstanding common stock options and warrants considered to be
common stock equivalents. Basic and diluted earnings per share
amounts are equal because the Company has a net loss and stock
options and other common stock equivalents are excluded from the
1998 net loss per share calculation as their effect would be
antidilutive. The weighted average number of shares used to
compute earnings per share were 500 shares.
NOTE 2 - ORGANIZATION
On November 16,1998, the organizers of the Company filed an application
for authority to form a state-chartered bank with the Comptroller of
the State of Florida Department of Banking and Finance. The approval of
this application is contingent upon certain conditions being met. These
conditions include, among other things, the establishment of total
capital accounts of not less than $4 million, with not less than $2
million allocated to common capital, after all organizational and
pre-opening expenses and the approval by the Board of Governors of the
Federal Reserve System of the Company's application to acquire the
stock of the Bank as a registered bank holding company.
F-7
<PAGE> 68
NOTE 3 - RELATED PARTIES
The Company has appointed one of its organizers as its President and
Chief Executive Officer.
The Company borrowed $300,000, in the form of an unsecured demand note
payable to its stockholder. This note, which accrues interest at a rate
of prime plus 2% (9.75% at December 31, 1998), has been used to fund
organizational and other costs incurred by the Company and the planned
Bank and has been guaranteed by one of the Company's organizers. It is
intended that the note will be repaid from the proceeds of the
Company's common stock offering.
NOTE 4 - INCOME TAXES
The approximate tax effects of significant temporary differences which
comprise the deferred tax assets at December 31, 1998 are as follows:
Net operating loss carryforward $ 73,500
Less valuation allowance (73,500)
--------
$ -0-
========
The Company has available an unused net operating loss carryforward of
approximately $196,000 for both regular and alternative minimum tax
purposes, which may be applied against future taxable income. The net
operating loss carryforward expires in the year 2013.
Due to the uncertain nature of the ultimate realization of the
carryforward benefits, the Company has established a full valuation
allowance against the benefits of the net operating loss carryforward
and will recognize these benefits only as reassessment demonstrates
they are realizable. Ultimate realization is dependent upon future
earnings. While the need for this valuation allowance is subject to
periodic review, if the allowance is reduced, the tax benefits of the
carryforward will be recorded in future operations as a reduction of
the Company's income tax expense.
NOTE 5 - CONCENTRATIONS OF CREDIT RISK
The Company maintains cash deposited in local banks which may, at
times, exceed the FDIC insured limits. At December 31, 1998, the
Company exceeded this limit by approximately $106,000.
Substantially all of the Bank's loans are expected to be to businesses
and individuals in the Miami-Dade County, Florida, area. Any decline in
the economy of this area could have an adverse impact on the Bank.
Although the Bank does not plan to make foreign loans or investments,
the economy of Miami and Miami-Dade County is based, in a significant
part, on international trade and investment and international tourism,
particularly with respect to
F-8
<PAGE> 69
NOTE 5 - CONCENTRATIONS OF CREDIT RISK (CONTINUED)
Latin America. The economies and governments of Latin America have
historically been, and continue to be, fragile and volatile. Any
economic downturn or political or economic crisis in the region as a
whole, or in a particular country important to the local market such as
Brazil or Venezuela, would have an adverse effect on the local economy
and might negatively affect the Bank.
NOTE 6 - COMMITMENTS
The Company has an option to lease bank facilities under an operating
lease. The option is contingent upon regulatory approval and upon the
termination of the current tenant's lease. In the event that the
current tenant does not terminate its lease, the current tenant has
agreed to sublease the facilities to the Company. Expected future
minimum rental commitments under a noncancelable lease will be
approximately $100,000 per year.
The Company has entered into an employment agreement with its President
providing an annual base compensation of $120,000. Upon commencement of
bank operations, the Company is required to increase the annual base
compensation to $170,000. In addition, the Company is required to make
a lump-sum payment in the amount that would have been paid during the
organizational period, had the annual base compensation been $170,000
(NOTE 11).
NOTE 7 - SALE OF COMMON SHARES AND WARRANTS
The Company plans to offer a total of 1,000,000 shares of its common
stock to the public. The price per share is expected to be $10. The
Company expects to incur approximately $100,000 in offering costs
relating to these sales and to pay between $855,000 and $950,000 in
discounts and fees to its placement agent.
NOTE 8 - INCENTIVE STOCK OPTION PLAN
The Company has adopted an Incentive Stock Option Plan ("Incentive
Plan"). The Incentive Plan provides for the grant of options, at the
discretion of a committee designated by the Board of Directors, to
administer the Incentive Plan. 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 and the options are exercisable by the holder thereof, in full,
immediately or at anytime following a vesting period, as determined by
the committee and prior to their expiration in accordance with the
terms of the Incentive Plan. The Company has reserved 150,000 shares
for issuance under the Incentive Plan.
NOTE 9 - OUTSIDE DIRECTOR STOCK OPTION PLAN
The Company has adopted an Outside Director Stock Option Plan ("Outside
Director Plan"). The Outside Director Plan provides for the grant of
options to non-employee directors automatically at the rate of 3,000
options per year for each outside director and an additional
F-9
<PAGE> 70
NOTE 9 - OUTSIDE DIRECTOR STOCK OPTION PLAN (CONTINUED)
1,000 options to each director serving on any of the Bank's
committees. The exercise price of the options is required to be no
lower than the fair market value as of the date of the grant. The
options are exercisable immediately and remain exercisable for a
period of ten years. The Company has reserved 150,000 shares for
issuance under the Outside Director Plan.
NOTE 10 - WARRANT PLAN
The Company has adopted a Warrant Plan ("Warrant Plan"). Under the
Warrant Plan, the Company is committed to grant 50,000 warrants to
purchase the common stock of the Company at $10.00 per share to three
organizers of the Bank. The warrants are non-transferable, will vest
immediately and will be exercisable after the first anniversary of the
opening of the Bank and will remain exercisable for a period of ten
years. The Company has reserved 150,000 shares for issuance under the
Warrant Plan.
NOTE 11 - EXECUTIVE EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with its President on
December 9, 1998 for an initial three year term effective on September
1, 1998. Under this agreement, the Company pays the President a
monthly salary of $10,000 during the organizational period. At the end
of this period, and upon commencement of operations of the Bank, the
Company will pay the President a lump sum amount based upon the
differential between an annual compensation of $120,000 and a base
salary of $170,000. The agreement shall be automatically renewed for
successive one year periods unless the Company and the Bank or the
President gives notice to terminate to the other party 180 days prior
to the expiration of the term.
After the organizational period, the employment agreement will provide
for a base salary of $170,000, an annual incentive bonus in an amount
determined by the Board of Directors, participation in the Company's
health, life, disability, retirement or any other company employee
benefit plans, vacation, and certain expenses. Additionally, the
employment agreement provides that the Company will purchase an
existing $1,000,000 single premium split dollar life insurance policy
on the President's life for $147,000 (approximate cash surrender
value) at the time that the Bank commences operations. This insurance
policy is currently owned by a former employer pursuant to a deferred
compensation agreement with a term of ten years. Currently the
agreement has five years remaining before it terminates.
Prior to the commencement of operations, the Company has been paying
interest on the $147,000 at a rate of 1% over prime to the President's
former employer. Pursuant to the former employer's agreement, 90 days
after the President terminated his employment with that former
employer, the former employer recorded the $147,000 as a loan to the
President, secured by the $1,000,000 death benefit and an assignment
of the cash surrender value. When the agreement terminates, the
President will reimburse the Company for the $147,000 it paid for the
policy. The cash surrender value of the policy will secure the
$147,000. The President is not required to pay the Company or the Bank
any interest with respect to this amount.
F-10
<PAGE> 71
NOTE 12 - NON-STATUTORY OPTIONS GRANTED UNDER THE EMPLOYMENT AGREEMENT
The Company is committed to grant the President 50,000 non-statutory
options to purchase its common stock at $10.00 per share, vesting at
10,000 shares per year at the opening of the Bank and on each of the
next four anniversaries of the Bank's opening. The Company has
reserved 50,000 shares for issuance under this agreement.
NOTE 13 - STOCKHOLDER'S EQUITY
The authorized capital stock of the Company presently consists of
10,000,000 shares of common stock, par value $.01 per share, and
2,000,000 shares of preferred stock, par value $.01 per share. As of
December 31, 1998, the Company has sold 500 shares of common stock for
an aggregate of $5,000. There were no shares of preferred stock issued
or outstanding.
The holders of common stock are entitled to one vote for each share of
record held on all matters voted upon by stockholders. Each share of
outstanding common stock is entitled to participate equally in any
distribution of net assets made to the stockholders in liquidation,
dissolution, or winding down of the Company and is entitled to
participate equally in dividends as and when declared by the Company's
Board of Directors.
The Board of Directors is authorized to fix or alter the rights,
preferences, privileges and restrictions of any wholly unissued series
of preferred stock, including the dividend rights, original issue
price, conversion rights, voting rights, terms of redemption,
liquidation preferences, and the number of shares constituting any
such series and the designation thereof and to increase or decrease
the number of shares of such series subsequent to the issuance of
shares of such series (but not below the number of shares then
outstanding). The Board of Directors, without shareholder approval,
can issue preferred stock, which could adversely affect the voting
power of the shareholders of common stock.
NOTE 14 - YEAR 2000 SYSTEMS COSTS
The Company expects to utilize software and related technologies
throughout its operations that may be affected by the date change in
the year 2000. The Company is in the process of evaluating the full
scope and related costs to insure that the Company's systems will meet
its internal needs and those of its customers. However, the Company
cannot measure the impact that the Year 2000 issue will have on its
investments, vendors, suppliers, customers and other parties with whom
it expects to conduct business.
F-11
<PAGE> 72
- --------------------------------------------------------------------------------
You should rely only on the information contained in this
prospectus. We have not authorized anyone to provide you with different
information.
We are not offering the Common Stock in any state where the
offer is not permitted.
We represent the accuracy of the information in this
prospectus only as of the date set forth on the cover page.
Until ____________, 1999, all dealers effecting transactions
in these securities, 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 Managing
Dealers and with respect to their unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary ............................................................ 1
Risk Factors................................................................... 4
Recent Developments ........................................................... 12
Use of Proceeds ............................................................... 13
Dividend Policy ............................................................... 16
Capitalization ................................................................ 16
Management's Discussion and Analysis of Financial Condition and Results
of Operations ............................................................... 17
Business ...................................................................... 18
Supervision and Regulation..................................................... 26
Management .................................................................... 35
Principal Shareholders ........................................................ 44
Certain Transactions .......................................................... 45
Description of Capital Stock .................................................. 47
Shares Eligible for Future Sales .............................................. 51
Plan of Distribution .......................................................... 52
Legal Proceedings ............................................................. 53
Legal Matters ................................................................. 53
Experts ....................................................................... 53
Additional Information ........................................................ 53
Index to Financial Statements.................................................. F-1
</TABLE>
1,000,000 SHARES
COASTAL BHC, INC.
COAST PARTNERS SECURITIES, INC.
COMMON STOCK PROSPECTUS
___________, 1999
<PAGE> 73
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24: INDEMNIFICATION OF OFFICERS AND DIRECTORS
As provided under Florida law, the Company's directors shall not be
personally liable to the Company or its stockholders for monetary damages for
the breach of the 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 that his conduct was lawful, or had no reasonable cause to believe that
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.
The Company's Articles of Incorporation and Bylaws provide that the
Company shall indemnify each of its directors and officers to the fullest extent
permitted by law, and that the indemnity will include advances for expenses and
costs incurred by such director or officer related to any action in regard to
which indemnity is permitted. At present, the Company expects to purchase
directors' and officers' liability insurance covering its directors and officers
against expenses and liabilities arising from certain actions to which they may
become subject by reason of having served in such role.
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 Managing Dealer's discounts and commissions, if any.
All of the amounts shown are estimated except for the registration fees of the
SEC.
SEC Registration Fees ............................................. $2,780.00
Blue Sky Registration Fees and Expenses ........................... 1,950.00
---------
Legal Fees and Expenses ........................................... *
---------
NASD Filing Fees .................................................. $1,500.00
Accounting Fees ................................................... *
---------
Printing and Engraving Expenses ................................... *
---------
Advertising ....................................................... *
---------
Total .................................................... $ *
=========
- ----------------------
* To be completed by amendment.
ITEM 26: RECENT SALES OF UNREGISTERED SECURITIES
The only sale of stock of the Company is to director Jerome J. Bushman
in the amount of 500 shares of common stock at $10.00 per share. The sale to Mr.
Bushman did not involve a public offering and the Company claimed exemption from
registration pursuant to Section 4(2) of the Securities Act of 1933 and SEC Rule
506.
II-1
<PAGE> 74
ITEM 27: EXHIBITS
The following exhibits are filed as part of this Registration
Statement:
Exhibit
Number Description of Exhibit
- ------- ----------------------
*1. Form of Placement Agreement between the Company and Coast Partners
Securities, Inc.
3.1 Articles of Incorporation of the Company
3.2 Bylaws of the Company
4.1 Form of Specimen Common Stock Certificate
4.2 Form of Warrant Plan adopted by the Company on December 9, 1998
4.3 1998 Incentive Stock Option Plan and Agreement adopted by the Company
on December 9, 1998
4.4 Form of Outside Director Stock Option Plan
4.5 Indemnification Agreement by and between the Company and Hans C.
Mueller dated December 9, 1998
4.6 Form of Restricted Non-Statutory Option Plan
5.1 Opinion of Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
@10.1 Employment Agreement between the Company, the Bank and Hans C. Mueller
dated as of September 1, 1998
10.2 Option to Lease between the Company and MCH Properties, Inc. dated
November 16, 1998
23.1 Consent of Gunster, Yoakley, Valdes-Fauli & Stewart, P.A. (included in
Exhibit 5.1 hereto)
23.2 Consent of Morrison, Brown, Argiz & Company
24. Power of Attorney (included on the signature page to this Registration
Statement)
27. Financial Data Schedule for the Company as of and for the Year Ended
November 30, 1998
- ------------------
@ Contracts with executive officers
* To be filed by amendment.
ITEM 28: UNDERTAKINGS
(d) The Registrant will provide to the Managing Dealer at the closing
specified in the placement agreement, certificates in such denominations and
registered in such names as required by the Managing Dealer to permit prompt
delivery to each purchaser.
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act) may be permitted to directors, officers, or controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
II-2
<PAGE> 75
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer, or controlling person of the Registrant in the 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 Securities Act and will be governed by the final adjudication
of such issue.
[THIS SPACE INTENTIONALLY LEFT BLANK]
II-3
<PAGE> 76
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Miami, State of Florida, on March 25, 1999.
COASTAL BHC, INC.
(Registrant)
By: /s/ Hans C. Mueller
----------------------------
Hans C. Mueller, Chairman, President
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Hans C. Mueller as his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him in his name, place, and stead in any and all capacities, to sign any and
all amendments (including post effective amendments) to this Registration
Statement, and to file same, with all exhibits thereto, and other documents in
connection therewith, with the SEC, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises as fully and to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
/s/ Hans C. Mueller /s/ Jerome J. Bushman
- ------------------------------------------ --------------------------------
Hans C. Mueller, Chairman, President Jerome J. Bushman, Director
and Chief Executive Officer,
Chief Financial and Accounting Officer
Date: March 25, 1999 Date: March 25, 1999
/s/ Allen M. Voelz /s/ James C. Merrill
- ------------------------------------------ --------------------------------
Allen M. Voelz, Director James C. Merrill, Director
Date: March 25, 1999 Date: March 25, 1999
/s/ Alex Soto /s/ Linda Marraccini, M.D.
- ------------------------------------------ --------------------------------
Alex Soto, Director Linda Marraccini, M.D., Director
Date: March 25, 1999 Date: March 25, 1999
II-4
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
COASTAL BHC, INC.
- -------------------------------------------------------------------------------
The undersigned, for the purpose of forming a corporation for profit
under the laws of Florida, hereby adopts the following Articles of
Incorporation:
ARTICLE I
NAME AND PRINCIPAL PLACE OF BUSINESS
The name of the Corporation is:
COASTAL BHC, INC.
The Corporation's initial place of business shall be One Biscayne
Tower, Suite 3400, Two South Biscayne Boulevard, Miami, Florida 33131.
ARTICLE II
DURATION AND EXISTENCE
This Corporation shall exist perpetually. The existence of the
Corporation shall commence on the date these Articles of Incorporation shall be
filed with the Florida Secretary of State or on a date specified herein, if
said date is within five (5) days prior to the date of filing.
ARTICLE III
NATURE OF BUSINESS
This Corporation is organized for the purpose of transacting any and
all lawful business for which corporations may be organized under the Florida
Business Corporation Act.
THIS DOCUMENT PREPARED BY:
Richard J. Bischoff, Esq.
Suite 3400 - One Biscayne Tower
2 South Biscayne Boulevard
Miami, Florida 33131
Tel: (305) 376-6016
Florida Bar No.: 140232
<PAGE> 2
ARTICLE IV
PRINCIPAL OFFICE AND MAILING ADDRESS
The principal office of the Corporation shall be One Biscayne Tower,
Suite 3400, Two South Biscayne Boulevard, Miami, Florida 33131.
The initial mailing address of the Corporation shall be: One Biscayne
Tower, Two South Biscayne Boulevard, Suite 3400, Miami, Florida 33131.
ARTICLE V
CAPITAL STOCK
The aggregate number of shares which the Corporation shall have
authority to issue is 10,000,000 shares of Common Stock which shall have a par
value of $0.01 per share and 2,000,000 shares of Preferred Stock which shall
have $0.01 par value. Shareholders shall have no preemptive rights. Cumulative
voting shall not be permitted.
The preferences, limitations and relative rights of the Preferred
Stock shall be as follows:
1. Shares of Preferred Stock may be issued in one or more series at
such time or times and for such consideration as the Board of Directors may
determine. Each such series shall be given a distinguishing designation. All
shares of any one series shall have preferences, limitations and relative
rights identical with those of other shares of the same series and, except to
the extent other wise provided in the description of such series, with those of
other shares of Preferred Stock.
2. Authority is hereby expressly granted to the Board of Directors to
fix from time to time, by resolution or resolutions providing for the
establishment and/or issuance of any series of Preferred Stock, the designation
of such series and the preferences, limitations and relative rights of the
shares of such series, including the following:
(a) The distinctive designation and number of shares
comprising such series, which number may (except where otherwise provided by
the Board of Directors in creating such series) be increased or decreased (but
not below the number of shares then outstanding) from time to time by action of
the Board of Directors;
(b) The voting rights, if any, which shares of that series
shall have, which may be special, conditional, limited or otherwise;
(c) The rate of dividends, if any, on the shares of that
series, whether dividends shall be non-cumulative, cumulative to the extent
earned, partially cumulative or cumulative (and,
-2-
<PAGE> 3
if cumulative, from which date or dates), whether dividends shall be payable in
cash, property or rights, or in shares of the Corporation's capital stock, and
the relative rights of priority, if any, of payment of dividends on shares of
that series over shares of any other series or over the Common Stock;
(d) Whether the shares of that series shall be redeemable
and, if so, the terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable, the event or events upon or
after which they shall be redeemable, whether they shall be redeemable at the
option of the Corporation, the shareholder or another person, the amount per
share payable in case of redemption (which amount may vary under different
conditions and at different redemption dates), whether such amount shall be a
designated amount or an amount determined in accordance with a designated
formula or by reference to extrinsic data or events and whether such amount
shall be paid in cash, indebtedness, securities or other property or rights,
including securities of any other corporation;
(e) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series and, if so, the terms of and
amounts payable into such sinking fund;
(f) The rights to which the holders of the shares of that
series shall be entitled in the event of voluntary or involuntary dissolution
or liquidation of the Corporation, and the relative rights of priority, if any,
of payment of shares of that series over shares of any other series or over the
Common Stock in any such event;
(g) Whether the shares of that series shall be convertible
into or exchangeable for cash, shares of stock of any other class or any other
series, indebtedness, or other property or rights, including securities of
another corporation and, if so, the terms and conditions of such conversion or
exchange, including the rate or rates of conversion or exchange, and whether
such rate shall be a designated amount or an amount determined in accordance
with a designated formula or by reference to extrinsic data or events, the date
or dates upon or after which they shall be convertible or exchangeable, the
duration for which they shall be convertible or exchangeable, the event or
events upon or after which they shall be convertible or exchangeable, and
whether they shall be convertible or exchangeable at the option of the
Corporation, the shareholder or another person, and the method (if any) of
adjusting the rate of conversion or exchange in the event of a stock split,
stock dividend, combination of shares or similar event;
(h) Whether the issuance of any additional shares of such
series or any other series, shall be subject to restrictions as to issuance, or
as to the powers, preferences or rights of any such other series; and
(i) Any other preferences, privileges and powers and
relative, participating, optional or other special rights and qualifications,
limitations or restrictions of such series, as the Board of Directors may deem
advisable and as shall not be inconsistent with the provisions of this Article
V and to the full extent now or hereafter permitted by laws of the State of
Florida.
-3-
<PAGE> 4
The whole or any part of the authorized shares of the Corporation may
be issued for a consid eration payable in cash or other property, tangible or
intangible, or in labor or services which shall have a value as determined from
time to time by the Board of Directors of the Corporation but which shall not
be less than the par value of the stock to be issued therefor, provided that
such services shall have actually been performed for the benefit of the
Corporation prior to the issuance of such stock.
ARTICLE VI
INITIAL REGISTERED OFFICE AND AGENT
The name of the Corporation's initial registered agent at such address
shall be: Richard J. Bischoff, Esq.
The street address of the Corporation's initial registered office
shall be:
One Biscayne Tower
2 South Biscayne Boulevard, Suite 3400
Miami, Florida 33131
ARTICLE VII
DIRECTORS
(a) NUMBER. This Corporation shall have one (1) director initially.
The number of directors may be increased or decreased from time to time as
specified in the bylaws, but shall never be less than one (1) nor more than
fifteen (15). The Board of Directors shall be divided into three classes, Class
I, Class II and Class III. The number of directors elected to each class shall
be as nearly equal in number as possible. The Board shall designate initially
which of the current directors shall serve in each of the classes. Each
director in Class I shall serve an initial term to expire at the annual meeting
next ensuing, each director in Class II shall serve an initial term to expire
one (1) year thereafter and each director in Class III shall serve an initial
term to expire two (2) years thereafter, in each case and until his or her
successor is duly elected and qualified or until his or her earlier
resignation, death or removal from office. Upon the expiration of the initial
terms of office for each class of directors, the directors of each class shall
be elected, except as provided in the bylaws, at the annual meeting of the
shareholders, for a term of three (3) years and to serve until their successors
are duly elected and qualified or until their earlier resignation, death or
removal from office. The Board, by the vote of a majority of the full Board,
may in any year between annual meetings of shareholders increase the membership
of the Board by not more than two (2) members, and by like vote, appoint
qualified persons to fill the vacancies created thereby and designate the class
in which they shall serve. The name and address of the initial director of the
Corporation is:
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Director Address
-------- -------
Hans C. Mueller 255 Palm Avenue,
Miami Beach, Florida 33139
ARTICLE VIII
INDEMNIFICATION
(a) The Corporation shall indemnify to the fullest extent permitted
under, in accordance with or not prohibited by the laws of the State of
Florida, as amended from time to time, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative by
reason of the fact that he is or was a director or officer of the Corporation
or is or was serving at the request of the Corporation as a director or officer
of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan, from
and against any and all of the expenses or liabilities incurred in defending a
civil, criminal, administrative or investigative action, suit or proceeding
(other than in an action, suit or proceeding brought by the Corporation upon
authorization of the Board of Directors), or other matters referred to in or
covered by the provisions of said laws, including advancement of expenses prior
to the final disposition of such proceedings and amounts paid in settlement of
such proceedings.
(b) The Corporation may indemnify to the fullest extent permitted
under, in accordance with or not prohibited by the laws of the State of
Florida, as amended from time to time, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative by
reason of the fact that he is or was an employee or agent of the Corporation or
is or was serving at the request of the Corporation as an employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan, from
and against any and all of the expenses or liabilities incurred in defending a
civil, criminal, administrative or investigative action, suit or proceeding
(other than in an action, suit or proceeding brought by the Corporation upon
authorization of the Board of Directors), or other matters referred to in or
covered by the provisions of said laws, including advancement of expenses prior
to the final disposition of such proceedings and amounts paid in settlement of
such proceedings.
(c) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation as authorized in this Article VIII. Such expenses (including
attorneys' fees) incurred by other employees and agents may also be so paid
upon such terms and conditions, if any, as the Board of Directors deems
appropriate.
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(d) The rights to indemnification and to the advancement of expenses
conferred in this Article VIII shall be deemed to constitute contract rights.
If a claim under this Article VIII is not paid in full by the Corporation
within sixty (60) days after a written claim has been received by the
Corporation, except in the case of a claim for an Advancement of Expenses, in
which case the applicable period shall be twenty (20) days, the indemnitee may
at any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim. If successful in whole or in part in any such suit, or in
a suit brought by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the indemnitee shall be entitled to be
paid also the expense and cost (including attorneys' fees) of prosecuting or
defending such suit. If any suit brought by the indemnitee to enforce a right
to indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) the Corporation shall have a
full defense to such suit if upon final adjudication it is found that the
indemnitee has not met the applicable standard for indemnification set forth in
the Florida Business Corporation Act. Likewise, in any suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Corporation shall be entitled to recover its expenses and
costs (including attorneys' fees) upon a final adjudication that the indemnitee
has not met the applicable standard for indemnification set forth in the
Florida Business Corporation Act. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
shareholders) to have made a determination prior to the commencement of such
suit that the indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard for indemnification, nor
an actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its shareholders) that the indemnitee has not met
the applicable standard of conduct for indemnification, shall create a
presumption that the indemnitee has not met the applicable standard of conduct
or, in the case of such a suit brought by the indemnitee, be a defense to such
suit. In any suit brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder, or by the
Corporation to recover an advancement of expenses, pursuant to the terms of an
undertaking, the burden of proving that the indemnitee is not entitled to be
indemnified, or to such advancement of expenses, whether under this Article
VIII, by statute, law, contract, or otherwise, shall be on the Corporation.
(e) The indemnification and advancement of expenses provided for
herein shall not be deemed to be exclusive of any other rights to which those
indemnified may be entitled to under any bylaw, agreement, vote of shareholders
or disinterested directors or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office. Such indemnification shall continue as to a person who has ceased to be
a director, officer, employee or agent, and shall inure to the benefit of the
heirs and personal representatives of such a person.
(f) Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article VIII may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of the
occurrence of the event or events giving rise to the action or proceeding, to
the extent provided or authorized by law, or on the basis of the applicable law
in effect at the time indemnification is sought.
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(g) The rights to indemnification and to the reimbursement or
advancement of expenses conferred in this Article VIII shall: (i) be deemed to
constitute contract rights pursuant to which the person entitled thereto may
bring suit as if the provisions hereof were set forth in a separate written
contract between the Corporation and the director or officer (notwithstanding
the existence or non-existence of any separate written contract); (ii) be
intended to be, and shall be, retroactive and shall be available with respect
to events occurring prior to the adoption hereof; (iii) continue to exist after
the rescission or restrictive modification or amendment hereof with respect to
the events occurring prior thereto; and (iv) continue after any termination of
position of employment, whether or not for cause, as to all claims made with
respect to the period during which the claimant was an officer or director.
ARTICLE IX
BYLAWS
The initial bylaws of the Corporation shall be adopted by the Board of
Directors. Bylaws shall be adopted, amended or repealed from time to time by
either the shareholders or the Board of Directors, but the Board of Directors
shall not amend or repeal any bylaw adopted by the shareholders if the
shareholders specifically provide that such bylaw is not subject to amendment
or repeal by the Board of Directors.
ARTICLE X
INCORPORATOR
The name and address of the incorporator are:
Richard J. Bischoff, Esq.
One Biscayne Tower
2 South Biscayne Boulevard, Suite 3400
Miami, Florida 33131
IN WITNESS WHEREOF, the Incorporator has executed these Articles of
Incorporation on this 6 day of October, 1998.
/s/ RICHARD J. BISCHOFF
--------------------------------
Richard J. Bischoff, Incorporator
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COASTAL BHC, INC.
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE
FOR THE SERVICE OF PROCESS WITHIN FLORIDA, NAMING
AGENT UPON WHOM PROCESS MAY BE SERVED
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In compliance with Section 48.091, Florida Statutes, the following is
submitted:
COASTAL BHC, INC., desiring to organize or qualify under the
laws of the State of Florida, with its principal place of
business at the City of Miami, State of Florida, has named
Richard J. Bischoff, Esq., One Biscayne Tower, 2 South
Biscayne Boulevard, Suite 3400, Miami, Florida 33131, as its
agent to accept service of process within Florida.
/s/ RICHARD J. BISCHOFF
-------------------------------
Richard J. Bischoff, Incorporator
Dated: Oct. 6, 1998
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<PAGE> 9
COASTAL BHC, INC.
CERTIFICATE OF ACCEPTANCE
OF AUTHORIZED AGENT
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Having been named to accept service of process for the above stated
Corporation, at the place designated in this Certificate, I hereby agree to act
in this capacity, and I further agree to comply with the provisions of all
statutes relative to the proper and complete performance of my duties.
Richard J. Bischoff, Esq.
One Biscayne Tower
2 South Biscayne Boulevard, Suite 3400
Miami, Florida 33131
By: /s/ RICHARD J. BISCHOFF
---------------------------------
Richard J. Bischoff
Dated: October 6, 1998
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<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
COASTAL BHC, INC.
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ARTICLE I
BUSINESS OFFICES
SECTION 1.1. The Corporation shall have such offices, within or
without the State of Florida, as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
REGISTERED OFFICES AND REGISTERED AGENT
SECTION 2.1. FLORIDA. The address of the initial registered office
in the State of Florida and the name of the initial registered agent of the
Corporation at such address are set forth in the Articles of Incorporation. The
Board of Directors of the Corporation may from time to time designate a
different address as its registered office or a different person as its
registered agent, or both; provided, however, that such designation shall
become effective upon the filing of a statement of such change with the
Department of State of the State of Florida as is required by law.
SECTION 2.2. OTHER STATES. In the event the Corporation desires to
qualify to do business in one or more states other than Florida, the Board of
Directors of the Corporation shall designate the location of the registered
office in each such state and designate the registered agent for service of
process at such address in the manner provided by the law of the state in which
the Corporation elects to be qualified.
ARTICLE III
SHAREHOLDERS' MEETING
SECTION 3.1. PLACE OF MEETINGS. All meetings of the shareholders of
the Corporation shall be held at such place within or without the State of
Florida as shall be designated from time to time in the notice of such meeting
or in a duly executed waiver of notice thereof.
<PAGE> 2
SECTION 3.2. ANNUAL MEETING. An annual meeting of the shareholders
of the Corporation shall be held within 120 days of the close of the fiscal
year or thereafter, as determined by the Board of Directors. The shareholders
entitled to vote at such a meeting shall elect the directors and shall transact
such other business as may properly be brought before the meeting.
SECTION 3.3. SPECIAL MEETINGS. Special meetings of the shareholders
of the Corporation may be called, for any purpose or purposes permitted by law,
by the Board of Directors on its own initiative and shall be called by the
Board of Directors upon written request by the Chairman of the Board, if there
be one, the President of the Corporation, or the holders of not less than
one-tenth of all the shares entitled to vote at the meeting which request shall
be delivered to the Secretary and shall state the purpose of such meeting. The
call for the meeting shall be issued by the Secretary.
SECTION 3.4. NOTICE. Written notice stating the place, day, and hour
of every meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than ten nor more
than sixty days before the meeting, either personally or by first class mail by
the Secretary to each shareholder of record entitled to vote at such meeting.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail addressed to the shareholder at his address as it appears on
the stock transfer books of the Corporation, with postage thereon prepaid.
SECTION 3.5. NOTICE OF ADJOURNED MEETINGS. When a meeting is
adjourned to another time or place, it shall not be necessary to give any
notice of the adjourned meeting if the time and place to which the meeting is
adjourned are announced at the meeting at which the adjournment is taken, and
at the adjourned meeting any business may be transacted that might have been
transacted on the original date of the meeting. If, however, after the
adjournment, the Board of Directors fixes a new record date for the adjourned
meeting, a notice of the new record date shall be given, as provided in Section
4 of this Article III, to each shareholder of record entitled to vote at such
meeting.
SECTION 3.6. WAIVER OF NOTICE. Whenever notice is required to be
given to any shareholder, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be the equivalent to the giving of such notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of business because the meeting is
not lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the shareholders need be
specified in the written waiver of notice.
SECTION 3.7. CLOSING OF TRANSFER BOOKS AND FIXING OF RECORD DATE.
For the purpose of determining shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of shareholders
for any other purpose, the Board of Directors may provide
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that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, sixty days. If the stock transfer books shall be closed
for the purpose of determining shareholders entitled to notice of or to vote at
a meeting of shareholders, such books shall be closed for at least ten days
immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the record date for any determination of
shareholders, such date in any case to be not more than sixty days and, in case
of a meeting of shareholders, not less than ten days prior to the date on which
the particular action requiring such determination of shareholders is to be
taken.
If the stock transfer books are not closed and no record date is
fixed for the determination of shareholders entitled to notice of or to vote at
a meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination of
shareholders.
When a determination of shareholders entitled to vote at any meeting
of shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof, unless the Board of Directors fixes a
new record date for the adjourned meeting.
SECTION 3.8. RECORD OF SHAREHOLDERS HAVING VOTING RIGHTS.
(1) If the Corporation shall have more than five shareholders, the
officers or agent having charge of the stock transfer books for shares of the
Corporation shall make, at least ten days before each meeting of shareholders,
a complete list of the shareholders entitled to vote at such meeting or any
adjournment thereof, with the address of and the number and class and series,
if any, of shares held by each. The list, for a period of ten days prior to
such meeting, shall be kept on file at the registered office of the
Corporation, at the principal place of business of the Corporation or at the
office of the transfer agent or registrar of the Corporation and any
shareholder shall be entitled to inspect the list at any time during usual
business hours. The list shall also be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
at any time during the meeting. If the requirements of this section have not
been substantially complied with, the meeting, on demand of any shareholder in
person or by proxy, shall be adjourned until the requirements are complied
with. If no such demand is made, failure to comply with the requirements of
this section shall not affect the validity of any action taken at such meeting.
(2) If the Corporation shall have less than six shareholders, the
books of record of shareholders shall be made available to any shareholder at
any annual or special meeting of the shareholders, upon the request of any
shareholder. If the books of record shall not be made available to the
shareholder requesting them at the meeting where the request is made, the
meeting, on demand of any shareholder in person or by proxy, shall be adjourned
until the requirements are complied with. If no such demand is made, failure to
comply with the requirements of this section shall not affect the validity of
any action taken at such meeting.
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SECTION 3.9. SHAREHOLDER QUORUM. The presence, in person or by
proxy, of shareholders entitled to cast a majority of the votes to which all
shareholders are entitled to cast shall constitute a quorum for such meeting.
Treasury shares shall not be counted in determining the total number of
outstanding shares for voting purposes at any given time. After a quorum has
been established at a shareholders' meeting, the subsequent withdrawal of
shareholders, so as to reduce the number of shareholders entitled to vote at
the meeting below the number required for a quorum, shall not affect the
validity of any action taken at the meeting or any adjournment thereof. When a
specified item of business is required to be voted on by any class or series of
stock, a majority of the shares of such class or series shall constitute a
quorum for the transaction of such item of business by that class or series.
SECTION 3.10. VOTING OF SHARES. If a quorum is present at any
meeting, the affirmative vote of the majority of the shares represented at the
meeting and entitled to vote on the subject matter shall be the act of the
shareholders, unless the question is one for which, by express provision of the
law or of the Articles of Incorporation or these Bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Except as may be otherwise provided in the Articles of
Incorporation, every shareholder of record shall have the right, at every
shareholders' meeting, to one vote for every share, and to a fraction of a vote
equal to every fractional share, of stock of the Corporation standing in his
name on the books of the Corporation. A shareholder may vote either in person
or by proxy. Treasury shares shall not be voted, directly or indirectly, at any
meeting of shareholders.
At each election for directors, every shareholder entitled to vote
shall have the right to vote the number of shares owned by him, for as many
persons as there are directors to be elected at that time and for whose
election he has a right to vote or, if cumulative voting is authorized by the
Articles of Incorporation, to accumulate his votes by giving one candidate a
number of votes equal to the number of directors to be elected at that time
multiplied by the number of his votes, or distribute such number of votes among
any number of candidates.
Shares held by an administrator, executor, guardian or conservator
may be voted by such person, either in person or by proxy, without a transfer
of such shares into the name of such person.
Shares standing in the name of a trustee may be voted by such
trustee, either in person or by proxy, but no trustee shall be entitled to vote
shares held by such trustee without a transfer of shares into the name of such
trustee. Shares standing in the name of a receiver and shares held by or under
the control of a receiver, may be voted by such receiver without the transfer
thereof into the name of the receiver, if authority to do so is contained in an
appropriate order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee or the nominee of the pledgee shall be
entitled to vote the shares so transferred.
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SECTION 3.11. PROXIES. Every shareholder entitled to vote at a
meeting of shareholders or to express consent or dissent to corporate action in
writing without a meeting, or a shareholders' duly authorized attorney-in-fact,
may authorize another person or persons to act for him by proxy in accordance
with applicable laws.
Every proxy must be signed by the shareholder or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven months
from the date thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the shareholder executing it, except as
otherwise provided by law.
If a proxy for the same shares confers authority upon two or more
persons and does not otherwise provide, a majority of them present at the
meeting, or if only one is present then that one, may exercise all the powers
conferred by the proxy; but if the proxy holders present at the meeting are
equally divided as to the right and manner of voting in any particular case,
the voting of such shares shall be prorated.
SECTION 3.12. VOTING TRUSTS. One or more shareholders may create a
voting trust, conferring on a trustee the right to vote or otherwise act for
them, by signing an agreement setting out the provisions of the trust and
transferring their shares to the trustee. When a voting trust agreement is
signed, the trustee shall prepare a list of the names and addresses of all
owners of beneficial interest in the trust, together with the number and class
of shares each transferred to the trust, and deliver copies of the list and
agreement to the Corporation's principal office. After filing a copy of the
list and agreement in the Corporation's principal office, such copies shall be
open to inspection by any shareholder of the Corporation, subject to the
requirements of the Act, or to any beneficiary of the trust under the agreement
during business hours. The trustee must also deliver a copy of each extension
of the voting trust agreement, and a list of beneficial owners under such
extended agreement, to the Corporation's principal office.
SECTION 3.13. SHAREHOLDERS' AGREEMENTS. Two or more shareholders may
provide for the manner in which they will vote their shares, and provide for
such other matters as are permitted by the Act, by signing an agreement for
that purpose and delivering copies of such agreement to the Corporation's
principal office. After filing a copy of the agreement in the Corporation's
principal office, such copies shall be open to inspection by any shareholder of
the Corporation, subject to the requirements of the Act, or by any party to the
agreement during business hours.
SECTION 3.14. ACTION BY SHAREHOLDERS WITHOUT A MEETING.
(1) Unless otherwise provided in the Articles of Incorporation, any
action required to be taken at any annual or special meeting of shareholders of
the Corporation, or any action which may be taken at any annual or special
meeting of such shareholders, may be taken without a meeting, without prior
notice, and without a vote if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that
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would be necessary to authorize or take such action at a meeting at which all
shares entitled a vote thereon were present and voted. If shares are entitled
to be voted by class and if any class of shares is entitled to vote thereon as
a class, such written consent shall be required of the holders of a majority of
the shares of each class of shares entitled to vote as a class thereon and of
the total shares entitled to vote thereon.
(2) Within 10 days after obtaining such authorization by written
consent, notice must be given to those shareholders who have not consented in
writing. The notice shall fairly summarize the material features of the
authorized action and, if the action is a merger, consolidation, or sale or
exchange of assets for which dissenters' rights are provided under Chapter 607
of the Florida Statutes, the notice shall contain a clear statement of the
right of shareholders dissenting therefrom to be paid the fair value of their
shares upon compliance with further provisions of such Chapter regarding the
rights of dissenting shareholders.
ARTICLE IV
DIRECTORS
SECTION 4.1. FUNCTION. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall
be managed under the direction of, the Board of Directors, except as may be
otherwise provided in the Act or the Articles of Incorporation. If any such
provision is made in the Articles of Incorporation, the powers and duties
conferred or imposed upon the Board of Directors by the Act shall be exercised
or performed to such extent and by such person or persons as shall be provided
in the Articles of Incorporation.
A director shall perform his duties as director, including duties as
a member of any committee of the Board upon which a director may serve, in good
faith, in a manner the director reasonably believes to be in the best interests
of the Corporation, and with such care as an ordinarily prudent person in a
like position would use under similar circumstances. In performing his duties,
a director shall be entitled to rely on information, opinions, reports or
statements, including financial statements and other data, in each case
prepared by:
(1) one or more officers or employees of the Corporation
whom the director reasonably believes to be reliable and competent in the
matters presented,
(2) counsel, public accountants or other persons as to
matters which the director reasonably believes to be within such person's
professional or expert competence, or
(3) a committee of the Board upon which the director does
not serve, duly designated in accordance with provisions of the Articles of
Incorporation or these Bylaws, as to matters within its designated authority,
which committee the director reasonably believes to merit confidence.
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A director shall not be considered to be acting in good faith if the
director has knowledge concerning the matter in question that would cause such
reliance described in the preceding subsection to be unwarranted.
A person who performs his duties in compliance with this section
shall have no liability by reason of being or having been a director of the
Corporation.
A director of the Corporation who is present at a meeting of the
Board of Directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken, unless the director votes
against such action or abstains from voting in respect thereto because of an
asserted conflict of interest.
SECTION 4.2. QUALIFICATION. Directors need not be residents of the
State of Florida or shareholders of the Corporation.
SECTION 4.3. COMPENSATION. The Board of Directors shall have authority
to fix the compensation of directors unless otherwise provided in the Articles
of Incorporation.
SECTION 4.4. NUMBER. The Board of Directors of the Corporation shall
consist of five (5) directors. The number of directors may be increased or
decreased from time to time by an amendment to these Bylaws and in accordance
with Section 4.5, but shall never be less than one. No decrease shall have the
effect of shortening the terms of any incumbent director.
SECTION 4.5. ELECTION AND TERM. The Board of Directors shall be
divided into three classes, Class I, Class II and Class III. The number of
directors elected to each class shall be as nearly equal in number as possible.
The Board shall designate initially which of the current directors shall serve
in each of the classes. Each director in Class I shall serve an initial term to
expire at the annual meeting next ensuing, each director in Class II shall
serve an initial term to expire one (1) year thereafter and each director in
Class III shall serve an initial term to expire two (2) years thereafter, in
each case and until his or her successor is duly elected and qualified or until
his or her earlier resignation, death or removal from office. Upon the
expiration of the initial terms of office for each class of directors, the
directors of each class shall be elected, except as provided in Section 4.7 of
this Article, at the annual meeting of the shareholders, for a term of three
(3) years and to serve until their successors are duly elected and qualified or
until their earlier resignation, death or removal from office. The Board, by
the vote of a majority of the full Board, may in any year between annual
meetings of shareholders increase the membership of the Board by not more than
two (2) members, and by like vote, appoint qualified persons to fill the
vacancies created thereby and designate the class in which they shall serve.
SECTION 4.6. REMOVAL OF DIRECTORS. Any director, or the entire Board
of Directors may be removed, with or without cause, at a meeting of the
shareholders called expressly for that purpose, as provided by the Act.
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SECTION 4.7. VACANCIES. Any vacancy occurring in the Board of
Directors, including any vacancy created by reason of an increase in the number
of directors, may be filled by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board of Directors. A
director elected to fill a vacancy shall hold office only until the next
election of the applicable class of directors by the shareholders.
SECTION 4.8. QUORUM AND VOTING. A majority of the number of
directors fixed by these Bylaws shall constitute a quorum for the transaction
of business. The act of the majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
SECTION 4.9. EXECUTIVE AND OTHER COMMITTEES. The Board of Directors,
by resolution adopted by a majority of the full Board of Directors, may
designate from among its members an executive committee and one or more other
committees, each committee to consist of two or more directors. The Board may
designate as alternate members of any committee one or more directors who may
replace any absent or disqualified member at any meeting of the committee.
The executive committee or other committee shall have and exercise
all of the authority of the Board to the extent provided in the resolution
designating the committee, except that no such committee of the Board shall
have the authority of the Board to:
(1) approve or recommend to shareholders actions or proposals
required by law to be approved by shareholders;
(2) designate candidates for office of director, for purposes
of proxy solicitation or otherwise;
(3) fill vacancies on the Board of Directors or any committee
thereof;
(4) amend these Bylaws;
(5) authorize or approve the re-acquisition of shares unless
pursuant to a general formula or method specified by the Board of Directors; or
(6) authorize or approve the issuance or sale of, or any
contract to issue or sell, shares or designate the terms of a series of a class
of shares, unless pursuant to a general formula or method specified by the
Board of Directors, within specifications authorized by law.
A majority of the directors in office designated to a committee, or
directors designated to replace them as provided in this section, shall be
present at each meeting to constitute a quorum for the transaction of business
and the acts of a majority of the directors in office designated to a committee
or their replacements shall be the acts of the committee.
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Each committee shall keep regular minutes of its proceedings and
report such proceedings periodically to the Board of Directors.
SECTION 4.10. ORGANIZATION. At every meeting of the Board of
Directors, the Chairman of the Board, if there be one, or in the absence of the
Chairman of the Board, the President of the Corporation, or a chairman chosen
by a majority of the directors present, shall preside, and the Secretary or any
person appointed by the chairman of the meeting shall serve as secretary.
SECTION 4.11. PLACE OF MEETINGS. Regular and special meetings by the
Board of Directors may be held within or without the State of Florida.
SECTION 4.12. TIME, NOTICE AND CALL OF MEETINGS. Regular meetings of
the Board of Directors shall be held immediately following the annual meeting
of shareholders each year, and regular or special meetings may be held at such
times thereafter as the Board of Directors may fix, and at such other times as
may be called by the Chairman of the Board, if there be one, the President of
the Corporation or any two directors. Written notice of the time and place of
special meetings of the Board of Directors shall be given to each director by
either personal delivery, telegram, or cablegram at least two days before the
meeting, or by notice mailed to each director at least five days before the
meeting.
Notice of a meeting of the Board of Directors need not be given to
any director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting, any objection
to the transaction of business because the meeting is not lawfully called or
convened.
Members of the Board of Directors may participate in a meeting of
such Board by conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other at the
same time. Participation by such means shall constitute presence in person at a
meeting.
SECTION 4.13. ACTION WITHOUT A MEETING. Any action required to be
taken at a meeting of the directors of the Corporation, or any action which may
be taken at a meeting of the directors or a committee thereof, may be taken
without a meeting if a consent in writing, setting forth the action so to be
taken, signed by all of the directors, or all the members of the committee, as
the case may be, and is filed in the minutes of the proceedings of the Board or
of the committee. Such consent shall have the same effect as a unanimous vote.
SECTION 4.14. DIRECTOR CONFLICTS OF INTEREST. No contract or other
transaction between the Corporation and one or more of its directors or any
other corporation, firm, association, or entity in which one or more of the
directors are directors or officers or are financially interested, shall be
either void or voidable because of such relationship or interest or because
such director or
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<PAGE> 10
directors are present at a meeting of the Board of Directors or a committee
thereof which authorizes, approves, or ratifies such contract or transaction or
because his or their votes are counted for such purpose, if:
(a) The fact of such relationship or interest is disclosed or known
to the Board of Directors or committee which authorizes, approves, or ratifies
the contract or transaction by a vote or consent sufficient for the purpose
without counting the votes or consents of such interested directors; or
(b) The fact of such relationship or interest is disclosed or known
to the shareholders entitled to vote and they authorize, approve, or ratify
such contract or transaction by vote or written consent; or
(c) The contract or transaction is fair and reasonable as to the
Corporation at the time it is authorized by the Board, a committee or the
shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves, or ratifies such contract or transaction.
ARTICLE V
OFFICERS
SECTION 5.1. OFFICERS. The officers of the Corporation shall consist
of a President, a Secretary and a Treasurer, and such other officers and agents
as may be deemed necessary by the Board of Directors. All officers and agents
of the Corporation shall be elected by the Board of Directors in accordance
with the provisions of this Article V. One person may hold more than one
office. Officers may but need not be directors or shareholders of the
Corporation. The Board of Directors may elect from among the members of the
Board a Chairman of the Board who, if elected, shall be an officer of the
Corporation. Failure to elect such officers shall not affect the existence of
the Corporation
SECTION 5.2. ELECTION AND TERM OF OFFICE. Except as otherwise
specified in this Article V, the officers of the Corporation shall be elected
annually by the Board of Directors to hold office until the next annual
organizational meeting of directors and until a successor shall have been duly
elected and qualified, or until his death, resignation or removal.
SECTION 5.3. SUBORDINATE OFFICERS, COMMITTEES AND AGENTS. The Board
of Directors may from time to time elect such officers and appoint such
committees, employees or other agents as the Board deems the business of the
Corporation may require, to hold office for such
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period, have such authority, and perform such duties as are provided in these
Bylaws, or as the Board of Directors may delegate.
SECTION 5.4. DUTIES. The officers of the Corporation shall have the
following duties:
(a) CHAIRMAN OF THE BOARD. The Chairman of the Board, if
elected, shall be the chief executive officer of the Corporation and
shall have general powers of supervision, direction, and control over
the business and operations of the Corporation, subject to the
authority of the Board of Directors. The Chairman of the Board shall
preside at all meetings of the shareholders and of the Board of
Directors, and shall perform such other duties as may from time to
time be requested of him by the Board of Directors.
(b) PRESIDENT. The President shall be the chief operating
officer of the Corporation, and shall have general supervision,
direction and control over the business and operations of the
Corporation, subject however, to the authority of the Chairman of the
Board and the Board of Directors. If the Board of Directors fails to
elect a Chairman of the Board, then the President shall also be the
chief executive officer of the Corporation. He shall sign, execute,
and acknowledge, in the name of the Corporation, deeds, mortgages,
bonds, contracts or other instruments except in cases where the
signing and execution thereof shall be expressly delegated by the
Board of Directors, or by these Bylaws, to some other officer or agent
of the Corporation; and, in general, shall perform all duties incident
to the office of President and such other duties as from time to time
may be assigned to him by the Chairman of the Board and Board of
Directors.
(c) VICE PRESIDENTS. The Vice Presidents shall perform
whatever duties and have whatever powers as may from time to time be
assigned to them by the Board of Directors, the Chairman of the Board,
or the President. If more than one Vice President is elected, one
thereof shall be designated Executive Vice President and shall, in the
absence or disability of the President, perform the duties and
exercise the powers of the President, and each of the other Vice
Presidents shall only perform whatever duties and have whatever powers
as the Board of Directors may from time to time assign him.
(d) SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and committees thereof and shall record the time
and place of holding of such meeting, whether regular or special, and,
if special, how authorized, the notice given, the names of those
present at directors' meetings or the number of shares present or
represented at shareholders' meetings in books to be kept for that
purpose; shall see to it that notices are given and all of the
corporate records and reports are properly kept and filed by the
Corporation as required by law; shall be the custodian of the seal of
the Corporation and see that it is affixed to all documents to be
executed on behalf of the Corporation under its seal; and, in general,
shall perform all duties incident to the office of Secretary and such
other duties as may from time to time be assigned to him by the Board
of Directors, the Chairman of the Board or the President.
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(e) TREASURER. The Treasurer shall have or provide for the
custody of all corporate funds or other property of the Corporation
and shall keep a separate book account of the same to his credit as
Treasurer; shall keep and maintain, or cause to be kept and
maintained, adequate and correct accounts of the properties and
business transactions of the Corporation, including, but not limited
to, accounts of its assets, liabilities, receipts, disbursements,
gains, losses, capital-surplus and shares; shall collect and receive
or provide for the collection and receipt of monies earned by or in
any manner due to or received by the Corporation; shall deposit all
funds in his custody as Treasurer in such banks or other places of
deposit as the Board of Directors may from time to time designate;
shall, whenever so required by the Board of Directors, render an
accounting showing his transactions as Treasurer and the financial
condition of the Corporation; and, in general, shall discharge such
other duties as may from time to time be assigned to him by the Board
of Directors, the Chairman of the Board or the President. The Books of
account shall be open at all reasonable times to inspection by any
director.
SECTION 5.5. COMPENSATION. The compensation of the President,
Secretary, Treasurer, and such other officers elected or appointed by the Board
of Directors shall be fixed by the Board of Directors and may be changed from
time to time by a majority vote of the Board. The fact that an officer is also
a director shall not preclude such person from receiving compensation as either
a director or an officer, nor shall it affect the validity of any resolution by
the Board of Directors fixing such compensation. The President shall have
authority to fix the salaries of all employees of the Corporation other than
officers elected or appointed by the Board of Directors.
SECTION 5.6. RESIGNATION. Any officer or agent may resign at any time
by giving written notice of resignation to the Board of Directors or to the
President or the Secretary of the Corporation. Any such resignation shall take
effect on the date of receipt of such notice or at any later time specified
therein and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 5.7. REMOVAL. Any officer, committee member or agent elected
or appointed by the Board of Directors may be removed, either for or without
cause, by the Board or other authority which elected or appointed such officer,
committee member or agent, whenever in its judgment the best interests of the
Corporation will be served thereby.
SECTION 5.8. VACANCIES. Any vacancy, however occurring, in any office
may be filled by the Board of Directors or by the officer or committee to which
the power to fill such office has been delegated, as the case may be, and if
the office is one for which these Bylaws prescribe a term, shall be filled for
the unexpired portion of such term.
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ARTICLE VI
SHARE CERTIFICATES
SECTION 6.1. AUTHORIZED ISSUANCE. The Corporation may issue the shares
authorized by its Articles of Incorporation and none other. Shares may be
issued only pursuant to a resolution adopted by the Board of Directors. No
shares may be validly issued or transferred in violation of any provision of
these Bylaws or in violation of any agreement respecting the issuance or
transfer of shares to which the Corporation is a party.
SECTION 6.2. ISSUANCE. Every holder of shares in the Corporation shall
be entitled to have a certificate representing all shares to which he is
entitled. No certificate shall be issued for any share until such share is
fully paid.
SECTION 6.3. SIGNATURES. Certificates representing shares in the
Corporation shall be signed by the Chairman of the Board, if there be one, or
by the President or a Vice President and the Secretary or an assistant
Secretary of the Corporation and may be sealed with the seal of the Corporation
or a facsimile thereof. The signatures of the Chairman of the Board, President
or Vice President and the Secretary or assistant Secretary may be facsimiles if
the certificate is manually signed on behalf of a transfer agent or a
registrar, other than the Corporation itself or an employee of the Corporation.
In the event any officer who has signed, or whose facsimile signature has been
placed upon any share certificate shall have ceased to be such officer because
of death, resignation or otherwise, before the certificate is issued, it may be
issued with the same effect as if the officer had not ceased to be such at the
date of its issue. Certificates representing shares of the Corporation shall be
in such form as specified under Section 4 of this Article VI. The share record
books and the blank share Certificate books shall be kept by the Secretary or
by any agency designated by the Board of Directors for that purpose. Every
certificate exchanged or returned to the Corporation shall be marked
"CANCELLED", with the date of cancellation.
SECTION 6.4. FORM. Each certificate representing shares shall state
upon the face thereof: the name of the Corporation; that the Corporation is
organized under the laws of Florida; the name of the person or persons to whom
issued; the number and class of shares, and the designation of the series, if
any, which such certificate represents; and the par value of each share
represented by such certificate, or a statement that the shares are without par
value. Each certificate shall otherwise comply in all respects with the
requirements of law.
SECTION 6.5. TRANSFER OF SHARES. The Corporation shall register a
share certificate presented to it for transfer if the certificate is properly
endorsed by the holder of record or by his duly authorized attorney; provided,
however, that the Corporation or its transfer agent may require the signature
of such person to be guaranteed by a commercial bank or trust company or by a
member of the New York or American Stock Exchange.
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SECTION 6.6. REGISTERED SHAREHOLDERS. The Corporation shall be
entitled to recognize a person is registered on its books in whose name any
shares of the Corporation are registered as the absolute owner thereof with the
exclusive rights to receive dividends, and to vote such shares as owner.
SECTION 6.7. LOST, STOLEN, OR DESTROYED CERTIFICATES. The Corporation
may issue a new share certificate in the place of any certificate previously
issued if the holder of record of the certificate (a) makes proof in affidavit
form that it has been lost, destroyed, or wrongfully taken; (b) requests the
issue of a new certificate before the Corporation has notice that the
certificate has been acquired by a purchaser for value in good faith and
without notice of any adverse claim; (c) gives bond in such form as the
Corporation may direct, to indemnify the Corporation, the transfer agent, and
registrar against any claim that may be made on account of the alleged loss,
destruction, or theft of a certificate; and (d) satisfies any other reasonable
requirements imposed by the Corporation.
ARTICLE VII
ACTIONS WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS
Unless otherwise directed by the Board of Directors, the President or
a designee of the President shall have the power to vote and to otherwise act
on behalf of the Corporation, in person or by proxy, at any meeting of
shareholders on, or with respect to, any action of shareholders of any other
corporation in which the Corporation may hold securities, and to otherwise
exercise any and all rights and powers which the Corporation may possess by
reason of its ownership of securities in other corporations.
ARTICLE VIII
BOOKS AND RECORDS
SECTION 8.1. BOOKS AND RECORDS. The Corporation shall keep correct and
complete books and records of accounts and shall keep minutes of the
proceedings of its shareholders, Board of Directors, and committees of
directors.
The Corporation shall keep at its registered office or principal place
of business, or at the office of its transfer agent or registrar, a record of
its shareholders, giving the names and addresses of all shareholders, and the
number, class, and series, if any, of the shares held by each.
Any books, records, and minutes may be in written form or in any other
form capable of being converted into written form within a reasonable time.
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SECTION 8.2. SHAREHOLDERS' INSPECTION RIGHTS. Any person who shall
have been a holder of record of shares or of voting trust certificates therefor
at least six (6) months immediately preceding his demand or shall be the holder
of record of, or the holder of record of voting trust certificates for, at
least five percent of the outstanding shares of any class or series of the
Corporation, upon written demand stating the purpose thereof, shall have the
right to examine, in person or by agent or attorney, at any reasonable time or
times, for any proper purpose its relevant books and records of accounts,
minutes, and records of shareholders and to make extracts therefrom.
SECTION 8.3. FINANCIAL INFORMATION. Unless modified by a resolution of
the shareholders, not later than four (4) months after the close of each fiscal
year the Corporation shall prepare a balance sheet showing in reasonable detail
the financial condition of the Corporation as of the close of its fiscal year,
and a profit and loss statement showing the results of the operations of the
Corporation during its fiscal year.
Upon the written request of any shareholder or holder of voting trust
certificates for shares of the Corporation, the Corporation shall mail to such
shareholder or holder of voting trust certificates a copy of the most recent
such balance sheet and profit and loss statement.
The balance sheets and profit and loss statements shall be filed in
the registered office of the Corporation in this state, shall be kept for at
least five (5) years, and shall be subject to inspection during business hours
by any shareholder or holder of voting trust certificates, in person or by
agent.
ARTICLE IX
DISTRIBUTIONS
The Board of Directors of the Corporation may, from time to time,
declare and the Corporation may make distributions as permitted by law on its
shares in cash, property, or its own shares, except when the Corporation is
insolvent or when the payment thereof would render the Corporation insolvent.
ARTICLE X
INDEMNIFICATION OF DIRECTORS, OFFICERS, AND EMPLOYEES
SECTION 10.1. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Each person
who was or is made a party or is threatened to be made a party to or is
otherwise involved in any action, suit or proceeding, whether civil, criminal,
administrative, legislative or investigative (hereinafter a "Proceeding"), by
reason of the fact that he or she is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director or officer of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an
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employee benefit plan (an "Indemnitee"), whether the basis of such proceeding
is alleged action in an official capacity as a director or officer or in any
other capacity while serving as a director or officer, whether involving any
actual or alleged breach of duty, neglect or error, any accountability, or any
actual or alleged misstatement, misleading statement or other act or omission,
shall be and is hereby indemnified and held harmless by the Corporation to the
fullest extent provided, authorized, allowed, or not prohibited by the Florida
Business Corporation Act, as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than
permitted prior thereto), against all claims, judgments, expenses, costs,
liabilities and losses including, without limitation, attorneys' fees,
judgments, fines, ERISA excise taxes, penalties and amounts paid in settlement,
reasonably incurred or suffered by such Indemnitee in connection therewith and
such indemnification shall continue as to an Indemnitee who has ceased to be a
director or officer and shall inure to the benefit of the Indemnitee's heirs,
executors and administrators; provided, however, that, except as provided in
Section 4 of this Article X with respect to proceedings to enforce rights to
indemnification, the Corporation shall and does hereby indemnify any such
Indemnitee in connection with a proceeding (or part thereof) initiated by such
Indemnitee only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation.
SECTION 10.2. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Board of
Directors of the Corporation may, in its discretion, indemnify and hold
harmless any person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative, legislative or investigative, by reason of the
fact that he or she is or was an employee or agent of the Corporation or is or
was serving at the request of the Corporation as an employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan, whether
the basis of such proceeding is alleged action in an official capacity as an
employee or agent or in any other capacity while serving as an employee or
agent, whether involving any actual or alleged breach of duty, neglect or
error, any accountability, or any actual or alleged misstatement, misleading
statement or other act or omission, to the fullest extent provided, authorized,
allowed, or not prohibited by the Florida Business Corporation Act, as the same
exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than permitted prior thereto), against all
claims, judgments, expenses, costs, liabilities and losses including, without
limitation, attorneys' fees, judgments, fines, ERISA excise taxes, penalties
and amounts paid in settlement, reasonably incurred or suffered by such
indemnitee in connection therewith and such indemnification shall continue as
to an indemnitee who has ceased to be an employee or agent and shall inure to
the benefit of the indemnitee's heirs, executors and administrators; provided,
however, that, except as provided in Section 4 hereof with respect to
proceedings to enforce rights to indemnification, the Board of Directors of the
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation.
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SECTION 10.3. RIGHT TO ADVANCEMENT OF EXPENSES. The right to
indemnification conferred in Section 1 of this Article X shall include the
right to be paid, repaid or advanced by the Corporation the expenses incurred
in defending any proceeding for which such right to indemnification is, may be
or may become, applicable in advance of its final disposition (hereinafter an
"Advancement of Expenses"); provided, however, that, if the Florida Business
Corporation Act requires, an Advancement of Expenses incurred by an Indemnitee
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such Indemnitee, including, without
limitation, service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "Undertaking"),
by or on behalf of such Indemnitee, to repay all amounts so advanced if it
shall ultimately be determined by final judicial decision from which there is
no further right to appeal (hereinafter a "Final Adjudication") that such
Indemnitee is not entitled to be indemnified for such expenses under this
Article X, by law, contract or otherwise.
SECTION 10.4. RIGHT OF ENFORCEMENT OF INDEMNITEE. The rights to
indemnification and to the Advancement of Expenses conferred in Sections 1 and
3 of this Article X shall be deemed to constitute contract rights. If a claim
under Sections 1 and 3 of this Article X is not paid in full by the Corporation
within sixty days after a written claim has been received by the Corporation,
except in the case of a claim for an Advancement of Expenses, in which case the
applicable period shall be twenty days, the Indemnitee may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim. If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an Advancement of Expenses pursuant to
the terms of an Undertaking, the Indemnitee shall be entitled to be paid also
the expense and cost (including attorneys' fees) of prosecuting or defending
such suit. In any suit brought by the Indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the Indemnitee to
enforce a right to an advancement of expenses) the Corporation shall have a
full defense to such suit if upon Final Adjudication it is found that the
Indemnitee has not met the applicable standard for indemnification set forth in
the Florida Business Corporation Act. Likewise, in any suit brought by the
Corporation to recover an Advancement of Expenses pursuant to the terms of an
Undertaking, the Corporation shall be entitled to recover its expenses and
costs (including attorneys' fees) upon a Final Adjudication that the Indemnitee
has not met the applicable standard for indemnification set forth in the
Florida Business Corporation Act. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the Indemnitee is proper in the circumstances
because the Indemnitee has met the applicable standard for indemnification, nor
an actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the Indemnitee has not met
the applicable standard for indemnification, shall create a presumption that
the Indemnitee has not met the applicable standard of conduct or, in the case
of such a suit brought by the Indemnitee, be a defense to such suit. In any
suit brought by the Indemnitee to enforce a right to indemnification or to an
Advancement of Expenses hereunder, or by the Corporation to recover an
Advancement of Expenses pursuant to the terms of an undertaking, the burden of
proving that the Indemnitee is not entitled to
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be indemnified, or to such Advancement of Expenses, whether under this Article
X, by statute, law, contract or otherwise, shall be on the Corporation.
SECTION 10.5. NON-EXCLUSIVITY OF RIGHTS. The rights to
indemnification and to the reimbursement or Advancement of Expenses conferred
in this Article X shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute or law, the Corporation's
Articles of Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 10.6. INSURANCE. The Corporation may maintain insurance, at
its expense, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against any expense, cost, claim,
judgment, penalty, liability or loss, whether or not the Corporation would have
the power to indemnify such person against such expense, cost, claim, judgment,
penalty, liability or loss under the Florida Business Corporation Act or
otherwise.
SECTION 10.7. APPLICABLE LAW. Any person entitled to be indemnified
or to the reimbursement or Advancement of Expenses as a matter of right
pursuant to this Article X may elect to have the right to indemnification (or
Advancement of Expenses) interpreted on the basis of the applicable law in
effect at the time of the occurrence of the event or events giving rise to the
action or proceeding, to the extent provided or authorized by law, or on the
basis of the applicable law in effect at the time indemnification is sought.
SECTION 10.8. CONTRACT RIGHTS. The rights to indemnification and to
the reimbursement or Advancement of Expenses conferred in this Article X shall:
(i) be deemed to constitute contract rights pursuant to which the person
entitled thereto may bring suit as if the provisions hereof were set forth in a
separate written contract between the Corporation and the director or officer
(notwithstanding the existence or non-existence of any separate written
contract); (ii) be intended to be, and shall be, retroactive and shall be
available with respect to events occurring prior to the adoption hereof; (iii)
continue to exist after the rescission or restrictive modification or amendment
hereof with respect to events occurring prior thereto; and (iv) continue after
any termination of position or employment, whether or not for cause, as to all
claims made with respect to the period during which the claimant was a director
or officer.
SECTION 10.9. FURTHER IMPLEMENTATION. If this Article X or any
portion thereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify each director
and officer of the Corporation as to all expenses (including attorneys' fees),
judgments, fines, penalties, liabilities, claims and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
legislative, investigative or administrative, including, without limitation,
any grand jury proceeding and any action, suit or proceeding by or in the right
of the Corporation, to the fullest extent permitted, allowed, authorized or not
prohibited by any applicable portion of this Article X that shall not have been
invalidated by the laws of the State of Florida or by any other applicable law
or contract. The Board of Directors
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may also, in its discretion, indemnify employees and agents of the Corporation
as to all expenses (including attorneys' fees), judgments, fines, penalties,
liabilities, claims and amounts paid in settlement with respect to any action,
suit or proceeding, whether civil, criminal, legislative, investigative or
administrative, including, without limitation, any grand jury proceeding and
any action, suit or proceeding by or in the right of the Corporation, to the
fullest extent permitted, allowed, authorized or not prohibited by any
applicable portion of this Article that shall not have been invalidated by the
laws of the State of Florida or by any other applicable law or contract.
ARTICLE XI
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall
have the name of the Corporation inscribed thereon, and may be facsimile,
engraved, printed, or an impression seal. The seal shall be circular in form
and shall have inscribed thereon the name of the Corporation, the words "Seal"
and "Florida" and the year of incorporation.
ARTICLE XII
AMENDMENT
These Bylaws may be amended or repealed, and new bylaws may be
adopted, by either the Board of Directors or the shareholders, but the Board of
Directors may not amend or repeal any bylaw adopted by the shareholders if the
shareholders specifically provide that such bylaw is not subject to amendment
or repeal by the Board of Directors.
Adopted: December 9, 1998
/s/ HANS C. MUELLER
- --------------------------
HANS C. MUELLER, President
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EXHIBIT 4.1
NUMBER SHARES
C
COMMON STOCK SEE REVERSE FOR
CERTAIN DEFINITIONS
COASTAL BHC, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
CUSIP
THIS CERTIFIES THAT
is the record owner of
FULLY PAID AND NON-ASSESSABLE SHARES WITH A PAR VALUE OF $.01 EACH OF THE COMMON
STOCK OF
COASTAL BHC, INC.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized Attorney, upon surrender of this Certificate properly
endorsed. This Certificate is not valid unless countersigned and registered by
the Transfer Agent and Registrar.
WITNESS the facsimile seal and the facsimile signatures of the duly
authorized officers of the Corporation.
Dated:
[COASTAL BHC, INC. SEAL]
/s/ James C. Merrill /s/ Hans C. Mueller
Secretary President and Chief Executive Officer
COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT AND REGISTRAR
BY AUTHORIZED SIGNATURE
<PAGE> 2
COASTAL BHC, INC.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL, OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF WHICH
THE CORPORATION IS AUTHORIZED TO ISSUE AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS OF EACH SUCH CLASS OF STOCK OR
SERIES THEREOF. ANY SUCH REQUEST SHOULD BE MADE TO THE SECRETARY OF THE
CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR TO THE TRANSFER AGENT AND
REGISTRAR.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT MIN ACT - ...Custodian....
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to minors
survivorship and not as tenants Act..........................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received, _________________________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
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(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF ASSIGNEE)
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_________________________________________________________________________shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ____________________________________________
______________________Attorney to transfer the said stock on the books of the
within named Corporation with full power of substitution in the premises.
Dated
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NOTICE: THE SIGNATURE TO THE ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.
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SIGNATURE(S) GUARANTEED: [THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE> 1
EXHIBIT 4.2
WARRANT PLAN
AS
ADOPTED BY THE BOARD OF DIRECTORS
OF
COASTAL BHC, INC.
ON
DECEMBER 9, 1998
ARTICLE I
PURPOSE OF THE PLAN
The Board of Directors of COASTAL BHC, INC. ("Company") has determined
that it is in the best interests of the Company to issue Warrants to purchase
the Company's Common Stock in connection with the Company's initial public
offering of Common Stock. The Company proposes to issue 1,000,000 shares of
Common Stock and 150,000 Warrants to purchase Common Stock. Each Warrant will
entitle the holder thereof to purchase one share of Common Stock. Therefore the
Board of Directors, in order to provide for the above, has adopted this Warrant
Plan ("Plan") on the date set forth herein.
The Company's Board of Directors and its initial stockholders have
adopted this Plan to compensate its organizers for their efforts in establishing
the strategic plan for Coastal Community Bank (the "Bank") and in causing the
initial funding of the organization of the Company and the Bank. Hans C.
Mueller, Jerome J. Bushman and Evaldo F. Dupuy, the Company's initial
organizers, have been granted Organizer's Warrants as recognition for their
efforts to establish a strategic plan for the formation of the Bank and for
their funding of the initial organizational expenses of the Bank and the
Company. Mr. Bushman caused the funds to be lent to the Company, Mr. Dupuy has
guaranteed the third party loan in the amount of $300,000 which allowed an
organizational expense fund to be created, and Mr. Mueller created the strategic
plan and arranged for the location of the proposed Bank.
ARTICLE II
SCOPE OF THE PLAN
SECTION 1. DEFINITIONS.
Unless the context clearly indicates otherwise, the following terms
have the meanings set forth below:
a. "Board" means the Board of Directors of the Company.
b. "Common Stock" means the $0.01 par value common stock of the
Company.
c. "Expiration Date" shall be 5:00 p.m. Eastern Standard Time on the
fifth annual anniversary date of the date of the Warrants become
exercisable.
<PAGE> 2
d. "Plan" means this Warrant Plan as adopted by the Board on December
9, 1998, as set forth herein and as amended from time to time.
e. "Warrant" means the right to purchase additional shares of Common
Stock.
f. "Warrant Certificate" means the evidence of ownership of Warrants,
as executed and issued by the Company in substantially the form
attached hereto as Exhibit A.
SECTION 2. FORM OF WARRANTS. The certificates evidencing the Warrants
(the "Warrant Certificates") shall be substantially in the form set forth in
Exhibit A attached hereto, and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or endorsements
printed, lithographed or engraved thereon as the Company may deem appropriate
and as are not inconsistent with provisions of this Plan, or as may be required
to comply with any law, or with any rule or regulation made pursuant thereto, or
to conform to usage. Each Warrant Certificate shall entitle the registered
holder thereof, subject to the provisions of this Agreement and of such Warrant
Certificate, to purchase the number stated therein of fully paid and
non-assessable shares of Common Stock evidenced by such Warrant Certificate, at
$10.00 per share.
SECTION 3. ISSUANCE OF WARRANTS. The Warrant Certificates when issued
shall be dated and signed on behalf of the Company, manually or by facsimile
signature, by its Chairman of the Board or President, and by its Secretary or an
Assistant Secretary under its corporate seal, if any. The seal of the Company,
if any, may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Warrants.
SECTION 4. REGISTRATION OF WARRANT CERTIFICATES; REGISTERED OWNERS. The
Company shall maintain or cause to be maintained books for registration of
ownership of the Warrant Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Warrant Certificates
and the number of Warrants evidenced by each such Warrant Certificate. The
Company may deem and treat the registered holder of a Warrant Certificate as the
absolute owner thereof and of the Warrants evidenced thereby thereon made by
anyone, for all other purposes, the contrary (notwithstanding any notation of
ownership or other writing for the purpose of any exercise of such Warrants and
the Company shall not be affected by any notice to the contrary).
SECTION 5. MUTILATED, DESTROYED, LOST OR STOLEN WARRANT CERTIFICATES.
Upon receipt by the Company of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of any Warrant Certificate, and, in the
case of loss, theft or destruction, receipt by the Company of indemnity or
security reasonably satisfactory to them, and reimbursement to them of all
reasonable expenses incidental thereto, and, in the case of mutilation, upon
surrender and cancellation of the Warrant Certificate, the Company shall deliver
a new Warrant Certificate of like tenor representing in the aggregate the same
number of Warrants.
<PAGE> 3
SECTION 6. PAYMENT OF TAXES. With respect to any Warrant, the Company
will pay all documentary stamp taxes attributable to the initial issuance of
shares of Common Stock upon the exercise of the Warrant; provided, however, that
the Company shall not be required to pay any tax or taxes which may be payable
in respect of any transfer involved in the issue of any Warrant or any
certificates for shares of Common Stock in a name other than that of the
registered holder of the Warrant or Warrant Certificate surrendered upon the
exercise of a Warrant, and the Company shall not be required to issue or deliver
such Warrant or certificates unless or until the person or persons requesting
the issuance thereof shall have paid to the Company the amount of such tax if
any, or shall have established to the satisfaction of the Company that such tax
if required, has been paid.
SECTION 7. EXERCISE, PURCHASE PRICE AND DURATION OF WARRANT. Subject to
the provisions of this Agreement, the holder of a Warrant shall have the right
to purchase from the Company (and the Company shall issue and sell to that
holder) one fully paid and non-assessable share of Common Stock for each Warrant
at the initial exercise price of $10.00 per share (subject to adjustment as
provided in Section 9 hereof), upon the surrender of the Warrant Certificate
evidencing such Warrant Agent on any business day subsequent to the first
anniversary date of the opening of the Company's subsidiary bank (the date when
these Warrants first become exercisable), and prior to 5:00 p.m. Eastern
Standard Time on the Expiration Date, with the Form of Election to Exercise on
the reverse thereof duly completed and executed, and payment of the Exercise
Price in lawful money of the United States of America in cash or by cashiers' or
certified check payable to the Company. The exercise price and the shares of
Common Stock issuable upon exercise of a Warrant shall be subject to adjustment
from time to time in the manner specified in Section 9 and, as initially
established or as so adjusted, are referred to herein as the "Exercise Price"
and the "Shares," respectively. The Warrants shall be so exercisable either as
an entirety or from time to time in part at the election of the registered
holder thereof except that the Company shall not be required to issue
certificates in denominations of less than fifty (50) shares. In the event that
fewer than all Warrants evidenced by a Warrant Certificate are exercised at any
time prior to 5:00 p.m. Eastern Standard Time on the Expiration Date a new
Warrant Certificate will be issued for the Warrants not so exercised.
No payments or adjustments shall be made for any cash dividends,
whether paid or declared, on Shares issuable on the exercise of a Warrant.
No fractional shares of Common Stock shall be issued upon exercise of a
Warrant, but, in lieu thereof, there shall paid to the registered holder of the
Warrant Certificate evidencing such Warrant or other person designated on the
Form of Election to Exercise as soon as practicable after date of surrender, an
amount in cash equal to the fraction of the current market value of a share of
Common Stock equal to the fraction of a share to which such Warrant related. For
such purpose, the current market value of a share of Common Stock shall be the
book value of the Common Stock as of the last day of the month immediately
preceding the date of the Election to Exercise.
<PAGE> 4
Subject to Section 6 hereof, upon surrender of a Warrant Certificate,
with the Form of Election to Exercise duly completed and executed, together with
payment of the Exercise Price, the Company shall issue and deliver the full
number of Shares issuable upon exercise of the Warrants tendered for exercise.
Shares shall be deemed to have been issued, and any person so designated by the
registered holder shall be deemed to have become the holder of record of a
Share, as of the date of the surrender of the Warrant Certificate to which the
Share relates and payment of the appropriate Exercise Price; provided, however,
if the date of surrender of a Warrant Certificate shall occur within any period
during which the transfer books for the Company's Common Stock are closed for
any purpose, such person shall not be deemed to have become a holder of record
of a Share until the opening of business on the day of reopening said transfer
books, and certificates representing such Shares shall not be issuable until
such day.
SECTION 8. RESERVATION OF SHARES. The Company will at all times reserve
and keep available out of the aggregate of its authorized but unissued Common
Stock, for the purpose of enabling it to satisfy any obligation to issue Shares
upon exercise of Warrants, through the close of business on the Expiration Date,
the number of Shares deliverable upon the exercise of all outstanding Warrants.
The Company covenants that all Shares issued upon exercise of the
Warrants will, upon issuance in accordance with the terms of this Agreement, be
fully paid and non-assessable.
The shares allocated for such Warrants will not be included for
Registration under the Securities Act of 1933, and Rule 415 adopted thereunder,
in a registration of securities expected to be filed by the Company with the
Securities and Exchange Commission in December, 1998.
SECTION 9. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES
PURCHASABLE. The Exercise Price and the number of Shares which may be purchased
upon the exercise of each Warrant are subject to adjustment from time to time
upon the occurrence, after the date hereof, if the Company shall (i) declare a
dividend on the Common Stock payable in shares of common stock, (ii) subdivide
the outstanding Common Stock into a greater number of shares or (iii) combine
the outstanding Common Stock into a smaller number of shares, then the Exercise
Price in effect on the record date for that dividend or on the effective date of
that subdivision or combination, and/or the number and kind of shares of capital
stock issuable on that date, shall be proportionately adjusted so that the
holder of any Warrant exercised after such time shall be entitled to receive
solely the aggregate number and kind of shares of capital stock which, if the
Warrant had been exercised immediately prior to that date, such holder would
have owned upon exercise and been entitled to receive by virtue of that
dividend, subdivision, or combination. The foregoing adjustments shall be made
by the Company successively whenever any event listed above shall occur.
SECTION 10. NOTICES TO WARRANT HOLDERS. Upon any adjustment to the
Exercise Price pursuant to Section 10 hereof, the Company within twenty calendar
days thereafter
<PAGE> 5
shall cause to be given to the registered holders of outstanding Warrant
Certificates at their respective addresses appearing on the Warrant Certificate
register written notice of the adjustments by first-class mail, postage prepaid.
Where appropriate, the notice may be given in advance and included as a part of
the notice required to be mailed under the other provisions of this Section 10.
Notice of any supervisory order regarding the capitalization of the
Bank, shall be delivered in the same manner within three (3) business days of
the Company's receipt of such notice.
SECTION 11. SUPPLEMENTS AND AMENDMENTS. The Company may from time to
time supplement or amend this Agreement without the consent or concurrence of or
notice to any holders of Warrant Certificates or Warrants in order to cure any
ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein, to correct any defective
provision, clerical omission, mistake or manifest error herein contained, or to
make any other provision with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of the Warrant
Certificates; provided that such action shall not adversely affect the interests
of the holders of the Warrant Certificates or Warrants. Other amendments to this
Agreement may be approved by a vote of at least a majority of the Company's
shares.
SECTION 12. GOVERNING LAW. This Plan and each Warrant Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Florida and for all purposes shall be governed by, construed and
enforced in accordance with the laws of said State.
SECTION 13. BENEFITS OF THIS PLAN. Nothing in this Plan shall be
construed to give to any person or corporation other than the Company and the
registered holders of the Warrant Certificates or Warrants any legal or
equitable right, remedy or claim under this Plan; this Plan shall be for the
sole and exclusive benefit of the Company and the registered holders of the
Warrant Certificates.
Adopted by the Board of Directors of Coastal BHC, Inc. on the 9th day
of December, 1998.
PRESIDENT: ATTEST:
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COASTAL BHC, INC.
WARRANT CERTIFICATE
Certificate No.__________ Number of Warrants: 50,000
WARRANT CERTIFICATE FOR PURCHASE OF
COMMON STOCK OF COASTAL BHC, INC.
(See Reverse Side for Summary of Terms of Warrant Plan)
THIS CERTIFIES THAT, for value received, ___________________________,
is the owner of the number of Warrants set forth above each of which entitles
the owner to purchase, subject to the terms and conditions hereof and of the
Warrant Plan referred to herein, at any time after the date hereof and prior to
the Expiration Date (as herein defined), one share of Common Stock, par value
$0.01 per share ("Shares"), of Coastal BHC, Inc., a Florida corporation
("Company") at $10.00 per share ("Exercise Price"), payable in cash, or by
cashiers check or other official bank check, payable to the Company. Warrants
may be exercised by delivery and surrender of this Warrant Certificate, along
with the form of Election to Exercise on the reverse hereof duly completed and
executed together with payment of the Exercise Price at the office of the
Company or its duly appointed agent.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject to all of the terms, provisions and conditions of
that certain Warrant Plan dated as of December 9, 1998 (hereinafter called the
"Warrant Plan"), adopted by the Company, to all of which terms, provisions and
conditions the registered holder of this Warrant Certificate consents by
acceptance hereof. The Warrant Plan and the summary of its terms set forth on
the reverse side of this Warrant Certificate are hereby incorporated into this
Warrant Certificate by reference and made a part hereof. The Warrant Plan sets
forth the terms and conditions under which the exercise price for a Warrant, the
number of shares to be received upon exercise of a Warrant, or both, may be
adjusted. Reference is hereby made to the Warrant Plan for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Company and the holders of the Warrant Certificates or Warrants. In the
event of any conflict between the provisions of this Warrant Certificate and the
Warrant Plan, the provisions of the Warrant Plan shall control.
Copies of the Warrant Plan are available for inspection at the
Company's Office, or may be obtained upon written request addressed to the
Secretary, Coastal BHC, Inc., 8700 North Kendall Drive, Miami, Florida 33176.
The Company shall not be required upon the exercise of the Warrants evidenced by
this Warrant Certificate to issue fractions of Warrants or Shares, but shall
make adjustments therefor in cash on the basis of the then current market value
of any fractional interest as provided in the Warrant Plan.
The Warrants evidenced by this Warrant Certificate shall expire at 5:00
p.m. Local Time on the "Expiration Date" (as defined in the Warrant Plan).
<PAGE> 7
IN WITNESS WHEREOF, COASTAL BHC, INC. has caused this certificate to be
executed by the signature of its duly authorized officers and has caused its
corporate seal to be hereunto affixed.
Dated:
---------------------------
SEAL
- ---------------------------------- -----------------------------------
, Director , Secretary
- ------------------------- ------------------------
<PAGE> 8
COASTAL BHC, INC.
SUMMARY OF TERMS OF WARRANT PLAN
The Company's Board of Directors and its initial stockholders have
adopted a Warrant Plan to compensate its organizers for their efforts in and
funding of the organization of the Company and Coastal Community Bank (the
"Bank"). Hans C. Mueller, Jerome J. Bushman and Evaldo F. Dupuy, three of the
Company's five initial organizers, have been granted Organizer's Warrants as
recognition for their efforts to establish a strategic plan for the formation of
the Bank and for their funding of the initial organizational expense of the Bank
and the Company. The organizers have also secured a third party loan in the
amount of $300,000 through the efforts of Mr. Bushman and the guarantee of Mr.
Dupuy which allowed an organizational expense fund to be created. The exercise
price of the Warrants will be $10 per share, the offering price of the Common
Stock being offered pursuant to the Company's Prospectus. The Warrants will be
non-transferable and will vest immediately and will have a term of ten (10)
years from the issuance date at which time they will expire.
The Warrant Plan provides that, upon the occurrence of certain events,
the initial exercise price set forth on the face of this Warrant Certificate
may, subject to specified conditions, be adjusted (such exercise price, as
initially established or as adjusted from time to time, is referred to herein as
the "Exercise Price"). If the Exercise Price is adjusted, the Warrant Plan
provides that the number of shares which can be purchased upon the exercise of
each Warrant represented by this Warrant Certificate and the type of securities
or other property subject to purchase upon the exercise of each Warrant
represented by this Warrant Certificate are subject to modification or
adjustment.
The Warrants evidenced by this Warrant Certificate shall be exercisable
until 5:00 p.m. Local Time on the Expiration Date (as defined in the Warrant
Plan).
In the event that upon any exercise the number of Warrants exercised
shall be fewer than the total number of Warrants represented hereby, there shall
be issued to the holder hereof a new Warrant Certificate evidencing the Warrants
not so exercised.
No payment or adjustment will be made for any cash dividends, whether
paid or declared, on any shares issuable upon exercise of a Warrant. The Company
shall not be required to issue fractions of shares or any certificates which
evidence fractional shares. In lieu of a fractional share, if any, there shall
be paid to the registered holder of a Warrant with regard to which the
fractional share would be issuable, an amount in cash equal to the same fraction
of the current market value (as determined pursuant to the Warrant Plan) of a
share.
The Company may deem and treat the registered holder of this Warrant
Certificate as the absolute owner hereof and of the Warrants represented by this
Warrant Certificate (notwithstanding any notation of ownership or other writing
hereon made by anyone) for the purposes of any exercise of such Warrants and for
all other purposes, and the Company shall not be affected by an notice to the
contrary.
Prior to the exercise of the Warrants represented hereby, the
registered holder of this Warrant Certificate, shall not be entitled to vote on
or be deemed the holder of Common Stock or any other securities of the Company
which may at any time be issuable on the exercise hereof for any purpose, and
nothing contained in the Warrant Plan or herein shall be construed to confer
upon the holder of this Warrant Certificate, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issue of
stock, reclassification of stock, change of par value or change of stock to no
par value, consolidation, merger, conveyance or otherwise) or to receive notice
of meetings or other actions affecting stockholders or to receive dividends or
subscription rights or otherwise.
This Warrant Certificate, together with other Warrant Certificates, may
be exchanged by the registered holder for another Warrant Certificate or
Certificates of different denominations, of like tenor and representing in the
aggregate Warrants equal in number to the same full number of Warrants
represented by this Warrant Certificate and any other Warrant Certificate so
exchanged.
<PAGE> 9
COASTAL BHC, INC.
WARRANT PLAN
ELECTION TO EXERCISE
The undersigned hereby irrevocably elects to exercise ____________
Warrants evidenced by this Warrant Certificate, to purchase___________ full
shares of the Common Stock of the Company ("Shares") and herewith tenders
payment for such Shares in the amount of $_____________ in accordance with the
terms hereof. The undersigned hereby acknowledges receipt of a Prospectus,
including amendments and supplements thereto relating to the Offering of the
Common Stock to be acquired in connection with this transaction. The undersigned
requests that a certificate representing such shares be registered in the name
of __________________________ and that the Certificate be delivered to
________________________________________, whose address is ____________________
_____________________. If said Shares are fewer than all the Shares purchasable
hereunder, the undersigned requests that a new Warrant Certificate evidencing
the right to purchase the balance of the shares be registered in the name of
____________________, whose address is __________________________________ and
delivered to __________________________________, whose address is
__________________________________.
Dated: __________________, _______.
______________________
Social Security Number
Name of Registered Holder of Warrant
__________________________________________
(Please Print)
Address:
_______________________________________________________________________
(Please Print)
Signature
_______________________________________________________________________
NOTE: The above signature must correspond with the name as written upon
the face of the Warrant Certificate in every particular, without
alteration or enlargement or any change whatever. If the holder hereof
is hereby electing to exercise fewer than all Warrants represented by
this Warrant Certificate and is requesting that a new Warrant
Certificate evidencing the Warrants not exercised be registered in a
name other than that in which this Warrant Certificate is registered,
the signature of the holder of this Warrant Certificate must be
guaranteed.
Signature Guaranteed:
<PAGE> 1
EXHIBIT 4.3
COASTAL BHC, INC.
1998 INCENTIVE STOCK OPTION PLAN
ARTICLE I
GENERAL
1.1 PURPOSE OF THE PLAN.
The purpose of the COASTAL BHC, INC. 1998 Incentive Stock Option Plan
(the "Plan") is to assist COASTAL BHC, INC. (the "Company") to promote equity
ownership of the Company by selected officers and employees of the Company and
Coastal Community Bank, Inc. (the "Bank"), to increase their proprietary
interest in the success of the Company and to encourage them to remain in the
employ of the Company.
1.2 DEFINITIONS.
(a) "ACCELERATION EVENT" means any event which in the opinion of the
Board of Directors of the Company is likely to lead to changes in control of
share ownership of the Company, whether or not such change in control actually
occurs.
(b) "BOARD OF DIRECTORS" or "BOARD" means the Board of Directors of the
Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended, and any
successor thereto, together with rules, regulations and interpretations
promulgated thereunder.
(d) "COMMITTEE" it means the committee referred to in Section 1.3.
(e) "COMMON STOCK" means the common stock of the Company having a par
value of $.01 per share.
(f) "FAIR MARKET VALUE" means the closing "asked" price of the shares
of Common Stock in the over-the-counter market on the day on which such value is
to be determined or, if such "asked" price is not available, the last sales
price on such day or, if no shares were traded on such day, on the next
preceding day on which the shares were traded, as reported by the National
Association of Securities Dealers Automatic Quotation System (NASDAQ) or other
quotation service. If the shares are listed on a National Securities Exchange,
"fair market value" means the closing price of the shares of Common Stock on
such National Securities Exchange on the day on which such value is to be
determined or, if no shares were traded on such day, on the next preceding day
on which shares were traded, as reported by National Quotation Bureau, Inc. or
other national
<PAGE> 2
quotation service. If at any time shares of Common Stock are not traded on an
exchange or in the over-the-counter market, Fair Market Value shall be the value
determined by the Board of Directors or Committee administering the Plan, taking
into consideration those factors affecting or reflecting value which they deem
appropriate.
(g) "INCENTIVE STOCK OPTION" means an option to purchase shares of
Common Stock which is intended to qualify as an incentive stock option as
defined in Section 422A of the Code.
(h) "KEY EMPLOYEE" means any person, including officers and directors,
in the regular employment of the Company or its Subsidiaries who is designated a
Key Employee by the Committee and is or is expected to be primarily responsible
for the management, growth, or supervision of some part or all of the business
of the Company or its Subsidiaries. The power to determine who is and who is not
a Key Employee is reserved solely for the Committee.
(i) "NONQUALIFIED STOCK OPTION" means an option to purchase shares of
Common Stock which is not intended to qualify as an Incentive Stock Option as
defined in Section 422A of the Code.
(j) "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option.
(k) "OPTIONEE" means a Key Employee to whom an Option is granted under
the Plan.
(1) "PARENT" means any corporation which qualifies as a parent of a
corporation under the definition of "parent corporation" contained in Section
425(e) of the Code.
(m) "STOCK APPRECIATION RIGHT" shall have the meaning stated in Article
IV of the Plan.
(n) "SUBSIDIARY" means any corporation which qualifies as a subsidiary
of a corporation under the definition of "subsidiary corporation" contained in
Section 425(f) of the Code.
(o) "TERM" means the period during which a particular option may be
exercised as determined by the Committee and as provided in the option
agreement.
1.3 ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Company's Compensation Committee
(the "Committee") appointed from time to time by the Board of Directors and is
comprised of at least two (2) non-employee directors who qualify to administer
the Plan as contemplated
-2-
<PAGE> 3
by Rule 16b-3 of the Securities Exchange Act of 1934 or any successor. No person
while a member of the Committee shall be eligible to participate in the Plan.
Subject to the control of the Board, and without limiting the control over
decisions described in Section 1.7, the Committee shall have the power to
interpret and apply the Plan and to make regulations for carrying out its
purpose. More particularly, the Committee shall determine which Key Employees
shall be granted Options under the Plan, the number of shares subject to each
Option, the price per share under each Option, the Term of each Option, and any
restrictions on the exercise of each Option. When granting Options, the
Committee shall designate the Option as either an Incentive Stock Option or a
Nonqualified Stock Option. The Committee shall also designate whether the Option
is granted with Stock Appreciation Rights. Determinations by the Committee under
the Plan (including, without limitation, determinations of the person to receive
Options, the form, amount and timing of such Options, and the terms and
provisions of such Options and the agreements evidencing same) need not be
uniform and may be made by it selectively among persons who receive, or are
eligible to receive, Options under the Plan, whether or not such persons are
similarly situated.
1.4 SHARES SUBJECT TO THE PLAN.
The total number of shares that may be purchased pursuant to Options or
transferred pursuant to the exercise of Stock Appreciation Rights under the Plan
shall not exceed 150,000 shares of Common Stock. Shares subject to the Options
which terminate or expire prior to exercise shall be available for future
Options. Shares represented by an unexercised Option surrendered upon an
exercise of Stock Appreciation Rights including, without duplication, any shares
issued in payment of any Stock Appreciation Rights, shall be deducted from the
aggregate and shall not be available for further Options hereunder. Shares
issued pursuant to the Plan may be either unissued shares of Common Stock or
reacquired shares of Common Stock held in treasury.
1.5 TERMS AND CONDITIONS OF OPTIONS.
All Options shall be evidenced by agreements in such form as the
Committee shall approve from time to time subject to the provisions of Article
II or Article III hereof, as appropriate, and the following provisions:
(a) EXERCISE PRICE. Except as provided in Section 3.1(c), the exercise
price of the Option shall not be less than the Fair Market Value (as determined
by the Committee) of the Common Stock at the time the Option is granted.
(b) EXERCISE. The Committee shall determine whether the Option shall be
exercisable partially or in full at any time during the Term.
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(c) TERMINATION OF EMPLOYMENT. An Optionee's Option shall expire on the
earlier of the expiration of (i) the date specified in the Option which in no
event shall be later than three (3) months after the termination of the
Optionee's employment for any reason other than death or disability (as defined
in Section 422A(c)(7) of the Code); or (ii) the Term specified in Section 2.1 or
3.1(a) as the case may be. In the event of exercise of the Option after
termination of employment the Optionee may exercise the Option only with respect
to the shares which could have been purchased by the Optionee at the date of
termination of employment. However, the Committee may, but is not required to,
waive any requirements made pursuant to Section 1.5(b) so that some or all of
the shares subject to the Option may be exercised within the time limitation
described in this subsection. An Optionee's employment shall be deemed to
terminate on the last date for which he receives a regular wage or salary
payment.
(d) DEATH OR DISABILITY. Upon termination of Optionee's employment by
reason of death or disability (as determined by the Committee consistent with
the definition of Section 422A(c)(7) of the Code), the Option shall expire on
the earlier of the expiration of (i) the date specified in the Option which in
no event shall be later than twelve (12) months after the date of such
termination, or (ii) the Term specified in Section 2.1 or 3.1(a) as the case may
be. The Optionee or his successor in interest, as the case may be, may exercise
the Option only as to the shares which could have been purchased by the Optionee
at the date of his termination of employment. However, the Committee may, but is
not required to, waive any requirements made pursuant to Section 1.5(b) so that
some or all of the shares subject to the Option may be exercised within the time
limitation described in this subsection.
(e) PAYMENT. Payment for shares as to which an Option is exercised
shall be made in such manner and at such time or times as shall be provided in
the option agreement, including cash, Common Stock of the Company which was
previously acquired by the Optionee, or any combination thereof. Common Stock
used in payment for shares as to which an Option is exercised shall be valued at
Fair Market Value (as determined by the Committee) as of the date of exercise.
(f) NONTRANSFERABILITY No Option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution.
During the lifetime of the Optionee, an Option shall be exercisable only by the
Optionee.
(g) ADDITIONAL PROVISIONS. Each Option agreement may contain such other
terms and conditions not inconsistent with the provisions of the Plan as the
Committee may deem appropriate from time to time.
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1.6 STOCK ADJUSTMENTS; MERGERS.
Notwithstanding Section 1.4, in the event the outstanding shares are
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Company or of any other corporation by
reason of a stock split, stock dividend, combination or reclassification of
shares, recapitalization, merger or similar event, the total number of shares
set forth in Section 1.4 shall be proportionately and appropriately adjusted by
the Committee. If the Company continues in existence, (i) the number and kind of
shares that are subject to any Option and the option price per share shall be
proportionately and appropriately adjusted without any change in the aggregate
price to be paid therefor upon exercise of the Option, and (ii) the Committee
may make such adjustments in the number and kind of Stock Appreciation Rights as
it shall deem appropriate in the circumstances. If the Company will not remain
in existence or substantially all of its voting Common Stock and Common Stock
will be purchased by a single purchaser or group of purchasers acting together,
then the Committee may (i) declare that all Options and Stock Appreciation
Rights shall terminate thirty (30) days after the Committee gives written notice
to all Optionees of their immediate right to exercise all Options and Stock
Appreciation Rights then outstanding (without regard to limitations on exercise
otherwise contained in the Options), or (ii) notify all Optionees that all
Options and Stock Appreciation Rights granted under the Plan shall apply with
appropriate adjustments as determined by the Committee to the securities of the
successor corporation to which holders of the numbers of shares subject to such
Options and Stock Appreciation Rights would have been entitled, or (iii) some
combination of aspects of (i) and (ii). The determination by the Committee as to
the terms of any of the foregoing adjustments shall be conclusive and binding.
Any fractional shares resulting from any of the foregoing adjustments under this
section shall be disregarded and eliminated.
1.7 ACCELERATION EVENT.
If an Acceleration Event occurs in the opinion of the Board of
Directors, based on circumstances known to it, the Board of Directors may direct
the Committee to declare that all Options and Stock Appreciation Rights granted
under the Plan shall become exercisable immediately notwithstanding the
provisions of the respective Option agreements regarding exercisability.
1.8 NOTIFICATION OF EXERCISE.
Options shall be exercised by written notice directed to the Secretary
of the Company at the principal executive offices of the Company. Such written
notice shall be accompanied by any payment required pursuant to Section 1.5(e).
Exercise by an Optionee's heir or the representative of his estate shall be
accompanied by evidence of his authority to so act in form reasonably
satisfactory to the Company.
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ARTICLE II
INCENTIVE STOCK OPTIONS
2.1 TERM OF INCENTIVE STOCK OPTIONS.
Each Incentive Stock Option granted under the Plan shall be exercisable
only during a Term fixed by the Committee; provided, however, that the Term
shall end no later than ten (10) years after the date the Incentive Stock Option
is granted.
2.2 LIMITATION ON OPTIONS.
The aggregate Fair Market Value of Common Stock (determined at the time
the Incentive Stock Option is granted) subject to Incentive Stock Options
granted to a Key Employee under all plans of the Key Employee's employer
corporation and its Parent or Subsidiary corporations and that become
exercisable for the first time by such Key Employee during any calendar year may
not exceed $100,000. To the extent a grant of Incentive Stock Options exceeds
this $100,000 limit, the portion of the grant in excess of such limit shall he
deemed a Nonqualified Stock Option.
2.3 CONTINUED EMPLOYMENT.
Whether military, government or other service or other leave of absence
shall constitute a termination of employment shall be determined in each case by
the Committee at its discretion, and any determination by the Committee shall be
final and conclusive. The termination of employment shall not occur where the
Optionee Transfers from the Company to one of its Subsidiaries or transfers from
a Subsidiary to the Company.
2.4 SPECIAL RULE FOR TEN PERCENT SHAREHOLDER.
If at the time an incentive Stock Option is granted, an employee owns
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of his employer corporation or of its Parent or any of
its Subsidiaries, as determined using the attribution rules of Section 425(d) of
the Code, then the terms of the Incentive Stock Option shall specify that the
option price shall be at least 110% of the Fair Market Value of the Stock
subject to the incentive Stock Option and such Incentive Stock Option shall not
be exercisable after the expiration of five (5) years from the date such
Incentive Stock Option is granted.
2.5 INTERPRETATION.
In interpreting this Article II of the Plan and the provisions of
individual option agreements, the Committee and the Board shall be governed by
the principles and
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<PAGE> 7
requirements of Sections 421, 422A and 425 of the Code, and applicable Treasury
Regulations.
ARTICLE III
NONQUALIFIED STOCK OPTIONS
3.1 TERMS AND CONDITIONS OF OPTIONS.
In addition to the requirements of Section 1.5, Nonqualified Stock
Options shall be subject to the following provisions:
(a) TERM. Each Nonqualified Stock Option granted under the
Plan shall be exercisable only during a Term fixed by the Committee.
(b) TERMINATION OF EMPLOYMENT. Notwithstanding the provisions
of Sections 1.5(c) and 1.5(d), the Committee in its discretion may
provide, either upon the original grant of an Option or in an amendment
to an Incentive or Nonqualified Stock Option, that an Option may be
exercisable during a Term that does not expire upon the expiration of
three months following an Optionee's termination of employment (twelve
(12) months in the case of termination as a result of death or
disability), but in no event later than the Term specified in Section
3.1(a) above.
(c) EXERCISE PRICE. The Company may elect to grant
Nonqualified Stock Options at a price less than the Fair Market Value
of the Common Stock at the time the Option is granted.
(d) ADDITIONAL TERMS. Pursuant to Section 1.5(g), the
Committee may add additional terms and conditions to a Nonqualified
Stock Option, including, but not limited to, a cash award for any
federal tax liability suffered by the Optionee upon the grant and/or
exercise of a Nonqualified Stock Option.
(e) TERMINATION AND CANCELLATION. In granting any Nonqualified
Stock Option, the Committee may specify that such Nonqualified Stock
Option shall be subject to the restrictions set forth herein with
respect to Incentive Stock Options, or to such other termination and
cancellation provisions as the Committee may determine. The Committee
may from time to time confer authority and responsibility on one or
more of its own members and/or one or more officers of the Company to
execute and deliver such instruments
The proper officers of the Company are authorized and directed
to take any and all action necessary or advisable from time to time to
carry out the terms of such instruments.
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<PAGE> 8
3.2 SECTION 83(b) ELECTION.
The Company recognizes that certain persons who receive Nonqualified
Stock options may be subject to restrictions regarding the right to trade Common
Stock under applicable securities laws. Such may cause Optionee's exercising
such Options not to be taxable under the provisions of Section 83(c) of the
Code. Accordingly, Optionees exercising such Nonqualified Stock Options may
consider making an election to be taxed upon exercise of the option under
Section 83(b) of the Code and to effect such election will file such election
with the Internal Revenue Service within thirty (30) days of exercise of the
Option and otherwise in accordance with applicable Treasury Regulations.
ARTICLE IV
STOCK APPRECIATION RIGHTS
4.1 TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.
Stock Appreciation Rights ("SAR") may be, but are not required to be,
granted by the Committee in connection with grant of an Option. All SARs shall
be in such form as the Committee may from time to time determine and shall be
subject to the following terms and conditions:
(a) TERMS OF EXERCISE. An SAR shall be exercisable only (i)
with the approval of the Committee, (ii) during the Term of the Option
to which it relates, (iii) at such times as the Option to which it
relates is exercisable, and (iv) if the Fair Market Value of the Common
Stock subject to the Option surrendered (on the date surrendered) minus
the aggregate option price of the Common Stock subject to the Option
surrendered is a positive amount.
(b) PAYMENT. In the event the Committee agrees to permit
exercise of the SAR, the Optionee shall surrender to the Company the
right to exercise the Option with respect to a specified number of
shares as to which the Option is then exercisable. In return, the
Optionee shall receive from the Company no more than an amount payable
in cash and/or in shares (as determined by the Committee after
considering the request of the Optionee) equal to the difference
between the Fair Market Value of Common Stock as to which the Optionee
has surrendered the Option and the exercise price with respect,
thereto. In the event the Committee determines to tender shares in full
or partial payment of the SAR, the number of shares to be issued to the
Optionee shall be based on the Fair Market Value of the shares as of
the date of exercise of the SAR. No fractional shares shall be issued
to Optionees upon exercise of an SAR. Instead, the Company shall pay
the Optionee the value of such fractional share based upon the Fair
Market Value of a share on the date the SAR is exercised.
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<PAGE> 9
(c) Nontransferability. An SAR granted under the Plan shall be
transferable only when the Option to which it relates is transferable.
4.2 OTHER TERMS AND CONDITIONS.
Option agreements reflecting Stock Appreciation Rights which are
granted under the Plan may contain such other conditions not inconsistent with
the provisions of the Plan as the Committee may deem appropriate from time to
time.
4.3 NOTIFICATION OF REQUEST TO EXERCISE.
The Optionee shall request the Committee's approval to exercise a Stock
Appreciation Right by written notice to the Secretary of the Company at the
principal executive offices of the Company. Such written notice shall state the
number of shares subject to the Option for which approval of the exercise of the
SAR is requested and the optionee's preferred form of payment of the SAR, as
hereinafter provided. The Optionee may indicate his or her preference to receive
payment of the SAR in cash or in Common Stock or in a combination thereof.
Notwithstanding anything to the contrary contained herein, the Committee shall
have absolute discretion in determining whether the request for approval of the
exercise of the SAR shall be approved and, if such approval is given, whether
payment shall be made in cash or Common Stock or in a combination thereof.
Within thirty (30) days after the delivery to the Secretary of the
Optionee's request to exercise the SAR as provided above, the Committee shall
inform the Optionee in writing of its determination by personal delivery of such
written determination to the Optionee or by mailing its written determination to
the Optionee by certified or registered mail, return receipt requested. The
Optionee must act on any approved exercise of an SAR within thirty (30) days
after the date of such determination by the Committee (or such longer period as
may be permitted by the Committee) and in accordance with the terms approved by
the Committee. Exercise shall be by written notice actually delivered, or mailed
by certified or registered mail, return receipt requested, to the Secretary of
the Company at the principal executive offices of the Company.
4.4 EFFECT OF EXERCISE.
Upon exercise of a Stock Appreciation Right, the Option to which it
relates shall lapse with respect to the shares as to which the SAR is exercised
and such shares shall not be available for further grant of Options.
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<PAGE> 10
ARTICLE V
ADDITIONAL PROVISIONS
5.1 STOCKHOLDER APPROVAL
The Plan shall be submitted for the approval of the stockholders of the
Company at the first annual meeting of stockholders held subsequent to the
adoption of the Plan and in all events within one (1) year of its approval by
the Board of Directors. If at said meeting the stockholders of the Company do
not approve the Plan, the Plan shall terminate.
5.2 COMPLIANCE WITH OTHER LAWS AND REGULATIONS.
The Plan, the grant and exercise of Options hereunder, and the
obligation of the Company to sell and deliver shares under such Options, shall
be subject to all applicable Federal and state laws, rules, and regulations and
to such approvals by any government or regulatory agency as may be required. The
Company shall not be required to issue or deliver any certificates for shares of
Common Stock prior to (a) the listing of such shares on any stock exchange on
which the Common Stock may then be listed and (b) the completion of any
registration or qualification of such shares under any Federal or state law, or
any ruling or regulation of any government body which the Company shall, in its
sole discretion, determine to be necessary or advisable. No holder of any Option
shall have any right to require the Company to register or qualify any shares of
Common Stock subject to any Options under any Federal, or state law, rule or
regulation.
5.3 AMENDMENTS.
The Board of Directors may discontinue the Plan at any time, and may
amend it from time to time, but no amendment, without approval by stockholders,
may (a) increase the total number of shares which may be issued under the Plan
or to any individual under the Plan, (b) reduce the option price for shares
which may be purchased pursuant to Options under Articles II and III of the
Plan, (c) extend the period during which Options may be granted, or (d) chance
the class of employees to whom Options may be granted, except as provided in
Section 1.6. Other than as expressly permitted under the Plan, no outstanding
Option may be revoked or altered in a manner unfavorable to the Optionee without
the consent of the Optionee.
5.4 NO RIGHTS AS SHAREHOLDER.
No Optionee shall have any rights as a shareholder with respect to any
share subject to his or her option prior to the date of issuance to him or her
of a certificate or certificates for such shares.
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5.5 WITHHOLDING.
Whenever the Company proposes or is required to issue or transfer
shares of Common Stock under the Plan, the Company shall have the right to
require the Optionee to remit to the Company an amount sufficient to satisfy any
Federal, state or local withholding tax liability prior to the delivery of any
certificate or certificates for such shares. Whenever under the Plan payments
are to be made in cash, such payments shall be made net of an amount sufficient
to satisfy any Federal, state, or local withholding tax liability.
5.6 CONTINUED EMPLOYMENT NOT PRESUMED.
This Plan and any document describing this Plan and the grant of any
stock Option or Stock Appreciation Right hereunder shall not give any Optionee
or other employee a right to continued employment by the Company or its
Subsidiaries or affect the right of the Company or its Subsidiaries to terminate
the employment of any such person with or without cause.
5.7 EFFECTIVE DATE; DURATION.
The Plan shall become effective as of December 9, 1998 subject to
stockholder approval pursuant to Section 5.1 and shall expire on December 9,
2008. No Options may be granted under the Plan after December 9, 2008, but
options granted on or before that date may be exercised according to the terms
of the option agreements and shall continue to be governed by and interpreted
consistent with the terms hereof.
THIS PLAN WAS APPROVED BY THE BOARD OF DIRECTORS OF COASTAL BHC, INC.
AND COASTAL COMMUNITY BANK ON DECEMBER 9, 1998.
THIS PLAN WAS SUBMITTED TO AND APPROVED BY THE STOCKHOLDERS OF COASTAL
BHC, INC. ON DECEMBER 9, 1998.
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<PAGE> 12
COASTAL BHC, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT, dated as of this ____ day of
December, 1998, between COASTAL BHC, INC., a Florida corporation (the
"Company"), and _______________________, an employee of the Company and/or one
of its subsidiaries ("Optionee"), each of which agrees to be bound by the terms
and conditions herein relating to the grant of an option to purchase shares of
the Common Stock of the Company.
1. AUTHORIZATION AND PURPOSE OF PLAN. The Company adopted the Incentive
Stock Option Plan (the "Plan") by approval of its Board of Directors on December
9, 1998 and approval of its Stockholders on December 9, 1998 to promote equity
ownership of the Company by selected officers and employees of the Company and
Coastal Community Bank (the "Bank"), to increase their proprietary interest in
the success of the Company and to encourage them to remain in the employ of the
Company.
2. GRANT OF OPTION. The Company hereby grants to Optionee an
irrevocable option to purchase up to _____________ shares of Common Stock of the
Company ("Shares") at the price of $____ per Share which is at least 100% of the
fair market value of such Shares as of _______________, the Effective Date of
the grant of the Option and the date of this Agreement. This Agreement, the
Option and the Shares shall be subject to the terms and conditions of the Plan
in its entirety which shall be incorporated herein by reference.
3. EXERCISE OF OPTION. Subject to the terms of the Plan and this
Agreement, this Option may be exercised, in whole or in part, no earlier than
one year, nor later than ten (10) years, from the date hereof, by delivery of
written notice to the Company stating the number of Shares with respect to which
the Option is being exercised, together with full payment of the purchase price
therefor. Payment may be made in cash or in such other form or combination of
forms (including, without limitation, Shares of the Company or a note, with or
without interest, secured or unsecured) as shall be acceptable to the designated
committee of the Board of the Company. This Option shall not have nor possess
any of the rights or privileges of ownership of any Shares of the Company.
4. RESERVED SHARES. The Company has duly reserved a number of
authorized but unissued Shares adequate to fulfill its obligations under this
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<PAGE> 13
Agreement. During the term of this Agreement the Company shall take such action
as may be necessary to maintain at all times an adequate number of Shares
reserved for issuance or treasury Shares to fulfill its obligations hereunder.
5. EARLY TERMINATION. If Optionee's employment is terminated for any
reason other than death or disability, the Option granted hereunder shall lapse
to the extent unexercised on the earlier of the expiration date of the Option or
the date three (3) months following the date of such termination. If Optionee
dies, the Option granted hereunder shall lapse to the extent unexercised on the
earlier of the expiration date of the Option or the date twelve (12) months
following the date of Optionee's death. If Optionee is permanently and totally
disabled within the meaning of Section 422(c)(6) and Section 22(e)(3) of the
Internal Revenue Code of 1986 (the "Code"), the Option granted hereunder shall
lapse to the extent unexercised on the earlier of the expiration date of the
Option or the first anniversary of the date of such disability.
6. ASSIGNMENT OR TRANSFER. This Option may not be assigned or
transferred except by will or by the laws of descent and distribution and shall
be exercisable only by Optionee during Optionee's lifetime.
7. PLAN AND BOARD. The construction of the terms of this Agreement
shall be controlled by the Plan, a copy of which is attached hereto as Exhibit A
and delivered to Optionee, and the rights of Optionee are subject to
modification and termination in certain events as provided in the Plan. The
Board's or Board Committee's interpretations of and determinations under any of
the provisions of the Plan or this Agreement shall be conclusive.
8. COMPLIANCE WITH LAW. This Option shall not be exercised and no
Shares shall be issued in respect hereof, unless in compliance with federal and
applicable state, tax and securities laws.
8.1 CERTIFICATE LEGENDS. The certificates for Shares purchased
pursuant to this Option shall bear such legends regarding
restrictions upon resale as shall be deemed necessary by the
Board, the Committee of the Board specifically authorized to
act on behalf of the Board or their or its counsel.
8.2 REPRESENTATIONS OF OPTIONEE. As a condition to the
exercise of this Option, Optionee will deliver to the Company
such signed representations as may be
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<PAGE> 14
necessary in the opinion of counsel satisfactory to the
Company, for compliance with applicable federal and state
securities laws.
8.3 RESALE. Optionee's ability to transfer Shares purchased
pursuant to this Option or securities acquired in lieu thereof
or in exchange therefor may be restricted under federal or
state securities laws. Optionee shall not resell or offer for
resale such Shares or securities unless they have been
registered or qualified for resale under all applicable
federal and state securities laws or an exemption from such
registration or qualification is available in the opinion of
counsel satisfactory to the Company.
8.4 OTHER CONDITIONS. The aggregate fair market value of
Common Stock (determined at the time of the grant) subject to
Incentive Stock Options granted to a key employee under all
plans that become exercisable for the first time by such key
employee during any calendar year may not exceed $100,000.
9. NOTICE. All notices or other communications desired to be given
hereunder shall be in writing and shall be deemed to have been duly given upon
receipt, if personally delivered, or on the third business day following mailing
by United States first class mail, postage prepaid, and addressed as follows:
If to Company: Coastal BHC, Inc.
Attn: Hans C. Mueller, Chief Executive Officer
8700 North Kendall Drive
Miami, Florida 33176
If to Optionee:
-----------------------------------
-----------------------------------
-----------------------------------
or to such other address as either party shall give to the other in the manner
set forth above.
10. TAX TREATMENT. This Option is intended to be treated as an
incentive stock option pursuant to Section 422 of the Code. Optionee
acknowledges that the tax treatment of this Option, Shares subject to this
Option or any events or transactions with respect thereto may be dependent upon
various factors or events which are not determined by the Plan or this
Agreement. The Company makes no representations with respect thereto and hereby
disclaims all responsibility as to such tax treatment.
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<PAGE> 15
11. MISCELLANEOUS. References herein to a date on or as of which an
expiration, termination or lapse shall occur shall be deemed to refer to 5:00
p.m. Eastern time, on such date. The terms "parent" or "subsidiary" herein refer
to such terms as defined in Section 424 of the Code. Nothing herein shall affect
the right of the Company or any of its subsidiaries to terminate Optionee's
employment, services, responsibilities, duties or authority to represent the
Company or its subsidiaries at any time or for any reason whatsoever, nor shall
it affect the right of the Optionee to participate in, and receive benefits
under and in accordance with, the then current provisions of any pension,
insurance, bonus, profit-sharing or other benefit plan or programs of the
Company or its subsidiaries. This Agreement shall constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
may not be amended except by written instrument duly executed by the parties
hereto. This Agreement is being delivered in, and shall be subject to the laws
of the State of Florida.
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Incentive Stock Option Agreement effective as of the date first set forth above.
COASTAL BHC, INC.,
a Florida corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Optionee:
-----------------------------------
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<PAGE> 16
EXHIBIT B
Coastal BHC, Inc.
Attn: Hans C. Mueller, Chief Executive Officer
8700 North Kendall Drive
Miami, Florida 33176
NOTICE OF EXERCISE OF OPTION
I hereby elect to purchase ________________________ shares of Common
Stock of COASTAL BHC, INC. (the "Company") at a price of $________ per share, in
accordance with that certain Incentive Stock Option Agreement dated December
___, 1998, between the Company and myself. For this purpose, I enclosed herewith
my payment in the amount of $_________ in full payment.
I hereby confirm my representations under the aforementioned Incentive
Stock Option Agreement, including that the shares of Common Stock are being
acquired in good faith for investment and not with a view to, or for resale or
in connection with, any distribution thereof. I represent that such shares are
intended to be held indefinitely and will not be sold, transferred or otherwise
disposed of in the absence of an effective registration statement covering such
shares unless in the opinion of counsel (which opinion in form and substance and
counsel shall be satisfactory to the Company), such registration is not
required.
I hereby acknowledge receipt of (i) the Company's most recent annual
financial statements, (ii) the Company's most recent internal financial
statements and (iii) a brief description of the Company's capital stock.
Optionee:
- -------------------------------
Date
--------------------------------
Signature of Optionee
--------------------------------
Street Address
--------------------------------
City State
<PAGE> 1
EXHIBIT 4.4
COASTAL BHC, INC.
OUTSIDE DIRECTOR STOCK OPTION PLAN
SECTION 1.
PURPOSE
1.1 The purpose of the COASTAL BHC, INC. OUTSIDE DIRECTOR STOCK OPTION
PLAN (the "Outside Director Plan") is to foster and promote the long-term
financial success of the Company and materially increase shareholder value by
enabling the Company to attract and retain the services of outstanding outside
directors whose judgment, interest, and special effort is essential to the
successful conduct of its operations.
SECTION 2.
DEFINITIONS
2.1. DEFINITIONS. Whenever used herein, the following terms shall have
the respective meanings set forth below:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Annual Award" means an Option for 3,000 shares of Stock for each
Outside Director of the Company plus an additional 1,000 shares of Stock for
each Outside Director who is also a member of the Bank's Executive Committee,
if established, Asset-Liability Management Committee, Audit Compliance and CRA
Committee, Compensation Committee or Loan Committee. In no case shall the
annual award exceed 4,000 shares per annum for any person.
(c) "Bank" means the COASTAL COMMUNITY BANK, a Florida banking
corporation wholly owned by the Company.
(d) "Board" means the Board of Directors of the Company.
(e) "Company" means COASTAL BHC, INC., a Florida corporation, and any
successor thereto.
(f) "Disability" means total disability, which if the Outside Director
were an employee of the Company, would be treated as a total disability under
the terms of the Company's long-term disability plan for employees, as in
effect from time to time.
(g) "Fair Market Value" means the closing "asked" price of the shares
of the Stock in the over-the-counter market on the day on which such value is
to be determined
<PAGE> 2
or, if the "asked" price is not available, the last sales price on such day or,
if not traded, the next preceding day when traded or reported by any national
quotation service.
(h) "Option" means the right to purchase Stock at a stated price for a
specified period of time. The term Option shall mean the grant of Annual
Awards.
(i) "Outside Director" means any member of the Board who is not an
employee of the Company or any of its subsidiaries.
(j) "Stock" means the common stock of the Company, par value $0.01 per
share.
2.2. GENDER AND NUMBER. Except when otherwise indicated by the
context, words in the masculine gender used in the Outside Director Plan shall
include the feminine gender, the singular shall include the plural, and the
plural shall include the singular.
SECTION 3.
ELIGIBILITY AND PARTICIPATION
Each Outside Director may participate in the Outside Director Plan.
SECTION 4.
STOCK SUBJECT TO OUTSIDE DIRECTOR PLAN
4.1. NUMBER. The total number of shares of Stock subject to Options
granted under the Outside Director Plan may not exceed 150,000 shares, subject
to adjustment pursuant to Section 4.3. The shares to be delivered under the
Outside Director Plan may consist, in whole or in part, of treasury Stock or
authorized but unissued Stock, not reserved for any other purpose.
4.2. CANCELED, TERMINATED, OR FORFEITED AWARDS. Any shares of Stock
subject to an Option which for any reason is canceled or terminated without the
issuance of any Stock may again be subjected to an Option under the Outside
Director Plan.
4.3. ADJUSTMENT IN CAPITALIZATION. In the event of any stock dividend
or stock split, recapitalization (including, without limitation, the payment of
an extraordinary dividend), merger, consolidation, combination spin-off,
distribution of assets to stockholders, exchange of shares, or other similar
corporate change, the aggregate number of shares of Stock available for
issuance hereunder or subject to Options and the respective exercise prices of
outstanding Options may be appropriately adjusted by the Board, whose
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determination shall be conclusive; provided, however, that any fractional
shares resulting from any such adjustment shall be disregarded.
SECTION 5.
STOCK OPTIONS
5.1 GRANT OF OPTIONS.
(a) ANNUAL AWARDS. During each calendar year during the term of the
outside Director Plan, each Outside Director shall be granted an Annual Award
on the later to occur of the first business day following the annual meeting of
the Company's stockholders held subsequent to the opening of the Bank or
December ___.
(b) OPTION AGREEMENT. Each Option shall be evidenced by an Option
agreement that shall specify the exercise price, the term of the Option, and
the number of shares of Stock to which the Option pertains.
5.2. OPTION PRICE. Options granted pursuant to Section 5.1(a) as an
Annual Award shall have an exercise price equal to the Fair Market Value of a
share of Stock on the date the Option is granted, multiplied by the number of
shares of Stock the Option holder elects to acquire pursuant to the Option.
5.3. EXERCISE OF OPTIONS. Options awarded under the Outside Director
Plan shall be fully and immediately exercisable in whole or in part. Each
Option shall be exercisable for ten (10) years after the date on which it is
granted.
5.4. PAYMENT. Options may be exercised by written notice of exercise
accompanied by payment in full of the Option price in cash or cash equivalents,
including by personal check, or with a partial or full payment in Stock already
owned by the Outside Director, valued at Fair Market Value on the date of
exercise. As soon as practicable after receipt of such written exercise notice
and full payment of the Option price, the Company shall deliver to the Outside
Director a certificate or certificates representing the acquired shares of
Stock.
SECTION 6.
TERMINATION OF DUTIES AS A DIRECTOR
6.1 TERMINATION OF DUTIES DUE TO RETIREMENT. In the event an Outside
Director's membership on the Board ceases on or after he has attained age
seventy (70), any Options then held by such Outside Director may be exercised
at any time prior to
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the expiration of the term of the Options within three (3) years following his
cessation of Board membership, whichever period is shorter.
6.2. TERMINATION OF DUTIES DUE TO DEATH OR DISABILITY. In the event an
Outside Director's membership on the Board ceases by reason of his death or
Disability, any Options then held by such Outside Director may be exercised by
the Outside Director or his legal representative at any time prior to the
expiration date of the terms of the Options or within one (1) year following
his cessation of Board membership, whichever period is shorter.
6.3. TERMINATION OF DUTIES FOR ANY OTHER REASON. In the event an
Outside Director's membership on the Board ceases for any reason other than one
described in Section 6.1 or 6.2, any Options then held by such Outside Director
shall be canceled within thirty (30) days following his cessation of Board
membership.
6.4. SERVICES AS AN EMPLOYEE. If an Outside Director becomes an
employee of the Company or any of its subsidiaries, the Outside Director shall
be treated as continuing in service for purposes of this Outside Director Plan,
but shall not be eligible to receive future grants while an employee. If the
Outside Director's services as an employee terminate without his again becoming
an Outside Director, the provisions of this Section 6 shall apply as though
such termination of employment were the termination of the Outside Director's
membership on the Board.
SECTION 7.
AMENDMENT, MODIFICATION, AND TERMINATION
OF OUTSIDE DIRECTOR PLAN
The Board at any time may terminate or suspend the Outside Director
Plan, and from time to time may amend or modify the Outside Director Plan, but
any amendment that materially increases the benefits to be provided to Outside
Directors shall be subject to approval by the Company's stockholders. No
amendment, modification, or termination of the Outside Director Plan shall in
any manner adversely affect any Option theretofore granted under the Outside
Director Plan, without the consent of the Outside Director.
SECTION 8.
MISCELLANEOUS PROVISIONS
8.1 NONTRANSFERABILITY OF AWARDS. No Options may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution. All rights with respect to Options
granted to an Outside Director shall be exercisable during his lifetime only by
him.
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8.2 BENEFICIARY DESIGNATION. Each Outside Director may from time to
time name any beneficiary or beneficiaries (who may be named contingently or
successively) by whom any Option granted under the Outside Director Plan is to
be exercised in case of his death. Each designation will revoke all prior
designations by such Outside Director and will be effective only when filed by
the Outside Director in writing with the Secretary of the Company during his
lifetime. In the absence of any such designation, Options outstanding at the
time of an Outside Director's death shall be exercised by the outside
Director's surviving spouse, if any, or otherwise by his estate.
8.3 NO GUARANTEE OF MEMBERSHIP. Nothing in the Outside Director Plan
shall confer upon an Outside Director the right to remain a member of the
Board.
8.4 REQUIREMENTS OF LAW. The Outside Director Plan, the granting of
Options and the issuance of shares of Stock upon the exercise of Options shall
be subject to all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required. The Company shall not be required to issue or deliver any
certificates for shares of Stock prior to (a) the listing of such shares on any
stock exchange on which the Stock may then be listed; (b) the completion of any
registration or qualification of such shares under any Federal or state law, or
any ruling or regulation of any government body which the Company shall, in its
sole discretion, determine to be necessary or advisable; and (c) payment of the
required withholding taxes by the holder of the Option. No holder of any Option
shall have any right to require the Company to register or qualify any shares
of Stock subject to any option under any state or Federal law, rule or
regulation.
8.5. ADMINISTRATION. The outside Director Plan shall, to the maximum
extent possible, be self-effectuating. Any determinations necessary or
advisable for the administration and interpretation of the Outside Director
Plan in order to carry out its provisions and purposes shall be made by the
Board of Directors of the Company or by a duly authorized Committee thereof
which shall not include any Outside Director or an administrator duly appointed
by the Board of Directors which administrator shall not be an outside Director.
8.6. TERM OF OUTSIDE DIRECTOR PLAN. The outside Director Plan shall be
effective upon its adoption by the Board, subject to approval by the Company's
stockholders at their next annual meeting. The Outside Director Plan shall
continue in effect, unless sooner terminated pursuant to Section 7, until the
tenth anniversary of the date on which it is adopted by the Board.
8.7. GOVERNING LAW. The Outside Director Plan, and all agreements
hereunder, shall be construed in accordance with and governed by the laws of
the State of Florida.
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COASTAL BHC, INC.
OUTSIDE DIRECTORS STOCK OPTION PLAN
TO: Grantees of Options to Outside Directors
GRANT DATE: December __, 1998
Coastal BHC, Inc. has made grants of options to purchase the Common
Stock of Coastal BHC, Inc. pursuant to its Outside Directors Stock Option Plan
to members of the Board of Directors who are not employees of the Company. Due
to the fact that outside directors are not employees of the Company, it is NOT
intended that the grant of these options will allow the same favorable income
tax treatment as would Incentive Stock Options.
It is the Company's intention that these options be granted to
purchase Common Stock of the Company at an exercise price no less than the fair
market value of the Common Stock of the Company on the date of the grant.
Accordingly, the exercise price has been established at $______, such price not
being less than the actual fair market value of the stock of the Company as of
the date of the grant, December __, 1998.
The taxation of non-statutory stock options is determined, in part, by
reference to Section 83 of the Internal Revenue Code of 1986 as amended (the
"Code"). Code Section 83 generally provides that property transferred in
connection with services is taxable to the recipient in the first taxable year
such property is freely transferable by the recipient or is no longer subject
to a substantial risk of forfeiture. Subsection (e)(3) of Code Section 83,
however, provides that the general rule of Section 83 shall not apply to the
transfer of an option "without a readily ascertainable fair market value."
Under applicable Treasury Regulations, the options granted under the Outside
Directors Stock Option Plan would be deemed to not have a "readily
ascertainable fair market value."
Applicable Treasury Regulations provide that at the grant of the
option, each director will not be deemed to have recognized any taxable income
and a taxable event shall not have occurred. Rather, at the time each director
elects to EXERCISE an option, the taxation of the exercise will be determined
in accordance with the rules of Code Section 83. Since, upon EXERCISE of the
options, the stock of the Company received by the director will not be subject
to a substantial risk of forfeiture, the exercise of the option can be expected
to give rise to income at that time equal to the difference between the option
price and the stock's fair market value on that (exercise) date.
Thus, under present law, you can expect to incur an income tax impact
at the time you exercise your options and purchase stock.
The foregoing description is not intended as a complete description of
the tax consequences of the Option Plan.
Please consult your tax advisor for further information and any
questions as to the specific tax issues of the option in your case.
214798.1
<PAGE> 7
EXHIBIT B
Coastal BHC, Inc.
Attn: Hans C. Mueller, Chief Executive Officer
8700 North Kendall Drive
Miami, Florida 33176
NOTICE OF EXERCISE OF OPTION
OUTSIDE DIRECTOR
I hereby elect to purchase ______ shares of Common Stock of COASTAL
BHC, INC. (the "Company") at a price of $____________ per share, in accordance
with that certain Non-Qualified Outside Director Stock Option Agreement dated
December __, 1998, between the Company and myself. For this purpose, I enclosed
herewith my check in the amount of $___________ in full payment.
I understand that the Shares to be issued may not be registered under
the Securities Act of 1933 or under Florida law, in which event the Shares will
be offered and issued in reliance upon one or more exemptions so afforded, and
at such time or times as shall be allowable thereunder.
I hereby confirm my representations under the aforementioned
Non-Qualified Outside Director Stock Option Agreement, including that the
shares of Common Stock are being acquired in good faith for investment and not
with a view to, or for resale or in connection with, any distribution thereof.
I represent that such shares are intended to be held indefinitely and will not
be sold, transferred or otherwise disposed of in the absence of an effective
registration statement covering such shares unless in the opinion of counsel
(which opinion in form and substance and counsel shall be satisfactory to the
Company), such registration is not required.
I hereby acknowledge receipt of (i) the Company's most recent annual
financial statements, (ii) the Company's most recent internal financial
statements and (iii) a brief description of the Company's capital stock.
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Date
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Signature
<PAGE> 1
EXHIBIT 4.5
INDEMNIFICATION AGREEMENT
This AGREEMENT, made and entered into this 9 day of December, 1998, by
and between COASTAL BHC, INC., a Florida chartered corporate organization
(hereinafter called the "Company") and HANS C. MUELLER (hereinafter called
"Indemnitee").
WITNESSETH:
WHEREAS, there is a general awareness that competent and experienced
persons are becoming more reluctant to serve as directors or officers of a
corporation unless they are protected by comprehensive insurance or
indemnification, especially since shareholder and derivative lawsuits against
corporations, their directors and officers for line-of-duty decisions and
actions have increased in number in recent years for damages in amounts which
have no reasonable or logical relationship to the amount of compensation
received by the directors or officers from the corporation; and
WHEREAS, the vagaries of "public policy" and the interpretations of
ambiguous statutes, regulations and by-laws are too uncertain to provide
corporate officers and directors with adequate, reliable knowledge of legal
risks to which they may be exposed with these indeterminables multiplied for
officers and directors of corporations such as the COMPANY, engaged in the
conduct of the financial services business; and
WHEREAS, damages sought by class action plaintiffs and derivative
action plaintiffs in some cases are brought or maintained whether or not the
case is meritorious, and the cost of defending them is enormous with few
individual directors and officers having the resources to sustain such legal
costs, not to mention the risk of a judgment even in cases where the defendant
was neither culpable nor profited personally to the detriment of the
corporation; and
WHEREAS, the Board of Directors, based upon their experience as
business managers, have concluded that the continuation of present trends in
litigation against corporate directors and officers will inevitably result in
less effective direction and supervision of the COMPANY and its subsidiaries'
and affiliates' business affairs and the operation of their facilities, as
opposed to aggressive supervision and management in the search for safety,
soundness and profits, and the Board deems such consequences to be so
detrimental to the best interests of the COMPANY's shareholders that it has
concluded that its directors and officers should be provided with maximum
protection against inordinate risks in order to insure that the most capable
persons otherwise available will be attracted to such positions; therefore,
said directors have further concluded that it is not only reasonable and
prudent but necessary for the COMPANY contractually to obligate itself to
indemnify in a reasonable and adequate manner its directors and officers and
the directors and officers of its affiliates and to assume for itself maximum
liability for expenses and damages in connection with claims lodged against
them for their line-of-duty decisions and actions; and
WHEREAS, Chapter 607 of the Florida Business Corporation Act, under
which the COMPANY is organized, empowers corporations to indemnify persons
serving as a director, officer, employee or agent of the COMPANY or a person
who serves at the request of the COMPANY as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, and further specifies that the
indemnification set forth in said chapter shall not be deemed exclusive of any
other rights to which those seeking indemnification may be
<PAGE> 2
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, and said Chapter further empowers to a corporation to
purchase and maintain insurance on behalf of such persons against any liability
asserted against him or her and incurred by him or her in any such capacity or
arising out of his or her status as such, whether or not the corporation would
have the power to indemnify him or her against such liability under the
provisions of said laws; and
WHEREAS, the COMPANY initiated an investigation to determine the type
of insurance available, the nature and extent of the coverage provided and the
cost thereof to the COMPANY to insure each director and officer of the COMPANY
and of its affiliates against expenses (including attorneys' fees) judgments,
fines and amounts paid in settlement actually and reasonably incurred by him or
her in connection with any action, suit or proceeding with which he or she
might become threatened or made a party by reason of such status and/or such
person's line-of-duty decisions or actions; and, upon receiving such
information the directors of the COMPANY concluded that, at present, it would
be in the best interests of its shareholders for the COMPANY to purchase and
maintain such insurance as the COMPANY has in fact purchased and that its
shareholders' interests would be best served by the COMPANY's additionally
contracting with such directors and officers as it should determine to
indemnify such persons and thereby provide additional protection to such of the
COMPANY's officers and directors against such potential liabilities; and
WHEREAS, the COMPANY desires to have INDEMNITEE serve or continue to
serve as a director, officer, employee or agent of the COMPANY or of any other
corporation, subsidiary, partnership, joint venture, employee benefit plan, or
trust or other enterprise of which he or she has been or is serving, or may
serve, at the request, for the convenience of or to represent the interests of
the COMPANY and to protect the same from undue claims by reason thereof, and
INDEMNITEE desires to serve or to continue to serve (provided that he or she is
furnished the indemnity provided for hereinafter), in one or more of such
capacities.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the COMPANY and INDEMNITEE do hereby covenant and agree as
follows:
1. AGREEMENT TO SERVE. INDEMNITEE will serve and/or continue to serve,
at the will of the COMPANY or under separate contract, if such exists, the
COMPANY and such Affiliates of the COMPANY as INDEMNITEE shall from time to
time agree, as a director, officer, employee and agent thereof, faithfully and
to the best of his or her ability so long as he or she is duly elected and
qualified in accordance with the provisions of the Bylaws thereof or until such
time as he or she tenders his or her resignation in writing.
2. INDEMNIFICATION. The COMPANY shall, and does hereby agree to,
indemnify and hold harmless in all respects INDEMNITEE:
(a) If INDEMNITEE is a person who was or is a party or is
threatened to be made a party to, a person named in, or a witness named for,
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, legislative or investigative in nature (other than an
action by or in the right of the COMPANY) by reason of the fact that he or she
is or was a director, officer, employee or agent of the COMPANY or is or was
serving at the request of the
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COMPANY as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including any employee
benefit plan, ("Affiliate") or by reason of anything actually or allegedly done
or not done by him or her in any such capacity, against any and all
liabilities, claims, assessments, judgments, fines, penalties and amounts paid
in settlement thereof, as well as any and all costs, fees and expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection with the investigation, defense or appeal of such action, suit or
proceeding or in the defense of any claim, issue or matter described therein;
(b) If INDEMNITEE is a person who was or is a party or is
threatened to be made a party to, a person named in, or a witness named for,
any threatened, pending or completed action, suit or proceeding by or in the
right of the COMPANY to procure a judgment in its favor by reason of the fact
that he or she is or was a director, officer, employee or agent of the COMPANY
or is or was serving at the request of the COMPANY as a director, officer,
employee or agent of any Affiliate, or by reason of anything actually or
allegedly done or not done by him or her in any such capacity, against any and
all liabilities, claims, assessments, judgments, fines, penalties and amounts
paid in settlement thereof, as well as any and all costs, fees and expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection with the investigation, defense, settlement or appeal of such
action, suit or proceeding;
(c) To the full extent provided, allowed, authorized or not
prohibited by: (i) Section 607.0850 of the Florida Business Corporation Act or
any amendment thereof (to the extent such amendment permits, authorize or
allows broader indemnification rights than permitted, authorized or allowed
prior thereto), or other statutory provision authorizing, allowing, permitting
or not prohibiting such indemnification that is adopted hereafter; and (ii)
Article VII of the COMPANY's Bylaws; and
(d) To the extent INDEMNITEE has been successful on the merits or
otherwise in defense of any actions, suits or proceedings referred to in
subsections (a), (b) or (c) of this section, or in the defense of any claim,
issue or matter described therein, against any and all costs, fees and expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection with the investigation, defense or appeal of such actions, suits or
proceedings.
3. ASSUMPTION OF LIABILITY BY THE COMPANY. If INDEMNITEE is deceased
and is entitled to indemnification under any provision of this Agreement, the
COMPANY shall indemnify and hold harmless INDEMNITEE's estate and his or her
spouse, heirs, administrators and executors against and the COMPANY shall
assume, and does hereby agree to assume, any and all liabilities, claims,
assessments, judgments, fines, penalties and amounts paid in settlement
thereof, as well as any and all costs, fees and expenses (including attorneys'
fees) actually and reasonably incurred by or for INDEMNITEE or his or her
estate, in connection with the investigation, defense, settlement or appeal of
any such action, suit or proceeding. Further, when requested in writing by the
spouse of INDEMNITEE, and/or the heirs, executors or administrators of
INDEMNITEE's estate, the COMPANY shall provide appropriate evidence of the
COMPANY's agreement set out herein, to indemnify INDEMNITEE against, and to
itself assume, such costs, liabilities and expenses.
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<PAGE> 4
4. PARTIAL INDEMNIFICATION. If INDEMNITEE is entitled under any
provision of this Agreement to indemnification by the COMPANY for some or a
portion of the liabilities, claims, assessments, judgments, fines, penalties
and amounts paid in settlement thereof, as well as any and all costs, fees and
expenses (including attorneys' fees) actually and reasonably incurred in
connection with any such suit, action or proceeding but not, however, for all
of the total amount thereof, the COMPANY, nevertheless, shall, and does hereby
agree to, indemnify INDEMNITEE for the portion thereof to which INDEMNITEE is
entitled.
5. INDEMNIFICATION PROCEDURES.
(a) Promptly after receipt by INDEMNITEE of notice of the
commencement of or the threat of commencement of any action, suit or
proceeding, INDEMNITEE shall, if indemnification with respect thereto may be
sought from the COMPANY under this Agreement, notify the COMPANY of the
commencement or the threat of commencement of such action, suit or proceeding.
(b) If, at the time of the receipt of such notice, the COMPANY has
D&O Insurance or other applicable insurance in effect, the COMPANY shall give
prompt notice of the commencement or threat thereof of such action, suit or
proceeding to the insurers in accordance with the procedures set forth in the
respective policies in favor of INDEMNITEE. The COMPANY shall thereafter take
all necessary or desirable action to cause such insurers to pay, on behalf of
INDEMNITEE, all indemnification payable as a result of such action, suit or
proceeding in accordance with the terms of such policies.
(c) To the extent the COMPANY does not, at the time of the
commencement of or the threat of commencement of such action, suit or
proceeding, have applicable D&O Insurance or other insurance, or if a
determination is made that any indemnification arising out of such action, suit
or proceeding will not be payable or fully and completely payable under the D&O
Insurance or other insurance then in effect, or in the event the COMPANY shall
for any reason fail to make any determination regarding any applicable D&O
Insurance or other insurance, the COMPANY shall be obligated to pay the
expenses of any such action, suit or proceeding in advance of the final
disposition thereof, and the COMPANY, if appropriate, and to the extent agreed
to by the INDEMNITEE, shall be entitled to assume the defense of such action,
suit or proceeding, with counsel satisfactory to INDEMNITEE, upon the delivery
to INDEMNITEE of written notice of its election so to do. After delivery of
such notice and upon the agreement by the INDEMNITEE and the assumption of the
defense by the COMPANY, the COMPANY will not be liable to INDEMNITEE under this
Agreement for any legal or other expenses subsequently incurred by the
INDEMNITEE in connection with such defense other than reasonable expenses of
investigation; PROVIDED THAT INDEMNITEE shall have the right to employ his or
her counsel in any such action, suit or proceeding, but the fees and expenses
of such counsel incurred after delivery of notice from the COMPANY of its
assumption of such defense shall be at the INDEMNITEE's expense; PROVIDED
FURTHER THAT if: (i) the employment of counsel by INDEMNITEE has been
previously authorized by the COMPANY; (ii) INDEMNITEE shall have reasonably
concluded that there may be a conflict of interest between the COMPANY and
INDEMNITEE in the conduct of any such defense; or (iii) the COMPANY shall not,
in fact, have employed counsel to assume the defense of such action; then the
fees and expenses of counsel shall be at the expense of the COMPANY.
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(d) All payments on account of the COMPANY's indemnification
obligations under this Agreement shall be made within sixty (60) days of
INDEMNITEE's written request therefor unless a determination is made that the
claims giving rise to INDEMNITEE's request are excluded claims or otherwise not
payable under this Agreement, PROVIDED THAT all payments on account of the
COMPANY's obligations for advancement of expenses prior to the final
disposition of any action, suit or proceeding shall be made within twenty (20)
days of INDEMNITEE's written request therefor or upon such earlier date as is
appropriate to properly defend any such action, suit or proceeding, COMPANY's
obligation to advance expenses hereunder shall not be subject to any such
determination but shall be subject to Paragraph 5(e) of this Agreement.
(e) INDEMNITEE agrees and undertakes that he will reimburse the
COMPANY for all advanced expenses paid by the COMPANY in connection with any
action, suit or proceeding against INDEMNITEE in the event and only to the
extent that a determination shall have been made by a court of competent
jurisdiction in a final adjudication from which there is no further right of
appeal that the INDEMNITEE is not entitled to be indemnified by the COMPANY for
such expenses because the INDEMNITEE is not entitled to payment by operation of
law and under this Agreement.
6. PLEA OF NOLO CONTENDERE. The termination of any such action, suit
or proceeding which is covered by this Agreement by judgment, order, settlement
or conviction, or upon a plea of nolo contendere or its equivalent, shall not
of itself create a presumption for the purposes of this agreement that
INDEMNITEE did not act in good faith and in a manner, which he reasonably
believed to be in or not opposed to the best interests of the COMPANY or any of
its Affiliates and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
7. LIMITATION OF ACTIONS AND RELEASE OF CLAIMS. No legal action shall
be brought and no cause of action shall be asserted by or on behalf of the
COMPANY or any Affiliate against INDEMNITEE, his spouse, heirs, executors or
administrators after the expiration of two years from the date INDEMNITEE
ceases (for any reason) to serve in any one or more of the capacities covered
by this Agreement, and any claim or cause of action by or on behalf of the
COMPANY or any Affiliate shall be extinguished and deemed released unless
asserted by filing of a legal action within such two-year period.
8. PREPAID EXPENSES. The costs and expenses incurred by INDEMNITEE in
investigating, defending or appealing any threatened, pending or completed
civil or criminal action, suit or proceedings, whether civil, criminal,
legislative, administrative or investigative covered hereunder, shall be paid
by the COMPANY in advance as may be appropriate properly to defend any such
action, suit or proceeding and/or paid in advance at the request of the
INDEMNITEE, and any judgments, fines or amounts paid in settlement shall be
paid by the COMPANY in advance, with the understanding and agreement hereby
made and entered into by INDEMNITEE and the COMPANY that in the event it shall
ultimately be determined as provided hereunder that INDEMNITEE was not entitled
to be indemnified, or was not entitled to be fully indemnified, that INDEMNITEE
shall repay to the COMPANY such amount, or the appropriate portion thereof, so
paid or advanced.
9. OTHER RIGHTS AND REMEDIES. The indemnification and advance payment
of expenses as provided by any provision of this agreement shall not be deemed
exclusive of any other rights
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<PAGE> 6
to which INDEMNITEE may be entitled under any provision of law, the Articles of
Incorporation, any Bylaw, this or any other agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while occupying any of the
positions or having any of the relationships referred to in this Agreement, and
shall continue after INDEMNITEE has ceased to occupy such position or have such
relationships and shall inure to the benefit of the heirs, executors and
administrators of INDEMNITEE.
10. SETTLEMENT. The COMPANY shall have no obligation to indemnify
INDEMNITEE under this Agreement for any amounts paid in settlement of any
action, suit or proceeding effected without the COMPANY's prior written
consent. The COMPANY shall not settle any claim in any manner which would
impose any claim, liability, fine, penalty, costs, expenses or any obligation
on INDEMNITEE without INDEMNITEE's written consent. Neither the COMPANY nor
INDEMNITEE shall unreasonably withhold their consent to any proposed
settlement.
11. RIGHTS NOT EXCLUSIVE. The rights provided hereunder shall not be
deemed exclusive of any other rights to which the INDEMNITEE may be entitled
under any by-law, agreement, vote of stockholders or of disinterested directors
or otherwise, both as to action in his or her official capacity and as to
action in any other capacity by holding such office, and shall continue after
the INDEMNITEE ceases to serve the COMPANY as an officer, director, employee or
agent of the COMPANY or any Affiliate.
12. ENFORCEMENT.
(a) INDEMNITEE's right to indemnification shall be enforceable by
INDEMNITEE only in the state courts of the State of Florida and shall be
enforceable notwithstanding any adverse determination resulting in the
liability for which indemnification is claimed, other than a determination
which has been made by the final adjudication of a court of competent
jurisdiction, the appeals period for which has expired. In any such action, if
a prior, though non-final, adverse determination has been made, the burden of
proving that indemnification is required under this Agreement shall be on
INDEMNITEE. The COMPANY shall have the burden of proving that indemnification
is not required under this Agreement if no such prior adverse determination
shall have been made.
(b) In the event that any action is instituted by INDEMNITEE under
this Agreement, or to enforce or interpret any of the terms of this Agreement,
INDEMNITEE shall be entitled to be paid all court costs and expenses, including
reasonable counsel fees, incurred by INDEMNITEE with respect to such action,
unless the court determines that each of the material assertions made by
INDEMNITEE as a basis for such action were not made in good faith or were
frivolous.
13. SEVERABILITY. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (i) the validity, legality and enforceability of the remaining
provisions of this Agreement
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(including without limitation, all portions of any paragraphs of this Agreement
containing any such provision held to be invalid, illegal or unenforceable,
that are not themselves invalid, illegal or unenforceable) shall not in any way
be affected or impaired thereby; and (ii) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, all portions of
any paragraph of this Agreement containing any such provision held to be
invalid, illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
14. PRIOR AGREEMENTS. This Agreement shall be of no force and effect
with regard to the cost of settlement borne or paid by INDEMNITEE under the
provisions of any agreement executed by the COMPANY and/or INDEMNITEE prior to
the date hereof.
15. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument, but only one of
which need be produced.
16. HEADINGS. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
17. USE OF CERTAIN TERMS. As used in this Agreement, the words
"herein", "hereof", and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular paragraph, subparagraph or
other subdivision.
18. MODIFICATION AND WAIVER. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
19. NOTICE BY INDEMNITEE. INDEMNITEE agrees to promptly notify the
COMPANY in writing upon being served with any citation, complaint, indictment
or other document covered hereunder, either civil or criminal.
20. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if:
(i) delivered by hand and receipted for by the party to whom said notice or
other communication shall have been directed; or if (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed.
(a) If to INDEMNITEE, to:
Hans C. Mueller
---------------------
---------------------
-6-
<PAGE> 8
(b) If to the COMPANY, to:
Hans C. Mueller, Chief Executive Officer
Coastal BHC, Inc.
8700 North Kendall Drive
Miami, Florida 33176
or to such other address as may have been furnished by either party to the
other.
21. GOVERNING LAW. The Parties hereto agree that this agreement shall
be construed and enforced in accordance with and governed by the Laws of the
State of Florida.
22. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
COMPANY and its successors and assigns and shall inure to be benefit of the
INDEMNITEE and his spouse, heirs, executors and administrators.
ENTERED into on the day and year first above written.
ATTEST: COASTAL BHC, INC.
By: /s/ THERESA RODRIGUEZ By: /s/ JAMES C. MERRILL
--------------------- -----------------------------
INDEMNITEE:
/s/ H.C. MUELLER
----------------------------------
Hans C. Mueller
<PAGE> 1
EXHIBIT 4.6
COASTAL BHC, INC.
RESTRICTED NON-STATUTORY OPTION PLAN
SECTION 1.
PURPOSE
1.1 The purpose of the RESTRICTED NON-STATUTORY OPTION PLAN (the
"Plan") is to foster and promote the long-term financial success of the Company
and materially increase shareholder value by enabling the Company to retain the
services of Hans C. Mueller (the "Executive"), whose judgment, interest, and
special effort is essential to the successful conduct of its operations.
SECTION 2.
DEFINITIONS
2.1. DEFINITIONS. Whenever used herein, the following terms shall have
the respective meanings set forth below:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Award" means the award of Options to purchase shares of the
Company's Stock.
(c) "Bank" means the COASTAL COMMUNITY BANK, a Florida banking
corporation wholly owned by the Company.
(d) "Board" means the Board of Directors of the Company.
(e) "Company" means COASTAL BHC, INC., a Florida corporation, and any
successor thereto.
(f) "Disability" means any total disability which qualifies as a total
disability under the terms of the Company's long-term disability plan for
employees, as in effect from time to time.
(g) "Option" means the right to purchase Stock at a stated price for a
specified period of time. The term Option shall mean the grant of Awards.
(h) "Stock" means the common stock of the Company, par value $0.01 per
share.
<PAGE> 2
2.2. GENDER AND NUMBER. Except when otherwise indicated by the
context, words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural, and the plural shall
include the singular.
SECTION 3.
STOCK SUBJECT TO THE PLAN
3.1. NUMBER. The total number of shares of Stock subject to Options
granted under the Plan may not exceed fifty thousand (50,000) shares. The
shares to be delivered under the Plan may consist, in whole or in part, of
treasury Stock or authorized but unissued Stock, not reserved for any other
purpose.
3.2. CANCELED, TERMINATED, OR FORFEITED AWARDS. Any shares of Stock
subject to an Option which for any reason is canceled or terminated without the
issuance of any Stock may again be subjected to an Option under the Plan.
3.3. ADJUSTMENT IN CAPITALIZATION. In the event of any stock dividend
or stock split, recapitalization (including, without limitation, the payment of
an extraordinary dividend), merger, consolidation, combination spin-off,
distribution of assets to stockholders, exchange of shares, or other similar
corporate change, the aggregate number of shares of Stock available for
issuance hereunder or subject to Options and the respective exercise prices of
outstanding Options may be appropriately adjusted by the Board, whose
determination shall be conclusive; provided, however, that any fractional
shares resulting from any such adjustment shall be disregarded.
SECTION 4.
STOCK OPTIONS
4.1 GRANT OF OPTIONS.
Subject to Section 5, the Executive will be granted a total of
fifty thousand (50,000) Options on the date of grant which shall be December 9,
1998, which shall vest over a five year period subject to the continued
employment of the Executive, whereby ten thousand (10,000) Options shall vest
on the date the Bank opens for business and ten thousand (10,000) Options shall
vest on each of the first, second, third and fourth anniversaries corresponding
to the date the Bank is opened, subject to continued employment as of that
date.
4.2. OPTION PRICE. Options granted pursuant to Section 4.1 shall have
an exercise price of ten dollars ($10.00) per share, which the Board of
Directors has deemed to be Fair Market Value as of the date of the grant.
-2-
<PAGE> 3
4.3. EXERCISE OF OPTIONS. Each Option shall be exercisable for ten
(10) years after the date on which such respective options shall vest.
4.4. PAYMENT. Options may be exercised by written notice of exercise
accompanied by payment in full of the Option price in cash or cash equivalents,
including by personal check, or with a partial or full payment in Stock already
owned by the Executive, valued at Fair Market Value on the date of exercise. As
soon as practicable after receipt of such written exercise notice and full
payment of the Option price, the Company shall deliver to the Executive a
certificate or certificates representing the acquired shares of Stock.
SECTION 5.
TERMINATION OF DUTIES AS AN EXECUTIVE
Pursuant to the terms of the Employment Agreement between the
Executive and the Company, in the event the Executive's employment is
terminated for any reason, except for lawful cause thereunder, all of the
Options shall immediately vest and become exercisable as of the effective date
of such termination.
SECTION 6.
AMENDMENT, MODIFICATION, AND TERMINATION
OF THE PLAN
No amendment, modification, or termination of the Plan shall in any
manner adversely affect any Option theretofore granted and vested under the
Plan and the Executive shall be entitled to all Options contemplated herein in
accordance with the terms of his Employment Agreement with the Company.
SECTION 7.
MISCELLANEOUS PROVISIONS
7.1 NONTRANSFERABILITY OF AWARDS. No Options may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution. All rights with respect to Options
granted to the Executive shall be exercisable during his lifetime only by him.
7.2 BENEFICIARY DESIGNATION. The Executive may from time to time name
any beneficiary or beneficiaries (who may be named contingently or
successively) by whom any Option granted under the Plan is to be exercised in
case of his death. Each designation will revoke all prior designations by the
Executive and will be effective only
-3-
<PAGE> 4
when filed by the Executive in writing with the Secretary of the Company during
his lifetime. In the absence of any such designation, Options outstanding at
the time of the Executive's death shall be exercised by the Executive's
surviving spouse, if any, or otherwise by his estate.
7.3 REQUIREMENTS OF LAW. The Plan, the granting of Options and the
issuance of shares of Stock upon the exercise of Options shall be subject to
all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required. The
Company shall not be required to issue or deliver any certificates for shares
of Stock prior to (a) the listing of such shares on any stock exchange on which
the Stock may then be listed; (b) the completion of any registration or
qualification of such shares under any Federal or state law, or any ruling or
regulation of any government body which the Company shall, in its sole
discretion, determine to be necessary or advisable; and (c) payment of the
required withholding taxes by the holder of the Option. The Executive shall not
have the right to require the Company to register or qualify any shares of
Stock subject to any option under any state or Federal law, rule or regulation.
7.4. ADMINISTRATION. The Plan shall, to the maximum extent possible,
be self-effectuating. Any determinations necessary or advisable for the
administration and interpretation of the Plan in order to carry out its
provisions and purposes shall be made by the Board of Directors of the Company
or by a duly authorized Committee thereof which shall not include the
Executive.
7.5. TERM OF THE PLAN. The Plan shall be effective upon its adoption
by the Board, subject to approval by the Company's stockholders at their next
annual meeting. The Plan shall continue in effect until the tenth anniversary
of the date on which it is adopted by the Board.
7.6. GOVERNING LAW. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Florida.
-4-
<PAGE> 5
COASTAL BHC, INC.
RESTRICTED NON-STATUTORY OPTION AGREEMENT
--------------------------
THIS RESTRICTED NON-STATUTORY OPTION AGREEMENT, dated as of this 9th
day of December, 1998, between COASTAL BHC, INC., a Florida corporation (the
"Company"), and Hans C. Mueller, an Executive who has entered into an
Employment Agreement with the Company (the "Executive"), each of which agrees
to be bound by the terms and conditions herein relating to the grant of an
option to purchase shares of the Common Stock of the Company.
1. AUTHORIZATION AND PURPOSE OF PLAN. The Company adopted the
Restricted Non-Statutory Option Plan (the "Plan") by approval of its Board of
Directors on December 9, 1998 and approval of its Stockholders on December 9,
1998 to promote the long term financial success of the Company by retaining
Hans C. Mueller, who is expected to play an essential role in the management of
the Company.
2. GRANT OF OPTION. The Company hereby grants the Executive ten
thousand (10,000) options as of the date hereof ("Options") to allow the
purchase of shares of the Common Stock of the Company ("Shares"). The Options
shall vest on the date Coastal Community Bank (the 'Bank") opens for business.
The Options granted shall have an exercise price of the greater of ten dollars
($10.00) per share or the fair market value of the Common Stock of the Company
on This Agreement, the Options and the Shares shall be subject to the terms and
conditions of the Plan in its entirety which shall be incorporated herein by
reference.
3. EXERCISE OF OPTION. Subject to the terms of the Plan and this
Agreement, the Options granted hereunder may be exercised at any time after
such Options vest in accordance with Section 2 hereof and shall remain
exercisable not later than ten (10) years from the date such Options vest, by
delivery of written notice to the Company stating the number of Shares with
respect to which the Option is being exercised, together with full payment of
the purchase price therefor. Payment may be made in cash or Shares of the
Company (as provided in the Plan). The Options granted hereunder shall not have
nor possess any of the rights or privileges of ownership of any Shares of the
Company.
<PAGE> 6
4. RESERVED SHARES. The Company has duly reserved a number of
authorized but unissued Shares adequate to fulfill its obligations under this
Agreement. During the term of this Agreement the Company shall take such action
as may be necessary to maintain at all times an adequate number of Shares
reserved for issuance or treasury Shares to fulfill its obligations hereunder.
5. EARLY TERMINATION. Pursuant to the terms of the Employment
Agreement between the Executive and the Company, in the event the Executive's
employment is terminated for any reason, except for lawful cause thereunder,
all of the Options shall immediately vest and become exercisable as of the
effective date of such termination.
6. ASSIGNMENT OR TRANSFER. This Option may not be assigned or
transferred except by will or by the laws of descent and distribution and shall
be exercisable only by the Executive-Optionee during the Executive-Optionee's
lifetime.
7. PLAN AND BOARD. The construction of the terms of this Agreement
shall be controlled by the Plan, a copy of which is attached hereto as Exhibit
A and delivered to the Executive-Optionee, and the rights of the
Executive-Optionee are subject to modification and termination as provided in
the Plan. The Board's or Board Committee's interpretations of and
determinations under any of the provisions of the Plan or this Agreement shall
be conclusive.
8. COMPLIANCE WITH LAW. This Option shall not be exercised and no
Shares shall be issued in respect hereof, unless in compliance with federal and
applicable state, tax and securities laws.
8.1 CERTIFICATE LEGENDS. The certificates for Shares purchased
pursuant to this Option shall bear such legends regarding
restrictions upon resale as shall be deemed necessary by the Board,
the Committee of the Board specifically authorized to act on behalf
of the Board or their or its counsel.
8.2 REPRESENTATIONS OF DIRECTOR-OPTIONEE. As a condition to the
exercise of this Option, the Executive-Optionee will deliver to the
Company such signed representations as may be necessary in the
opinion of counsel satisfactory to the Company, for compliance with
applicable federal and state securities laws.
-2-
<PAGE> 7
8.3 RESALE. The Executive-Optionee's ability to transfer Shares
purchased pursuant to this Option or securities acquired in lieu
thereof or in exchange therefor may be restricted under federal or
state securities laws. The Executive-Optionee shall not resell or
offer for resale such Shares or securities unless they have been
registered or qualified for resale under all applicable federal and
state securities laws or an exemption from such registration or
qualification is available in the opinion of counsel satisfactory
to the Company.
9. NOTICE. All notices or other communications desired to be given
hereunder shall be in writing and shall be deemed to have been duly given upon
receipt, if personally delivered, or on the third business day following
mailing by United States first class mail, postage prepaid, and addressed as
follows:
If to Company: Coastal BHC, Inc.
c/o Gunster, Yoakley, Valdes-Fauli
& Stewart, P.A.
One Biscayne Tower
Two S. Biscayne Blvd.
Suite 3400
Miami, Florida 33131
If to the Executive-Optionee: Hans C. Mueller
255 Palm Avenue
Miami Beach, Florida 33139
or to such other address as either party shall give to the other in the manner
set forth above.
10. TAX TREATMENT. This Option is not intended to be treated as an
incentive stock option pursuant to Section 422 of the Code. The
Executive-Optionee acknowledges that the tax treatment of this Option, Shares
subject to this Option or any events or transactions with respect thereto may
be dependent upon various factors or events which are not determined by the
Plan or this Agreement. The Company makes no representations with respect
thereto and hereby disclaims all responsibility as to such tax treatment.
-3-
<PAGE> 8
11. MISCELLANEOUS. References herein to a date on or as of which an
expiration, termination or lapse shall occur shall be deemed to refer to 5:00
p.m. Eastern time, on such date. The terms "parent" or "subsidiary" herein
refer to such terms as defined in Section 424 of the Code. Nothing herein shall
affect the right of the Company or any of its subsidiaries to terminate the
Executive-Optionee's services, responsibilities, duties or authority to
represent the Company or its subsidiaries at any time or for any reason
whatsoever, nor shall it affect the right of the Executive-Optionee to
participate in, and receive benefits under and in accordance with, the then
current provisions of any pension, insurance, bonus, profit-sharing or other
benefit plan or programs of the Company or its subsidiaries. This Agreement
shall constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and may not be amended except by written instrument duly
executed by the parties hereto. This Agreement is being delivered in, and shall
be subject to the laws of the State of Florida.
IN WITNESS WHEREOF, the Company and the Executive-Optionee have
executed this Restricted Non-Statutory Option Plan Agreement effective as of
the date first set forth above.
COASTAL BHC, INC.,
a Florida corporation
By:____________________________
Name:__________________________
Title:_________________________
EXECUTIVE-OPTIONEE
________________________________
Hans C. Mueller
Grant on December ____, 1998:
<PAGE> 9
EXHIBIT B
Coastal BHC, Inc.
8700 North Kendall Drive
Miami, Florida 33176
NOTICE OF EXERCISE OF OPTION
HANS C. MUELLER
I hereby elect to purchase ______ shares of Common Stock of COASTAL
BHC, INC. (the "Company") at a price of $____________ per share, in accordance
with that certain Restricted Non-Statutory Option Agreement dated December 9,
1998, between the Company and myself. For this purpose, I enclosed herewith my
check in the amount of $___________ in full payment.
I understand that the Shares to be issued may not be registered under
the Securities Act of 1933 or under Florida law, in which event the Shares will
be offered and issued in reliance upon one or more exemptions so afforded, and
at such time or times as shall be allowable thereunder.
I hereby confirm my representations under the aforementioned
Restricted Non-Statutory Option Agreement, including that the shares of Common
Stock are being acquired in good faith for investment and not with a view to,
or for resale or in connection with, any distribution thereof. I represent that
such shares are intended to be held indefinitely and will not be sold,
transferred or otherwise disposed of in the absence of an effective
registration statement covering such shares unless in the opinion of counsel
(which opinion in form and substance and counsel shall be satisfactory to the
Company), such registration is not required.
I hereby acknowledge receipt of (i) the Company's most recent annual
financial statements, (ii) the Company's most recent internal financial
statements and (iii) a brief description of the Company's capital stock.
- --------------------
Date
------------------------------
Signature
<PAGE> 1
EXHIBIT 5.1
[FIRM LOGO]
GUNSTER, YOAKLEY, VALDES-FAULI & STEWART, P.A.
ATTORNEYS AT LAW
March 25, 1999
Coastal BHC, Inc.
255 Palm Avenue
Miami Beach, FL 33139
Re: COASTAL BHC, INC.
SEC File No. 333-__________
Ladies and Gentlemen:
We have acted as counsel to COASTAL BHC, INC., a Florida corporation
(the "Company"), in connection with the proposed issuance and sale of the
following securities registered on a Form SB-2 Registration Statement, SEC File
No. 333-________ (the "Registration Statement"), filed with the U.S. Securities
and Exchange Commission (the "Commission") pursuant to the Securities Act of
1933, as amended (the "Act"):
1. A maximum of 1,000,000 shares of Common Stock, $.01 Par Value
Per Share.
In rendering the opinion expressed herein, we have obtained from
officers of the Company certificates, agreements and assurances and have
examined originals or copies, identified to our satisfaction, of such other
certificates, agreements and other assurances as we considered necessary for
the purposes of rendering the opinion hereinafter expressed.
We have also consulted with officers and directors of the Company and
have obtained such representations with respect to the matters of fact as we
have deemed necessary or advisable for purposes of rendering the opinion
hereinafter expressed. We have not independently verified the factual
statements made to us in connection therewith, nor the veracity of such
representations.
One Biscayne Tower
2 South Biscayne Boulevard, Suite 3400, Miami, Florida 33131-1897
(305) 376-6000 Fax: (305) 376-6010 e-mail: [email protected]
http://www.gunster.com
<PAGE> 2
Mr. Hans C. Mueller
March 25, 1999
Page 2
After the Commission has declared the Registration Statement to be
effective (such Registration Statement as is finally declared effective and the
form of Prospectus contained therein being hereinafter referred to as the
"Registration Statement" and the "Prospectus," respectively) and when the
applicable provisions of the "Blue Sky" or other state securities laws shall
have been complied with, the Company's securities covered by the Registration
Statement, upon receipt of payment therefor, will constitute legally issued
securities of the Company, fully paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference of this law firm in the Prospectus
under the heading "Legal Matters." In giving this consent, we do not hereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Commission promulgated
thereunder.
Very truly yours,
GUNSTER, YOAKLEY, VALDES-FAULI & STEWART, P.A.
By: /s/ RICHARD J. BISCHOFF
------------------------------------
Richard J. Bischoff
One Biscayne Tower
2 South Biscayne Boulevard, Suite 3400, Miami, Florida 33131-1897
(305) 376-6000 Fax: (305) 376-6010 e-mail: [email protected]
http://www.gunster.com
<PAGE> 1
EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "AGREEMENT") is made as of
September 1, 1998 by and between the organizers (the "ORGANIZERS") of COASTAL
BHC, INC., a to-be-formed Florida-incorporated bank holding company (the
"COMPANY"), COASTAL COMMUNITY BANK, a commercial bank in organization under the
laws of the State of Florida (the "BANK"), and HANS C. MUELLER, an individual
residing in Miami, Florida (the "EXECUTIVE").
WHEREAS, the Executive has been offered the positions of President,
Chief Executive Officer and Chairman of the Board of Directors of the Bank and
the Company and will begin to serve in such capacities on the Effective Date
(as herein defined);
WHEREAS, the Organizers of the Bank and the Company wish to assure the
services of the Executive for the period provided for herein and the Executive
is willing to serve as an executive officer of the Bank and the Company for
said period upon the terms and conditions hereinafter provided; and
WHEREAS, the Organizers have determined that the best interests of the
Bank, the Company and the Company's shareholders would be served by providing
for the terms and conditions of the Executive's employment as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and intending to be legally bound hereby, the Organizers, on behalf
of the Bank and the Company, and the Executive hereby agree as follows:
Section 1. DEFINITIONS. As used herein, the following terms shall have
the meanings set forth below.
"BASE COMPENSATION" shall have the meaning set forth in Section 5(a).
"BOARD" means the incumbent Board of Directors of the Bank and the
Company as of the point in time reference thereto is made in this Agreement.
"BUDGET" means an estimate of the Bank's revenues and expenditures for
its first Fiscal Year of operation, and thereafter, as applicable.
"CAUSE" shall have the meaning set forth in Section 8(b).
"CHANGE OF CONTROL" shall have the meaning set forth in Section
8(e)(1)(B).
"COLA ADJUSTMENT" means the cost of living adjustment, which shall
correspond to the percent rise in prices for the preceding year as measured by
the Consumer Price Index For All Urban Consumers (CPI-U), U.S. City Average,
All Items (base year 1982-1984 = 100) published by the United States Department
of Labor, Bureau of Labor Statistics (the "Index"). The COLA
<PAGE> 2
Adjustment shall be determined by multiplying the amount or figure to be
adjusted by a fraction, the numerator of which is the Index published for the
month in which occurs the date of adjustment and the denominator of which is
the Index published for the same month of the preceding year.
"COMMENCEMENT OF OPERATIONS" means the date on which the Bank and the
Company commence operations, after receipt of all Regulatory Approvals.
"DISABILITY" of the Executive means that, as a result of the
Executive's incapacity due to physical or mental illness, the Executive shall
have been absent from his duties on a full-time basis for six consecutive
months, or for an aggregate of nine months in any consecutive 12-month period,
and a physician selected by the Executive is of the opinion that (a) he is
suffering from "total disability" as defined in the Bank's disability insurance
program or policy and (b) he will qualify for Social Security disability
payments and (c) within 30 days after written notice thereof is given by the
Bank to the Executive (which notice may be given at any time after the end of
such six- or 12-month periods) the Executive shall not have returned to the
performance of his duties on a full-time basis. (If the Executive is prevented
from performing his duties because of Disability, upon request by the Bank, the
Executive shall submit to an examination by a physician selected by the Bank,
at the Bank's expense, and the Executive shall also authorize his personal
physician to disclose to the selected physician such of the Executive's medical
records that specifically pertain to the condition or illness causing the
incapacity.)
"EMPLOYMENT PERIOD" shall have the meaning set forth in Section 2.
"EMPLOYMENT TERMINATION DATE" means the date the Employment Period
terminates as provided in Section 8.
"FISCAL YEAR" means the fiscal year of the Bank, as applicable.
"INCENTIVE BONUS COMPENSATION" shall have the meaning set forth in
Section 5(c).
"NOTICE OF TERMINATION" shall have the meaning set forth in Section
8(a)(1).
"ORGANIZATIONAL PERIOD" means the period beginning on the Effective
Date and ending on the earlier of the Commencement of Operations or the date on
which one or more of the Regulatory Approvals are denied or the efforts to
secure such Regulatory Approvals are terminated or abandoned by the Board.
"PERSON" means any individual, sole proprietorship, general or limited
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party, limited liability company or
government (whether territorial, national, federal, state, provincial, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
-2-
<PAGE> 3
"REGULATORY APPROVALS" means all required approvals of the state and
federal banking regulators necessary for the Bank and the Company to operate
their respective businesses, including, without limitation, the approvals of
the Florida Department of Banking and Finance, the Federal Deposit Insurance
Corporation, and the Board of Governors of the Federal Reserve System and the
Securities and Exchange Commission.
"SCHEDULED EMPLOYMENT TERMINATION DATE" means the later of (a) the
expiration of the Employment Period, as provided in Section 2, or (b) such date
as is specified by either the Bank or the Executive in a Notice of Termination
delivered for the purpose of fixing the Scheduled Employment Termination Date.
Section 2. EMPLOYMENT AND TERM. The Bank and the Company hereby employ
the Executive, and the Executive hereby accepts such employment, for the
purposes and upon the terms and conditions contained in this Agreement. Subject
to the terms and conditions contained herein, the initial term of this
Agreement shall be for an initial three-year period, commencing on September 1,
1998 (the "EFFECTIVE DATE") and ending on August 31, 2001. Thereafter, this
Agreement shall be automatically renewed on its then-current terms and
conditions for successive one-year extension terms unless either party hereto
gives notice to the other party of its intent to terminate this Agreement at
least 180 days prior to the expiration of the initial term or any extension
term, as applicable. The initial term hereof and any extension term are
referred to herein as the "EMPLOYMENT PERIOD."
Section 3. EMPLOYMENT CAPACITY AND DUTIES. The Executive shall be
employed throughout the Employment Period as President, Chief Executive Officer
and Chairman of the Board of the Bank and the Company. The Executive shall
serve as Chairman of the Board upon his re-election to that position by the
Board. The Executive shall have the duties and responsibilities incumbent with
the positions of President, Chief Executive Officer and Chairman of the Board
and shall render services to the Bank and the Company and in connection
therewith shall perform such other duties, not inconsistent with the terms of
this Agreement, as the Executive may reasonably be directed to perform by the
Board. Accordingly, and not by way of limitation, the Executive shall
coordinate and supervise the organization of the Bank and the Company,
including developing the Bank's business plan, preparing all necessary
regulatory applications, assisting in the subscription offering for the
Company, and overseeing the commencement of the Bank's operations. Upon
completion of the Bank's organization, the Executive shall attend all meetings
of the shareholders of the Company and of the Board, supervise and manage the
operations and business of the Bank and the Company and coordinate and
supervise the work of its other officers and employees and perform all
functions of a chief executive officer and a general manager of the Bank's and
the Company's business. The Executive shall serve as a Board member upon his
election as director by the shareholders and as a member of such committees as
the Executive and the Baord may deem appropriate for the duration of the
Employment Period. The Board may authorize any and all of the Executive's
actions regarding the operation and/or business of the Bank and the Company for
the duration of the Employment Period. The Bank and the Company agree that in
the event that they relocate their principal executive offices to a location
outside Miami, Florida without the Executive's
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written consent or require the Executive to be based anywhere other than such
principal executive offices, except for required travel on the Bank's business,
the Executive shall have the right, in his sole discretion, to terminate this
agreement for good cause pursuant to Section 8(1)(c).
Section 4. EXECUTIVE PERFORMANCE COVENANTS. The Executive accepts the
employment described in Section 3 and agrees to devote his full working time
and efforts (except for absences due to illness and appropriate vacations) to
the business and affairs of the Bank and the Company and the performance of the
aforesaid duties and responsibilities. However, the Executive shall have the
right to devote a reasonable amount of time and effort to civic, professional,
community or charitable organizations, affairs and matters. The Executive may
serve as a director of other companies during the Employment Period, subject to
the terms and conditions of Section 8 herein and to applicable law and
regulations.
Section 5. COMPENSATION. The Bank shall pay to the Executive for his
services hereunder, the compensation provided for in this Section 5. The
Executive shall not be entitled to any additional compensation from the
Company. Such compensation shall be paid to the Executive at the time and in
the manner as follows:
(a) BASE COMPENSATION. The Executive shall be paid "BASE COMPENSATION"
for each Fiscal Year at an annual rate of One Hundred, Seventy Thousand Dollars
($170,000.00) (the "BASE COMPENSATION RATE"), payable in equal installments in
accordance with the Bank's payroll policies, but in no event less frequently
than two times per month; provided, however, during the Organizational Period,
the Executive shall be paid at an annual rate of One Hundred, Twenty Thousand
Dollars ($120,000). Upon the Commencement of Operations, the Executive shall
receive a lump-sum payment of an amount equal to the difference between the
salary actually received by the Executive during the Organizational Period and
the salary that would have been payable during the Organizational Period if
paid at the Base Compensation Rate.
(b) ANNUAL REVIEW OF COMPENSATION. During the Employment Period, the
Executive's Base Compensation shall be reviewed on an annual basis. The first
such review shall be made no later than the one-year anniversary of the date of
Commencement of Operations and shall be conducted by the Bank's Board, or a
committee designated by the Bank's Board, and such Board or committee, as
applicable, may in its discretion, (i) increase (to reflect the Executive's
performance and to maintain a compensation level comparable to that of
similarly situated senior executives in the financial institutions industry),
but not decrease, the Executive's Base Compensation then in effect to an amount
greater than required subsequent to the COLA Adjustment; or (ii) shall be
increased by the COLA Adjustment annually as of the beginning of each Fiscal
Year, commencing with the first Fiscal Year beginning after the Commencement of
Operations. The Base Compensation shall be pro-rated for any Fiscal Year
hereunder that is less than a full Fiscal Year.
(c) INCENTIVE BONUS COMPENSATION. In addition to any and all
compensation and benefits required or permitted to be made by the Bank to the
Executive hereunder, the Executive
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shall be entitled to receive on an annual basis "INCENTIVE BONUS COMPENSATION"
in an amount determined by the Board in its sole discretion.
(d) WARRANTS TO ACQUIRE COMPANY COMMON STOCK. Upon the Commencement of
Operations, the Executive shall be granted 50,000 warrants (the "WARRANTS") to
purchase shares of the Company's Common Stock. The Warrants shall be
exercisable on any business day subsequent to the first anniversary of the
Commencement of operations and for the 5-year period following the date that
the Warrants first become exercisable at an exercise price per share equal to
the lesser of (A) $10.00 per share or (B) the price per share offered to
investors in the Company's initial subscription offering. The Warrant Agreement
shall provide for typical anti-dilution adjustments.
(e) OPTIONS TO ACQUIRE COMPANY COMMON STOCK. Upon the Commencement of
Operations, the Executive shall be granted 10,000 options to purchase shares of
the Company's Common Stock (the "Options"). The Options shall be exercisable
immediately. The Company shall grant to the Executive an additional 10,000
Options on the first, second, third and fourth anniversaries of the date of the
Commencement of Operations, which Options shall be immediately exercisable. The
Options shall be exercisable for a period of 10 years from the date of grant
(notwithstanding any earlier termination of this Agreement or the Executive's
employment hereunder) at an exercise price equal to the greater of $10.00 per
share or fair market value of the Company's Common Stock on the date of grant.
The Option Agreement shall provide for typical anti-dilution adjustments.
(f) INSURANCE PLAN. As of the Commencement of Operations, the Bank and
the Company shall purchase for $147,000 the Executive's existing split-dollar
life insurance policy, and shall thereafter assume all obligations and expenses
related thereto for its maintenance. The Bank and the Company shall hold and
maintain such policy, subject to the Executive's right to repurchase the policy
in accordance with its terms. The Bank and the Company agree to reimburse the
Executive for all costs and expenses (including, without limitation, all
interest charges and expenses payable by the Executive related to the initial
investment cost of the policy) and all other expenses associated with the
maintenance of the policy during the Organizational Period and the purchase of
the policy by the Bank and the Company as of the Commencement of Operations.
The Executive shall cause the cash surrender value and the proceeds to be
pledged to the Bank and the Company upon the purchase of the policy by the Bank
and the Company. The Executive shall repurchase the policy from the Bank and
the Company on __________ or within 90 days from the date on which the
Executive's employment shall terminate for any reason.
Section 6. REIMBURSEMENT OF EXPENSES. The Bank shall reimburse the
Executive for any and all expenses incurred in providing services to the Bank,
including expenses for travel, entertainment and similar items, in accordance
with the Bank's reimbursement policies as determined from time to time by the
Board. If there is a dispute as to the eligibility of an expense for
reimbursement in accordance with the Bank's reimbursement policies, then such
expense shall be determined to be reimbursable if approved by a majority of the
Board.
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Section 7. EMPLOYEE BENEFITS; VACATION. During the Employment Period,
in addition to any and all compensation and benefits required or permitted to
be made by the Bank to Executive hereunder, the Executive shall receive the
benefits and enjoy the perquisites described below:
(a) VACATION. The Executive shall be entitled to a minimum of four
weeks paid vacation annually, plus additional paid time off for all statutory
and other holidays generally available to other senior executives of the Bank;
and
(b) CELLULAR PHONE. The Bank shall pay for any and all cellular
telephone fees and expenses incurred by Executive in connection with the
performance of his duties hereunder; and
(c) CAR ALLOWANCE. The Executive shall be entitled to a car allowance
of $500 per month, plus reimbursement of all fuel expenses; and
(d) SUPPORT SERVICES. The Bank shall furnish Executive with an office
and technical assistance and such other facilities as requested by the
Executive suitable to his position and satisfactory for the performance of his
duties hereunder; and
(e) PARTICIPATION IN BENEFIT PLANS. The Executive shall be entitled to
participate in the Bank's group hospitalization, health, dental care, vision
care, or sick-leave plan, life or other insurance or death benefit plan, travel
or accident insurance, deferred compensation or executive contingent
compensation plan, including, without limitation, capital accumulation
programs, restricted or stock purchase plan, stock option plan, retirement
income or pension plan, 401 (k) plan, supplemental pension plan, excess benefit
plan, short- and long-term disability programs or other present or future group
employee benefit plan or program of the Bank for which executives are or shall
become eligible (collectively, the "BENEFIT PLANS"), and the Executive shall be
eligible to receive during the Employment Period, and during any subsequent
period for which he shall be entitled to receive payments from the Bank under
Section 8, all of the foregoing benefits and emoluments for which executives
are eligible under every plan or program to the extent permissible under the
general terms and provisions of such plans or programs and in accordance with
the provisions thereof. The Bank shall bear the full cost of coverage of the
Executive's dependents under such of the foregoing plans as is applicable.
Nothing contained in this Agreement shall prevent the Board from amending or
otherwise altering any such plan, program or arrangement as long as such
amendment or alteration equitably affects all senior executive officers (of the
level of vice president or above) of the Bank; and
(f) INDEMNIFICATION. The Executive shall be entitled to
indemnification and protection from liability as set forth in Section 9; and
(g) DIRECTORS AND OFFICERS INSURANCE. Prior to Commencement of
Operations, the Bank and the Company shall obtain Director and Officer
liability insurance coverage at the Bank's and the Company's sole expense, and
the Executive shall be named as an insured. Such insurance
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shall be maintained in the minimum amount of ______________________________
($_______) during the Employment Period.
8. Section TERMINATION OF EMPLOYMENT.
(a) NOTICE OF TERMINATION: EMPLOYMENT TERMINATION DATE.
(1) Any termination of the Executive's employment by the Bank and
the Company or the Executive shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a
"NOTICE OF TERMINATION" shall mean a notice that indicates the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated.
(2) "EMPLOYMENT TERMINATION DATE" shall mean the date on which the
Employment Period and the Executive's right and obligation to perform
employment services for the Bank shall terminate effective upon the first to
occur of the following, it being understood that in no event may the Employment
Period be terminated other than as the result of one of the following events:
(A) If the Executive's employment is terminated for Disability,
the date that is 30 days after Notice of Termination is given (provided that
the Executive shall not have returned to the performance of his duties on a
full-time basis during such 30-day period);
(B) If the Executive's employment is terminated by the
Executive for Good Reason or otherwise by voluntary action of the Executive (as
provided in Section 8(e)), the date specified in the Notice of Termination,
which date (except with the written consent of the Bank to the contrary) shall
not be more than 60 days after the date that the Notice of Termination is
given;
(C) The death of the Executive;
(D) The Scheduled Employment Termination Date;
(E) If the Executive's employment is terminated by the Bank and
the Company for Cause (as provided in Section 8(b)(1)), the date on which a
Notice of Termination is given; provided that if within 30 days after any
Notice of Termination is given the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination, the
Employment Termination Date shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding and
final arbitration award or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected); and
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(F) If the Executive's employment is terminated by the Bank and
the Company other than for Cause, Disability or death of the Executive, the
date specified in the Notice of Termination, which date (except with the
written consent of the Executive to the contrary) shall not be more than 60
days after the date that the Notice of Termination is given.
(b) TERMINATION FOR CAUSE:
(1) The Bank and the Company may terminate the Executive's
employment hereunder and the Employment Period for Cause. For the purposes of
this Agreement, there shall be "CAUSE" to terminate employment hereunder only
(A) if termination shall have been the result of the Executive's conviction for
an act or acts constituting fraud against the Bank or the Company or another
felony involving similar misconduct or material injury to the Bank or the
Company, or (B) upon the willful and continued failure by the Executive to
substantially perform his duties with the Bank (other than any such failure
resulting from incapacity due to mental or physical illness) after a demand in
writing for substantial performance is delivered by the Board, which demand
specifically identifies the manner in which the Board believes that the
Executive has not substantially performed his duties, and such failure results
in demonstrably material injury to the Bank or the Company. The Executive's
employment shall in no event be considered to have been terminated for Cause if
such termination took place as the result of (i) bad judgment or negligence, or
(ii) any act or omission without intent of gaining therefrom directly or
indirectly a profit to which the Executive was not legally entitled, or (iii)
any act or omission believed in good faith by the Executive to have been in or
not opposed to the interest of the Bank or the Company, or (iv) any act or
omission in respect of which a determination is made that the Executive met the
applicable standard of conduct prescribed for indemnification or reimbursement
or payment of expenses under the charter or bylaws of the Bank or the Company
or the laws of the State of Florida, in each case as in effect at the time of
such act or omission. The Executive shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to him a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board at a meeting of the Board called and held
for that purpose (after not less than 30 days' written notice to the Executive
and an opportunity for him together with his legal counsel, to be heard before
the Board, such notice of meeting to indicate the specific termination
provision of this Agreement relied upon and specify in explicit detail the
facts and circumstances claimed to provide a basis for termination under the
provision so indicated), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct set forth above in clauses (A) or (B) of
the second sentence of this paragraph and specifying the particulars thereof in
detail.
(2) If the Executive's employment shall be terminated for Cause,
the Bank shall pay the Executive (or his successors) his unpaid Base
Compensation through the thirtieth day following the Employment Termination
Date at his then-effective Base Compensation Rate within 10 days of such
termination, his unpaid Base Compensation through the Employment Termination
Date at the rate in effect at the time Notice of Termination is given to
Executive and all accrued but unpaid allowances and expense reimbursements,
plus any Incentive Bonus Compensation accrued, but not yet paid to Executive,
with respect to any previous Fiscal Year (without regard to the
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termination of Executive's employment), plus a pro rata share of any Incentive
Bonus Compensation computed with respect to the Fiscal Year in which the
Employment Termination Date occurs as if such termination had not occurred.
(c) TERMINATION FOR DISABILITY. The Bank and the Company may terminate
the Executive's employment because of the Disability of the Executive (or his
successors) and, in such event, the Bank shall pay to the Executive (1) his
unpaid compensation through the sixth month following the Employment
Termination Date at the then-effective Base Compensation Rate and all accrued
but unpaid allowances and expense reimbursements, plus (2) any Incentive Bonus
Compensation accrued with respect to any previous Fiscal Year, the full amount
of which shall become immediately payable, plus (3) an amount equal to a pro
rata share of any Incentive Bonus Compensation calculated through the sixth
full month following the Employment Termination Date as though all of such
six-month period were part of the Fiscal Year in which occurred the Employment
Termination Date (but otherwise as though such termination had not occurred)
and assuming for purposes of calculating the amounts due, the largest amount of
Incentive Bonus Compensation accrued in any Fiscal Year during the Employment
Period.
(d) TERMINATION UPON EXECUTIVE'S DEATH. In the event of the
Executive's death, the Bank shall pay to the Executive's estate (1) any unpaid
amount of Base Compensation through the date of death at the then-effective
Base Compensation Rate and all accrued but unpaid allowances and expense
reimbursements, plus (2) any Incentive Bonus Compensation accrued with respect
to any previous Fiscal Year, the full amount of which shall become immediately
payable, plus (3) an amount equal to the pro rata share of any Incentive Bonus
Compensation calculated with respect to the Fiscal Year in which the death
occurs and assuming for purposes of calculating the amounts due, the largest
amount of Incentive Bonus Compensation accrued in any Fiscal Year during the
Employment Period. All previously granted awards shall fully vest on the death
of the Executive, except that the provisions of the Bank's and the Company's
Benefit Plans shall control the benefits and awards covered thereby.
(e) TERMINATION OF EMPLOYMENT BY THE EXECUTIVE.
(1) The Executive may terminate his employment for Good Reason and
receive the payments and benefits specified in Section 8(g) in the same manner
as if the Bank and the Company had terminated his employment. For purposes of
this Agreement, "GOOD REASON" will exist if any one or more of the following
occur:
(A) Any purported termination by the Bank and the Company of
the Executive's employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8(a) above and, for purposes
of this Agreement, no such purported termination shall be effective; or
(B) If there is a Change in Control of the Bank (as defined
below) and the employment of the Executive is concurrently or subsequently
terminated (i) by the Bank
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without Cause, (ii) by service of a Notice of Termination or (iii) by the
resignation of the Executive because he has reasonably determined in good faith
that his titles, authorities, responsibilities, salary, bonus opportunities or
benefits have been materially diminished, or that a material adverse change in
his working conditions has occurred or the Bank has breached this Agreement.
For the purpose of this Agreement, a "CHANGE IN CONTROL" of the Bank has
occurred when: (x) any person (defined for the purposes of this Section
8(e)(1)(B) to mean any person within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), other than
the Bank, the Company or an employee benefit plan established by the Board
acquires, directly or indirectly, the beneficial ownership (determined under
Rule l3d-3 of the regulations promulgated by the Securities and Exchange
Commission under Section 13(d) of the Exchange Act) of securities issued by the
Bank or the Company having 20% or more of the voting power of all of the voting
securities issued by the Bank or the Company in the election of directors at a
meeting of the holders of voting securities to be held for such purpose; or (y)
a majority of the directors elected at any meeting of the holders of voting
securities of the Bank or the Company are persons who were not nominated for
such election by the Board of the Bank or the Company or a duly constituted
committee of the Board of the Bank or the Company having authority in such
matters; or (z) the Bank merges or consolidates with or transfers substantially
all of its assets to another person; or
(C) The Bank and the Company relocate their principal executive
offices to a location outside of Miami, Florida or require the Executive to be
based anywhere other than such principal executive offices except for required
travel on the Bank's business; or
(D) The shareholders of the Bank and the Company fail to elect
the Executive as a director of the Bank and of the Company or the Board of
Directors of the Bank and the Company fail to elect the Executive as Chairman.
(2) The Executive shall have the right voluntarily to terminate his
employment other than for Good Reason prior to the Scheduled Employment
Termination Date, and if the Executive shall so terminate his employment (other
than a termination by the Executive pursuant to Section 8(f)), he shall be
entitled only to payment of the amounts that would be payable under Section
8(b)(2) had he been terminated for Cause.
(f) TERMINATION FOR FAILURE TO OBTAIN REGULATORY APPROVALS. If the
Bank's applications for one or more of the Regulatory Approvals are denied or
if efforts to secure all of the Regulatory Approvals are terminated or
abandoned by the Board, then the Executive or the Board shall each have the
right to terminate this Agreement, and no party shall have any liability to the
other except as expressly set forth herein. Notwithstanding the foregoing, if
the Commencement of Operations shall not have occurred on or before September
1, 1999, then the Executive shall have the right to terminate this Agreement.
(g) COMPENSATION UPON TERMINATION OTHER THAN FOR CAUSE.
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(1) If the Bank and the Company shall terminate the Executive's
employment for any reason other than for Cause pursuant to Section 8(b) or
pursuant to Section 8(c) or (d), or if the Executive shall terminate his
employment for Good Reason pursuant to Section 8(e)(1) (but not a termination
voluntarily by the Executive other than for Good Reason under Section 8(e)(2)),
then the Bank and the Company shall pay to the Executive the following amounts:
(A) (i) His unpaid Base Compensation through the Employment
Termination Date at his then-effective Base Compensation Rate and all accrued
but unpaid allowances and expense reimbursements; plus (ii) any Incentive Bonus
Compensation accrued and deferred with respect to any previous Fiscal Year, the
full amount of which shall become immediately payable; plus (iii) an amount
equal to a pro rata share of the amount of any Incentive Bonus Compensation
payable to him with respect to the Fiscal Year in which occurs the Employment
Termination Date (assuming for purposes of calculating Incentive Bonus
Compensation, the largest amount thereof accrued in any Fiscal Year during the
Employment Period).
(B) In addition, the Bank and the Company shall pay to the
Executive promptly in a single lump sum payment in cash an amount equal to the
product of (i) two, multiplied by (ii) 100% of the aggregate total amount that
would have been payable to Executive under Section 5 for the entire Fiscal Year
in which the Employment Termination Date occurs as if his employment had not
been terminated (and without deduction or offset for any amounts actually paid
for such Fiscal Year on account of Base Compensation or Incentive Bonus
Compensation, under Section 5, this Section 8 or otherwise), and assuming for
purposes of calculating (x) the Base Compensation, 100% of the amount thereof
at the annual rate payable for such Fiscal Year pursuant to Section 5(a), and
(y) the Incentive Bonus Compensation, the largest amount thereof accrued in any
Fiscal Year during the Employment Period.
(C) The Bank and the Company shall also pay all reasonable
legal fees and expenses incurred as a result of such termination (including all
such fees and expenses, if any, incurred in contesting or disputing any such
termination, in seeking to obtain or enforce any right or benefit provided by
this Agreement, or in interpreting this Agreement).
(D) The Executive shall be under no obligation to seek other
employment and there shall be no offset against any amounts due the Executive
under this Agreement on account of any remuneration attributable to any
subsequent employment that the Executive may obtain (any amounts due under
Section 8(f) are in the nature of severance payments, or liquidated damages, or
both, and are not in the nature of a penalty). In the event that such severance
payments would constitute in the aggregate an "excess parachute payment" as
such term is defined in Section 280G of the Internal Revenue Code of 1986, as
amended, such severance payments shall be limited to the maximum amount that
does not represent such an "excess parachute payment."
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(2) Unless the Executive is terminated for Cause, the Bank and
the Company shall maintain in full force and effect, for the Executive's
continued benefit through the Scheduled Employment Terminate Date, all active
and retired Benefit Plans and other benefit programs or arrangements in which
he was entitled to participate immediately prior to the Scheduled Employment
Termination Date (except as specified in Section 8(a) of this Agreement,
provided that continued participation is possible under the general terms and
provisions of such plans and programs). In the event that participation in any
such plan or program is barred, the Bank shall arrange to provide the Executive
with benefits substantially similar to those which he is entitled to receive
under such plans and programs.
(3) Unless the Executive is terminated for Cause, the Bank and
the Company shall allow the Executive, at the Bank's and the Company's expense,
to continue to utilize the services of an accountant or attorney of his choice
for assistance in enforcing this Agreement and preparation of his tax returns
for the year following termination of employment.
(h) COMPENSATION UPON DISABILITY. During any period that the
Executive fails to perform his duties hereunder as a result of incapacity due
to physical or mental illness, he shall continue to receive his full Base
Compensation at the rate then in effect and his full Incentive Bonus
Compensation calculated according to the provisions of Section 5(c), all until
this Agreement is terminated pursuant to Section 8(c) hereof. Thereafter, the
Executive's benefits shall be determined in accordance with the Bank's and the
Company's Benefit Plans.
(i) COMPENSATION UPON FAILURE TO OBTAIN REGULATORY APPROVALS. If
this Agreement is terminated by the Board pursuant to Section 8(f), the
Executive shall be entitled to receive a lump-sum payment equal to (1) his
unpaid Base Compensation through the Employment Termination Date and all
accrued but unpaid allowances and expense reimbursements, plus (2) an amount
equal to three months' salary at the Base Compensation Rate. If this Agreement
is terminated by the Executive pursuant to Section 8(f), the Executive shall be
entitled to receive only the amount set forth in clause (1) above.
Section 9.INDEMNIFICATION. As an employee, officer and director of the
Bank and the Company, the Executive shall be indemnified by the Bank and the
Company against all liabilities, damages, fines, costs and expenses by the Bank
and the Company to the fullest extent to which employees, officers and
directors of a corporation organized under the laws of Florida may be
indemnified pursuant to Section 607.0850 of the Florida Statutes, as the same
may be amended from time to time (or any subsequent statute of similar tenor
and effect), subject to the terms and conditions of such statute.
Section 10. SUCCESSORS AND ASSIGNs. Except as hereinafter expressly
provided, the agreements, covenants, terms and provisions of this Agreement
shall bind the respective heirs, executors, administrators, successors and
assigns of the parties. Specifically, and not by way of limitation of the
foregoing, the Executive shall be bound by the terms and conditions of this
Agreement to any successor assignee of the Bank's and the Company's rights and
obligations
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hereunder as a result of any merger, consolidation or sale or lease of all or
substantially all of the Bank's or the Company's business and assets. If any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Bank fails, concurrently with the effectiveness of any such succession, to
agree in writing in form and substance reasonably satisfactory to the Executive
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Bank would be required to perform if no such
succession had taken place, then the Executive shall have the right, effected
by notice to such successor not later than 90 days after the effectiveness of
such succession, to terminate the Employment Period under Section 8(e) as
though such failure was an uncured breach by the Bank of a material covenant or
agreement of the Bank contained in this Agreement.
If the Executive should die while any amounts are payable to him
hereunder, or if by reason of his death payments are to be made to him
hereunder, then this Agreement shall inure to the benefit of and be enforceable
by the Executive's executors, administrators, heirs, distributees, devisees and
legatees and all amounts payable hereunder shall then be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee or other
designee or, if there is no such designee, to his estate.
This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this Agreement or
any rights or obligations hereunder, except as hereinbefore provided in this
Section 10. Without limiting the foregoing, the Executive's right to receive
payments hereunder shall not be assignable or transferable, whether by pledge,
creation of a security interest or otherwise, other than a transfer by his will
or by the laws of descent or distribution, and in the event of any attempted
assignment or transfer contrary to this paragraph the Bank shall have no
liability to pay to the purported assignee or transferee any amount so
attempted to be assigned or transferred.
As used in this Agreement, the "Bank" shall mean the Bank as herein
defined and any successor to its business and/or assets as aforesaid that
executes and delivers the agreement provided for in the first paragraph of this
Section 10 or that otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
Section 11. NOTICES. All notices and other communications that are
required or may be given under this Agreement shall be in writing and shall be
delivered personally or by certified mail addressed to the party concerned at
the following addresses:
[CONTINUED ON NEXT PAGE]
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If to the Bank or the Company: Coastal BHC, Inc.
Coastal Community Bank
------------------------------
------------------------------
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Attn: Board of Directors
With a copy to: Richard J. Bischoff, Esq.
Gunster Yoakley Valdes-Fauli & Stewart, P.A.
2 S. Biscayne Boulevard
Miami, Florida 33131
If to Executive: Hans C. Mueller
255 Palm Avenue
Miami Beach, Florida 33139
With a copy to: Broad and Cassel
201 South Biscayne Boulevard
30th Floor
Miami, Florida 33131
Attn: Gary M. Carman, Esq.
Section 12. WAIVER; REMEDIES CUMULATIVE. No waiver of any right or
option hereunder by any party shall operate as a waiver of any other right or
option, or the same right or option as respects any subsequent occasion for its
exercise, or of any legal remedy. No waiver by any party of any breach of this
Agreement or of any agreement or covenant contained herein shall be held to
constitute a waiver of any other breach or a continuation of the same breach.
All remedies provided by this Agreement are in addition to all other remedies
provided under this Agreement or applicable law.
Section 13. GOVERNING LAW; SEVERABILITY. This Agreement is made and is
expected to be performed in Miami, Florida, and the various terms, provisions,
covenants and agreements, and the performance thereof, shall be construed,
interpreted and enforced under and with reference to the laws of the State of
Florida. It is the intention of the Bank and the Executive to comply fully with
all laws and matters of public policy relating to employment agreements, and
this Agreement shall be construed consistently with such laws and public policy
to the extent possible. If and to the extent any one or more covenants,
agreements, terms and provisions of this Agreement or any portion or portions
thereof shall be held invalid or unenforceable by a court of competent
jurisdiction, then such covenants, agreements, terms and provisions (or
portions thereof) shall be deemed separable from the remaining covenants,
agreements, terms and provisions of this Agreement and such holding shall in no
way affect the validity or enforceability of any of the other covenants,
agreements, terms and provisions hereof.
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Section 14. EXPENSES. The Bank and the Company agree to reimburse the
Executive's expenses, including legal fees, incurred in connection with the
negotiation, preparation and execution of this Agreement.
Section 15. MISCELLANEOUS. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
This Agreement may not be modified, changed or amended except in a writing
signed by each of the parties hereto. This Agreement may be signed in multiple
counterparts, each of which shall be deemed an original hereof. The captions of
the several sections and subsections of this Agreement are not a part of the
context hereof, are inserted only for convenience in locating such sections and
subsections and shall be ignored in construing this Agreement.
IN WITNESS WHEREOF, the Bank and the Executive have executed this
Agreement as of the Effective Date.
EXECUTIVE:
HANS C. MUELLER
/s/ HANS C.MUELLER
----------------------------
Hans C. Mueller
BANK:
COASTAL COMMUNITY BANK
By:
-----------------------------
Name:
--------------------------
Title: *
--------------------------
COMPANY:
COASTAL BHC, INC.
By: /s/ JAMES C. MERRILL
----------------------------
Name: JAMES C. MERRILL
--------------------------
Title: *
--------------------------
*On behalf of the Organizers.
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<PAGE> 1
EXHIBIT 10.2
COASTAL BHC, INC.
255 PALM AVENUE
MIAMI BEACH, FLORIDA 33139
OPTION TO LEASE
THIS AGREEMENT made and entered into as of the 16th day of November,
1998, by and between COASTAL BHC, INC., a Florida corporation on behalf of
Coastal Community Bank (in organization) (collectively, the "Bank") as
hereinafter provided and MCH PROPERTIES, INC., a Florida corporation
("Landlord").
W I T N E S S E T H:
WHEREAS, the Landlord is the owners of the developed commercial
property more particularly described on Exhibit "A" attached hereto (the
"Premises"), that it desires to lease; and
WHEREAS, Bank desires to secure an option to lease the Premises (the
"Option") under terms and conditions hereinafter generally set forth; and
NOW THEREFORE, in consideration of the mutual covenants contained in
this agreement and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto covenant and agree as follows:
1. RECITALS. The above recitals are true and correct.
2. OPTION TO LEASE. The Landlord to hereby grants Bank an option to
lease the Premises beginning on the date first above written and ending on the
lst day of June, 1999 (the "Option Period"). The Option is subject to the
following conditions:
A. That the Bank obtain the necessary federal and state regulatory
approvals to operate as a Florida state chartered commercial bank; and
B. That the lease between the Landlord and the current tenant of the
Premises, Health South, Inc. be terminated or, in the event that Health South,
Inc. retains its lease with the Landlord, that the execution of this Option to
Lease shall constitute consent by the landlord to the Bank as sublessee.
3. SUBJECT OF LEASE. Before the expiration of the Option Period, the
Landlord and the Bank shall enter into a written lease agreement in form, terms,
conditions and substance mutually satisfactory to Landlord and Bank whereby the
Landlord leases the Premises, which are to be used by the Bank for a banking
facility, to the Bank.
<PAGE> 2
4. TERM OF LEASE. The Premises shall be leased to the Bank for an
initial term of five (5) years beginning on existing Tenant move-out date. The
Lease shall be automatically renewable for one (1) successive five (5) year
option, unless the Bank gives written notice of, its intention not to exercise
said option at least 90 days prior to the end of the five (5) year term in
question.
5. MONTHLY RENTAL.
A. Bank shall pay FIVE HUNDRED THOUSAND DOLLARS AND 00/100
($500,000.00) plus sales tax, for the term of the Lease as rental with the first
monthly payment due on or before the first of the following month, or when the
Bank opens for business whichever is earlier in time. Subsequent monthly rental
payments shall be due on the 1st day of each succeeding month. Any occupancy
prior to the opening of the Bank shall be without charge.
B. The Monthly Rental Payment shall be subject to adjustment based
on the CPI Index.
6. LEASE PROVISIONS. The Landlord shall draw and submit the Lease to
Bank. The Lease shall contain INTER ALIA the following terms, conditions and
covenants, together with other usual and reasonable terms and conditions not
inconsistent with the following:
A. The Lease shall contain usual provisions providing for default,
notice of default and reasonable time to cure.
B. The Lease shall be drafted to comply with all local and state
requirements for leases and shall contain such provisions as are normally found
in long-term leases for commercial property located within Miami-Dade County,
Florida.
C. The Lease shall provide for leasehold improvements at lessee's
expense, provided, however, no structural alterations or modifications to the
structural portions of the Premises may be made without first securing prior
written consent of Lessor.
D. Subject to the provisions hereof, the form of the Lease shall be
generally that shown in Exhibit "B" attached.
7. GOVERNING LAW. This agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Florida.
8. ATTORNEY FEES. In the event that any action is filed in relation to
this agreement, the prevailing party shall be entitled to its attorney fees.
9. ENTIRE AGREEMENT. This agreement shall constitute the entire
agreement between
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<PAGE> 3
the parties. Any prior understanding or representations of any kind preceding
the date of this agreement shall not be binding upon either party except to the
extent incorporated in this agreement.
10. BINDING EFFECT. This agreement shall bind and inure to the benefit
of the respective heirs, personal representatives, successors and assigns of the
parties.
11. PARAGRAPH HEADINGS. The titles to the paragraphs of this agreement
are solely for the convenience of the parties and shall not be used to explain,
modify, simplify, or aid in the interpretation of the provisions of this
agreement.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
on the date and year first above written.
WITNESSES: COASTAL BHC, INC., on behalf of
COASTAL COMMUNITY BANK (in organization)
/s/ Theresa Rodriguez
- ---------------------------------------
/s/ Hans C. Mueller
- --------------------------------------- -----------------------------------
Hans C. Mueller, Chairman and Chief
Executive Officer
MCH PROPERTIES, INC.
/s/ Theresa Rodriguez
- ---------------------------------------
/s/ Mario Henriquez
- --------------------------------------- -----------------------------------
Mario Henriquez, President
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<PAGE> 4
OFFICE LEASE
THIS LEASE ("Lease"), made and entered into as of this ____
day of __________, 199_ by and between Landlord and Tenant as specified in Items
1 and 2 of the Definitions in Section 1.1 hereof.
Landlord hereby demises and rents unto Tenant, and Tenant
hereby leases from Landlord, certain Premises now existing in Landlord's
Building ("Building") as described in Item 3 of the Definitions appearing in
Section 1.1 hereof, and upon the terms, covenants and conditions contained
herein.
ARTICLE I
EXHIBITS, PREMISES, USE OF PREMISES AND TERM
Section 1.0 Covenants of Landlord's Authority
Landlord represents and covenants that: a) prior to commencement of
the Lease term, it will have either good title to or a valid leasehold interest
in the land and building of which the Premises form a part; and b) upon
performing all of its obligations hereunder, Tenant shall peacefully and quietly
have, hold and enjoy the Premises for the term of this Lease.
Section 1.1 Definitions
The following Items shall be defined or be referred to as indicated
below for the purposes of this Lease and the Exhibits attached hereto:
Item 1 - Landlord: MCH MEDICAL CENTER LTD.
Item 2 - Tenant: COASTAL BHC, INC.
Item 3 - Building:
Lennar Center
8700, 8720, 8740 N. Kendall Drive
Miami, Florida 33176
Premises (Section 1.3): Suite # ______ in Building 8700 having a gross
leasable area of approximately 4.000 square feet. including an add-on
factor of 4%.
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<TABLE>
<CAPTION>
<S> <C>
Item 4 - Use of Premises (Section 1.4): Banking facility.
Item 5 - Tenant's Trade Name: COASTAL BHC, INC.
Item 6 - Lease Term (Section 1.5): 5 year(s) and 0 month(s)
----- ------
Item 7 - Lease Commencement Date (Section 1.5): Upon existing Tenant move-out date.
Lease Expiration Date (Section 1.5): Five years from commencement date.
Item 8 - Rent Commencement Date (Section 1.6): Lease commencement date.
Item 9 - Total Fixed Minimum Rent (Section 2.1): $500,000.00
Payable as follows, plus all applicable taxes: $ 8,333.33 per month
-----------
Item 10 - Fixed Minimum Rent Increases(s) CPI (Section 2.2): Adjustment Dates:
Basic Standard: Three month from commencement date.
Item 11 - Security Deposit (Section 10.1): $ 16,666.66
-----------
</TABLE>
Item 12 - Tenant's Participation in Operating Expenses (Section 4.1):
Base Operating Year: 1998
Monthly Estimated Amount.- $ 90.00
-------
Item 13 - Tenant's Participation in Real Estate Taxes (Section 5.2):
Base Tax Year: 1998
Item 14 - Notices (Section 12.1): Tenant: COASTAL BHC, INC.
8700 N. Kendall Dr.
Suite
Miami, FL 33176
Landlord: MCH MEDICAL CENTER LTD.
8720 N. Kendall Drive
Suite 202
Miami, FL 33176
Item 15 - Additional Terms:
A. Commencing on ______________ and on the first day of each month
thereafter during each subsequent Lease Year or subsequent Partial
Lease Year, as defined in Section 1.7, during the term of this
Lease or any renewal thereof, Tenant shall pay to
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<PAGE> 6
Landlord its monthly estimated pro rata share of Operating Expenses as
set forth in Item 12. At the end of each Lease Year or Partial Lease
Year, Tenant shall pay to Landlord its proportionate share, as
hereinafter defined, of the amount by which the annual Operating
Expenses, as defined in Section 4.2, exceed the Operating Expenses of
the Base Operating Year specified in Item 12. Tenant's proportionate
share for said Operating Expenses for each Lease Year or Partial Lease
Year of the term of this Lease or any renewal thereof shall be
determined by dividing the total number of square feet in the Premises
by the total number of square feet of all leasable space within the
Building. In the event Tenant's proportionate share of Operating
Expenses at the end of each Lease Year or Partial Lease Year exceed
the monthly estimated payments made by Tenant during the Lease Year or
Partial Lease Year in which such Operating Expenses are incurred,
Tenant shall pay to Landlord the excess on or before thirty (30) days
following receipt of Landlord's statement showing the amount due by
Tenant, and subsequent monthly payments shall be adjusted so that such
monthly payments for the next Lease Year of Partial Lease Year shall
be based on Landlord's actual Operating Expenses for each Lease Year
or Partial Lease Year. In no event shall Tenant's monthly payments
hereunder be less than the monthly pro rata amount as set forth in
Item 12.
B. Landlord shall not be liable for any injury or damage to persons or
property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water, rain, or leaks from any part of the Premises or
from the pipes, appliances, or plumbing works of from the roof,
street, or subsurface or from any other place or by dampness or by any
other cause of whatsoever nature. All property of Tenant, including
merchandise and furnishings, kept or stored on the Premises shall be
so kept or stored at the risk of Tenant only and Tenant shall hold
Landlord harmless from any and all claims arising out of damage to
same. If Landlord is required to make repairs by reason of any act,
omission or negligence of Tenant, any permitted subtenants,
concessionaires or their respective employees, agents, invitees,
licensees, or contractors, the cost of such repairs shall be borne by
Tenant and shall be due and payable immediately upon receipt of
Landlord's notification of the amount due.
C. Tenant shall be solely responsible for removal and disposal of all
bio-medical wastes from the Premises, and under no circumstances shall
Tenant dispose of such wastes on the property of which the Premises is
a part nor in any manner that is illegal or hazardous. Tenant shall
defend, indemnify, and hold Landlord harmless from and against any and
all lawsuits, fines, claims, losses, liabilities, fees, actions, costs
and expenses, including but not limited to attorneys' fees, and all
other things or matters of any nature whatsoever in any way related to
Tenant's bio-medical wastes or its disposal of such wastes. A
violation of the foregoing by Tenant shall be a default of this Lease,
and Landlord shall have all the remedies available to it as set forth
in this Lease and provided by Law.
D. Radon Gas. Pursuant to F.S. 404.056(8)(1988), Tenant is hereby
notified that
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<PAGE> 7
radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health
risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings in
Florida. Additional information regarding radon and radon testing may
be obtained from your county public health unit. In no event shall
Landlord be liable for direct or indirect, consequential or incidental
damages arising form existence or discovery of radon in the Premises.
5. PARKING. Landlord has the unqualified right to charge a
parking fee to all persons using its parking facilities.
Notwithstanding, no parking fees shall be charged to the
Tenants or their bonafide employees. In case of the Tenant
being a Corporation or Partnership, only the principals
thereof will be except from the parking fee
6. OPTION TO RENEW. Provided that Tenant is not in default
of the Lease, then Tenant, by giving Landlord written
notice not less than ninety (90) days nor more than one
hundred eighty ( 180) days prior to the expiration of this
Lease term. shall have the right to renew the Lease for an
additional One (1) term of five (5) years upon the same
terms covenants and conditions, at the then prevailing
Market Rate.
Section 1.2 Exhibits
The Exhibits listed hereunder and attached to this Lease are
incorporated and made a part hereof by reference:
Exhibit A-- Legal Description
Exhibit B-- Site Plan
Exhibit C-- Rules and Regulations
Exhibit D-- Covenant Running with the Land in Favor of
Metropolitan Dade County which prohibits the use.
generation, handling, disposal, storage, or
discharge of hazardous materials.
THIS SPACE LEFT BLANK INTENTIONALLY
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<PAGE> 8
Section 1.3 Premises Leased by Tenant
A. The Premises leased by Tenant are located at the Building set forth
in Item 3 of the Definitions, which Premises are particularly described in Item
3 of the Definitions.
The boundaries and location of the Premises are outlined on tile Site
Plan diagram of the Building, (Exhibit "B"), which sets forth the general layout
of tile Building, but shall not be deemed to be a warranty, representation, or
agreement upon the part of tile Landlord that said Building will be exactly as
indicated on said diagram.
The Premises includes, for the purpose of this Lease, the Premises
within Landlord's Building leased to Tenant herein and shall extend to tile
exterior faces of all walls or to the building line where there is no wall, or
to the center line of those walls separating the Premises from other premises in
the Building, together with the appurtenances specifically granted in this
Lease, but reserving and excepting to Landlord the use of tile exterior walls
and the roof and the right to install, maintain, use, repair and replace pipes,
ducts, conduits, and wires leading through the Premises in locations which will
not materially interfere with Tenant's use thereof and serving other parts of
the Building.
Section 1.4 Use of Premises
The Premises shall be used and occupied only for the purpose as
specified in Item 4 of tile Definitions and for no other purpose or purposes
without Landlord's prior written consent. Tenant shall. at its own risk and
expense, obtain all governmental licenses and permits necessary for such use.
Section 1.5 Lease Term
The term of this Lease shall be for the period specified in Item 6 of
the Definitions commencing and expiring as provided in Item 7 of the
Definitions, unless sooner terminated or extended as hereinafter provided.
Section 1.6 Rent Commencement Date
Tenant shall commence payment of Rent at the earlier of (a) the date
specified in Item 8 of the Definitions, or (b) the date when the Tenant shall
occupy the Premises, which date shall be agreed to by both parties in writing no
later than five (5) days after Tenant opens for business. If the Rent
Commencement Date falls on a day other than the first day of a calendar month,
the Fixed Minimum Rent for such month shall be prorated on a per diem basis,
calculated on the basis of a Thirty (30) day month.
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<PAGE> 9
Section 1.7 Lease Year
For purpose of this Lease, the term Lease Year is defined to mean a
calendar year (beginning January 1 and extending through December 31 of any
given year). Any portion of a year which is less than a Lease Year, that is,
from the Lease Commencement Date through the next December 31, and from the last
January 1 falling within the term of the Lease through the last day of the term,
shall be defined as a Partial Lease Year.
Section 1.8 Acceptance of Premises
Tenant acknowledges that it has fully inspected and accepts tile
Premises in their present condition and "as is", and that the same are suitable
for the use specified in Item 4 of the Definitions.
ARTICLE II
RENT
Section 2.1 Fixed Minimum Rent
The total Fixed Minimum Rent for the Lease Term as specified in Item 9
of the Definitions shall be payable by Tenant as specified in Item 9 of the
Definitions.
The phrase Fixed Minimum Rent shall be the Fixed Minimum Rent above
specified, payable monthly in advance on the first day of each month, without
prior demand therefor and without any deduction or setoff whatsoever. In
addition, Tenant covenants and agrees to pay Landlord all applicable sales or
other taxes which may be imposed on the above specified rents or payments
hereinafter provided for to be received by Landlord when each such payment is
made. Should Tenant fail to pay any installment of Rent when due and continuing
for a period of time constituting a default as further defined under the
provisions of this Lease, Section 9.1, Default, Landlord may, at its option,
require the total Fixed Minimum Rent remaining for the term of this Lease to
immediately become due and payable. If Tenant pays any installment of Fixed
Minimum Rent or any other sum by check and such check is returned for
insufficient funds or other reasons not the fault of Landlord, then Tenant shall
pay to Landlord on demand a processing fee of $25.00 per returned check.
Landlord, at its option, may subtract any such processing fee from any Security
Deposit held by Landlord, and, in such event, Tenant shall deposit a like amount
with Landlord in accordance with the terms of Section 10.1.
Section 2.2 Fixed Minimum Rent Increase
So as to afford Landlord with consistent purchasing power of its rental
income during future years of the Lease, the Fixed Minimum Rent described in
Item 9 of the Definitions shall be subject to adjustments from time to time as
provided for herein. Landlord and Tenant agree to adopt as a standard for
measuring fluctuations of the purchasing power of this rental income the
Consumer
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<PAGE> 10
Price Index (for all urban consumers) - All items (1967 = 100) issued by the
Bureau of Labor Statistics of the U.S. Department of Labor ("CPI"). The Fixed
Minimum Rent shall be adjusted to reflect increases in the cost of living as set
forth by the CPI Figure or any successor or substituted index appropriately
adjusted. The CPI Figure for the month specified in Item 10 of the Definitions
shall be defined as the BASIC STANDARD. The CPI Figure for each anniversary date
of the Basic Standard shall be defined as the NEW INDEX FIGURE. Adjustments
shall be made annually on the dates as provided in Item 10 of the Definitions.
These adjustments shall be made and the adjusted monthly Fixed Minimum Rent (NEW
RENTAL) for tile ensuing period shall be arrived at by multiplying the monthly
Fixed Minimum Rent for the last full month of the first year of the initial
Lease term, as described in Item 9, by a fraction, the numerator of which shall
be the respective NEW INDEX FIGURE and the denominator of which shall be the
BASIC STANDARD.
Landlord shall notify Tenant in writing of the amount of the NEW RENTAL
and same shall be due on the first day of the month beginning that same
adjustment period and each month thereafter until adjusted again. However, in no
event shall the rental due and payable hereunder be less than the annual Fixed
Minimum Rent for each preceding year of the Lease, regardless of the value of
the dollar as reflected by said CPI Figure.
In the event the amount of the CPI Figure increase is not known until
after the first month of the period for which the adjustment is to be made, due
to delays in publications of the CPI Figure, or any other reason, then, upon
notification of the increase by Landlord, the Tenant shall pay the full amount
of the increase which is due for any prior months during the adjustment period,
within Fifteen (15) days following receipt of Landlord's written notice of the
amount due.
In the event of any controversy arising as to the proper adjustment for
rental payments as herein provided, the Tenant shall continue paying the rental
under the last preceding rental adjustment, as herein provided, until such time
as said controversy has been settled, at which time an adjustment will be made,
retroactive to the beginning of the adjustment period in which the controversy
arose.
Section 2.3 Late Payment
Should Tenant fail to pay when due any installment of Fixed Minimum
Rent or any other sum payable to Landlord under the terms of this Lease, then
Landlord shall assess a servicing fee of Fifty Dollars ($50.00) per month from
and after the Fifth (5th) day following the date on which any sum shall be due
and payable, until the required payments are made. Landlord, at its option, may
subtract any such amount that is not paid from any Security Deposit held by
Landlord and, in such event, Tenant shall deposit a like amount with Landlord in
accordance with the terms of Section 10.1 herein. Should Tenant remit a partial
payment for any outstanding Fixed Minimum Rent or Additional Rent due, Landlord
shall apply said partial payment to the outstanding Fixed Minimum Rent or
Additional Rent as Landlord deems necessary, in its sole discretion.
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<PAGE> 11
Section 2.4 Additional Rent-Definition
In addition to the foregoing Fixed Minimum Rent and Fixed Minimum Rent
Increase, all payments to be made under this Lease by Tenant to Landlord shall
be deemed to be and shall become Additional Rent hereunder and, together with
Fixed Minimum Rent, shall be included in the term "Rent" whenever such term is
used herein. Unless another time shall be herein expressly provided for the
payment thereof, any Additional Rent shall be due and payable on demand or
together with the next succeeding installment of Fixed Minimum Rent, whichever
shall first occur, together with all applicable State taxes and interest thereon
at the then prevailing legal rate, and Landlord shall have the same remedies for
failure to pay the same as for non-payment of Fixed Minimum Rent. Landlord, at
its election, shall have the right to pay or do any act which requires the
expenditure of any sums of money by reason of the failure or neglect of Tenant
to perform any of the provisions of this Lease, and in the event Landlord elects
to pay such sums or do such acts requiring the expenditure of monies, all such
sums so paid by Landlord, together with interest thereon, shall be deemed to be
Additional Rent and payable as such by Tenant to Landlord upon demand.
ARTICLE III
SERVICES
Section 3.1 Services of Landlord
(a) Landlord shall maintain the public and common areas of the
Building, including lobbies, stairs, elevators, corridors and restrooms, the
windows in the Building, the mechanical, plumbing and electrical equipment
serving the Building, and the structure itself in reasonably good order and
condition except for damage occasioned by the act of the Tenant, which damage
shall be repaired by Landlord at Tenant's expense.
(b) Landlord shall furnish the Premises with (1) electricity for
lighting and the operation of office machines, (2) heat and air conditioning to
the extent reasonably required for the comfortable occupancy by Tenant in its
use of the Premises during the period from 8:00 a.m. to 6:00 p.m. on weekdays
and from 8:30 a.m. to 1:00 p.m. on Saturdays, except for holidays declared by
the Federal government, or such shorter period as may be prescribed by any
applicable policies or regulations adopted by any utility or governmental
agency, (3) elevator service, if applicable, (4) lighting replacement (for
building standard lights), (5) restroom supplies, (6) window washing with
reasonable frequency, (7) and daily janitor service five (5) days a week during
the times and in the manner that such services are customarily furnished in
comparable office buildings in the area. Landlord shall not be in default
hereunder or be liable for any damages directly or indirectly resulting from,
nor shall the rental herein reserved be abated by reason of (i) the
installation, use or interruption of use of any equipment in connection with the
furnishing of any of the foregoing services (ii) failure to furnish or delay in
furnishing any such services when such failure or delay is caused by accident or
any condition beyond the reasonable control of Landlord or by the making of
necessary repairs or improvements to the Premises or to the Building, or (iii)
the limitation, curtailment, rationing or restrictions on use of water,
electricity, gas cir any other form of energy serving the Premises or the
Building. Landlord shall use reasonable efforts diligently to remedy any
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<PAGE> 12
interruption in the furnishing of such services.
(c) Whenever heat generating equipment or lighting other than building
standard lights are used in the Premises by Tenant which affect the temperature
otherwise maintained by the air conditioning system, Landlord shall have the
right, after notice to Tenant, to install supplementary air conditioning
facilities in the Premises or otherwise modify the ventilating and air
conditioning systems serving the Premises, and the cost of such facilities and
modifications shall be borne by Tenant. Tenant shall also pay as Additional
Rent, the cost of providing all cooling energy to the Premises in excess of that
required for normal office use or during hours requested by Tenant when air
conditioning is not otherwise furnished by Landlord. If Tenant installs lighting
requiring power in excess of that required for normal office use in the
Building, or if Tenant installs equipment requiring power in excess of that
required for normal desk-top office equipment or normal copying equipment,
Tenant shall pay for the cost of such excess power as Additional Rent, together
with the cost of installing any additional risers or other facilities that may
be necessary to furnish such excess power to the Premises.
ARTICLE IV
OPERATING EXPENSES
Section 4.1 Tenant's Participation In Operating Expenses
Section 4.2 Definition Of Operating Expenses
The term "Operating Expenses" shall mean (1) all costs of management,
operation and maintenance of the Office Complex, including, without limitation,
wages, salaries and payroll burden of employees, janitorial, maintenance, guard
and other services, building management office rent or rental value, power,
fuel, water, waste disposal, landscaping care, premiums for liability, fire,
hazard and other property related insurance, parking area care, advertising and
promotion, fees for energy saving programs, administrative costs, including
management fee, and (2) the cost (amortized over such reasonable period as
Landlord shall determine) of any capital improvements made to the Building by
Landlord after the date of this Lease that reduce the Operating Expenses or made
to the Building by Landlord after the date of this Lease that are required under
any governmental law or regulation that was not applicable to the Building at
the time it was constructed; provided, however, that Operating Expenses shall
not include real property taxes, depreciation on the Building, costs of tenant
improvements, real estate brokers' commissions, interest and capital items other
than those referred to in clause (2) above.
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<PAGE> 13
ARTICLE V
TAXES
Section 5.1 Tenant's Taxes
Tenant covenants and agrees to pay promptly when due all taxes imposed
upon its business operations and its personal property situated in the Premises.
Section 5.2 Tenant's Participation in Real Estate Taxes
Landlord will pay in the first instance all real property taxes,
including extraordinary and/or special assessments (and all costs and fees
incurred in contesting the same), hereinafter collectively referred to as Real
Estate Taxes, which may be levied or assessed by the lawful tax authorities
against the land, buildings, and all other improvements in the Building.
Tenant, for each Lease Year or Partial Lease Year, as defined in
Section 1.7, during the term of this Lease or any renewal thereof, shall pay to
Landlord its proportionate share, as hereinafter defined, of the amount by which
the annual Real Estate Taxes assessed or levied against the land and buildings
of the Building exceed the Real Estate Taxes for the Base Tax Year specified in
Item 13 of the Definitions.
Tenant's proportionate share for said Real Estate Taxes for each Lease
Year or Partial Lease Year of the term of this Lease or any renewal thereof
shall be determined by dividing the total number of square feet in the Premises
by the total number of square feet of all leasable building space within the
Building. Any payments due by Tenant hereunder shall be made during each Lease
Year or Partial Lease Year of the term of this Lease or any renewal thereof
within Thirty (30) days after Tenant's receipt of Landlord's written
certification of the amount due. Tenant's share shall be prorated in the event
Tenant is required to make such payment for a Partial Lease Year. In addition,
should the taxing authorities include in such Real Estate Taxes the value of any
improvements made by Tenant, or include machinery, equipment, fixtures,
inventory or other personal property or assets of the Tenant, then Tenant shall
also pay 100% of the Personal Property Taxes and Real Estate Taxes for such
items.
If the Lease expires during a Partial Lease Year, Landlord shall bill
Tenant, not more than Sixty (60) days prior to the expiration date of the Lease,
for its estimated pro rata share of Real Estate Taxes for the Partial Lease
Year. Tenant shall remit full payment to Landlord within Seven (7) days of such
bill. If Tenant fails to remit such full payment to Landlord, Landlord in its
sole discretion, may deduct the amount due from Tenant's Security Deposit and be
entitled to all other rights and remedies hereunder for Tenant's default.
Should any governmental taxing authority, acting under any present or
future law, ordinance, or regulation, levy, assess or impose a tax, excise
and/or assessment (other than income or franchise tax) upon or against or in any
way related to the land and buildings comprising the Building, either by way of
substitution or in addition to any existing tax on land and buildings or
otherwise, Tenant shall be responsible for and shall pay to Landlord its
proportionate share as set forth above of such tax, excise and/or assessment.
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ARTICLE VI
ADDITIONS, ALTERATIONS, REPLACEMENTS AND TRADE FIXTURES
Section 6.1 By Landlord
Landlord hereby reserves the right at any time to make alterations or
additions to the Building in which the Premises are contained and to build
additional stories thereon. Landlord also reserves the right to construct other
buildings or improvements in the Building or Common Areas from time to time and
to make alterations thereof or additions thereof and to build additional office
space on any such building or buildings so constructed.
Section 6.2 By Tenant
Upon receipt of Landlord's prior written approval, Tenant may from time
to time, at its own expense, alter, renovate or improve the interior of the
Premises provided the same be performed in a good and workmanlike manner, in
accordance with accepted building practices and so as not to weaken or impair
the strength or lessen the value of the Building in which the Premises are
located. No changes, alterations or improvements affecting the exterior of the
Premises shall be made by Tenant without the prior written approval of Landlord.
Any work done by Tenant under the provisions of this Section shall not interfere
with the use by the other tenants or their premises in the Building. Tenant also
agrees to pay 100% of any increase in the Real Estate Taxes or Landlord's
Personal Property Taxes resulting from such improvements.
All alterations, decorations, additions and improvements made by
Tenant, or made by Landlord on Tenant's behalf as provided in this Lease, shall
remain the property of the Tenant for the term of this Lease or any extension or
renewal thereof, but they shall. not be removed from the Premises without the
prior written consent of Landlord.
Upon obtaining the prior written consent of Landlord, Tenant shall
remove such alterations, decorations, additions and improvements and restore the
Premises as provided in Section 6.5, and if Tenant fails to do so and moves from
the Premises, all such alterations, decorations, additions and improvements
shall become the property of Landlord.
Section 6.3 Construction Insurance and Indemnity
Tenant shall indemnify and hold Landlord harmless from any and all
claims for loss or damages or otherwise based upon or in any manner growing out
of any alterations or construction undertaken by Tenant under the terms of this
Lease, including all costs, damages, expenses, court costs and attorneys' fees
incurred in or resulting from claims made by any person or persons, by other
tenants of premises in the Building, their subtenants, agents, employees,
customers and invitees.
Before undertaking any alterations or construction, Tenant shall obtain
and pay for a public
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liability policy insuring Landlord and Tenant against any liability which may
arise on account of such proposed alterations or construction work in limits of
not less than $1,000,000.00 for any one person, $1,000,000.00 for more than one
person in any one accident and $200,000.00 for property damage; and a copy of
such policy shall be delivered to Landlord prior to the commencement of such
proposed work. Tenant shall also maintain at all times fire insurance with
extended coverage in the name of Landlord and Tenant as their interests may
appear in an amount adequate to cover the cost of replacement of all
alterations, decorations, additions or improvements in and to the Premises and
all trade fixtures therein, in the event of fire or extended coverage loss.
Tenant shall deliver to Landlord copies of such fire insurance policies which
shall contain a clause requiring the insurer to give Landlord Ten (10) days
notice of cancellation of such policies.
Section 6.4 Mechanic's Liens and Additional Construction
If by reason of any alteration, repair, labor performed or materials
furnished to the Premises for or on behalf of Tenant any mechanic's or other
lien shall be filed, claimed, perfected or otherwise established or as provided
by law against the Premises, Tenant shall discharge or remove the lien by
bonding or otherwise, within Fifteen (15) days after the Tenant receives notice
of the filing of same. Notwithstanding any provision of this Lease seemingly to
the contrary, Tenant shall never, under any circumstances, have the power to
subject the interest of Landlord in the Premises to any mechanics' or
materialmen's liens or liens of any kind, nor shall any provision contained in
this Lease ever be construed as empowering the Tenant to encumber or cause the
Landlord to encumber the title or interest of Landlord in the Premises.
Tenant hereby expressly acknowledges and agrees that no alterations,
additions, repairs or improvements to the Premises of any kind are required or
contemplated to be performed as a prerequisite to the execution of this Lease
and the effectiveness thereof according to its terms or in order to place the
Premises in a condition necessary for use of the Premises for the purposes as
set forth in this Lease, that the Premises are presently complete and usable for
the purposes set forth in this Lease and that this Lease is in no way
conditioned on Tenant making or being able to make alterations, additions,
repairs or improvements to the Premises, unless otherwise specified under the
Special Provisions section of the Definitions, notwithstanding the fact that
alterations, repairs, additions or improvements may be made by Tenant, for
Tenant's convenience or for Tenant's purposes, subject to Landlord's prior
written consent, at Tenant's sole cost and expense.
Landlord and Tenant expressly acknowledge and agree that neither the
Tenant nor any one claiming by, through or under the Tenant, including without
limitation contractors, sub-contractors, materialmen, mechanics and laborers,
shall have any right to file or place any mechanics' or materialmen's liens of
any kind whatsoever upon the Premises nor upon any building or improvement
thereon; on the contrary, any such liens are specifically prohibited. All
parties with whom the Tenant may deal are hereby put on notice that the Tenant
has no power to subject the Landlord's interest in the Premises to any claim or
lien of any kind or character and any persons dealing with the Tenant must look
solely to the credit of the Tenant for payment and not to the Landlord's
interest in the Premises or otherwise.
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Any lien filed against the Premises in violation of this paragraph
shall be null and void and of no force or effect. In addition, Tenant shall
cause any lien filed against the Premises in violation of this paragraph to be
cancelled, released, discharged and extinguished within Fifteen (15) days after
Tenant receives notice of filing of the same and shall indemnify and hold the
Landlord harmless from and against any such lien and any costs, damages, charges
and expenses, including, but not limited to, attorney's fees, incurred in
connection with or with respect to any such lien.
Section 6.3 Trade Fixtures
All trade fixtures and equipment installed by Tenant in the Premises
shall be new or completely reconditioned and shall remain the property of
Tenant.
Provided Tenant is not in default hereunder, Tenant shall have the
right, at the termination of this Lease, to remove any and all trade fixtures,
equipment and other items of personal property not constituting a part of the
freehold which it may have stored or installed in the Premises including, but
not limited to, counters, shelving, showcases, chairs, and movable machinery
purchased or provided by Tenant and which are susceptible of being moved without
damage to the Building and the Premises, provided this right is exercised before
the Lease is terminated or during the Ten (10) day period immediately following
such termination and provided that Tenant, at its own cost and expense, shall
repair any damage to the Premises caused thereby. The right granted Tenant in
this Section shall not include the right to remove any plumbing or electrical
fixtures or equipment, heating or air conditioning equipment, floor-coverings
(including wall-to-wall carpeting) glued or fastened to the floors or any
paneling, tile or other materials fastened or attached to the walls or ceilings,
all of which shall be deemed to constitute a part of the freehold, and, as a
matter of course, shall not include the right to remove any fixtures or
machinery that were furnished or paid for by the Landlord. The Premises and the
immediate areas in front, behind and adjacent to it shall be left in a
broom-clean condition. Should Tenant fail to comply with this provision,
Landlord may deduct the cost of cleanup from Tenant's Security Deposit. If
Tenant shall fail to remove its trade fixtures or other property at the
termination of this Lease or within Ten (10) days thereafter, such fixtures and
other property not removed by Tenant shall be deemed abandoned by Tenant, and,
at the option of Landlord, shall become the property of Landlord.
All of the foregoing is subject to Section 10.2 of this Lease.
Section 6.6 Right of Entry
Landlord or its representatives shall have the right to enter the
Premises at reasonable hours of any day during the Lease Term to: a) ascertain
if the Premises are in proper repair and condition, and further, Landlord or its
representatives shall have the right, without liability, to enter the Premises
for the purposes of making repairs, additions or alterations thereto or to the
Building in which the same are located, including the right to take the required
materials therefor into and upon the Premises without the same constituting an
eviction of Tenant in whole or in part, and the Rent shall not abate while such
repairs, alterations, replacements or improvements are being made by
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reason of loss or interruption of Tenant's business due to the performance of
any such work; and b) show the Premises to prospective purchasers, lenders and
tenants. If Tenant shall not be personally present to permit an entry into said
Premises when for any reason an entry therein shall be permissible, Landlord may
enter the same by a master key or by the use of force without rendering Landlord
liable therefor and without in any manner affecting Tenant's obligations under
the Lease.
ARTICLE VII
INSURANCE AND INDEMNITY
Section 7.1 Tenant's Insurance
Tenant shall maintain, at its own cost and expense, in responsible
companies approved by Landlord, combined single limit public liability
insurance, insuring Landlord and Tenant, as their interests may appear, against
all claims, demands or actions for bodily injury, personal injury or death of
any one person in an amount of not less than $500,000.00; and for bodily injury,
personal injury or death of more than one person in any one accident in an
amount of not less than $500,000.00; and for damage to property in an amount of
not less than $500,000.00. Landlord shall have the right to direct Tenant to
increase such amounts whenever it considers them inadequate. Such liability
insurance shall also cover and include all exterior signs maintained by Tenant.
The policy of insurance may be in the form of a general coverage or floater
policy covering these and other premises, provided that Landlord is specifically
insured therein. Tenant shall carry like coverage against loss or damage by
boiler or compressor or internal explosion of boilers or compressors, if there
is a boiler or compressor in the Premises. Tenant shall maintain insurance
covering all glass forming a part of the Premises including plate glass in the
Premises and fire insurance against loss or damage by fire or windstorms, with
such endorsements for extended coverage, vandalism, malicious mischief and
special extended coverage as Landlord may require, covering 100% of the
replacement costs of any items of value, including but not limited to signs,
stock, inventory, fixtures, improvements, floor coverings and equipment. All of
said insurance shall be in form and in responsible companies satisfactory to
Landlord, and shall provide that it will not be subject to cancellation,
termination or change except after at least Thirty (30) days prior written
notice to Landlord. Any insurance procured by Tenant as herein required shall
contain an express waiver of any right of subrogation by the insurance company
against Landlord. The policies, together with satisfactory evidence of the
payment of the premiums thereon, shall be deposited with Landlord on the day
Tenant begins operations. Thereafter, Tenant shall provide Landlord with
evidence of proof of payment upon renewal of any such policy, not less than
Thirty (30) days prior to expiration of the term of such coverage. In the event
Tenant fails to obtain or maintain the insurance required hereunder, Landlord
may obtain same and any costs incurred by Landlord in connection therewith shall
be payable by Tenant upon demand. Landlord shall carry public liability
insurance covering the exterior of the Premises, including, but not limited to
the sidewalks, malls and parking lot.
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Section 7.2 Extra Hazard Insurance Premiums
Tenant agrees that it will not keep, use, sell or offer for sale in or
upon the Premises any article or permit any activity which may be prohibited by
the standard form of fire or public liability insurance policy. Tenant agrees to
pay any increase in premiums for fire and extended coverage or public insurance
which may be carried by Landlord on the Premises or the Building of which they
are a part, resulting from the type of merchandise sold or services rendered by
Tenant or activities in the Premises, whether or not Landlord has consented to
the same. In determining whether increased premiums are the result of Tenant's
use of the Premises, a schedule, issued by the organization making the insurance
rate on the Premises, showing various components of such rate, shall be
conclusive evidence of the several items and charges which make up the fire and
public liability insurance rate on the Premises.
Tenant shall not knowingly use or occupy the Premises or any part
thereof, or suffer or permit the same to be used or occupied for any business or
purpose deemed extra hazardous on account of fire or otherwise. In the event
Tenant's use and/or occupancy causes any increase of premium for the fire,
boiler and/or casualty rates on the Premises or any part thereof above the rate
for the least hazardous type of occupancy legally permitted in the Premises,
Tenant shall pay such additional premium on the fire, boiler and/or casualty
insurance policy that may be carried by Landlord for its protection against rent
loss through fire. Bills for such additional premiums shall be rendered by
Landlord to Tenant at such times as Landlord may elect, and shall be due from
and payable by Tenant when rendered in writing, but such increases in the rate
of insurance shall not be deemed a breach of this covenant by Tenant. Failure to
pay amounts due hereunder shall be a breach of the Lease.
Section 7.3 Indemnity
Tenant during the term hereof shall indemnify and save harmless
Landlord from and against any and all claims and demands whether for injuries to
persons or loss of life, or damage to property, occurring within the Premises
and immediately adjoining the Premises and arising out of the use and occupancy
of tile Premises by Tenant, or occasioned wholly or in part by any act or
omission of Tenant, its subtenants, agents, contractors, employees, servants,
lessees or concessionaires, excepting however such claims and demands, whether
for injuries to persons or loss of life or damage to property, caused by the
negligence of Landlord. If, however, any liability arises in the Common Areas
because of the negligence of Tenant, Tenant's subtenants, agents, employees,
contractors, invitees, customers or visitors, then in such event Tenant shall
hold Landlord harmless. In case Landlord shall, without fault on its part, be
made a party to any litigation commenced by or against Tenant, then Tenant shall
protect and hold Landlord harmless and shall pay all costs, expenses and
reasonable attorneys' fees incurred or paid by Landlord in connection with such
litigation. Tenant shall also pay all costs, expenses and reasonable attorneys'
fees that may be incurred or paid by Landlord in enforcing the covenants and
agreements of this Lease.
Section 7.4 Definition and Liability of Landlord
The term Landlord as used in this Lease means only the owner or the
mortgagee in possession
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for the time being of the Building in which the Premises are located or the
owner of a leasehold interest in the Building and/or the land thereunder so that
in the event of sale of the Building or an assignment of this Lease, or a demise
of the Building and/or land, Landlord shall be and hereby is entirely freed and
relieved of all obligations of Landlord hereunder and it shall be deemed without
further agreement between the parties and such purchaser(s), assignee(s) and
lessee(s) that the purchaser, assignee or lessee has assumed and agreed to
observe and perform all obligations of Landlord hereunder.
It is specifically understood and agreed that there shall be no
personal liability on Landlord in respect to any of the covenants, conditions or
provisions of this Lease; in the event of a breach or default by Landlord of any
of its obligations under this Lease, Tenant shall look solely to the equity of
Landlord in the Building for the satisfaction of Tenant's remedies.
ARTICLE VIII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 8.1 Damage or Destruction by Fire or Other Casualty
A. Tenant shall give prompt notice to Landlord in case of fire or other
damage to the Premises or the Building containing the Premises. In the event the
Premises are damaged by fire, explosion, flood, tornado or by the elements, or
through any casualty, or otherwise, after the commencement of the term of this
Lease, the Lease shall continue in full force and effect. If the extent of the
damage is less than Fifty Percent (50%) of the cost of replacement of the
Premises, the damage shall promptly be repaired by Landlord at Landlord's
expense, provided that Landlord shall not be obligated to so repair if such
fire, explosion or other casualty is caused directly by the negligence of
Tenant, its subtenants, permitted concessionaires, or their agents, servants or
employees, and provided further that Landlord shall not be obligated to expend
for such repair an amount in excess of the insurance proceeds recovered or
recoverable as a result of such damage, and that in no event shall Landlord be
required to replace Tenant's stock in trade, fixtures, furniture, furnishings,
floor coverings and equipment. In the event of any such damage and (a) Landlord
is not required to repair as hereinabove provided, or (b) the Premises shall be
damaged to the extent of Fifty Percent (50%) or more of the cost of replacement,
or (c) the Building of which the Premises are a part is damaged to the extent of
Twenty-Five Percent (25%) or more of the cost of replacement, or (d) all
buildings (taken in the aggregate) in the Building shall be damaged to the
extent of more than Twenty-Five Percent (25%) of the aggregate cost of
replacement, Landlord may elect either to repair or rebuild the Premises or the
Building or buildings, or to terminate this Lease upon giving notice of such
election to Tenant within Ninety (90) days after the occurrence of the event
causing the damage.
B. If the casualty, repairing, or rebuilding shall render the Premises
untenantable, in whole or in part, and the damage shall not have been due to the
default or neglect of Tenant, a proportionate abatement of the Fixed Minimum
Rent shall be allowed from the date when the
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damage occurred until the date Landlord completes the repairing or rebuilding,
said proportion to be computed on the basis of the relation which the gross
square foot area of the space rendered untenantable bears to the floor area of
the Premises. If Landlord is required or elects to repair the Premises as herein
provided, Tenant shall repair or replace its stock in trade, fixtures,
furniture, furnishings, floor coverings and equipment, and if Tenant has closed
for business, Tenant shall promptly reopen for business upon the completion of
such repairs.
C. In the event the Premises or the Building or buildings shall be
damaged in whole or in substantial part within the last Twenty-Four (24) months
of the original term, or within the last Twenty-Four (24) months of the last
renewal term, if renewals are provided for herein, Landlord shall have the
option, exercisable within Ninety (90) days following such damage, of
terminating this Lease, effective as of the date of Tenant's receipt of notice
from Landlord. If any such termination occurs during the initial term, any
options for renewal shall automatically be of no further force or effect.
D. No damage or destruction of the Premises or the Building or
buildings shall allow Tenant to surrender possession of the Premises nor affect
Tenant's liability for the payment of Rent or any other covenant contained
herein, except as may be specifically provided in this Lease. Notwithstanding
any of the provisions herein to the contrary, Landlord shall have no obligation
to rebuild the Premises or the Building or buildings and may at its own option
cancel this Lease unless the damage or destruction is a result of a casualty
covered by Landlord's insurance policy.
Section 8.2 Condemnation
(a) Total: In the event the entire Premises shall be appropriated or
taken under the power of eminent domain by any public or quasi-public authority,
this Lease shall terminate and expire as of the date of title vesting in such
proceeding, and Landlord and Tenant shall thereupon be released from any further
liability hereunder. (b) Partial: If any part of the Premises shall be taken as
aforesaid, and such partial taking shall render that portion not so taken
unsuitable for the business of Tenant, as determined by Landlord, then this
Lease and the term herein shall cease and terminate as aforesaid. If such
partial taking is not extensive enough to render the Premises unsuitable for the
business of Tenant, then this Lease shall continue in effect, except that the
Fixed Minimum Rent shall be reduced in the same proportion that the floor area
of the Premises taken bears to the original floor area leased and Landlord
shall, upon receipt of the award in condemnation, make all necessary repairs or
alterations to the Building in which the Premises are located so as to
constitute the portion of the Building not taken a complete architectural unit,
but such work shall not exceed the scope of the work to be done by Landlord in
originally constructing said Building, nor shall Landlord, in any event, be
required to spend for such work an amount in excess of the amount received by
Landlord as damages for the part of the Premises so taken. "Amount received by
Landlord" shall mean that part of the award in condemnation which is free and
clear to Landlord of any collection by mortgagee for the value of the diminished
fee. (c) Termination: If more than Twenty Percent (20%) of the floor area of the
Building in which the Premises are located shall be taken as aforesaid, Landlord
may, by written notice to Tenant, terminate this Lease, such termination to be
effective as aforesaid. (d) Rent
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on Termination: If this Lease is terminated as provided in this paragraph, the
Rent shall be paid up to the date that possession is so taken by public
authority and Landlord shall make an equitable refund of any Rent paid by Tenant
in advance. (e) Award: Tenant shall not be entitled to and expressly waives all
claim to any condemnation award for any taking, whether whole or partial, and
whether for diminution in value of the leasehold or to the fee although Tenant
shall have the right, to the extent that the same shall not reduce Landlord's
award, to claim from the condemnor, but not from Landlord, such compensation as
may be recoverable by Tenant in its own right for damage to Tenant's business,
fixtures and improvements installed by Tenant at its expense.
ARTICLE IX
DEFAULT
Section 9.1 Default
Landlord may, at its option, terminate this Lease, as provided below
and take the action outlined in Paragraph 9.2 hereof, IF:
A. Tenant defaults in the payment of any Rent or any other payments
when due, and such default shall continue for Five (5) days after notice from
Landlord to Tenant; OR
B. Tenant defaults in fulfilling any of the other covenants or
obligations of this Lease on Tenant's part to be performed hereunder, and such
default has not been cured within Five (5) days after written notice from
Landlord to Tenant specifying the nature of said default; OR
C. The default so specified shall be of such a nature that the same
cannot be reasonably cured or remedied within said Five (5) day period, if
Tenant shall not in good faith have commenced the curing or remedying of such
default within such Five (5) day period and shall not thereafter diligently
proceed therewith to completion, which completion shall in no event be more than
Thirty (30) days after notice from Landlord; OR
D. Tenant shall fail to occupy the Premises on the commencement date as
fixed herein, or anytime thereafter, or shall fail to remain open for business
throughout the term of this Lease, as hereinbefore provided; OR
E. At any time during the term should there be filed by or against
Tenant or against any successor tenant then in possession, in any court,
pursuant to any statute, either of the United States or any state. a petition;
(i) In bankruptcy,
(ii) Alleging insolvency,
(iii) For reorganization,
(iv) For the appointment of a receiver or trustee,
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(v) For an arrangement under the Bankruptcy Acts, or
(vi) If a similar type of proceeding shall be filed and any such
petition or filing against Tenant has not been dismissed within a period of
twenty (20) days; OR
F. Tenant makes or proposes to make an assignment for the benefit of
creditors, OR
G. Tenant does, or permits to be done, any act which creates a
mechanic's lien or claim therefor against the Premises or the Building; OR
H. Tenant fails to furnish Landlord with a copy of any insurance policy
required to be furnished by Tenant to Landlord when due, and such default shall
continue for Thirty (30) days after written notice from Landlord, Landlord may
elect.
(i) to terminate this Lease, or
(ii) to assess and collect an administrative fee of Five Dollars
($5.00) for each day said policy has not been received in the office of Landlord
at the close of each business day.
Then the Landlord may elect to declare the entire Rent for the balance
of the term, or any part thereof, due and payable forthwith, or at the option of
the Landlord, this Lease and the term thereunder shall terminate and come to an
end on the date specified in such notice of cancellation, and Tenant shall quit
and surrender the Premises to Landlord as if the term herein ended by the
expiration of the time fixed herein, but Tenant shall remain liable as
hereinafter provided.
Section 9.2 Landlord's Rights on Default
If the notice provided shall have been given and the term shall expire
as aforesaid, or should Landlord elect to terminate this Lease, Landlord shall
have the immediate right to re-entry and may remove all persons and property
from the Premises and such property may be removed and stored in a public
warehouse or elsewhere at the cost of, and for the account of Tenant, all
without service of notice or resort to legal process, all of which Tenant
expressly waives, and Landlord shall not be deemed guilty of trespass, or become
liable for any loss or damage which may be occasioned thereby. Landlord shall
have a lien for the payment of all sums agreed to be paid by Tenant herein upon
all Tenant's property, which is to be in addition to Landlord's lien now or that
may hereafter be provided by law.
Should Landlord elect to re-enter or should it take possession pursuant
to legal proceedings or pursuant to any notice provided for by law, it may make
such alterations and repairs as may be necessary in order to relet the Premises
or any part thereof, for such term or terms (which may be for a term extending
beyond the term of this Lease) and at such rentals and upon such other terms and
conditions as Landlord, in its sole discretion, may deem advisable. Upon each
such reletting, all rentals received by Landlord from such reletting shall be
applied, first, to the payment of any indebtedness, other than Rent due
hereunder, from Tenant to Landlord; second, to the payment of any costs and
expenses of such reletting, including brokerage fees and to costs of such
alterations
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and repairs; third, to the payment of Rent due and unpaid hereunder, the
residue, if any, shall be held by Landlord and applied in payment of future rent
as the same may become due and payable hereunder. If such rentals received from
such reletting during any month be less than that to be paid during that month
by Tenant as set forth herein, Tenant shall pay any such deficiency to Landlord.
Such deficiency shall be calculated and paid monthly. Landlord shall recover
from Tenant all damages it may incur by reason of Tenant's default, including
the cost of recovering the Premises and, including charges equivalent to Rent
reserved in this Lease for the remainder of the stated term, all of which
amounts shall be immediately due and payable from Tenant to Landlord.
The parties hereby waive trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other or any
matters whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises,
and/or claim of injury or damage.
In the event of a breach by Tenant of any of the covenants or
provisions hereof, Landlord shall have, in addition to any other remedies which
it may have, the right to invoke any remedy allowed at law or in equity,
including injunctive relief, to enforce Landlord's rights or any of them, as if
re-entry and other remedies were not herein provided for.
In the event of any litigation arising out of enforcement of this
Lease, the prevailing party in such litigation shall be entitled to recovery of
all costs, including reasonable attorneys' fees.
Notwithstanding anything in this Lease to the contrary, Landlord
reserves all rights which any state or local laws, rules, regulations or
ordinances confer upon a Landlord against a Tenant in default. This article
shall apply to any renewals or extensions of this Lease.
This agreement shall be deemed to have been made in Dade County,
Florida and shall be interpreted, and the rights and liabilities of the parties
here determined, in accordance with the laws of the State of Florida.
Section 9.3 Non-Waiver Provisions
The failure of Landlord to insist upon a strict performance of any of
the terms, conditions and covenants herein shall not be deemed to be a waiver of
any rights or remedies that Landlord may have and shall not be deemed a waiver
of any subsequent breach or default in the terms, conditions and covenants
herein contained except as may be expressly waived in writing.
The maintenance of any action or proceeding to recover possession of
the Premises or any installment or installments of Rent or any other monies that
may be due or become due from Tenant to Landlord shall not preclude Landlord
from thereafter instituting and maintaining subsequent actions or proceedings
for the recovery or possession of the Premises or of any other monies that may
be due or become due from Tenant including all expenses, court costs and
attorneys' fees and disbursements incurred by Landlord in recovering possession
of the Premises and all costs and
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charges for the care of the Premises while vacant. Any entry or re-entry by
Landlord shall not be deemed to absolve or discharge Tenant from liability
hereunder.
Section 9.4 Inability to Perform
If Landlord is delayed or prevented from performing any of its
obligations under this Lease by reason of strike, labor disputes, or any cause
whatsoever beyond Landlord's reasonable control, the period of such delay or
such prevention shall be deemed added to the time herein provided for the
performance of any obligation by Landlord.
ARTICLE X
SECURITY
Section 10.1 Security Deposit
A. Tenant has deposited with Landlord the sum specified in Item 11 of
the Definitions to be retained by Landlord without liability for interest, as
security for the payment of all Rent and other sums of money which shall or may
be payable for the full stated term of this Lease, and any extension or renewal
thereof, and for the faithful performance of all the terms of this Lease to be
observed and performed by Tenant.
B. The Security Deposit shall not be mortgaged, assigned, transferred
or encumbered by Tenant without the prior written consent of Landlord and any
such act on the part of Tenant shall be without force or effect and shall not be
binding upon Landlord. If any of the Rent herein reserved or any other sum
payable by Tenant to Landlord shall be overdue and unpaid or should Landlord
make payments on behalf of Tenant, or if Tenant shall fail to perform any of the
terms of this Lease, then Landlord may, at its option and without prejudice to
any other remedy which Landlord may have on account thereof, appropriate and
apply said entire deposit or so much thereof as may be necessary to compensate
Landlord toward the payment of Rent or Additional Rent or loss or damage
sustained by Landlord due to breach on the part of Tenant; and Tenant shall
promptly upon demand restore said security to the original sum deposited. If
Tenant should be overdue in the payment of monthly Rent or other sums payable to
Landlord on at least two or more occasions during a year, Landlord, at its
option, may require Tenant to increase the amount of Security Deposit now held
by Landlord by an amount sufficient to cover at least two months Rent or greater
amount to be determined at the sole discretion of Landlord. In this event, upon
receipt of the additional security sum, Landlord and Tenant shall evidence such
receipt by a letter signed and acknowledged by both Landlord and Tenant to be
incorporated as part of this Lease amending Section A. hereof, stating the "New
Total Amount" so held without liability for any interest. Within Sixty (60) days
after the expiration of the tenancy hereby created, whether by lapse of time or
otherwise, provided Tenant shall not be in default hereunder and shall have
complied with all the terms, covenants and conditions of this Lease, including
the yielding up of the immediate possession to Landlord, Landlord shall, upon
being furnished with affidavits and other satisfactory evidence by Tenant that
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Tenant has paid all bills incurred by it in connection with its performance of
the terms, covenants and conditions of this Lease, return to Tenant said sum on
deposit or such portion thereof then remaining on deposit with Landlord as set
forth herein. In the event Tenant has not complied with all the obligations
provided for hereunder, Landlord may appropriate a part or a of the Security
Deposit as liquidated damages to satisfy Tenant's obligations.
Section 10.2 Personal Property
As additional security for the performance of Tenant's obligations
hereunder, Tenant hereby pledges and assigns to Landlord all the furniture,
fixtures', goods, inventory, stock and chattels, and all other personal property
of Tenant which are now or may hereafter be brought or put in the Premises, and
further grants to Landlord a security interest therein under the Uniform
Commercial Code. Upon default of the payment of Rent, assessments, charges,
penalties and damages herein covenanted to be paid by Tenant, and for the
purpose of securing the performance of all other obligations of Tenant
hereunder, and at the request of Landlord, Tenant hereby agrees to execute and
deliver to Landlord all financing statements, amendments thereto or other
similar statements which Landlord may reasonably request. Nothing herein
contained shall be deemed to be a waiver by Landlord of its statutory lien to
Rent and remedies, rights and privileges of Landlord in the case of default of
Tenant as set forth above and shall not be exclusive and, in addition thereto,
Landlord may also exercise and enforce all its rights at law or in equity which
it may otherwise have as a result of Tenant's default hereunder. Landlord is
herein specifically granted all of the rights of a secured creditor under the
Uniform Commercial Code with respect to the property in which Landlord has been
granted a security interest by Tenant, including, but not limited to, the right
to take possession of the above mentioned property and dispose of it by sale in
a commercially reasonable manner.
Section 10.3 Transfer of Deposit
In the event of a sale or transfer of the Building or any portion
thereof which includes the Premises, or in the event of the making of a lease of
the Building or of any portion, or in the event of a sale or transfer of the
leasehold estate under any such underlying lease, the grantor, transferror or
Landlord, as the case may be, shall thereafter be entirely relieved of all
terms, covenants and obligations thereafter to be performed by Landlord under
this Lease to the extent of the interest or portion so sold, transferred or
leased, and it shall be deemed and construed, without further agreement between
the parties and the purchaser, transferee or Tenant, as the case may be, has
assumed and agreed to carry out any and all covenants of Landlord hereunder;
provided that (i) any amount then due and payable to Tenant or for which
Landlord or the then grantor, transferor or Landlord would otherwise then be
liable to pay to Tenant (it being understood that the owner of an undivided
interest in the fee or any such lease shall be liable only for his or its
proportionate share of such amount) shall be paid to Tenant; (ii) the interest
of the grantor, transferor or Landlord, as Landlord, in any funds then in the
hands of Landlord or then grantor, transferor or Landlord in which Tenant has an
interest, shall be turned over, subject to such interest, to the then grantee,
transferee or Tenant; and (iii) notice of such sale, transfer or lease shall be
delivered to Tenant.
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ARTICLE XI
ADDITIONAL TENANT AGREEMENTS
Section 11.1 Mortgage Financing and Subordination
This Lease and all of Tenant's rights hereunder are and shall be
subordinate to the present mortgage upon the Building, as well as to any
existing ground lease, however, Tenant shall, upon request of either Landlord,
the holder of any mortgage or Deed of Trust now or hereafter placed upon the
Landlord's interest in the Premises or future additions thereto, and to any
ground lease now or hereafter affecting the Premises, execute and deliver upon
demand, such further instruments subordinating this Lease to the lien of any
such mortgage or mortgages, and such ground lease, provided such subordination
shall be upon the express condition that this Lease shall be recognized by the
mortgagees and ground lessors and that the rights of Tenant shall remain in full
force and effect during the term of this Lease and any extension thereof,
notwithstanding any default by the mortgagors with respect to the mortgages or
any foreclosure thereof, or any default by the ground lessee, so long as Tenant
shall perform all of the covenants and conditions of this Lease. Tenant agrees
to execute all agreements required by Landlord's mortgagee or ground lessor or
any purchaser at a foreclosure sale or sale in lieu of foreclosure by which
agreements Tenant will attorn to the mortgagee or purchaser or ground lessor.
Section 11.2 Assignment or Subletting
All assignments of this Lease or sublease or subleases of the Premises
by Tenant shall be subject to and in accordance with all of the provisions of
this Section.
Tenant may not assign this Lease or sublease the Premises, in whole or
in part, to a wholly-owned corporation or controlled subsidiary of Tenant or to
a party other than a wholly-owned corporation or controlled subsidiary of Tenant
without first having obtained the written consent of Landlord, such consent not
to be unreasonably withheld.
Any assignment or sublease by Tenant shall be only for the purpose
specified in Section 1.4, Use of Premises, and for no other purpose, and in no
event shall any assignment or sublease of the Premises release or relieve Tenant
from any obligations of this Lease.
In the event that Tenant shall seek Landlord's permission to assign
this Lease or sublet the Premises, Tenant shall provide to Landlord the name,
address, financial statement and business experience resume for the immediately
preceding Ten (10) years of the proposed assignee or subtenant and such other
information concerning such proposed assignee or subtenant as Landlord may
require. This information shall be in writing and shall be received by Landlord
no less than Thirty (30) days prior to the effective date of the proposed
assignment or sublease. It shall be a condition to any consent by Landlord to an
assignment or sublease that Tenant shall pay to Landlord a processing fee in the
amount of $125.00 or One Percent (1%) of the annual current value of this
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Lease, whichever is greater, as reimbursement to Landlord for any and all
legally-related expenses in connection with the review and preparation of
assignment or sublease-related documents which may be incurred by Landlord in
connection therewith. Payment of such fee shall be submitted along with Tenant's
request for Landlord's consent. Any consent by Landlord to any assignment or
sublease, or to the operation of a concessionaire or licensee, shall not
constitute a waiver or the necessity for such consent to any subsequent
assignment or sublease, or operation by a concessionaire or licensee.
If Tenant is a corporation and any transfer, sale, pledge or other
disposition of more than Ten Percent (10%) of the common stock shall occur, or
voting control or power to vote the majority of the outstanding capital stock be
changed, such action shall be deemed an assignment under the terms of this Lease
and shall be subject to all the terms and conditions thereof. Any breach of the
assignment clause by Tenant will constitute a default under the terms of this
Lease and Landlord shall have all rights and remedies available to it as set
forth herein.
In the event Tenant shall sublease the entire Premises for rentals in
excess of those rentals payable hereunder, Tenant shall pay to Landlord, as
Additional Rent hereunder, all such excess rentals.
Any proposed assignee or subtenant of Tenant shall assume Tenant's
obligations hereunder and deliver to Landlord an assumption agreement in form
satisfactory to Landlord no less than Ten (10) days prior to the effective date
of the proposed assignment.
Notwithstanding any of the foregoing provisions, if Tenant is or has
been at any time in default under any of the terms of this Lease, Tenant may not
assign or sublet the Premises in whole or in part.
Section 11.3 Tenant's Notice to Landlord of Default
Should Landlord be in default under any of the terms of this Lease,
Tenant shall give Landlord prompt written notice thereof in the manner specified
in Section 12.1, Notices, and Tenant shall allow Landlord a reasonable length of
time in which to cure such default, which time shall not in any event be less
than Thirty (30) days from the date of receipt of such notice.
Section 11.4 Short Form Lease
Tenant agrees not to record this Lease without the express written
consent of Landlord.
Section 11.5 Surrender of Premises and Holding Over
A) Tenant shall give written notice to Landlord not less than One
Hundred and Eighty (180) days nor more than Two Hundred Forty (240) days prior
to the expiration of the Lease term and each extension or renewal thereof of
Tenant's intention to: (i) vacate the Premises at the end of
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the Lease term or extension or renewal; (ii) to enter into a new lease agreement
for the Premises at terms to be negotiated by Landlord and Tenant, if no such
renewal or extension rights remain. As to (ii) above, Tenant shall deliver to
Landlord an executed copy of the new lease agreement within Thirty (30) days
after receipt of said document from Landlord. In the event that Tenant 1) fails
to notify Landlord of Tenant's intention to vacate the Premises at the
expiration of the Lease term; or 2) fails to execute a new lease agreement as
specified above, Tenant shall be in default of this Lease and Landlord shall
have the right to appropriate the entire amount of the Security Deposit as
liquidated damages and to declare this Lease terminated.
B) At the expiration of the tenancy and subject to Paragraph 11.5A,
Tenant shall surrender the Premises in good condition, reasonable wear and tear
excepted, and damage by unavoidable casualty (except to the extent that the same
is covered by Landlord's fire insurance policy with extended coverage
endorsement), and Tenant shall surrender all keys for the Premises to Landlord
at the place then fixed for the payment of Rent and shall inform Landlord of all
combinations on locks, safes and vaults, if any, in the Premises. Tenant shall
remove all its trade fixtures and any alterations or improvements, subject to
the provisions of Section 6.5, before surrendering the Premises, and shall
repair, at its own expense, any damage to the Premises caused thereby. Tenant's
obligations to observe or perform this covenant shall survive the expiration or
other termination of the term of this Lease. In the event Tenant remains in
possession of the Premises after the expiration of the tenancy created
hereunder, whether or not with the consent or acquiescence of Landlord, and
without the execution of a new lease, Tenant, at the option of Landlord, shall
be deemed to be occupying the Premises as a tenant at will on a week-to-week
tenancy and in no event on a month-to-month or on a year-to-year tenancy. The
rent during this week-to-week tenancy shall be payable weekly at twice the Fixed
Minimum Rent, and twice all other charges due hereunder, and it shall be subject
to all the other terms, conditions, covenants, provisions and obligations of
this Lease, and no extension or renewal of this Lease shall be deemed to have
occurred by such holding over. Tenant's obligations to observe or perform this
covenant shall survive the expiration or other termination of the term of this
Lease.
Section 11.6 Estoppel Certificate
Tenant agrees to provide at any time, within Ten (10) days of
Landlord's written request, a statement certifying that this Lease is unmodified
and in full force and effect or, if there have been modifications, that same are
in full force and effect as modified and stating the modifications, and the
dates to which the Fixed Minimum Rent and other charges have been paid in
advance, if any. It is intended that any such statement delivered pursuant to
this paragraph may be relied upon by any prospective purchaser or mortgagee of
the Premises.
Section 11.7 Delay of Possession
If the Landlord is unable to give possession of the Premises on the
date of the commencement of the aforesaid term by reason of the holding over of
any prior tenant or tenants or for any other reason; an abatement or diminution
of the rent to be paid hereunder shall be allowed Tenant under
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such circumstances, but nothing herein shall operate to extend the term of the
Lease beyond the agreed expiration date; and said abatement of rent shall be the
full extent of Landlord's liability to Tenant for any loss or damage to Tenant
on account of said delay in obtaining possession of the Premises.
Section 11.8 Compliance With Law, Waste And Quiet
Tenant shall comply with all governmental laws, ordinances and
regulations applicable to the use of the Premises and shall promptly comply with
all governmental orders and directives for the correction, prevention and
abatement of nuisances in, upon, or connected with the Premises, all at Tenant's
sole risk and expense. Tenant shall not commit, or suffer to be committed, any
waste upon the Premises or any nuisance, other act, or thing which may disturb
the quiet enjoyment of any other tenant in the Building in which the Premises
may be located.
Section 11.9 Rules and Regulations
Tenant's use of the Premises shall be subject, at all times during the
term of this Lease, to Landlord's right to adopt in writing, from time to time,
modify and/or rescind reasonable Rules and Regulations not in conflict with any
of the express provisions hereof governing the use of the parking areas, walks,
driveways, passageways, signs, exterior of Building, lighting and other matters
affecting other tenants in and the general management and appearance of the
Building of which the Premises are a part, but no such rule or regulation shall
discriminate against Tenant. The current Rules and Regulations are attached
hereto as Exhibit "C" and made a part hereof.
Section 11.10 Abandonment
Tenant shall not vacate or abandon the Premises at any time during the
term of this Lease, nor permit the Premises to remain unoccupied for a period
longer than Ten (10) consecutive days during the term of this Lease; and if
Tenant shall abandon, vacate or surrender the Premises, or be dispossessed by
process of law or otherwise, any personal property belonging to Tenant left on
the Premises shall, at the option of the Landlord be deemed abandoned.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 Notices
Whenever notice shall or may be given to either of the parties by the
other, each such notice shall be either delivered in person or sent by
registered or certified mail, with return receipt requested.
Notice to Landlord shall be sent to the address specified in Item 14 of
the Definitions.
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Notice to Tenant shall be sent to the address specified in Item 14 of
the Definitions.
If by mail, any notice under this Lease shall be deemed to have been
given at the time it is received by the addressee.
Section 12.2 Entire and Binding Agreement
This Lease contains all of the agreements between the parties hereto,
and it may not be modified in any manner other than by agreement in writing
signed by all parties hereto or their successors in interest. Tenant shall pay
Landlord for any and all legally-related expenses which may be incurred by
Landlord in connection with the review or preparation of all lease-related
documents including, without limitation, consents, amendments, modifications and
assignments therewith. The terms, covenants and conditions contained herein
shall inure to the benefit of and be binding upon Landlord and Tenant and their
respective heirs, successors and as-signs, except as may be otherwise expressly
provided in this Lease.
Section 12.3 Provisions Severable
If any term or provision of this Lease or the application thereof to
any person or circumstance shall, to any extent, be illegal, invalid or
unenforceable, the remainder of this Lease, or the application of such term or
provision to persons or circumstances other than those to which it is held
illegal, invalid or unenforceable shall not be affected hereby and each term and
provision of this Lease shall be valid and be enforced to the fullest extent
permitted by law.
Section 12.4 Captions
The captions contained herein are for convenience and reference only
and shall not be deemed as part of this Lease or construed as in any manner
limiting or amplifying the terms and provisions of this Lease to which they
relate.
Section 12.5 Relationship of the Parties
Nothing herein contained shall be deemed or construed as creating the
relationship of principal and agent or of partnership or joint venture between
the parties hereto; it being understood and agreed that neither, the method of
computing rent nor any other provision contained herein nor any acts of the
parties hereto shall be deemed to create any relationship between the parties
other than that of Landlord and Tenant.
Section 12.6 Accord and Satisfaction
No payment by Tenant or receipt by Landlord of a lesser amount than the
Rent herein stipulated shall be deemed to be other than on account of the
earliest stipulated Rent nor shall any endorsement or statement on any check or
any letter accompanying any check or payment as Rent
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be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
Rent or pursue any other remedy provided for in this Lease or available at law
or in equity.
Section 12.7 Broker's Commission
Tenant warrants that there are no claims for broker's commissions or
finder's fees in connection with its execution of this Lease and agrees to
indemnify and save Landlord harmless from any liability that may arise from such
claim, including reasonable attorneys' fees.
Section 12.8 Corporate Status
If Tenant is a corporation, Tenant's corporate status shall
continuously be in good standing and active and current with the state of its
incorporation and the state in which the Building is located at the time of
execution of the Lease and at all times thereafter and Tenant shall keep its
corporate status active and current throughout the term of the Lease or any
extensions or renewals. Tenant shall annually file with Landlord a current copy
of the Certificate of Good Standing under Seal. Failure of Tenant to keep its
corporate status active and current shall constitute a default under the terms
of the Lease. In the event this Lease is signed on behalf of Tenant by a person
in a representative capacity, each of the person or persons signing in such
capacity represents and warrants to the Landlord and its successors and assigns
that:
a. Their execution and delivery of this Lease has been duly and
validly authorized and all requisite actions have been taken
to make it valid and binding on the entity they represent.
THIS SPACE LEFT BLANK INTENTIONALLY
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b. The entity they represent will, on the date of the
commencement of this Lease. be duly organized, validly
existing and in good standing in the state of its organization
and entitled to conduct its business in the state where the
Premises is located.
In the event of a breach of the foregoing representations and
warranties, the person or persons signing this Lease on behalf of the Tenant
shall be personally responsible for the Tenant's obligations under this Lease.
IN WITNESS WHEREOF, Landlord and Tenant above duly executed this Lease
as of the day and year first above written, each acknowledging receipt of an
executed copy hereof.
WITNESSES: LANDLORD:
MCH MEDICAL CENTER, LTD.
By: MCH PROPERTIES, INC.,
as SOLE GENERAL PARTNER
By:
- ------------------------------- ------------------------------
MARIO E. HENRIQUEZ,
President
- ------------------------------
WITNESSES: TENANT:
COASTAL BHC, INC.
By:
- ------------------------------- ------------------------------
HANS C. MUELLER,
Chief Executive Officer
- ------------------------------
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EXHIBIT A
LEGAL DESCRIPTION
PARCEL C:
A portion of the North 3/4 of the NW 1/4 of the NW 1/4 of the NW 1/4 of Section
3, Township 55 South, Range 40 East, Dade County, Florida, being more
particularly described as follows:
Commencing at the Northwest corner of the NW 1/4 of said Section 3; thence run
South 0(0)26'35" West along the West line of the said NW 1/4 of Section 3 for a
distance of 55.00 feet to a point on the South right-of-way line of S.W. 88th
street (North Kendall Drive); thence run East along the said South right-of-way
line of S.W. 88th Street (North Kendall Drive), said right-of-way line being
parallel to the North line of the said NW 1/4 of Section 3, for a distance of
422.83 feet to the point of beginning of the parcel of land herein described;
thence from the above established point of beginning run South 0(0)26'35" West
for a distance of 276.42 feet; thence run West for a distance of 122.32 feet;
thence run South 0(0)26'35" West for a distance of 158.40 feet to a point of
intersection with the South line of the aforesaid North 3/4 of the NW 1/4 of the
NW 1/4 of the NW 1/4 of Section 3; thence run South 89(0)44'09" East along the
said line of the North 3/4 of the NW 1/4 of the NW 1/4 of the NW 1/4 of Section
3 for a distance of 138.98 feet to a point of intersection with the
northwesterly right-of-way line of S.W. 87th Avenue, said point lying on a
circular curve concave to the northwest, said point bearing South 49(0)58'28"
East from the center of said curve; thence run Northwesterly along the said
Northwesterly right-of-way line of S.W. 87th Avenue and along the arc of said
circular curve to the left having for its elements a radius of 914.93 feet and a
central angle of 28(0)29'24" for an arc distance of 454.94 feet to a point of
compound curvature with a circular curve to the left; thence to the left along
said curve having for its elements a radius of 25.00 feet and a central angle of
101(0)32'08" for an arc distance of 44.30 feet to the point of tangency, said
point lying on the aforesaid South right-of-way line of S.W. 88th Street (North
Kendall Drive); thence run West along the said right-of-way line of S.W. 88th
Street (North Kendall Drive) for a distance of 184.63 feet to the point of
beginning.
<PAGE> 34
EXHIBIT C
RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors, or halls shall not be obstructed or encumbered by any
TENANT or used for any purpose other than ingress and egress to and from the
demised premises.
2. No awnings or other projections shall be attached to the outside
walls of the building without the prior written consent of the LANDLORD. No
curtains, blinds, shades or screens shall be attached to or hung in, or used in
connection with, any window or door of the demised premises, without the prior
written consent of the LANDLORD. Such awnings, projections, curtains, blinds,
shades, screens, or other fixtures must be of a quality, type, design, and
color, and attached in the manner approved by the LANDLORD.
3. No sign, advertisement, notice, or other lettering shall be
exhibited, inscribed, painted, or affixed by any TENANT on any part of the
outside or inside or the demised premises or building without the prior written
consent of the LANDLORD. In the event of the violation of the foregoing by any
TENANT, LANDLORD may remove same without any liability, and may charge the
expense incurred by such removal to the TENANT or TENANTS violating this rule.
Interior signs on doors and directory tablet shall be inscribed, painted, or
affixed at the expense of the TENANT, and shall be of a size, color, and style
acceptable to the LANDLORD.
4. The sashes, sash door, skylights, windows, and doors that reflect or
admit light and air into the halls, passageways, or other public places in the
building shall not be covered or obstructed by any TENANT, nor shall any
bottles, parcels or other articles be placed on the windowsills.
5. The water and wash closets and other plumbing fixtures shall not be
used for any purpose other than those for which they were constructed and no
sweepings, rubbish, rags, or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by the TENANT
who, or whose servants, employees, agents, visitors, or licensees shall have
caused the same.
6. No TENANT shall mark, paint, drill into, or in any way deface any
part of the demised premises or the building of which they form a part. No
boring, cutting, or stringing of wires shall be permitted, except with the prior
written consent of the LANDLORD, and as it may direct.
7. No bicycles, vehicles, or animals of any kind shall be brought into
or kept in or about the premises, and no cooking shall be done or permitted by
any TENANT on said premises. No TENANT shall cause or permit any unusual or
objectionable odors to be produced upon or permeate from the demised premises.
8. No TENANT shall make, or permit to be made, any unseemly or
disturbing noises
<PAGE> 35
or disturb or interfere with occupants of this or neighboring buildings or
premises or those having business with them, whether by the use of any musical
instrument, radio, talking machine, unmusical noise, whistling, singing, or in
any other way. No TENANT shall throw anything out of the doors, windows, or
skylights, or down the passageways.
9. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any TENANT, nor shall any changes he made in existing
locks or the mechanism thereof. Each TENANT must, upon termination of his
tenancy, restore to the LANDLORD all keys of offices and toilet rooms, either
furnished to, or otherwise procured by, such TENANT and in the event of the loss
of any keys so furnished, such TENANT shall pay to the LANDLORD the cost
thereof.
10. All removals, or the carrying in or out of any safes, freight,
furniture, bulky matter of any description must take place during the hours
which the LANDLORD or its agent may determine from time to time. The LANDLORD
reserves the right to prescribe the weight and position of all safes, which must
be placed upon 2-inch thick plank strips to distribute the weight. The moving of
safes or other fixtures or bulky matter of any kind must be made after previous
notice to the Manager of the building. Any damage done to the building or to the
tenants or to other persons in bringing in or removing safes, furniture or other
bulky or heavy articles shall be paid for by TENANT.
11. No TENANT shall occupy or permit any portion of the premises
demised to him to be used for manufacturing or for the possession, storage,
manufacture, or sale of liquor or narcotics or as a barber or manicure shop, or
as an employment bureau, unless lease so provides. No TENANT shall engage or pay
any employees on the demised premises, except those actually working for such
TENANT on said premises, nor advertise for laborers giving and address at said
premises.
12. Each TENANT, before closing and leaving the said premises at any
time, shall see that all windows are closed. All tenants and occupants must
observe strict care not to leave their windows open when it rains, and for any
default or carelessness in these respects, or any of them, shall make good any
injury sustained by other tenants, and to the LANDLORD for damage to paint,
plastering or other parts of the building, resulting from default or
carelessness.
13. The premises shall not be used for gambling, lodging or sleeping or
for any immoral or illegal purposes.
14. The requirements of TENANTS will be attended to only upon
application at the office of the building. Employees shall not perform any work
or do anything outside of the regular duties, unless under special instructions
from the office of the LANDLORD.
15. Canvassing, soliciting, and peddling in the building is prohibited
and each TENANT shall cooperate to prevent the same.
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16. TENANT shall have the free use of the mail chutes installed in the
building, but the LANDLORD in no way guarantees the efficiency of the said mail
chutes and shall be in no way responsible for any damage or delay which may
arise from the use thereof.
17. The LANDLORD specifically reserves the right to refuse admittance
to the building after 7 p.m. daily, or on Sundays or on legal holidays, to any
person or persons who cannot furnish satisfactory identification, or to any
person or persons who, for any other reason in the LANDLORD'S judgment, should
be denied access to the premises. The LANDLORD, for the protection of the
TENANTS and their effects may prescribe hours and intervals during the night, on
Sundays and Holidays, when all persons entering and departing the Building may
be required to enter their names, the offices to which they are going or from
which they are leaving, and the time of entrance or departure in a Register
provided for that purpose by the LANDLORD.
18. The LANDLORD may retain a pass key to the leased premises, and be
allowed admittance thereto at all times to enable its representative to examine
the said premises.
19. The LANDLORD reserves the right to make such other and further
reasonable rules and regulations as in its judgment may from time to time be
needful for the safety, care and cleanliness of the premises, and for the
preservation of good order therein, and any such other or further rules and
regulations shall be binding upon the parties hereto with the same force and
effect as if they had been inserted herein at the time of the execution hereof.
20. No TENANT, nor any of the TENANT'S servants, employees, agents,
visitors, or licensees, shall at any time bring or keep upon the demised
premises any inflammable, combustible, or explosive fluid, chemical or
substance.
21. PARKING. The TENANT agrees to observe all parking rules and
regulations as established by the LANDLORD, or his Agent, also, the TENANT
agrees to cooperate to see that. all employees, clients, customers, or
suppliers, also observe the parking arrangements on all parking areas controlled
by ownership or leased by the LANDLORD.
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<PAGE> 37
COVENANT RUNNING WITH THE LAND IN FAVOR OF
METROPOLITAN DADE COUNTY
The undersigned. I.R.E. Real Estate Income Fund, Ltd. as the owner(s)
of the following described real property (hereinafter called "the Property"):
SEE ATTACHED EXHIBIT "A"
Located at 8700 NORTH KENDALL DRIVE, MIAMI, FLORIDA, pursuant to Section
24-12.1(5)(a) of the Code of Metropolitan Dade County, hereby submit(s) this
executed covenant running with the liquid in favor of Metropolitan Dade County:
The undersigned agree(s) and covenant(s) to the following:
1. Hazardous materials, shall not be used, generated, handled, disposed
of, discharged or stored on that portion of the Property within the Northwest
Wellfield protection area or within the West Wellfield Interim Protection Area
or within the basic wellfield protection area of any public utility potable
water supply well and hazardous wastes shall not be used, generated, handled,
disposed of, discharged or stored on that portion of the Property within the
average day pumpage wellfield protection area but not within the basic wellfield
protection area of the Alexander Orr Wellfield, Snapper Creek Wellfield,
Southwest Wellfield, Miami Springs Lower Wellfield, Miami Springs Upper
Wellfield, John E. Preston Wellfield or Hialeah Wellfield unless a variance is
granted by the Environmental Quality Control Board, pursuant to Chapter 24 of
the Code of Metropolitan Dade County, and if so granted; said hazardous
materials or hazardous wastes may be used, handled, generated, disposed of,
discharged or stored on the property only to the extent permitted by any such
variance from the Environmental Quality Control Board of Metropolitan Dade
County.
2. Fuels and lubricants required for rockmining operations (lake
excavations, concrete batch plants, rock crushing and aggregate plants) within
the Northwest Wellfield protection area or within the West Wellfield interim
protection area; electrical transformers serving non-residential land uses;
small quantity generators of hazardous wastes as defined in Chapter 24 of the
Metropolitan Dade County Code within the average day pumpage wellfield
protection area but not within the basic wellfield protection area of the
Alexander Orr Wellfield, Snapper Creek Wellfield, Southwest Wellfield, Miami
Springs Lower Wellfield, Miami Springs Upper Wellfield, John E. Preston
Wellfield or Hialeah Wellfield; and existing land uses required by the director
or his designee to correct violations of this chapter; shall not be prohibited
when the following water pollution prevention and abatement measures and
practices will be provided:
(i) Monitoring and detection of water pollution caused by
hazardous materials, and
(ii) Secondary containment of water pollution caused by hazardous
materials, and
(iii) Inventory control and record-keeping of hazardous materials,
and
<PAGE> 38
(iv) Stormwater management of water pollution caused by hazardous
materials, and
(v) Protection and security of facilities utilized for the
generation, storage, usage, handling, disposal or discharge of
hazardous materials.
Said water pollution prevention and abatement measures and practices shall be
subject to the approval of the director of the department of environmental
resources management or his designee.
3. The use, handling or storage of factory pre-packaged products
intended primarily for domestic use or consumption determined by the director of
the department of environmental resources management or his designee to be
hazardous materials shall not be prohibited, provided however, that:
(i) The use, handling or storage of said factory pre-packaged
products occurs only within a building, and
(ii) The non-residential land use is an office building use (or
equivalent municipal land use) or a business district use (or
equivalent municipal land use) engaged exclusively in retail
sales of factory pre-packaged products intended primarily for
domestic use or consumption, and
(iii) The non-residential land use is served or is to be served by
an operable public water main and an operable public sanitary
sewer, and
(iv) Said building is located more than thirty (30) days' travel
time from any public utility potable water supply well.
4. Prior to the entry into a landlord-tenant relationship with respect
to the Property, the undersigned agree(s) to notify in writing all proposed
tenants of the Property of the existence and contents of this Covenant.
5. The undersigned agree(s) and covenant(s) that this Covenant and the
provisions contained herein may be enforced by the Director of the Department of
Environmental Resources Management by preliminary and permanent. prohibitory and
mandatory injunctions as well as otherwise provided for by law or ordinance.
6. This agreement and Covenant shall be recorded in the Public Records
of Dade County, Florida and the provisions hereof shall constitute a Covenant
Running With the Land and shall remain in full force and effect and be binding
upon the undersigned. their heirs, legal representatives, estates, successors,
grantees and assigns.
7. This agreement and Covenant shall upon request by the undersigned be
released by the director of the Department of Environmental Resources Management
or his designee when the
-2-
<PAGE> 39
director or his designee determines that the Property is neither within the
Northwest Wellfield protection area nor within the West Wellfield interim
protection area nor within the average day pumpage wellfield protection area of
the Alexander Orr Wellfield, Snapper Creek Wellfield, Southwest Wellfield, Miami
Springs Lower Wellfield, Miami Springs Upper Wellfield, John E. Preston
Wellfield or Hialeah Wellfield nor within the basic wellfield protection area of
any public utility potable water supply well.
IN WITNESS WHEREOF, the undersigned have caused this Covenant to be
executed this____ day of ______________, 19__.
OWNER(S) I.R.E. REAL ESTATE INCOME FUND,
LTD. a dissolved Florida
limited partnership acting by
and through I.R.E. Income
Advisors, Corp., a Florida
corporation, its Managing
General Partner
- ------------------------------
By:
- ------------------------------ ------------------------------
Glen R. Gilbert
Title (if any) Senior Vice President
- ------------------------------ ------------------------------
Witnesses As to Owner(s) Title (if any)
STATE OF FLORIDA
COUNTY OF DADE
BEFORE ME, personally appeared GLEN R. GILBERT, SENIOR, VICE PRESIDENT
to me well known to be the person(s) described in and who executed the foregoing
instrument, and acknowledge to and before me that they executed said instrument
under oath, and for the purposes therein expressed.
WITNESS my hand and official seal this ____ day of ___________, 19__.
--------------------------------------------
Notary Public, State of Florida at Large
-3-
<PAGE> 40
EXHIBIT "A"
A portion of the North 3/4 of the NW 1/4 of the NW 1/4 of the NW 1/4 of Section
3, Township 55 South, Range 40 East, Dade County, Florida, being more
particularly described as follows:
Commencing at the Northwest corner of the NW 1/4 of said Section 3; thence run
South 0 degrees 26 minutes 35 seconds West along the West line of the said NW
1/4 of Section 3 for a distance of 55.00 feet to a point on the South
right-of-way line of S.W. 88th Street (North Kendall Drive); thence run East
along the said South right-of-way line of S.W. 88th Street (North Kendall
Drive), said right-of-way line being parallel to the North line of the said NW
1/4 of Section 3, for a distance of 422.83 feet to the point of beginning of the
parcel of land herein described; thence from the above established point of
beginning run South 0 degrees 26 minutes 35 seconds West for a distance of
276.42 feet; thence run West for a distance of 122.32 feet; thence run South 0
degrees 26 minutes 35 Seconds West for a distance of 158.40 feet to a point of
intersection with the South line of the aforesaid North 3/4 of the NW 1/4 of the
NW 1/4 of the NW 1/4 of Section 3; thence run South 89 degrees 44 minutes 09
seconds East along the said line of the North 3/4 of the NW 1/4 of the NW 1/4 of
the NW 1/4 of Section 3 for a distance of 138.98 feet to a point of intersection
with the northwesterly right-of-way line of S.W. 87th Avenue, said point lying
on a circular curve concave to the northwest, said point bearing South 49
degrees 58 minutes 28 seconds East from the center of said curve; thence run
Northwesterly along the said Northwesterly right-of-way line of S.W. 87th Avenue
and along the arc of said circular curve to the left having for its elements a
radius of 914.93 feet and a central angle of 28 degrees 29 minutes 24 Seconds
for an are distance of 454.94 feet to a point of compound curvature with a
circular curve to the left; thence to the left along said curve having for its
elements a radius of 25.0 feet and a central angle of 101 degrees 32 minutes 08
seconds for an arc distance of 44.0 feet to the point of tangency, said point
lying on the aforesaid South right-of-way line of S.W. 88th Street (North
Kendall Drive); thence run Wes along the said right-of-way line of S.W. 88th
Street (North Kendall Drive) for a distance of 184.63 feet to the point of
beginning.
(8700 North Kendall Drive)
<PAGE> 41
EXHIBIT "B"
SITE PLAN - OFFICE BUILDINGS FOR LENNAR CORP.
MAP
ADDENDUM TO LEASE ("LEASE")
BETWEEN MCH PROPERTIES, INC. ("LANDLORD")
AND COASTAL BHC, INC. ON BEHALF OF COASTAL COMMUNITY BANK (IN ORGANIZATION)
("TENANT")
This Addendum is hereby made a part of the referenced Lease executed on
even date hereto for property known as 4,000 square feet on the first floor of
the North end of Building C of Lennar Medical Center, 8700 North Kendall Drive,
Miami, Florida.
LANDLORD and TENANT agree that the following provisions be added to the
Lease:
1) An additional section to Article 9 of the Lease which refers to
certain requirements of the Florida Department of Banking and Finance and the
Federal Deposit Insurance Corporation with respect to regulatory takeover and
receivership:
Section 9.5 REGULATORY TAKEOVER; APPOINTMENT OF RECEIVER OR
LIQUIDATOR BY REGULATOR
Notwithstanding any other provisions contained in this lease,
in the event the Lessee is (a) closed or taken over by the banking
authority of the State of Florida, or other financial institution
supervisory authority, or (b) Lessee or its successors or assignees
shall become insolvent or bankrupt, or if it or their interests under
this lease shall be levied upon or sold under execution or other legal
process, the Lessor may terminate the lease only with the concurrence
of such banking authority or other bank supervisory authority or any
receiver or liquidator appointed by such authority, and any such
authority shall in any event have the election either to continue or to
terminate the lease: Provided, that in the event this lease is
terminated, the maximum claim of Lessor for damages or indemnity for
injury resulting from the rejection or abandonment of the Unexpired
term of the lease shall in no event be in an amount exceeding the rent
reserved by the lease, without acceleration, for the year next
succeeding the date of the surrender of the premises to the Lessor, or
the date of re-entry of the Lessor, whichever first occurs, whether
before or after the closing of the institution, plus an amount equal to
the unpaid rent accrued, without acceleration up to such date.
2) An additional section regarding signage:
Tenant shall have the right to install an illuminated,
detached sign at the entrance to the leased premises of a size no
larger than the sign currently in use by the present tenant. Such sign
will be installed at Tenant's sole expense after approval of Landlord
of the sign, its design and placement.
3) An additional section regarding parking:
Tenant shall be entitled to the exclusive use of seven (7)
parking spaces located in a separate,
<PAGE> 42
gated lot immediately adjacent to the leased premises. Tenant shall pay
Landlord, in addition to the monthly rent, the sum of $65.00 per space, per
month for a yearly total of $5,460.00
<PAGE> 43
Except as modified in this instrument the Lease remains in full force
and effect as of the day first executed.
Dated this __ day of _____________, 1998.
WITNESSES LANDLORD:
MCH PROPERTIES, INC., a Florida Corporation
By:
- ------------------------------ ---------------------------------------
Mario Henriquez, President
TENANT:
COASTAL BHC, INC., a Florida corporation
on behalf of COASTAL COMMUNITY BANK
(in organization)
- ------------------------------
By:
- ------------------------------ ----------------------------------------
Hans C. Mueller, Chief Executive Officer
<PAGE> 1
EXHIBIT 23.2
MORRISON, BROWN, ARGIZ
+ COMPANY
Certified Public Accountants
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Registration Statement of Coastal BHC, Inc. on
Form SB-2, of our report dated January 26, 1999, appearing in the Prospectus,
which is part of this Registration Statement, relating to the financial
statements of Coastal BHC, Inc. as of December 31, 1998. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
/s/ Morrison, Brown, Argiz & Company
Miami, Florida
March 11, 1999
1001 Brickell Bay Drive, 9th Floor, Miami, Florida 33131
phone 305.373.5500 fax 305.373.0056 http://www.mba-cpa.com
1600 Stout Street, Suite 1100, Denver, Colorado 80202
phone 303.615.9500 fax 303.615.9572
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 161,642
<INT-BEARING-DEPOSITS> 0
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<TOTAL-ASSETS> 175,748
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0
0
<COMMON> 5,000
<OTHER-SE> (195,574)
<TOTAL-LIABILITIES-AND-EQUITY> 175,748
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<NET-INCOME> (195,574)
<EPS-PRIMARY> (391.15)
<EPS-DILUTED> (391.15)
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