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As filed with the Securities and Exchange Commission on June 22, 1999
Registration Statement No. 333-75033
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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
(Amendment No. 1)
COASTAL COMMUNITY GROUP, INC.
(Formerly known as Coastal BHC, Inc.)
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(Name of Small Business Issuer in its Charter)
FLORIDA 6712 65-0867286
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(State or other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction ) Classification Code Number) Identification No.)
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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Mark J. Scheer, 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) 376-6040 (303) 297-2400
(Attorney for Coastal Community Group, Inc.) (Attorney for Coast Partners
Securities, Inc.)
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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 $10,000,000 $2,780
Par Value Per Per Share
Share
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Total 1,000,000 $10 $10,000,000 $2,780*
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* Previously paid.
Coastal Community Group hereby amends this registration statement on
such date or dates as may be necessary to delay its effective date until
Coastal Community Group 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 COMMUNITY GROUP, INC.
Cross Reference Sheet
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Items of Form SB-2 Prospectus Caption or Location
- ------------------ ------------------------------
PART I - INFORMATION REQUIRED IN
PROSPECTUS
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1. Front of Registration Statement and outside Facing Page of Registration Statement;
Front Cover Page of Prospectus ................... Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Pages Inside Front Cover Page;
of Prospectus..................................... 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................................. LEGAL MATTERS
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 DESCRIPTION OF CAPITAL STOCK
Indemnification for Securities Act Liabilities.... -- 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 MANAGEMENT'S DISCUSSION AND
Plan of Operation................................. ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF
OPERATION
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18. Description of Property........................... BUSINESS -- Bank Premises
19. Certain Relationships and Related MANAGEMENT; CERTAIN
Transactions ..................................... TRANSACTIONS
20. Market for Common Equity and Related SHARES ELIGIBLE FOR FUTURE
Stockholder Matters............................... 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 Not Applicable
Accounting and Financial Disclosure...........
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PART II - INFORMATION NOT REQUIRED IN
PROSPECTUS Page II - 1
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 - 3
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SUBJECT TO COMPLETION, DATED JUNE 22, 1999
INITIAL PUBLIC OFFERING
PROSPECTUS
COASTAL COMMUNITY GROUP, 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
Coastal Community Bank which will have its executive offices in Miami, Florida.
Coastal Community Bank will offer a full range of commercial and consumer
banking services.
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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 Coastal Community Group $ 9.05 $8,145,000 $ 9,050,000
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We are offering shares of common stock in minimum amounts of 250 shares
($2,500) and you may purchase a maximum of 50,000 shares ($500,000), unless we
waive these minimum and maximum requirements.
This is our initial public offering, and no public market currently exists for
our shares. The offering will end ninety (90) days after the effective date
unless we extend the offering period for additional periods of up to 90 days in
the aggregate.
The common stock is being offered on a best-efforts basis, and no common stock
will be sold unless we sell a minimum of 900,000 shares.
Until the minimum number of shares are sold and until Coastal Community Bank
receives preliminary regulatory approval, your subscriptions will be deposited
into an escrow account. See "Terms of 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 contained in this prospectus is not complete and may be
amended. 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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PROSPECTUS SUMMARY
You should read the entire prospectus carefully to fully understand
the offering. All information in this prospectus assumes that the minimum
number of shares is sold unless we indicate otherwise.
COASTAL COMMUNITY GROUP AND COASTAL COMMUNITY BANK
Coastal Community Group 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, and
will own all of the common stock of Coastal Community Bank. We will organize
Coastal Community Bank as a Florida state chartered commercial bank with
depository accounts to be insured by 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 FDIC, and the Federal Reserve Bank of Atlanta and plan
to start business in the third 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. Coastal Community Bank's address will be
8700 North Kendall Drive, Miami, Florida. Coastal Community Bank and Coastal
Community Group's temporary phone number is (305) 673-9442.
OUR PLANS FOR COASTAL COMMUNITY BANK
We seek to create a customer oriented 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 Coastal Community 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 Coastal Community
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 Coastal Community Bank to use current technology while minimizing
the costs. We expect customers to appreciate a combination of the most
innovative technology with personalized service. We expect that customers will
prefer this approach to the depersonalized environment of Coastal Community
Bank's larger competitors. See "Business - Business Strategy."
COASTAL COMMUNITY BANK'S MARKET AREA
Coastal Community Bank's primary service area for its banking services
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.
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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 Coastal Community Bank will occupy approximately
4,600 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 third quarter of 1999.
MANAGEMENT
We have hired Hans C. Mueller to serve as Chairman, President, and
Chief Executive Officer of Coastal Community Group and Coastal Community 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
Coastal Community Bank. Some officers and directors of Coastal Community Group
and Coastal Community 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.
DIVIDEND POLICY
We do not anticipate paying dividends on the common stock for the
immediately foreseeable future.
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SUMMARY
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Securities offered We are offering a maximum of 1,000,000
shares of common stock. We are requiring
that a minimum of 900,000 shares
be sold in this offering. We anticipate
that members of our board of directors and
their affiliates will purchase
approximately 187,500 shares in this
offering. See "Principal Shareholders."
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 will be $8,176,250 after
deducting Coast Partners Securities, Inc.'s
discounts, fees and the estimated offering
expenses. Our organizers have advanced
$650,000 to us to partially cover the
expense of this offering and the organizing
and pre-opening expenses of Coastal
Community Bank. Organizational expenses are
expenses related to the initial
organization of Coastal Community Bank and
include regulatory application fees, legal
and accounting fees, and salaries.
Pre-opening expenses are expenses incurred
in the establishment of Coastal Community
Bank other than for organizational matters.
These include furniture, fixtures and
equipment, construction, computer hardware,
architects' fees, data processing set up
and signage. Offering expenses are expenses
related solely to the offering of Coastal
Community Group's common stock and include
legal and accounting fees in connection
with the issuance and registration of the
common stock, dealer commissions, escrow
fees, printing costs and filing fees. After
receipt of preliminary approval by the
Department of Banking and Finance evidenced
by our receipt of the "Notice of Intent to
Approve", we will use part of the net
proceeds to repay, with interest, the funds
advanced by the organizers. Until such
approval is received, all funds shall
remain in escrow. We will invest the
balance in overnight repurchase agreements
with commercial banks secured by United
States Treasury and agency securities. Once
Coastal Community Bank is authorized to
incorporate, we will use a substantial
portion of the remaining proceeds from the
sale of the common stock to purchase all of
Coastal Community Bank's common stock for
$7.5 million.
Coastal Community Bank will use
approximately $582,000, from the proceeds
of the sale of the common stock to lease
its office space, improve real estate for
its main banking facility site, construct
its main office and purchase furniture,
fixtures and equipment and other necessary
assets for its operations. We anticipate
that the balance of the net proceeds
contributed to Coastal Community Bank will
be used to fund investments in loans and
securities and for the payment of the
operating expenses of Coastal Community
Bank.
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The remaining proceeds, if any, after our
purchase of Coastal Community Bank's common
stock, will be invested in repurchase
agreements with Coastal Community Bank
secured by United States Treasury and
agency securities. These remaining proceeds
will be held as working capital for general
corporate purposes and to pay operating
expenses as well as for possible future
capital contributions to Coastal Community
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."
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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. There may also be
other risks that we have not discussed. We have, however, disclosed all
material risk factors now known to us.
RISKS ASSOCIATED WITH DELAY OR DENIAL OF STATE OR FEDERAL REGULATORY APPROVAL
In order to operate as a bank, Coastal Community Bank must obtain
regulatory approval from state and federal bank regulatory agencies. If
regulatory approval is denied, Coastal Community Bank would not be able to
commence its banking activities and investors could lose all or part of their
investment. If regulatory approval is inordinately delayed, Coastal Community
Group's accumulated deficit will continue to increase which will reduce the
value of Coastal Community Group. Coastal Community Bank has applied for a
Florida bank charter, for deposit insurance with the FDIC, and for membership
in the Federal Reserve System. Coastal Community Group has applied to the
Federal Reserve to become a bank holding company. Approval by these agencies is
based upon a review of our application materials and upon a background
investigation of our officers and directors. These agencies may also condition
their approval upon the satisfaction of additional requirements. We may not
have received regulatory approvals when the closing of this offering takes
place. There can be no assurance that the necessary approvals will be
forthcoming or that Coastal Community Bank and Coastal Community Group could
comply with any additional requirements.
YOU MAY LOSE ALL OF YOUR INVESTMENT IF COASTAL COMMUNITY GROUP IS DISSOLVED AND
LIQUIDATED
If we satisfy the offering conditions before we receive preliminary
approval from the Florida Department of Banking and Finance, all funds shall
remain in escrow until we receive the approval. If we do not receive
preliminary approval within 180 days after the end of the offering period, as
extended, all funds will be returned to you. In such case, any interest which
may have accrued on such funds in the escrow account will be distributed to you
as equitably as possible pro rata in accordance with your subscription amount
and the length of time such amount is held in escrow. If we receive preliminary
approval, but if final approval to begin banking operations is not granted
within 18 months after the receipt of Florida Department of Banking and Finance
preliminary approval, or if we are unable to commence business for some other
reason, we will ask the shareholders to approve our dissolution and
liquidation. If this happens, we will return your investment, less all expenses
incurred by us, including the expenses of the offering, the organizational and
pre-opening expenses of Coastal Community Group and Coastal Community Bank, and
claims of creditors. If we liquidate, the organizer's loans will be paid back
to our organizers before any proceeds are returned to you. As a result, funds
returned to you, if any, will be reduced or possibly completely depleted. Our
expenses and potential
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losses will increase if preliminary approval and/or the opening of Coastal
Community Bank is delayed. See "Return of Proceeds to Investors If Coastal
Community Bank, Inc. Does Not Open For Business."
WE MAY BE UNABLE TO OPEN FOR BUSINESS IF WE CANNOT OCCUPY OUR LEASED FACILITIES
We expect to begin operations in our leased facility in the third
quarter of 1999, but there can be no assurance as to when, if at all, this will
occur. Whether we open for business is dependent upon our ability to occupy the
leased premises. If Coastal Community Bank is unable to open for business,
investors may lose all or part of their investment. 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. Before we undertake
the leasehold improvements and construction needed to operate a bank, we must
obtain 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.
DELAYS IN STARTING BUSINESS WILL INCREASE OUR DEFICIT
As of April 30, 1999, our accumulated deficit was $387,364 and we will
continue to incur pre-opening expenses until Coastal Community 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 Coastal Community Bank's
proposed premises, salaries and other administrative and professional expenses
continue to be incurred.
WE MAY BE UNABLE TO OPEN FOR BUSINESS IF WE ARE UNABLE TO STAFF COASTAL
COMMUNITY BANK
In order to operate, we must hire experienced personnel to run the day
to day operations of Coastal Community Bank. If we are unable to hire an
experienced staff, we will not be able to open for business. Coastal Community
Bank anticipates that in addition to Mr. Mueller, it 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 employees,
and one loan and other operations staff member. There can be no assurance that
Coastal Community Bank will be able to hire a staff sufficient to operate
Coastal Community Bank.
WE ARE A NEW BUSINESS WITH NO OPERATING HISTORY
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 Coastal Community Group and have only recently applied for the necessary
regulatory approvals to establish Coastal Community 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.
WE EXPECT SIGNIFICANT LOSSES FOR AT LEAST TWO YEARS
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. Our profitability will depend primarily upon
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Coastal Community Bank's operations and there is no assurance that Coastal
Community Bank will ever operate profitably.
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 Coastal Community Bank.
As of April 30, 1999, approximately 12 branch bank offices are located
within the primary service area. See "Business - General" and "Business --
Market Area." Many of these financial institutions aggressively compete for
business in the primary service area. 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 Coastal Community
Bank. Coastal Community Bank will have only one location when it commences
business and this may put Coastal Community Bank at a competitive disadvantage
with respect to competitors which 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 Coastal Community 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 will likely need additional capital beyond that which will be
provided by this offering and any amounts likely to be generated by Coastal
Community 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. If additional capital is not generated any expansion will be
delayed or canceled and this may affect book value per share. Regulatory
capital requirements and borrowing restrictions may have the effect of
constraining future growth. We do not, however, expect to need additional
capital in the next 12 months to open for business.
FUTURE SALES OF STOCK MAY DILUTE YOUR INTEREST
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.
RISKS ASSOCIATED WITH FEDERAL, ECONOMIC AND MONETARY POLICY MAY AFFECT OUR
ABILITY TO ATTRACT DEPOSITS, MAKE LOANS AND ACHIEVE SATISFACTORY INTEREST RATE
SPREADS
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 Coastal Community 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."
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WE DEPEND ON HANS C. MUELLER AND HE WOULD BE DIFFICULT TO REPLACE
We are dependent upon the services of Mr. Mueller, the Chairman of the
Board and Chief Executive Officer of Coastal Community Group and Coastal
Community Bank. The loss of Mr. Mueller could adversely affect the operations
of Coastal Community Group and Coastal Community 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
Coastal Community Group for the possible loss of his services. See "Business -
Employees" and "Management."
RISKS ASSOCIATED WITH CREDIT LOSSES
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 our stock may decrease. We expect to focus on
small-to-medium sized businesses, which may result in a larger concentration by
Coastal Community 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 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.
LENDING LIMITS MAY ADVERSELY AFFECT OUR ABILITY TO ATTRACT LARGE CUSTOMERS
Because of lending limits, the size of the loans which Coastal
Community Bank 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. 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 we may make to
any one borrower and 25% of capital or $1,875,000 on secured loans that we may
make to any one borrower. The board of directors of Coastal Community Bank 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. We expect to accommodate loan
volumes larger than our lending limit by selling participation 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 participation in such loans on terms favorable to
us.
OUR BUSINESS WILL BE HEAVILY CONCENTRATED ON LOANS TO THE HEALTHCARE INDUSTRY
The business economy of Coastal Community Bank's primary service area
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 Coastal Community Bank's primary service area 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."
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RISKS ASSOCIATED WITH INTEREST RATE FLUCTUATION AND ECONOMIC DOWNTURN
The profitability of financial institutions, including Coastal
Community 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
that we earn on investments and loans and the interest rates that we pay 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 Coastal Community 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 Coastal
Community Bank's portfolio
A DECLINE IN THE MIAMI-DADE COUNTY 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 Coastal Community 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.
FAILURE TO UPDATE BANKING COMPUTER TECHNOLOGY MAY NEGATIVELY AFFECT OUR BUSINESS
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 our
customers. 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. See "Business - Business Strategy."
8
<PAGE> 14
WE FACE RISKS RELATING TO YEAR 2000 COMPLIANCE
There can be no assurance that Coastal Community 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 Coastal Community Bank. 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 A00" as A1900" instead of
A2000." As a result, many computers and computer dependent systems may produce
errors or cease to function all together. We will obtain certification from our
vendors and suppliers of computer hardware and software that all of our systems
will be Year 2000 compliant. Coastal Community 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.
See "Business- Year 2000."
ANTI-TAKEOVER PROVISIONS MAY LOWER THE PRICE YOU RECEIVE FOR YOUR STOCK
Anti-takeover provisions in our articles of incorporation may have the
effect of delaying or preventing a change in control of Coastal Community Group
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 Coastal Community Group.
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 of Coastal Community Group to issue shares of
preferred stock, with such rights as the directors may determine upon issuance.
See "Description of Capital Stock - Certain Anti-Takeover Provisions."
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 Coastal Community Bank for funds to pay dividends on our
common stock, if and when such dividends are declared. Coastal Community 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 Coastal Community 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, See "Dividend Policy."
WE HAVE INDEMNIFIED OUR DIRECTORS AS FULLY AS POSSIBLE AND THIS MIGHT RESULT IN
A CHARGE AGAINST EARNINGS
Our articles of incorporation and bylaws provide for the
indemnification of officers and directors and insulate 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 to provide
them with the maximum possible
9
<PAGE> 15
protection in order to attract officers and directors with the proper
background in banking and healthcare. It is possible that the indemnification
obligations imposed under our articles of incorporation and bylaws and
indemnification 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. 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 AND LOWER THE PRICE YOU
RECEIVE FOR YOUR STOCK
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 receiving a higher
price for our common stock from a potential acquirer. See "Principal
Shareholders."
BECAUSE WE EXPECT A LIMITED TRADING MARKET, AS A START-UP COMPANY, IT MAY BE
DIFFICULT FOR YOU TO RESELL YOUR STOCK
A public trading market may not develop or may develop slowly which
may make it difficult to resell your stock. You should carefully consider the
potentially illiquid and long-term nature of your investment in the shares
being sold in this offering. Prior to this offering, there has been no public
trading market for our common stock and the offering price of $10 per share has
been determined by negotiations between us and Coast Partners Securities, Inc.
and may be greater than the market price for the common stock following this
offering. Coast Partners Securities, Inc. has advised us that, upon completion
of this offering, either it or its syndicate members intend 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 Coastal Community Group,
Coastal Community 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.
Coast Partners Securities, Inc. 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.
10
<PAGE> 16
RECENT DEVELOPMENTS
Since April 30, 1999, the date of Coastal Community Group's most
recent audited financial statements, Coastal Community Group has continued to
incur organizational and offering expenses. As of April 30, 1999, Coastal
Community Group's accumulated deficit was $387,364. The expenses incurred
relate to salaries, filing fees, supplies, and legal and other professional
fees incurred in the organization of Coastal Community Bank, the regulatory
application process and in connection with this offering. On March 10, 1999,
our organizers advanced an 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
some pre-opening expenses of Coastal Community Bank.
TERMS OF THE OFFERING
Coastal Community Group is offering 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 initial investor. Individual investors, other than
the organizers, may subscribe for up to a maximum of 50,000 shares in the
offering period. The purchase price of $10.00 per share shall be paid in full
upon the closing of the offering. Coastal Community Group will offer the shares
to the public for a period of 90 days, unless extended by Coastal Community
Group in its sole discretion for additional periods of up to 90 days in the
aggregate.
The offering conditions, which may not be waived, are as follows:
(a) Subscriptions for a minimum of 900,000 shares shall be received,
and not less than $9,000,000 in subscriptions shall be received, during the
offering period, as the same may be extended; and
(b) Coastal Community Group shall not have terminated this offering
prior to the closing of the offering.
All funds raised during the offering period, as extended, shall be
held in escrow by SunTrust Bank, Miami, Florida as escrow agent. If less than
$9,000,000 is raised during the offering period, as extended, the offering will
be canceled and all funds shall be returned promptly to investors. In addition
to the foregoing offering conditions, if the minimum of $9,000,000 is raised
during the offering period, as extended, but Coastal Community Bank has not
received preliminary approval from the Florida Department of Banking and
Finance, evidenced by our receipt of the "Notice of Intent to Approve" our
application, all funds shall remain in escrow, and the closing shall not occur,
until such approval is granted. If Coastal Community Bank does not receive
preliminary approval within 180 days after the end of the offering period, as
extended, the offering will be canceled and all funds will be returned in full
to investors. In the event that the escrowed subscription funds are returned to
investors because any of the above conditions are not satisfied within the
specified time periods, any interest which may have accrued on such funds in
the escrow account will be distributed to investors as equitably as possible
pro rata in accordance with each investor's subscription amount and the length
of time such amount is held in escrow. In the event the conditions are
satisfied and the closing occurs, any and all interest which may have accrued
on such funds will be retained by Coastal Community Group.
If Coastal Community Bank is granted preliminary approval but
subsequently fails to receive final approvals to begin banking operations
within 18 months after the receipt of the preliminary approval or subsequently
fails to commence business, all remaining funds shall be returned to investors,
after we have paid organizational and pre-opening expenses and the costs of the
offering. See Risk Factors - "You may lose all of your investment if Coastal
Community Group is dissolved and liquidated" and "Return of Proceeds to
Investors If Coastal Community Bank, Inc. Does Not Open for Business." Coastal
Community Group may cancel this offering for any reason at any time prior to
the closing of this offering.
11
<PAGE> 17
We can give no assurance that proceeds from the sale of the common
stock can or will be invested at the highest rate of return available or that
any income will be realized from the investment of funds.
<TABLE>
<CAPTION>
USE OF PROCEEDS
SUMMARY TABLE OF USE OF PROCEEDS
- -----------------------------------------------------------------------------------------
A B
Min. Max
---------- ----------
<S> <C> <C>
Net Proceeds(1): $8,176,250 $9,081,250
========== ==========
1) Invested in Bank:
Organizational Expenses:
Compensation $ 120,000 $ 120,000
Regulatory Application Fees 15,000 15,000
Accounting and Legal Fees 90,000 90,000
Other 75,000 75,000
---------- ----------
Total Organizational Expenses 300,000 300,000
Leasehold improvements 250,000 250,000
Furniture, Fixtures & Equip. 200,000 200,000
First year occupancy expense 115,000 115,000
Loans 3,000,000 3,000,000
Investments 2,000,000 2,000,000
Working Capital 1,635,000 1,635,000
---------- ----------
Total Invested in Bank 7,500,000 7,500,000
2) Remaining in Coastal Community Group
Working Capital $ 676,250 $1,581,250
---------- ----------
TOTAL NET PROCEEDS $8,176,250 $9,081,250
========== ==========
</TABLE>
(1) The net proceeds are net of offering commissions which are $723,750 and
$818,750 respectively for minimum and maximum results of the offering, assuming
that officers, directors and affiliates purchase an aggregate of 187,500 shares
in the offering, and offering expenses of $100,000 with respect to both the
minimum and maximum results of the offering. The offering expenses include up
to a maximum of $50,000 of reimbursement expenses paid to Coast Partners
Securities Inc.
Upon receipt of regulatory approval to incorporate Coastal Community
Bank, $7.5 million of the net proceeds of this offering will be invested by
Coastal Community Group in shares of common stock of Coastal Community Bank to
provide Coastal Community Bank's initial capitalization. If such regulatory
approval is not obtained, but Coastal Community Bank has received preliminary
approval from the Department of Banking
12
<PAGE> 18
and Finance evidenced by our receipt of "Notice of Intent to Approve" our
application, the net proceeds, less organizational and pre-opening expenses of
Coastal Community Group and Coastal Community Bank will be returned to
investors. If such preliminary approval is not obtained all funds will be
returned to investors. See Risk Factors - "You may lose all of your investment
if Coastal Community Group is dissolved and liquidated" and "Return of Proceeds
to Investors If Coastal Community Bank, Inc. Does Not Open for Business."
Coastal Community Bank expects to use approximately $300,000 for organizational
expenses and $565,000 to lease, improve, furnish and equip the permanent
premises in which Coastal Community Bank will be located. The remaining amount
of $6,766,250 will be used by Coastal Community Bank to fund investments in
loans and U.S. government and agency securities, and for working capital.
A total of approximately $650,000 has been advanced by an affiliate of
one of the organizers to Coastal Community Group to cover expenses of
organizing Coastal Community Bank and 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 Coastal Community Bank with $7.5 million, is
estimated to be approximately $1,581,250 ($676,250 if the minimum number of
shares is sold). Such amounts will initially be invested by Coastal Community
Group in overnight repurchase agreements with commercial banks secured by U.S.
Treasury and agency securities and otherwise will be held by Coastal Community
Group as working capital for general corporate purposes as well as for possible
future capital contributions to Coastal Community Bank to support asset growth.
Such uses by Coastal Community Group, however, may be subject to change.
Coastal Community Group believes that the net proceeds of the offering will
satisfy Coastal Community Group's cash requirements for at least the first
12-month period following the opening of Coastal Community Bank.
Coastal Community Group's organizers also have indicated their present
intention to purchase shares of common stock in this offering. See "Principal
Shareholders."
RETURN OF PROCEEDS TO INVESTORS IF COASTAL COMMUNITY BANK, INC.
DOES NOT OPEN FOR BUSINESS
We expect to open for business upon receipt of final approval from the
Florida Department of Banking and Finance. We expect the Florida Department of
Banking and Finance to approve our application after completing its
investigation. We will need the approval of the FDIC and the Federal Reserve
Bank of Atlanta before we will be able to commence operations. There can be no
assurance that the Florida Department of Banking and Finance will grant either
preliminary or final approval or that the approvals of the FDIC or of the
Federal Reserve Bank of Atlanta will be granted.
After receipt of preliminary approval, we expect to complete the
construction of the banking premises in order to be ready to open for business.
There can be no assurance that the construction will be successfully completed.
If final approval is not granted in a timely manner or if the opening of
Coastal Community 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 Coastal Community Bank.
If the board determines that continued efforts would be futile, we
will ask the shareholders to approve the dissolution and liquidation of Coastal
Community Group. If this happens, we will return your investment, less all
expenses incurred by us up to that point including the expenses of the
offering, the organizational and pre-opening expenses of both Coastal Community
Group and Coastal Community Bank, and any claims of creditors. If Coastal
Community Bank's application is denied before it receives preliminary approval
evidenced by our receipt of the "Notice of Intent to Approve" our application,
all funds shall be returned to investors.
13
<PAGE> 19
After the offering and before Coastal Community Bank receives final
approvals from the Florida Department of Banking and Finance and the FDIC to
commence banking operations, the proceeds from this offering will be available
for organizational and pre-opening expenses of Coastal Community Group and
Coastal Community Bank and for the offering expenses. As a result, if we
liquidate, you would receive a return of only a portion of your investment due
to the foregoing expenses and would suffer a significant loss.
We expect to obtain preliminary approval on or about August 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 Coastal
Community 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.
Assuming that officers, directors and affiliates purchase an aggregate
of 187,500 shares in the offering, we expect that Coast Partners Securities,
Inc.'s discounts and commissions will be within a range between $723,750 to
$818,750. The minimum and maximum range will decrease if more than 187,500
shares are purchased by officers, directors, affiliates or investors identified
by Coastal Community Group (up to a maximum of 400,000 shares).
In addition, we expect that the offering expenses and expenses
incurred in organizing Coastal Community Group will total approximately
$100,000. These expenses include legal and accounting fees, financial printing
costs, filing fees, and other expenses associated with the offering and the
initial operations of Coastal Community Group.
In the period between the time that we obtain preliminary approval and
the time when the Bank opens for business, we expect to incur pre-opening
expenses of approximately $550,000. These expenses include the expenses for
interior construction including architects' and design fees, construction costs
and furniture, fixtures and equipment, the cost of Coastal Community Bank's
data processing system, the installation of a local area network computer
system, rental expense, salaries, additional legal fees, and other expenses
required to allow Coastal Community Bank to open for business and operate.
If Coastal Community 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 you would be at risk that would not be returned
to you if Coastal Community Bank failed to open would be $1,800,000 or
approximately 18% of an expected investment of $10,000,000. It is possible that
your loss could exceed this estimate.
DIVIDEND POLICY
Coastal Community Group initially expects that all its earnings and
Coastal Community Bank's earnings, if any, will be retained to finance the
growth of Coastal Community Group and Coastal Community Bank and that no cash
dividends will be paid for the foreseeable future. If and when dividends are
declared, Coastal Community Group will probably be largely dependent upon
dividends paid by Coastal Community Bank for funds to pay dividends on the
common stock. It is also possible, however, that Coastal Community Group will
pay dividends in the future generated from investment income and other
activities of Coastal Community Group Under federal regulation, Coastal
Community Bank will be restricted as to the maximum amount of dividends it may
pay on its common stock. Moreover, the approval of the Florida Department of
Banking and Finance is required for the payment of any dividend if the
aggregate amount of all dividends paid by Coastal Community Bank during such
calendar year would exceed the sum of:
(a) the total net profits of Coastal Community Bank for that year; and
14
<PAGE> 20
(b) the retained net profits of Coastal Community Bank for the
previous two years less any amounts required to be transferred to surplus.
The Florida Department of Banking and Finance and the FDIC are also
authorized under circumstances to prohibit the payment of dividends by Coastal
Community 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
Coastal Community Group'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 Coastal Community
Group as of April 30, 1999, and as adjusted to reflect the sale of the shares
of common stock offered hereby (assuming the maximum number of shares is sold):
<TABLE>
<CAPTION>
APRIL 30, 1999
---------------------------------------------
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
(1,000,500 shares as adjusted) $ 5 $10,005
Preferred Stock, $.01 par value, 2,000,000 shares
authorized; no shares issued or outstanding
-none- -none-
Additional paid-in capital 4,995 9,076,245(2)
Accumulated deficit (3) (387,364) (387,364)
--------- ----------
Total stockholders' equity $(382,364) $8,698,886
========= ==========
</TABLE>
- -------------------
(1) Does not include 200,000 shares of common stock issuable upon exercise
of outstanding options under Coastal Community Group's incentive stock
option plan and 200,000 shares of common stock issuable under options
and warrants granted to Coastal Community Group's organizers. See
"Management - Incentive Stock Option Plan" and "Management -
Organizers' Warrants."
(2) After deducting offering discounts and commissions of $818,750 to
Coast Partners Securities, Inc. and other offering costs of
approximately $100,000.
(3) The accumulated deficit as of April 30, 1999, is comprised primarily
of aggregate organizational and offering 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 Coastal Community Group. The accumulated deficit will
continue to increase prior to the start of Coastal Community Bank's
operations, and will then increase further as Coastal Community Bank
incurs expected initial operating losses. Coastal Community Bank will
hire additional employees prior to opening and then will incur further
15
<PAGE> 21
salary expenses and training costs. Coastal Community Group 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
Coastal Community Group is still in a development stage and will
remain in that stage until the offering of Coastal Community Group's common
stock is completed and Coastal Community Bank starts operating. Coastal
Community Group has funded its start-up and organization costs through $650,000
in advances from the organizers to Coastal Community Group. 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 Coastal Community Bank receives final approvals from the
Florida Department of Banking and Finance and the FDIC to begin banking
operations, but will be available for organizational and pre-opening expenses
of Coastal Community Group and Coastal Community Bank. Coastal Community Group
believes that the remaining net proceeds of the offering will satisfy Coastal
Community Group's cash requirements for at least the first 12-month period
following the opening of Coastal Community Bank. Accordingly, Coastal Community
Group does not anticipate that it will be necessary to raise additional funds
for the operation of Coastal Community Group and Coastal Community 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 employees following the opening of Coastal Community Bank, see
"Business-Employees." For additional information about the plan of operations
for Coastal Community Group and Coastal Community Bank, see "Business" and
"Management." For a discussion of Year 2000 issues, see Risk Factors - We face
risks relating to Year 2000 compliance" and "Business - Year 2000."
BUSINESS
GENERAL
Coastal Community Group was incorporated under the laws of the State
of Florida on October 6, 1998 and filed a name change amendment to become
Coastal Community Group on May 6, 1999. Coastal Community Group was formed to
own all of the common stock of Coastal Community Bank and to engage in the
business of a bank holding company under the Federal Bank Holding Company Act
of 1956.
Coastal Community 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. Coastal Community Bank intends to
offer a full range of commercial and consumer banking services primarily within
its designated primary service area which 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.
Coastal Community Group and Coastal Community Bank have applied or
will, at the appropriate time, apply for all necessary regulatory approvals.
Assuming that Coastal Community Bank and Coastal Community Group receive the
regulatory approvals, and successfully complete this offering, Coastal
Community Group and Coastal Community Bank anticipate starting business in the
third quarter of 1999 at 8700 North Kendall Drive, Miami, Florida. Coastal
Community Bank expects to receive Florida Department of Banking and Finance
preliminary approval on or about August 1, 1999 which is only an estimate and
is subject to many factors inherent in the regulatory approval process.
16
<PAGE> 22
Coastal Community 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 Florida Department of Banking and Finance 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 Florida
Department of Banking and Finance has completed its investigation with respect
to the information contained in the application and has determined that Coastal
Community Bank is ready to commence business.
In addition to approval by the Florida Department of Banking and
Finance, Coastal Community Bank must receive approval from the FDIC in order to
obtain deposit insurance and approval from the Federal Reserve Bank of Atlanta
for membership in the Federal Reserve System. Coastal Community Group also must
receive approval from the Federal Reserve Bank of Atlanta to operate as a
registered bank holding company. See "Risk Factors - Risks associated with
delay or denial of state or federal regulatory approval." Coastal Community
Group currently maintains its offices at 255 Palm Avenue, Miami Beach, Florida
33139. Coastal Community Group's telephone number is (305) 673-9442.
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 Coastal Community Group'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 Coastal Community Group
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. Coastal Community
Group 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. Coastal Community Bank
will seek to take advantage of this opportunity by emphasizing in its marketing
plan its local management and its ties and commitment to the local community.
Coastal Community Group and Coastal Community 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, Coastal Community 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, Coastal Community Bank intends to hire two additional
experienced individuals to serve as Senior Vice Presidents of Coastal Community
Bank. One Vice President will serve as Coastal Community Bank's Senior Lending
Officer and the second Senior Vice President will serve as Coastal Community
Bank's Senior Operations Officer. The Senior Lending Officer will be an
individual with experience in that capacity
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within Coastal Community Bank's market area while the Senior Operations Officer
will have bank operations experience with community banks in the Miami-Dade
Florida area.
Coastal Community Bank plans to encourage its employees to be active
in civic, charitable and social organizations in the local communities. Most of
Coastal Community Group's directors currently hold, and have held in the past,
leadership positions in a number of community organizations, and intend to
continue this active involvement in future years. Other members of the
management team will also be encouraged to volunteer for such positions.
Coastal Community Group's goal is to create a customer oriented
organization focused on providing high value to customers by promptly
delivering products and services matched directly to their needs. Coastal
Community Bank will strive to establish a high standard of quality in each
service it provides and the employees of Coastal Community Bank will be
expected to emphasize service in their dealings with customers. Because Coastal
Community 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 combination of technology and personal service to be appealing to
customers.
When it opens, Coastal Community Bank plans to undertake a marketing
campaign using an officer calling program and community-based promotions. The
campaign will emphasize Coastal Community Bank's independence, local management
and special focus on customer service. All employees will be expected to
actively market Coastal Community Bank's services.
Coastal Community 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 of Coastal Community Bank will establish an
"in-house" limit that will be somewhat lower than Coastal Community 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 Coastal Community Bank to seek relationships with the area's larger
businesses. However, in light of senior management's previous experience and
their relationships with a number of the region's other financial institutions,
Coastal Community Bank may originate loan volumes in excess of its lending
limit and sell participation in such loans to other banks. Likewise, it is
quite possible that Coastal Community Bank will purchase participation from
other area institutions. See "Risk Factors - Lending limits may adversely
affect our ability to attract large customers."
PRODUCTS AND SERVICES
Coastal Community 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, Coastal Community Bank's employees will be available to
customers wishing to make appointments outside traditional banking hours,
either at Coastal Community Bank or at the customers' homes or businesses. By
providing "appointment banking," Coastal Community Bank intends to demonstrate
its high level of responsiveness and service to its customers.
Coastal Community 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. Coastal Community Bank intends to solicit these
accounts from individuals, businesses, associations, organizations, financial
institutions and government authorities. It does not intend to accept brokered
deposits. Coastal Community Bank may
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also use alternative funding sources as needed, including advances from Federal
Reserve Banks, conduit financing and the packaging of loans for securitization
and sale.
Coastal Community Bank will offer a range of short to intermediate
term personal and commercial loans as well as real estate loans. Coastal
Community Bank expects that the percentage mix of the loan portfolio to be 40%
real estate loans, 9% personal loans and 51% commercial loans.
Coastal Community 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. Coastal Community Bank plans to retain substantially all
of these loans. Coastal Community 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. Coastal Community Bank expects that any fixed rate
residential mortgage loans it generates will be sold to third party investors,
although Coastal Community Bank may continue to service some of the loans for a
fee. Coastal Community 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.
Coastal Community 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 Coastal Community Bank has been
involved in discussions with a number of vendors regarding the provision of
such services, Coastal Community Bank does not expect to make final decisions
about the service providers until approximately 60 days before it opens for
business. Coastal Community 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 Coastal Community 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 Coastal Community Bank. Coastal
Community Bank is in the process of discussing arrangements with potential data
processing companies.
ASSET/LIABILITY MANAGEMENT
Coastal Community Group and Coastal Community 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 Coastal Community
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 Coastal Community
Bank will seek to invest the largest portion of its assets in commercial,
consumer and real estate loans. Bank management also will view Coastal
Community Bank's investment portfolio as a source of liquidity and as a means
to balance its asset/liability mix. Coastal Community Bank will invest
primarily in obligations of the United States or obligations guaranteed as to
principal and interest by the Unites States, or other taxable securities and in
certain obligations of states and municipalities. Coastal Community 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.
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Coastal Community 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 Coastal Community
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 Coastal Community 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.
Coastal Community Bank anticipates that the primary service area 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 primary service
area 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 primary service area range
from $225,000 to $2,500,000. The primary service area 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 primary service area also contains various major retail shopping
malls and strip shopping centers. In the central portion of the primary service
area 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, a new mall has opened known as the Shops of Sunset. From the northern
boundary of the primary service area to the southern boundary of the primary
service area 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 primary service area.
The primary service area 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.
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The area immediately surrounding the proposed location of Coastal
Community 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 primary service area and the areas immediately
beyond the boundaries of the primary service area. 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
Coastal Community Bank's intended market area is highly competitive.
There are currently 11 banks and thrifts with 12 offices in the primary service
area. Coastal Community 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 Coastal Community 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 Coastal Community
Bank. Because of this, Coastal Community Bank's competitors can offer certain
services, including multiple branches and international banking services, that
Coastal Community 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 Coastal Community 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 Coastal Community
Bank's proposed location. Large regional banks with branches in the primary
service area include SunTrust, 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 primary service area have operations at more than one
location. Coastal Community Bank will have only one location when it commences
business and this may put Coastal Community Bank at a competitive disadvantage
with respect to banks with several branches either locally or regionally.
Coastal Community Group anticipates that Coastal Community 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 its clients in excess
of this amount will be met through loan participation arrangements with
correspondent banks and others.
BANK PREMISES
Coastal Community Group 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
if we cannot occupy our leased facilities." The terms of the lease provide for
the lease of 4,600 square feet of space for five years at $115,000 per year
payable monthly at $9,583.33 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 construction costs totaling
approximately $250,000 and total costs for equipment and furnishings for the
leased premises totaling approximately $200,000. Coastal Community Group has
not entered into any
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agreement with respect to the foregoing expenditures and, accordingly, the
amounts actually incurred by Coastal Community Group may exceed these
estimates.
EMPLOYEES
Coastal Community 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. 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 Coastal Community Group and Coastal Community
Bank and, commencing in September 1998, has been receiving a monthly salary of
$10,000. See Management - "Compensation of Management." Coastal Community Group
also anticipates that Coastal Community Bank will hire two experienced
individuals to serve as Senior Vice Presidents of Coastal Community Bank. One
Vice President will serve as Coastal Community Bank's Senior Lending Officer
and the second Vice President will serve as Coastal Community Bank's Senior
Operations Officer. Coastal Community Group and Coastal Community Bank
anticipate that the Senior Lending Officer will be an individual with
experience in that capacity within Coastal Community Bank's market area while
Coastal Community Group and Coastal Community 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 Coastal
Community Bank.
Coastal Community Group does not anticipate a problem in finding
qualified employees due in part to recent bank consolidation which has resulted
in additional experienced personnel seeking employment. Company management
anticipates that Coastal Community Bank 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. Coastal Community Bank plans to employ
as its officers and employees primarily persons from its market areas who have
experience in banking. Coastal Community Bank intends to pay competitive
salaries to attract and retain such officers and employees.
YEAR 2000
Coastal Community Group recognizes that despite its and Coastal
Community Bank's efforts to avoid the possible consequences of Year 2000
issues, those issues may have a material effect upon it and Coastal Community
Bank. Coastal Community Bank will obtain certification from its data processing
provider that of the computer hardware and software to be provided to Coastal
Community Bank for its operations will be Year 2000 compliant. Additionally,
Coastal Community Bank will 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. Coastal Community Bank will
require such certification with respect to all computer hardware and software
comprising of information technology systems as well as with respect to
non-information technology 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, Coastal Community Bank will
obtain representations from borrowers and other customers, where applicable,
that their businesses are Year 2000 compliant.
Coastal Community Bank expects that due to its small size, its staff
will be able to operate manually, without computers 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.
Coastal Community Bank expects to have a written contingency plan in place
prior to opening which will detail the procedures for its manual operation.
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Coastal Community 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 third quarter of 1999 with new systems and equipment
that are Year 2000 compliant and will not require upgrading or reprogramming.
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 Coastal
Community Group and Coastal Community 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 Coastal Community Group
and Coastal Community Bank. Any change in the applicable law or regulation may
have a material effect on the business and prospects of Coastal Community Group
and Coastal Community 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
Coastal Community Group is a bank holding company which will seek to
become registered with the Federal Reserve under the Federal Bank Holding
Company Act of 1956 and is subject to the supervision, examination and
reporting requirements of the Federal Bank Holding Company Act of 1956 and the
regulations of the Federal Reserve. Coastal Community Group 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 Federal Bank Holding Company Act of 1956. The Federal Bank
Holding Company Act of 1956 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 Federal Bank Holding Company Act of 1956 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
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, both of
which are discussed below.
The Federal Bank Holding Company Act of 1956 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
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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 Community Reinvestment Act
of 1977. Under the terms of the Community Reinvestment Act of 1977, 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 lowand 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.
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
Coastal Community Bank will seek to be chartered by the Florida
Department of Banking and Finance under Florida law and will seek to be a
Federal Reserve member. Coastal Community Bank's deposits will be insured by
the FDIC to the extent provided by law. Coastal Community Bank will be subject
to comprehensive regulation, examination and supervision by the Florida
Department of Banking and Finance and the Federal Reserve. Coastal Community
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;
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- 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.
Coastal Community Bank will be examined periodically by the Florida
Department of Banking and Finance and the Federal Reserve, to whom Coastal
Community Bank will submit periodic reports regarding its financial condition
and other matters. Coastal Community Bank will also be subject to examination
by the FDIC which will be provided with the examination data of the other
regulators. The Florida Department of Banking and Finance 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 Florida Department of Banking and Finance 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 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 was enacted and contains major regulatory reforms, stronger capital
standards for savings and loan associations and stronger civil and criminal
enforcement provisions. The Financial Institutions Reform, Recovery and
Enforcement Act of 1989 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 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 was enacted which 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. Full-scope, on-site examinations,
per statutes, 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. The FDIC Improvement Act of 1991 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 Coastal
Community Group and any future non-bank subsidiaries can borrow or otherwise
obtain credit from Coastal Community Bank. There also are legal restrictions on
Coastal Community Bank's purchase of or investments in:
- the securities of and purchases of assets from Coastal
Community Group and any of its future non-bank subsidiaries;
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- Coastal Community Bank's loans or extensions of credit to
third parties collateralized by the securities or obligations
of Coastal Community Group and any of its future non-bank
subsidiaries;
- guarantees, acceptances, and letters of credit issued on
behalf of Coastal Community Group and any of its future
non-bank subsidiaries; and
- certain bank transactions with Coastal Community Group and any
of its future non-bank subsidiaries, or with respect to which
Coastal Community Group and non-bank subsidiaries act as
agent, participate or have a financial interest.
Subject to certain limited exceptions, Coastal Community Bank may not
extend credit to Coastal Community Group or to any other affiliate in an amount
which exceeds 10% of Coastal Community 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 Coastal Community Bank and
Coastal Community Group 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 Coastal Community Bank as
those prevailing at the time for comparable transactions with non-affiliated
companies. Also, Coastal Community Group and its subsidiaries are prohibited
from engaging in tie-in arrangements in connection with any extension of
credit, lease or sale of property or furnishing of services.
Dividends
Dividends from Coastal Community Bank will constitute the primary
source of funds for dividends to be paid by Coastal Community Group. 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 Coastal Community Bank to pay dividends, extend
credit, or otherwise supply funds to Coastal Community Group. As a Florida
state chartered bank, Coastal Community 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 Florida Department of Banking and Finance
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 Florida Department of
Banking and Finance or a state or federal regulatory agency. Florida law
applicable to companies (including Coastal Community Group) provides that
dividends may be declared and paid only if, after paying the dividends, (i) it
is able to pay its debts as they become due in the usual course of business,
and (ii) its total assets would be greater than the sum of its total
liabilities plus the amount that would be needed if it were to be dissolved at
the time of the dividend to satisfy the preferential rights upon the
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
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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.
The FDIC Improvement Act of 1991 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 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 the FDIC Improvement Act of 1991. In
general, the regulations define the five capital categories as follows:
(a) 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;
(b) 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 bank rating system in the most recent
examination of the bank and is not experiencing or anticipating
significant growth;
(c) 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 bank rating system in the most recent examination of the
bank and is not experiencing or anticipating significant growth;
(d) 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
(e) 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;
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- improve their management;
- 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 Coastal Community Group in several ways. After completion
of this offering, and the capitalization of Coastal Community Bank, Coastal
Community Bank'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 Coastal Community Bank's capital
position in a relatively short period of time, making an additional capital
infusion necessary.
Additionally, the FDIC Improvement Act of 1991 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. The FDIC Improvement
Act of 1991 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 Florida Department of
Banking and Finance 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 Coastal Community 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 Florida Department of Banking and Finance. 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 Florida Department of Banking and Finance 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.
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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 Coastal Community Group 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 Florida Department of Banking and
Finance for a certificate of approval. When they receive notice, the Federal
Reserve or the Florida Department of Banking and Finance, 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 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
continually operated 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
continually operated, on the date of the acquisition, for more than three
years.
Effect of Governmental Policies
The earnings and businesses of Coastal Community Group and Coastal
Community 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
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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; whereas
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 Coastal Community Group and
Coastal Community Bank.
MANAGEMENT
DIRECTORS AND OFFICERS
The directors and officers of Coastal Community Group will also be the initial
officers and directors of Coastal Community Bank. As of the date hereof, the
directors and officers of Coastal Community Group are as follows:
<TABLE>
<CAPTION>
POSITIONS INITIAL POSITIONS
--------------------- ----------------------
WITH COASTAL WITH COASTAL
--------------------- ----------------------
NAME AGE COMMUNITY GROUP COMMUNITY 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>
Coastal Community Group 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.
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 Coastal Community Group's
directors, officers or key personnel. Officers of Coastal Community Group and
Coastal Community 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 not be reimbursed for travel expenses. Additionally, each
outside (non-employee) director will automatically participate in the Outside
Directors Stock Option Plan.
COMMITTEES OF COASTAL COMMUNITY 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:
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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.
Audit, Compliance and Community Reinvestment Act Committee
Responsible for:
- insuring the board receives objective information regarding
policies, procedures and controls of Coastal Community Bank
including auditing, accounting, internal accounting controls,
financial reporting;
- recommending the appointment of an independent auditor on an
annual basis;
- reviewing independent auditors' report and management's
response;
- reviewing all reports from regulatory authorities and
management's response;
- establishing independent review and audits;
- insuring Coastal Community 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
Coastal Community 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 Coastal Community Bank; and
- recommending all compensation increases, benefit changes and
bonuses for senior officers to the board for approval.
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.
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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 Coastal Community Group and Coastal Community 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.
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, Mr. 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 agencies in South Florida. Prior to
joining InSource Financial Services, Inc., Mr. Soto served as President of
Pennekamp & Soto Insurance Agency from 1972 to 1997.
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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., age 45, 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 COASTAL COMMUNITY BANK
At this time, the only person hired to become an executive officer of
Coastal Community Bank is Mr. Mueller who will be President and CEO.
COMPENSATION OF MANAGEMENT
Current management compensation is limited to the compensation of Mr.
Mueller as President and Chief Executive Officer of Coastal Community Group and
of Coastal Community Bank. Mr. Mueller will also serve as the Chairman of the
Board of Coastal Community Group and Coastal Community Bank upon his
re-election by both boards to that position. Mr. Mueller's yearly compensation
totals $192,840 which includes $170,000 in base salary upon the opening of
Coastal Community Bank, a monthly allowance of $500 for a car, costs and
expenses of $1,042 with respect to Mr. Mueller's split dollar life insurance
policy and $320 for health insurance. Coastal Community Bank intends to enter
into employment agreements with a Senior Vice President for Lending and a
Senior Vice President for Lending before Coastal Community Bank commences
operations.
Coastal Community Group entered into a revised employment agreement
with Mr. Mueller on June 11, 1999 for an initial three year term effective on
September 1, 1998 and terminating on August 31, 2001. Under this agreement,
Coastal Community Group pays Mr. Mueller a monthly salary of $10,000 during the
organizational period. At the end of this period, upon commencement of
operations of Coastal Community Bank, Coastal Community Group 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
$49,992.00 based upon a September 1, 1999 commencement of operations. The
agreement shall be automatically renewed for successive one year extensions
unless Coastal Community Group and Coastal Community 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 Coastal Community Group;
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<PAGE> 39
- participation in Coastal Community Group'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 Coastal
Community Group's common stock at $10.00 per share. See -
"Organizers' Warrants"; and
- the grant of 50,000 non-statutory options to purchase Coastal
Community Group's common stock at $10.00 per share vesting at
10,000 per year at the opening of Coastal Community Bank and
on each of the next four anniversaries of Coastal Community
Bank's opening.
Additionally, the employment agreement provides that Coastal Community
Group 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 Coastal Community 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,
Coastal Community Group 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
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 Coastal Community Group 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 Coastal Community Group or Coastal Community Bank any interest
with respect to this amount.
The employment agreement is terminable at any time by Coastal
Community Group'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 Coastal Community Bank without
proper notice; and
- A change in control of Coastal Community 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
Coastal Community Bank has breached the employment agreement.
The agreement provides severance benefits in the event the executive
is terminated "without cause," including severance compensation equal to 200%
of the aggregate amount that would have been payable to the executive for the
entire fiscal year in which employment is terminated. In addition, the
severance package for termination "without cause" includes unpaid base
compensation through the employment termination date including accrued but
unpaid allowances and expense reimbursements, any accrued and deferred
incentive compensation from any previous year. Coastal Community Group may
terminate the agreement at any time for "cause" without incurring any
post-termination obligations beyond the payment by Coastal Community Group
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.
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INCENTIVE STOCK OPTION PLAN
Coastal Community Group's board of directors and initial shareholder
have adopted an Incentive Stock Option Plan to promote equity ownership of
Coastal Community Group by selected officers and employees of Coastal Community
Group and Coastal Community Bank, to increase their proprietary interest in the
success of Coastal Community Group and to encourage them to remain in the
employ of Coastal Community Group and Coastal Community Bank.
Administration
The Incentive Stock Option Plan will be administered by Coastal
Community Group's Compensation Committee (the "Committee"), which is comprised
of at least two non-employee directors appointed by Coastal Community Group'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 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 Coastal Community Group and
Coastal Community 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 Coastal
Community Group. 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 Coastal Community Group 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.
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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 (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 Coastal Community Group.
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 Coastal
Community Group 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
Coastal Community Group's board of directors and initial shareholder
have adopted an Outside Director Stock Option Plan to promote equity ownership
of Coastal Community Group by non-employee directors to increase their
proprietary interest in Coastal Community Group and to encourage them to
continue as directors of Coastal Community Group.
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 Coastal Community Bank's committees are awarded an
additional 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. Coastal Community Group 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 Coastal Community Group subsequent to the opening of
Coastal Community 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 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
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income and Coastal Community Group 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
Coastal Community Group's board of directors and initial shareholder
have adopted a Restricted Non-Statutory Stock Option Plan to promote equity
ownership of Coastal Community Group by Mr. Mueller to increase his proprietary
interest in Coastal Community Group.
The Restricted Non-Statutory Stock Option Plan is a non-qualified plan
under which Coastal Community Group has granted options to purchase 50,000
shares of Coastal Community Group's stock. The exercise price of the options is
$10.00 per share, determined by Coastal Community Group 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 Coastal Community Bank for
10,000 shares, and vest for additional 10,000 share increments on each of the
next four anniversary dates of Coastal Community 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 Coastal
Community Group 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.
ORGANIZERS' WARRANTS
Coastal Community Group's five initial organizers are Messrs. Mueller,
Bushman, Voelz, Soto and Dupuy. Coastal Community Group's board of directors and
its initial shareholders have adopted a warrant plan to compensate Messrs.
Bushman and Mueller for their efforts to establish a strategic plan for the
formation of Coastal Community Bank and for their efforts in funding the initial
organizational expenses of Coastal Community Bank and Coastal Community Group.
Of these two organizers, Mr. Bushman has caused one of his affiliates to lend
Coastal Community Group $300,000 which allowed an organizational expense fund to
be created and caused a second loan of $350,000 to be made to cover pre-opening
expenses and offering expenses. Both of these loans have been guaranteed by Mr.
Bushman. Coastal Community Group will act to repay the organizers prior to the
opening
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of Coastal Community 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
Coastal Community Bank and will have a term of 10 years from the issuance date
at which time they will expire. Coastal Community Group has reserved 150,000
shares of its common stock for issuance thereunder, 50,000 warrants to Mr.
Mueller and 100,000 warrants to Mr. Bushman. The grant of organizers' warrants
is not contingent upon the purchase of stock by the organizers or upon any
other condition.
PRINCIPAL SHAREHOLDERS
Except for 500 shares issued to Mr. Bushman at $10.00 per share for
the sole purpose of incorporating Coastal Community Group and electing its
directors, Coastal Community Group 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
Coastal Community Group; and
- all such directors and executive officers of Coastal
Community Group as a group.
All share numbers are provided based upon estimates, supplied to Coastal
Community Group 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."
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
NAME NUMBER OF SHARES PERCENTAGE OF
- ---- ------------------------ ----------------------------
BENEFICIALLY OWNED AFTER OUTSTANDING SHARES
------------------------ ---------------------------
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 1,000 0.1%
- -----------------------------------------------------------------------------------------
James C. Merrill (5) 10,000 1%
- -----------------------------------------------------------------------------------------
Alex Soto 2,000 0.2%
- -----------------------------------------------------------------------------------------
Linda Marraccini, M.D. 500 .05%
- -----------------------------------------------------------------------------------------
Other directors (6) 73,000 7.3%
- -----------------------------------------------------------------------------------------
Directors and executive officers 187,500 18.75%
as a group (six individuals)
- -----------------------------------------------------------------------------------------
</TABLE>
- ----------------------------
(1) The information contained in this column is based upon
information furnished to Coastal Community Group by the
persons named above based upon a sale of 1,000,000 shares.
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.
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<PAGE> 44
(3) Does not include 100,000 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.
(6) The Florida Department of Banking and Finance has advised
Coastal Community Group's board of directors that, as a
condition to granting preliminary approval, it will require
commitments from the current directors and proposed directors
to purchase an aggregate of $1,875,000 of the stock of
Coastal Community Group in order that the directors'
aggregate investment equals 25% of the capital of Coastal
Community Bank. Additional proposed directors have not been
identified at this time, but are to be named prior to
preliminary approval being received by Coastal Community
Bank.
CERTAIN TRANSACTIONS
ORGANIZATIONAL ADVANCES
Mr. Bushman has caused an affiliate to lend 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.
Bushman has guaranteed the repayment of both of these loans. Mr. Bushman is an
organizer of Coastal Community Bank and of Coastal Community Group. All amounts
advanced to Coastal Community Group bear interest at a rate of two percentage
points above the prime rate. These advances will be repaid on or after the
closing of the offering. In compensation for the risk and for the efforts in
creating and funding the organization of Coastal Community Group and Coastal
Community Bank, Coastal Community Group has granted warrants to Messrs. Bushman
and Mueller to purchase common stock of Coastal Community Group for $10 per
share. See "Principal Shareholders," "Management - Organizers' Warrants" and
"-Transactions with Promoters."
BANKING TRANSACTIONS
It is anticipated that the directors and officers of Coastal Community
Group and Coastal Community Bank and the companies with which they are
associated will have banking and other transactions with Coastal Community
Group and Coastal Community Bank in the ordinary course of business. All
transactions between Coastal Community Group and affiliated persons, including
5% stockholders, will be on terms no less favorable to Coastal Community Group
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
Mr. Alex Soto, a director of Coastal Community Group, 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 could provide Coastal Community Group and Coastal Community 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 Coastal
Community Group and Coastal Community Bank are estimated to be $40,000. This
transaction and any other transactions with directors will be made in accordance
with all applicable laws and regulations and on substantially the same terms as
those prevailing at the time for comparable transactions with unaffiliated
parties.
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<PAGE> 45
TRANSACTIONS WITH PROMOTERS
Evaldo F. Dupuy, one of the organizers of Coastal Community Group and
of Coastal Community Bank, is the branch manager of the Miami office of Coast
Partners Securities, Inc. which will act as managing dealer of this offering.
Coast Partners Securities, Inc. will receive dealers' discounts and commissions
of up to $0.95 per share with respect to this offering which may total as much
as $818,750. Initially, Coastal Community Group agreed to grant Mr. Dupuy 50,000
organizers' warrants exercisable at $10.00 per share in recognition of his
efforts as an organizer and his guaranty of a $300,000 loan made to Coastal
Community Group to cover organizational expenses and a $350,000 loan to cover
offering and pre-opening expenses. However, Mr. Dupuy has waived his right to
the warrant and has been released from his guaranty of Coastal Community Group's
loans. Mr. Bushman has agreed to guaranty both loans in full, for which he will
receive 100,000 organizers' warrants exercisable at $10.00 per share.
INDEMNIFICATION
The articles of incorporation and bylaws of Coastal Community Group
provide for the indemnification of directors and officers of Coastal Community
Group and any person serving as a director or officer of another corporation at
the request of Coastal Community Group, including reasonable legal fees,
incurred by such directors and officers while acting for or on behalf of
Coastal Community Group or Coastal Community Bank as a director, officer,
employee or agent, subject to certain limitations. See "Description of Capital
Stock - Indemnification and Limited Liability Provisions." Additionally,
Coastal Community Group has entered into indemnification agreements, adopted by
the shareholder, with the directors of Coastal Community Group which provide a
contractual obligation by Coastal Community Group to indemnify the directors
for liability, including legal fees that they incur as a result of actions
taken on behalf of Coastal Community Group. Coastal Community Bank expects to
enter into similar indemnification agreements with directors of Coastal
Community Bank. Coastal Community Group has purchased directors' and officers'
liability insurance for directors and officers of Coastal Community Group.
Articles of incorporation of Coastal Community Bank provide for
indemnification of officers and directors of Coastal Community 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 Coastal Community Group 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.
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 Mr. Bushman. These shares
were issued at a price of $10.00 per share for the purpose of incorporating
Coastal Community Group, and to provide a shareholder to enable Coastal
Community Group to undertake corporate actions requiring shareholder approval.
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 Coastal Community Group and is entitled
to participate equally in dividends as and when declared by Coastal Community
Group's board of directors. There are no redemption, sinking fund, conversion
or
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<PAGE> 46
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 stock with the voting and
conversion rights described above, which could adversely affect the voting
power of the shareholders of common stock.
ANTI-TAKEOVER PROVISIONS
Coastal Community Group's board of directors may authorize the
issuance of additional shares of common stock or preferred stock without
further action by Coastal Community Group 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 Coastal Community
Group 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 Coastal Community Group.
In addition, the sale of a substantial number of shares of common
stock or preferred stock to persons who have an understanding with Coastal
Community Group concerning the voting of such shares, or the distribution or
dividend of common stock or preferred stock (or right to receive such shares)
to Coastal Community Group's shareholders, may have the effect of discouraging
or otherwise increasing the cost of unsolicited attempts to acquire control of
Coastal Community Group. Further, because Coastal Community Group'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 Coastal
Community Group's incumbent management. Coastal Community Group 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 Coastal Community Group and its
shareholders.
Coastal Community Group'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 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 Coastal Community Group's directors and
policies in the future, since a majority of the directors at any given time
will have prior experience as directors of Coastal Community Group. The
classification provision applies for every election of directors, regardless of
whether a change in the board might arguably be beneficial to Coastal
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<PAGE> 47
Community Group and its shareholders and whether or not a majority of Coastal
Community Group's shareholders believe that such a change would be desirable.
Coastal Community Group 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 provisions. Coastal Community Group 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 Coastal Community Group being less attractive to a potential acquirer
and/or result in shareholders receiving less for their shares than might
otherwise be available in the event of an unsolicited takeover attempt.
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.
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:
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<PAGE> 48
- 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.
Coastal Community Group's articles of incorporation and bylaws provide
that Coastal Community Group 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. Coastal Community Group
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 Coastal Community Group 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.
Coastal Community Group has entered into indemnification agreements
with each of its directors. Pursuant to such agreements Coastal Community Group
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.
Coastal Community Group's directors shall not be personally liable to Coastal
Community Group or its stockholders for monetary damages for the breach of the
duty of care or any other duty owed to Coastal Community Group 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; (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.
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 Coastal Community Group pursuant to the
above provisions, or otherwise, Coastal Community Group 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.
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SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering (and assuming the maximum number of
shares is sold), Coastal Community Group expects to have 1,000,500 shares of
its common stock outstanding. The 1,000,000 shares of Coastal Community Group's
common stock purchased in this offering have been registered with the SEC 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 Coastal Community Group or Coastal Community Bank
(collectively, "Affiliates"). Affiliates of Coastal Community Group 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 Coastal Community Group 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 Coastal Community Group's common stock (10,000 shares
immediately after the completion of this offering) or the average weekly
trading volume in Coastal Community Group'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 Coastal Community Group.
Coastal Community Group and the directors and officers of Coastal
Community Group and Coastal Community Bank (who are expected to hold an
aggregate of approximately 187,500 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 Coast Partners Securities, Inc. 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.
PLAN OF DISTRIBUTION
Subject to the terms and conditions contained in the Managing Dealer
Agreement, Coast Partners Securities, Inc., has agreed to use its best efforts
to sell a minimum of 900,000 shares and a maximum of 1,000,000 shares of
Coastal Community Group's common stock. Directors of Coastal Community Group
and their affiliates are expected to purchase a minimum of 187,000 shares in
this offering.
Coastal Community Group has been advised by Coast Partners Securities,
Inc. 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 Coast Partners Securities, Inc. fee. However, no Coast
Partners Securities, Inc. fee will be assessed with respect to sales to certain
investors identified by Coastal Community Group to Coast Partners Securities,
Inc., in writing, including the directors of Coastal Community Group, up to a
maximum of 400,000 shares. Coast Partners Securities, Inc. and the selling
dealers may realize a concession not in excess of $0.60 per share to other
dealers.
Coast Partners Securities, Inc. also will be reimbursed for its
expenses incurred in connection with this offering, up to a maximum of $50,000.
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<PAGE> 50
Unless waived by Coastal Community Group, 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).
Coast Partners Securities, Inc. has informed Coastal Community Group
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.
Coastal Community Group and Coast Partners Securities, Inc. have
agreed to enter into an escrow agreement under which the proceeds of the sale
of common stock will be held by SunTrust Bank, Miami, N.A., as escrow agent.
These proceeds shall be released by the escrow agent to Coastal Community Group,
Inc. at such time as the minimum of $9,000,000 of common stock is sold, the
proceeds have been received by the escrow agent, Coastal Community Bank has
received preliminary regulatory approval and Coastal Community Group, Inc. has
not canceled this offering. If subscriptions for at least 900,000 shares of
common stock and at least $9,000,000 are not received within ninety (90) days
after the effective date of the offering (or as extended up to an additional
ninety (90) days), all proceeds (including any interest which may have accrued
on the subscription funds) will be promptly returned to investors. If the
minimum of $9,000,000 is raised during the offering period but Coastal Community
Bank does not receive preliminary approval from the Florida Department of
Banking and Finance within 180 days after the end of the offering period, as
extended, the offering will be canceled and all proceeds (including any interest
which may have accrued on the subscription funds) will be promptly returned to
investors.
Coastal Community Group, its directors and executive officers and
those of Coastal Community Bank have agreed or will agree with Coast Partners
Securities, Inc., 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 Coast Partners Securities, Inc.
Coast Partners Securities, Inc. has advised Coastal Community Group
that either it or its syndicate members presently intend 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. Coast
Partners Securities, Inc. 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.
Coastal Community Group and Coast Partners Securities, Inc. 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 Coastal
Community Group and Coast Partners Securities, Inc. 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 offering, the desire that the security being offered
be attractive to individuals and Coast Partners Securities, Inc.'s experience
in dealing with initial public offerings for financial institutions.
LEGAL PROCEEDINGS
Neither Coastal Community Bank nor Coastal Community Group is a party
to, nor is it aware of, any pending legal proceeding. Management believes there
is no litigation threatened in which Coastal Community Group or Coastal
Community Bank faces potential loss or exposure or which will materially affect
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<PAGE> 51
stockholders' equity or Coastal Community Group'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 Coastal Community Group by Gunster, Yoakley, Valdes-Fauli &
Stewart, P.A. of Miami, Florida which is acting as counsel for Coastal
Community Group.
Certain legal matters will be passed upon for Coast Partners
Securities, Inc. by Kutak Rock, Denver, Colorado.
EXPERTS
The financial statements of Coastal Community Group included in this
prospectus have been audited by Morrison, Brown, Argiz & Co., independent
public accountants, as indicated in their report (included herein) on Coastal
Community Group. 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.
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 contains
brief descriptions and 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 Coastal Community Group, Inc. 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. The summaries do however
disclose all material information.
46
<PAGE> 52
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
<TABLE>
<S> <C>
BALANCE SHEETS..................................................... F-2
STATEMENTS OF OPERATIONS........................................... F-3
STATEMENTS OF CHANGES IN STOCKHOLDER'S DEFICIT..................... F-4
STATEMENTS OF CASH FLOWS........................................... F-5
NOTES TO FINANCIAL STATEMENTS...................................... F-6-12
</TABLE>
F-1
<PAGE> 53
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
April 30, December 31,
1999 1998
--------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 275,359 $ 161,642
Other 10,000 14,106
--------- ---------
TOTAL CURRENT ASSETS 285,359 175,748
FURNITURE AND EQUIPMENT, net of
accumulated depreciation of $1,176 26,066 --
DEFERRED OFFERING COSTS 61,547 --
--------- ---------
$ 372,972 $ 175,748
========= =========
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 81,750 $ 58,569
Accrued interest payable - stockholder 23,586 7,753
Notes payable - stockholder 650,000 300,000
--------- ---------
TOTAL CURRENT LIABILITIES 755,336 366,322
--------- ---------
STOCKHOLDER'S DEFICIT:
Common stock, $.01 par value,
10,000,000 shares authorized;
500 shares issued and outstanding 5 5
Preferred stock, $.01 par value,
2,000,000 shares authorized;
none issued and outstanding -- --
Additional paid-in capital 4,995 4,995
Deficit accumulated during the development stage (387,364) (195,574)
--------- ---------
TOTAL STOCKHOLDER'S DEFICIT (382,364) (190,574)
--------- ---------
$ 372,972 $ 175,748
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE> 54
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM OCTOBER 6, 1998 (DATE OF INCEPTION)
TO DECEMBER 31, 1998, THE FOUR MONTH PERIOD ENDED APRIL 30, 1999,
AND THE PERIOD FROM OCTOBER 6, 1998 (DATE OF INCEPTION) TO APRIL 30, 1999
<TABLE>
<CAPTION>
Four month October 6, 1998 October 6, 1998
period ended (Inception) to (Inception) to
April 30, December 31, April 30,
1999 1998 1999
------------ -------------- ---------------
<S> <C> <C> <C>
INTEREST INCOME $ 2,440 $ 2,452 $ 4,892
--------- --------- ---------
ADMINISTRATIVE EXPENSES (174,079) (190,273) (364,352)
INTEREST EXPENSE (20,151) (7,753) (27,904)
--------- --------- ---------
TOTAL EXPENSES (194,230) (198,026) (392,256)
--------- --------- ---------
NET LOSS $(191,790) $(195,574) $(387,364)
========= ========= =========
BASIC AND DILUTED
LOSS PER SHARE $ (383.58) $ (391.15) $ (774.73)
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 55
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDER'S DEFICIT
FOR THE PERIOD FROM OCTOBER 6, 1998 (DATE OF INCEPTION)
TO DECEMBER 31, 1998 AND THE FOUR MONTH PERIOD ENDED APRIL 30, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the Total
Common Paid-In Development Stockholder's
Stock Capital Stage Deficit
------ ---------- ------------ --------------
<S> <C> <C> <C> <C>
Initial issuance of
common stock $ 5 $4,995 $ -- $ 5,000
Net loss -- -- (195,574) (195,574)
------ ------ --------- ---------
Balances - December 31, 1998 5 4,995 (195,574) (190,574)
Net loss -- -- (191,790) (191,790)
------ ------ --------- ---------
Balances - April 30, 1999 $ 5 $4,995 $(387,364) $(382,364)
====== ====== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 56
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM OCTOBER 6, 1998 (DATE OF INCEPTION)
TO DECEMBER 31, 1998, THE FOUR MONTH PERIOD ENDED APRIL 30, 1999,
AND THE PERIOD FROM OCTOBER 6, 1998 (DATE OF INCEPTION) TO APRIL 30, 1999
<TABLE>
<CAPTION>
Four month October 6, 1998 October 6, 1998
period ended (Inception) to (Inception) to
April 30, December 31, April 30,
1999 1998 1999
------------ --------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(191,790) $(195,574) $(387,364)
--------- --------- ---------
Adjustments to reconcile net loss to net cash
used in administrative activities during the
development stage:
Depreciation 1,176 -- 1,176
Change in operating assets and liabilities:
Other assets 4,106 (14,106) (10,000)
Accounts payable and accrued expenses 23,181 58,569 81,750
Accrued interest payable - stockholder 15,833 7,753 23,586
--------- --------- ---------
TOTAL ADJUSTMENTS 44,296 52,216 96,512
--------- --------- ---------
NET CASH USED IN
OPERATING ACTIVITIES (147,494) (143,358) (290,852)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of furniture and equipment (27,242) -- (27,242)
Increase in deferred offering costs (61,547) -- (61,547)
--------- --------- ---------
NET CASH USED IN
INVESTING ACTIVITIES (88,789) -- (88,789)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable - stockholder 350,000 300,000 650,000
Proceeds from issuance of common stock -- 5,000 5,000
--------- --------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 350,000 305,000 655,000
--------- --------- ---------
NET INCREASE IN CASH 113,717 161,642 275,359
CASH - BEGINNING OF PERIOD 161,642 -- --
--------- --------- ---------
CASH - END OF PERIOD $ 275,359 $ 161,642 $ 275,359
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 4,318 $ -- $ 4,318
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 57
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) GENERAL
Coastal Community Group, Inc. (formerly known as 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 April 30, 1999. 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) FURNITURE AND EQUIPMENT
Furniture and equipment are stated at cost less accumulated
depreciation. Normal repairs and maintenance are expensed as
incurred. Depreciation is determined using the straight-line
method over the estimated useful lives of the respective
assets, which typically range from 5 to 7 years.
F-6
<PAGE> 58
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(E) DEFERRED OFFERING COSTS
Costs related to the Company's proposed registration and sale
of its common stock have been deferred (NOTE 7). Upon
completion of the stock offering, these costs will be charged
against paid-in capital. Should the offering be unsuccessful,
these deferred costs will be charged against operations.
(F) 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.
(G) 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.
(H) 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.
(I) EARNINGS (LOSS) 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 net loss per share calculations as their
effect would be antidilutive. The weighted average number of
shares used to compute earnings per share were 500 shares.
F-7
<PAGE> 59
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND DECEMBER 31, 1998
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.
NOTE 3 - RELATED PARTIES
The Company has appointed one of its organizers as its President and
Chief Executive Officer.
The Company has borrowed $650,000, in the form of two unsecured demand
notes payable to its stockholder. These notes, which accrue interest at
a rate of prime plus 2% (9.75% at April 30, 1999 and December 31,
1998), have 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 notes will be repaid
from the proceeds of the Company's common stock offering.
NOTE 4 - INCOME TAXES
The Company has available an unused net operating loss carryforward of
approximately $380,000 for both regular and alternative minimum tax
purposes, which may be applied against future taxable income. The net
operating loss carryforward expires through the year 2014.
The approximate tax effects of significant temporary differences which
comprise the deferred tax assets at April 30, 1999 are as follows:
<TABLE>
<S> <C>
Net operating loss carryforward $ 143,000
Less valuation allowance (143,000)
---------------
$ -0-
===============
</TABLE>
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.
F-8
<PAGE> 60
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND DECEMBER 31, 1998
NOTE 5 - CONCENTRATIONS OF CREDIT RISK
The Company maintains cash deposited in local banks which may, at
times, exceed the FDIC insured limits. At April 30, 1999, the Company
exceeded this limit by approximately $193,000.
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 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.
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.
F-9
<PAGE> 61
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND DECEMBER 31, 1998
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
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 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.
F-10
<PAGE> 62
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND DECEMBER 31, 1998
NOTE 11 - EXECUTIVE EMPLOYMENT AGREEMENT (CONTINUED)
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.
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 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
April 30, 1999, 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.
F-11
<PAGE> 63
COASTAL COMMUNITY GROUP, INC. (F/K/A COASTAL BHC, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 AND DECEMBER 31, 1998
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.
NOTE 15 - SUBSEQUENT EVENTS
During May 1999, the Company's board of directors voted to change its
name from Coastal BHC, Inc. to Coastal Community Group, Inc.
F-12
<PAGE> 64
- --------------------------------------------------------------------------------
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 a dealer and with
respect to their unsold allotments or subscriptions.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TABLE OF CONTENTS
<S> <C>
Prospectus Summary................................................................................................. 1
Risk Factors....................................................................................................... 4
Recent Developments................................................................................................ 11
Terms of the Offering.............................................................................................. 11
Use of Proceeds.................................................................................................... 12
Return of Proceeds to Investors if Coastal Community Bank, Inc. Does Not Open for Business......................... 13
Dividend Policy.................................................................................................... 14
Capitalization..................................................................................................... 15
Management's Discussion and Analysis of Financial Condition and Results of Operations.............................. 16
Business........................................................................................................... 16
Supervision and Regulation......................................................................................... 23
Management......................................................................................................... 30
Principal Shareholders............................................................................................. 38
Certain Transactions............................................................................................... 39
Description of Capital Stock....................................................................................... 40
Shares Eligible for Future Sales................................................................................... 44
Plan of Distribution............................................................................................... 44
Legal Proceedings.................................................................................................. 45
Legal Matters...................................................................................................... 46
Experts............................................................................................................ 46
Available Information.............................................................................................. 46
Index to Financial Statements...................................................................................... F-1
==========================================================================================================================
</TABLE>
1,000,000 SHARES
COASTAL COMMUNITY GROUP, INC.
COAST PARTNERS SECURITIES, INC.
COMMON STOCK PROSPECTUS
___________, 1999
<PAGE> 65
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24: INDEMNIFICATION OF OFFICERS AND DIRECTORS
As provided under Florida law, Coastal Community Group's directors
shall not be personally liable to Coastal Community Group or its stockholders
for monetary damages for the breach of the duty of care or any other duty owed
to Coastal Community Group 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; (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.
Coastal Community Group's articles of incorporation and bylaws provide
that Coastal Community Group 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, Coastal
Community Group 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 Coast Partners Securities, Inc.'s discounts and
commissions, if any. All of the amounts shown are estimated except for the
registration fees of the SEC.
<TABLE>
<S> <C>
SEC Registration Fees.................................... $ 2,780.00
Blue Sky Registration Fees and Expenses.................. $ 1,950.00
Legal Fees and Expenses.................................. $ 70,000.00
NASD Filing Fees......................................... $ 1,500.00
Accounting Fees.......................................... $ 7,120.00
Printing Expenses........................................ $ 14,150.00
Advertising.............................................. $ 2,500.00
-----------
Total........................................... $100,000.00
===========
</TABLE>
ITEM 26: RECENT SALES OF UNREGISTERED SECURITIES
The only sale of stock of Coastal Community Group is to director Mr.
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 Coastal Community
Group claimed exemption from registration pursuant to Section 4(2) of the
Securities Act of 1933 and SEC Rule 506.
II-1
<PAGE> 66
ITEM 27: EXHIBITS
The following exhibits are filed as part of this registration
statement:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
** 1.1 Form of Managing Dealer Agreement between Coastal Community Group, Inc. and Coast Partners Securities, Inc.
** 1.2 Form of Escrow Agreement between Coastal Community Group, Inc., Coast Partners Securities, Inc. and SunTrust
Bank
* 3.1 Articles of Incorporation of Coastal Community Group, Inc. filed on October 6, 1998
** 3.1(a) Articles of Amendment of Articles of Incorporation of Coastal Community Group, Inc. filed on May 6, 1999
* 3.2 Bylaws of Coastal BHC, Inc.
** 3.2(a) Amended and Restated Bylaws of Coastal BHC, Inc. adopted May 6, 1999
* 4.1 Form of Specimen Common Stock Certificate
* 4.2 Form of Warrant Plan adopted by Coastal Community Group, Inc. on December 9, 1998
** 4.2(a) Form of Amendment to that Warrant Plan adopted by the Board of
Directors of Coastal Community Group, Inc. on December 9, 1998
* 4.3 1998 Incentive Stock Option Plan and Agreement adopted by Coastal Community Group, Inc. on December 9, 1998
* 4.4 Form of Outside Director Stock Option Plan
* 4.5 Indemnification Agreement by and between Coastal Community Group, Inc. 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 Executive Employment Agreement between Coastal Community Group, Inc., Coastal Community Bank and Hans C.
Mueller dated as of September 1, 1998
**@10.1(a) Executive Employment Agreement between Coastal Community Group, Inc., Coastal Community Bank and Hans C.
Mueller dated as of September 1, 1998 and revised as of May 21, 1999
* 10.2 Option to Lease between Coastal Community Group, Inc. and MCH Properties, Inc. dated November 16, 1998
** 10.3 Option to Sublease between Coastal Community Group, Inc. and HEALTHSOUTH Corporation dated June 4, 1999
</TABLE>
II-2
<PAGE> 67
<TABLE>
<S> <C>
** 10.4 Form of Selected Dealer Agreement
** 10.5 Form of Lock-Up Agreement
** 10.6 Restated Promissory Note dated October 1, 1998 by Bushmans' Inc.
** 10.7 Restated Promissory Note dated March 18, 1999 by Bushmans' Inc.
** 10.8 Guaranty dated as of October 1, 1998 in the principal amount of
$300,000.00
** 10.9 Guaranty dated as of March 18, 1999 in the principal amount of
$350,000.00
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
** 23.3 Consent of Morrison, Brown, Argiz & Company
* 24. Power of Attorney (included on the signature page to this registration statement)
** 27. Financial Data Schedule for Coastal Community Group, Inc.
</TABLE>
- ------------------
@ Contracts with executive officers
* Filed on Registration Statement on Form SB-2 filed with the U.S. Securities
and Exchange Commission on March 25, 1999
** Filed herewith
*** To be filed by amendment.
ITEM 28: UNDERTAKINGS
(d) Coastal Community Group will provide to Coast Partners Securities,
Inc. at the closing specified in the placement agreement, certificates in such
denominations and registered in such names as required by Coast Partners
Securities, Inc. 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 Coastal Community Group pursuant to the foregoing
provisions, or otherwise, Coastal Community Group has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by Coastal Community Group of expenses incurred or paid
by a director, officer, or controlling person of Coastal Community Group 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, Coastal Community Group 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> 68
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, Coastal Community Group, Inc. certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing this amendment 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 June 21, 1999.
COASTAL COMMUNITY GROUP, 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.
<TABLE>
<S> <C>
/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: June 22, 1999 Date: June 22, 1999
/s/ Allen M. Voelz /s/ James C. Merrill
- -------------------------------------------- -----------------------------------
Allen M. Voelz, Director James C. Merrill, Director
Date: June 22, 1999 Date: June 22, 1999
/s/ Alex Soto /s/ Linda Marraccini, M.D.
- -------------------------------------------- -----------------------------------
Alex Soto, Director Linda Marraccini, M.D., Director
Date: June 22, 1999 Date: June 22, 1999
</TABLE>
II-4
<PAGE> 1
EXHIBIT 1.1
1,000,000 Shares Common Stock
Coastal Community Group, Inc.
_________, 1999
MANAGING DEALER AGREEMENT
Coast Partners Securities, Inc.
As representative of the several
Dealers named in Schedule A
601 California Street, Suite 1400
San Francisco, California 94108
Dear Sirs:
Coastal Community Group, Inc., a Florida corporation (the "Offeror"),
proposes to issue and sell 1,000,000 shares (the "Common Shares") of the
Offeror's common stock, $0.01 par value per share (the "Common Stock"), the
terms of which are more fully described in the Prospectus (as defined in Section
2). Pursuant to the terms of this Agreement, Coast Partners Securities, Inc.
(the "Managing Dealer"), acting for itself and on behalf of the several dealers
named in Schedule A (the "Dealers"), who are acting severally and not jointly,
will use their best efforts to solicit subscriptions to purchase a minimum of
900,000 and a maximum of 1,000,000 Common Shares at a purchase price of $10.00
per share (the "Purchase Price"), with a minimum purchase from any investor of
250 shares or $2,500 and a maximum purchase of 50,000 shares or $500,000 unless
waived by the Offeror (the "Offering"). The Offeror, the Managing Dealer and the
Dealers hereby confirm their agreement in connection with the Offering.
1. SALE OF COMMON SHARES; COMMISSIONS.
(a) On the basis of the Dealers' representations, warranties and
covenants, but subject to the terms and conditions of this Agreement, the
Offeror hereby grants the Dealers the exclusive right to solicit purchasers
for the Common Shares during the period between the effective date of this
Agreement (as defined in Section 9 hereof) and the Sales Termination Date
(defined in Section 1(e)), such period being the Offering Period, and,
subject to the Offeror's performance of all of its obligations to be
performed hereunder and to the completeness and accuracy of all of the
Offeror's representations and warranties contained herein, the Dealers
agree to use their best efforts to find purchasers for the Common Shares at
the Purchase Price. Notwithstanding the preceding sentence, the Offeror
reserves the right to solicit the potential investors who have been
identified by the Offeror in writing to the Managing Dealer prior to the
Closing Date (defined in Section 1(g) below). The Offeror also reserves the
right to reject any prospective investor, and no commission will be payable
to a Dealer for any proposed sale to any rejected investor.
(b) Each investor desiring to purchase Common Shares will be
required to complete, execute and deliver a subscription agreement
substantially similar to the form
<PAGE> 2
attached as an exhibit hereto (a "Subscription"), together with payment of
the Purchase Price for the Common Shares subscribed for, which payment
shall be made by certified or bank cashier's check. Each Dealer will have
the right to review Subscriptions solicited by it and to reject the tender
of any investor which such Dealer deems not acceptable. Copies of all
Subscriptions which have not been rejected by the Dealers shall be
forwarded together with the investor's check, in the amount of the Purchase
Price for the subscribed Common Shares and payable to "SunTrust Bank,
Miami, N.A. as Escrow Agent - Coastal Community Group, Inc.," to SunTrust
Bank, Miami, N.A., 777 Brickell Avenue, Miami, Florida 33131 (the "Escrow
Agent"), by noon of the first Business Day after receipt thereof by the
Dealer. All Dealers will comply with the requirements of Rule 15c2-4 of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). "Business
Day" means any day on which commercial banks are not authorized or required
to close in Miami, Florida.
(c) Originals of all Subscriptions will be forwarded to the Offeror,
and copies of all Subscriptions will be forwarded to the Managing Dealer,
by noon of the second Business Day after receipt thereof by the Dealer.
Promptly upon receipt thereof, the Offeror will determine whether it wishes
to reject the investor's Subscription and will notify the tendering Dealer
if such Subscription is rejected. Rejected Subscriptions will be returned
promptly to the tendering Dealer. Payment for the Common Shares subscribed
for in Subscriptions which have been accepted by the Offeror will be
delivered to the Offeror on the applicable closing date.
(d) In addition to forwarding Subscriptions to the Escrow Agent,
Dealers will provide such other information deemed reasonably necessary by
the Offeror and all documents, if any, required under state securities
laws.
(e) All Subscriptions by investors for Common Shares will be
conditional upon (A) the tendering of Subscriptions for an amount of Common
Shares equal to at least 900,000 ("Minimum Subscriptions") by ______, 1999
[90 DAYS], which may be extended to _______, 1999, at the election of the
Offeror (the "Sales Termination Date"), (B) upon the Offeror's receipt from
the Dealers on the Closing Date (defined in Section 1(g)) of funds from
investors representing an aggregate Purchase Price of $9,000,000 ("Minimum
Payments"), and (C) receipt by the Offeror of a "Notice of Intent to
Approve" from the Florida Department of Banking and Finance within 180 days
of the Sales Termination Date. If Minimum Subscriptions have not been
accepted by the Sales Termination Date, or Minimum Payments have not been
accepted on the Closing Date, or the Offeror does not receive a Notice of
Intent to Approve within 180 days of the Sales Termination Date, this
Agreement will terminate and all funds previously contributed by
subscribers will be returned promptly, in full, with interest, if any.
(f) If Minimum Subscriptions have been accepted before the Sales
Termination Date, the Offeror and the Escrow Agent shall so notify the
Managing Dealer in writing. The "Initial Closing Date" shall be the first
full Business Day following the date on which the Minimum Subscriptions are
achieved and the Company has received the Notice of Intent to Approve, or
such day thereafter as shall be mutually agreed upon by the Managing Dealer
and the Offeror. Subject to fulfillment of the conditions
2
<PAGE> 3
specified in Section 6 hereof, on the Initial Closing Date payment of the
Purchase Price for the Common Shares for which the Dealers have found
purchasers as of the Initial Closing Date, and delivery, with respect to
each purchaser, of a copy of the Subscription signed by such purchaser,
shall be made to the Offeror at the offices of Gunster, Yoakley,
Valdes-Fauli & Stewart, P.A., counsel for the Offeror, at One Biscayne
Tower, Two South Biscayne Blvd., Suite 3400, Miami, Florida 33131 (the
"Gunster Offices"), or at such other place as shall be agreed to by the
Managing Dealer and the Offeror.
(g) If at least Minimum Subscriptions are achieved but less than all of
the Common Shares have been purchased on the Initial Closing Date, the
Offering Period shall continue until 10:00 a.m., Miami time on the Sales
Termination Date, or at such other time not more than 25 Business Days
after the Sales Termination Date as the Offeror and the Managing Dealer
shall determine (the "Closing Date"). At all times during the Offering, the
Dealers shall follow the procedures proscribed by this Section 1. Common
Shares will be issued at closing dates ("Subsequent Closing Dates")
occurring after the Initial Closing Date and prior to the Closing Date as
agreed upon by the Managing Dealer and the Offeror. All closings of the
Offering, if any, shall take place at the Gunster Offices or at such other
place as shall be agreed to by the Managing Dealer and the Offeror.
(h) If Subscriptions are received for more than $10,000,000 then the
Offeror may accept one Subscription over another or allocate Common Shares
among subscribers as the Offeror deems fit. Subject to the Offeror's right
to reject any prospective investor as set forth in Section 1(a), the
Offeror will accept in the order designated by the Managing Dealer all
Subscriptions which are specifically designated, if the Offeror can do so
without violating applicable securities laws.
(i) On the Closing Date, Subscriptions for Common Shares received by
the Dealers and delivered to the Offeror which have not been rejected by
the Offeror will be deemed to be accepted.
(j) On a closing date, the Offeror will deliver certificates for the
Common Shares to the Dealers. Certificates for Common Shares to be
purchased hereunder shall be in book-entry form and registered in the name
of Cede & Co. not later than 12:00 noon, Miami time, two Business Days
prior to the applicable closing date.
(k) In consideration for the performance of its obligations hereunder,
the Managing Dealer shall be entitled to a commission from the Offeror of
$.70 per Common Share sold in the Offering; provided, that no commission
shall be paid with respect to Common Shares sold to investors who have been
identified by the Offeror in writing to the Managing Dealer prior to the
Closing Date, up to a maximum of 400,000 Common Shares. In the event
Minimum Subscriptions are not received or Minimum Payments are not made and
the Offering is terminated, or in the event that the Offeror does not
receive a Notice of Intent to Approve within 180 days of the Sales
Termination Date, the Managing Dealer will not be entitled to receive any
commissions and will not be reimbursed for its expenses, except as provided
in Section 4 below. Any commissions,
3
<PAGE> 4
investment banking fees and allowable expenses will be payable to the
Managing Dealer on the Closing Date.
(l) Each Dealer may sell Common Shares to dealers chosen by it (the
"Selected Dealers") at the Purchase Price less the applicable Selected
Dealers' concessions set forth in the Prospectus, for re-offering by
Selected Dealers to the public at the Purchase Price. The Dealers may
allow, and Selected Dealers may re-allow, a concession set forth in the
Prospectus (which shall not exceed $.60) to certain other brokers and
dealers.
(m) In addition to the commission payable to the Managing Dealer
specified in subsection (k) above, the Offeror shall pay to the Managing
Dealer an investment banking fee equal to $.25 per Common Share sold in the
Offering.
(n) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Offeror and its officers,
directors, agents and employees will not, prior to the Closing Date,
directly or indirectly contact or communicate with any potential investor
with respect to an investment in the Common Shares, except to the extent
required by applicable securities laws and regulations and except with
respect to investors who have been identified by the Offeror in writing to
the Managing Dealer prior to the Closing Date.
(o) The Managing Dealer hereby represents and warrants to the Offeror
that it has the authority to enter into this Agreement on behalf of the
several Dealers and that the Dealers have indicated to the Managing Dealer
their intention to severally and not jointly solicit, on a best-efforts
basis, purchasers for the Common Shares as provided herein.
2. REPRESENTATIONS AND WARRANTIES.
(a) The Offeror represents and warrants to the several Dealers that:
(i) The Offeror has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on
Form SB-2 (File Number 333-75033) for the registration of $10,000,000
aggregate amount of Common Shares under the Securities Act of 1933, as
amended (the "1933 Act"), including the related preliminary prospectus
subject to completion included therein, and one or more amendments or
supplements to such registration statement may have been so filed, in
each case in conformity with the requirements of the 1933 Act, the
rules and regulations promulgated thereunder (the "1933 Act
Regulations"). Copies of such registration statement, including any
amendments thereto, each Preliminary Prospectus (as defined herein)
contained therein and the exhibits, financial statements and schedules
to such registration statement, as finally amended and revised, have
heretofore been delivered by the Offeror to the Dealers. After the
execution of this Agreement, the Offeror will file with the Commission
(A) if such registration statement, as it may have been amended, has
been declared by the Commission to be effective under the 1933 Act, a
prospectus in the form most recently included in an
4
<PAGE> 5
amendment to such registration statement (or, if no such amendment
shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A of the 1933 Act
Regulations ("Rule 430A") or permitted by Rule 424(b) of the 1933 Act
Regulations ("Rule 424(b)") and as have been provided to and not
objected to by the Dealers prior to (or as are agreed to by the
Dealers subsequent to) the execution of this Agreement, or (B) if such
registration statement, as it may have been amended, has not been
declared by the Commission to be effective under the 1933 Act, an
amendment to such registration statement, including a form of final
prospectus, necessary to permit such registration statement to become
effective, a copy of which amendment has been furnished to and not
objected to by the Dealers prior to (or is agreed to by the Dealers
subsequent to) the execution of this Agreement. Except as required by
applicable law as evidenced by a written opinion of counsel relating
thereto, the Offeror will not file any amendment to the registration
statement or any amended Preliminary Prospectus or any amendment
thereto, of which the Dealers have not been previously furnished a
copy or to which the Dealers or counsel thereto shall have reasonably
objected in writing. As used in this Agreement, the term "Registration
Statement" means such registration statement, as amended at the time
when it was or is declared effective under the 1933 Act, including (1)
all financial schedules and exhibits thereto, and (2) any information
omitted therefrom pursuant to Rule 430A and included in the Prospectus
(as hereinafter defined); the term "Preliminary Prospectus" means each
preliminary prospectus subject to completion filed with such
Registration Statement or any amendment thereto (including the
preliminary prospectus subject to completion, if any, included in the
Registration Statement and each prospectus filed pursuant to Rule
424(a) under the 1933 Act); and the term "Prospectus" means the
prospectus first filed with the Commission pursuant to Rule 424(b)(1)
or (4) if no prospectus is required to be filed pursuant to Rule
424(b)(1) or (4), the prospectus included in the Registration
Statement, in each case including the financial schedules. The date on
which the Registration Statement becomes effective under the 1933 Act
is hereinafter referred to as the "Effective Date."
(ii) No order preventing or suspending the use of any
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) has been issued by the Commission, nor has the
Commission, to the knowledge of the Offeror, threatened to issue such
an order or instituted proceedings for that purpose. Each Preliminary
Prospectus, at the time of filing thereof, (A) complied in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations and (B) did not contain an untrue statement of fact or
omit to state any fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that this
representation and warranty does not apply to statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Offeror by the Dealers expressly for inclusion in the
Prospectus beneath the heading "Plan of Distribution" and on the cover
page of the Prospectus with respect to price, placement discounts and
terms of the offering (such information referred to herein as the
"Dealer Information").
5
<PAGE> 6
(iii) At the Effective Date and at all times subsequent thereto,
up to and including the Closing Date, the Registration Statement and
any post-effective amendment thereto (A) complied and will comply in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and (B) did not and will not contain an untrue
statement of fact or omit to state any fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. At the
Effective Date and at all times when the Prospectus is required to be
delivered in connection with offers and sales of Common Shares,
including, without limitation, the Closing Date, the Prospectus, as
amended or supplemented, (1) complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations and (2) did not contain and will not contain an untrue
statement of fact or omit to state any fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty does not apply to
Dealer Information.
(iv) The Offeror is duly incorporated, validly existing and in
good standing under the laws of the State of Florida, with full
corporate power and authority to own, lease and operate its properties
and conduct its business as described in and contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) and as
currently being conducted. The Offeror has all necessary power and
authority to issue and sell the Common Shares, to enter into and
perform its obligations under this Agreement and to consummate the
transactions herein contemplated; the Offeror is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or the ownership of its property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Offeror; the Offeror has conducted and will
conduct no business other than the transactions contemplated by this
Agreement and described in the Prospectus; the Offeror is not a party
to or bound by any agreement or instrument other than this Agreement
and the agreements and instruments described in the Prospectus; the
Offeror has no liabilities or obligations other than those arising out
of the transactions contemplated by this Agreement and as described in
the Prospectus; the Offeror is not a party to or subject to any
action, suit or proceeding of any nature.
(v) The Offeror does not own or control, directly or indirectly,
more than 5% of any class of equity security of any corporation,
association or other entity. The Offeror intends to use the proceeds
from the Offering to acquire a subsidiary, Coastal Community Bank (the
"Bank").
(vi) All of the issued and outstanding shares of capital stock of
the Bank, when issued to the Offeror, will be (A) duly authorized and
validly issued, (B) fully paid and nonassessable except to the extent
such shares may be deemed assessable under 12 U.S.C. Section 55 or 12
U.S.C. Section 1831o, and (C) except
6
<PAGE> 7
as disclosed in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), directly owned by
the Offeror free and clear of any security interest, mortgage, pledge,
lien, encumbrance, restriction upon voting or transfer, preemptive
rights, claim or equity. Except as disclosed in the Prospectus, there
are no outstanding rights, warrants or options to acquire or
instruments convertible into or exchangeable for any capital stock or
equity securities of the Bank.
(vii) The capital stock of the Offeror conforms to the
description thereof contained in the Prospectus or the financial
information included therein (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus). The outstanding
shares of capital stock and equity securities of the Offeror have been
duly authorized and validly issued and are fully paid and
nonassessable, and no such shares were issued in violation of the
preemptive or similar rights of any security holder of the Offeror; no
person has any preemptive or similar right to purchase any shares of
capital stock or equity securities of the Offeror. Except as disclosed
in the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), there are no outstanding rights,
options or warrants to acquire from the Offeror any securities of the
Offeror other than options issued under the Offeror's 1998 Incentive
Stock Option Plan, Outside Director Stock Option Plan and Restricted
Non-Statutory Stock Option Plan, and warrants issued to certain of the
Offeror's organizers, and there are no outstanding securities
convertible into or exchangeable for any such securities and no
restrictions upon the voting or transfer of any capital stock of the
Offeror pursuant to the Offeror's corporate charter or bylaws or any
agreement or other instrument to which the Offeror is a party or by
which the Offeror is bound.
(viii) The Offeror has all requisite power and authority to issue,
sell and deliver the Common Shares in accordance with and upon the
terms and conditions set forth in this Agreement, the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus). All corporate
action required to be taken by the Offeror for the authorization,
issuance, sale and delivery of the Common Shares in accordance with
such terms and conditions has been validly and sufficiently taken. The
Common Shares, when delivered in accordance with this Agreement, will
be duly and validly issued and outstanding, will be fully paid and
nonassessable, will not be issued in violation of or subject to any
preemptive or similar rights, and will conform in all material
respects to the description thereof in the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) and the Offeror's Articles of
Incorporation. None of the Common Shares, immediately prior to
delivery, will be subject to any security interest, lien, mortgage,
pledge, encumbrance, restriction upon voting or transfer, preemptive
rights, claim, equity or other defect.
(ix) The Offeror has complied with all federal, state and local
statutes, regulations, ordinances and rules applicable to the
ownership and operation of its properties or the conduct of its
business as described in and contemplated by the
7
<PAGE> 8
Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) and as
currently being conducted except for such matters as would not be
expected to have a materially adverse effect thereon.
(x) The Offeror and the Bank have all governmental and
regulatory permits, easements, consents, licenses, franchises and
other authorizations from all appropriate federal, state, local or
other public authorities ("Permits") as are necessary to own and lease
their properties and conduct their businesses in the manner described
in and contemplated by the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and as currently being conducted, except for
necessary approvals from the Florida Department of Banking and Finance
(the "FDBF"), the Federal Deposit Insurance Corporation (the "FDIC")
and the Federal Reserve Bank of Atlanta (the "FRBA"), and except as
such matters that would not have a material adverse effect on the
Offeror and the Bank or their financial condition, earnings, business,
prospects or results of operations. All such Permits are in full force
and effect and each of the Offeror and the Bank are complying
therewith in all material respects, and no event has occurred that
allows, or after notice or lapse of time would allow, revocation or
termination thereof or will result in any other impairment of the
rights of the holder of any such Permit, subject in each case to such
qualification as may be adequately disclosed in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus) except as such matters that would not have a material
adverse effect on the Offeror and the Bank or their financial
condition, earnings, business, prospects or results of operations.
Such Permits contain no restrictions that would materially impair the
ability of the Offeror or the Bank to conduct their businesses in the
manner described in and contemplated by the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) and as currently being conducted.
Neither the Offeror nor the Bank has received notice or otherwise has
knowledge of any proceeding or action relating to the revocation or
modification of any such Permit.
(xi) The Bank has applied, or at the appropriate time shall
apply, for approval from the FDBF to operate as a Florida state
chartered commercial bank. The Bank has applied, or at the appropriate
time shall apply, for deposit insurance from the FDIC. The Bank has
applied, or at the appropriate time shall apply, for membership in the
Federal Reserve System from the FRBA. The Offeror has applied, or at
the appropriate time shall apply, for approval from the FRBA to
operate as a registered bank holding company.
(xii) Neither the Offeror nor the Bank is in breach or violation
of its corporate charter, bylaws or other governing documents. Neither
the Offeror nor the Bank is, and to the knowledge of the Offeror no
other party is, in violation, breach or default (with or without
notice or lapse of time or both) in the performance or observance of
any term, covenant, agreement, obligation, representation, warranty or
condition contained in (A) any contract, indenture,
8
<PAGE> 9
mortgage, deed of trust, loan or credit agreement, note, lease,
franchise, license, Permit or any other agreement or instrument to
which it is a party or by which it or any of its properties may be
bound, which such breach, violation or default would reasonably be
expected to have a material adverse effect on the Offeror and the Bank
on a consolidated basis, and to the knowledge of the Offeror, no other
party has asserted that the Offeror or the Bank is in such violation,
breach or default (provided that the foregoing representations in
clause (A) shall not apply to defaults by borrowers from the Bank), or
(B) except as disclosed in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), any order,
decree, judgment, rule or regulation of any court, arbitrator,
government, or governmental agency or instrumentality, domestic or
foreign, having jurisdiction over the Offeror or the Bank or any of
their respective properties the breach, violation or default of which
would have a material adverse effect on the financial condition,
earnings, business, prospects or results of operations of the Offeror
and the Bank on a consolidated basis.
(xiii) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated by this
Agreement, the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) do not and will not conflict with, result in the creation
or imposition of any lien, claim, charge, encumbrance or restriction
upon any property or assets of the Offeror or the Bank or the Common
Shares pursuant to, constitute a breach or violation of, or constitute
a default under, with or without notice or lapse of time or both, any
of the terms, provisions or conditions of the charter or bylaws of the
Offeror or the Bank, any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease, franchise, license, Permit or
any other agreement or instrument to which the Offeror or the Bank is
a party or by which any of them or any of their respective properties
may be bound or any order, decree, judgment, rule or regulation of any
court, arbitrator, government, or governmental agency or
instrumentality, domestic or foreign, having jurisdiction over the
Offeror or the Bank or any of their respective properties which
conflict, creation, imposition, breach, violation or default would
have either singly or in the aggregate a material adverse effect on
the financial condition, earnings, business, prospects or results of
operations of the Offeror and the Bank on a consolidated basis. No
authorization, approval, consent or order of, or filing, registration
or qualification with, any person (including, without limitation, any
court, governmental body or authority) is required in connection with
the transactions contemplated by this Agreement, the Registration
Statement and the Prospectus, except such as may be required by, and
have been obtained under, the 1933 Act, state securities laws,
Interpretations or Rules of the National Association of Securities
Dealers, Inc. ("NASD") in connection with the offer and distribution
of the Common Shares by the Dealers.
(xiv) The Offeror has all requisite corporate power and authority
to enter into this Agreement and this Agreement has been duly and
validly authorized, executed and delivered by the Offeror and
constitutes the legal, valid and binding agreement of the Offeror,
enforceable against the Offeror in accordance with its
9
<PAGE> 10
terms, except as the enforcement thereof may be limited by general
principles of equity and by bankruptcy, moratorium, reorganization,
fraudulent conveyance or other laws relating to or affecting
creditors' rights generally and except as any indemnification or
contribution provisions thereof may be limited under applicable
securities laws or public policy.
(xv) The Offeror and the Bank have good and marketable title in
fee simple to all real property and good title to all personal
property owned by them, in each case free and clear of all security
interests, liens, mortgages, pledges, encumbrances, restrictions,
claims, equities and other defects except such as are referred to in
the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) or such as do not materially affect the
value of such property in the aggregate and do not materially
interfere with the use made or proposed to be made of such property;
and all of the leases under which the Offeror or the Bank hold real or
personal property are valid, existing and enforceable leases and in
full force and effect and do not interfere with the use made or
proposed to be made of such real or personal property, and neither the
Offeror nor the Bank is in default of any of the terms or provisions
of any leases, except as such matters that would not have a material
adverse effect on the Offeror and the Bank or their financial
condition, earnings, business, prospects or results of operations.
(xvi) Morrison, Brown, Argiz & Co., who have certified the
financial statements of the Offeror, including the notes thereto,
included in the Registration Statement and Prospectus, are independent
public accountants with respect to the Offeror, as required by the
1933 Act and the 1933 Act Regulations.
(xvii) The financial statements, including the notes thereto,
included in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) with respect to the Offeror comply with the 1933 Act and
the 1933 Act Regulations and present fairly the financial position of
the Offeror as of the dates indicated and the results of operations,
cash flows and shareholders' equity of the Offeror for the periods
specified and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis. The selected and
summary financial data concerning the Offeror included in the
Registration Statement and the Prospectus (or such Preliminary
Prospectus) comply with the 1933 Act and the 1933 Act Regulations,
present fairly the information set forth therein, and have been
compiled on a basis consistent with that of the financial statements
of the Offeror in the Registration Statement and the Prospectus (or
such Preliminary Prospectus). The other financial, statistical and
numerical information with respect to the Offeror and the Bank
included in the Registration Statement and the Prospectus (or such
Preliminary Prospectus) comply with the 1933 Act and the 1933 Act
Regulations, present fairly the information shown therein, and to the
extent applicable have been compiled on a basis consistent with the
financial statements of the Offeror included in the Registration
Statement and the Prospectus (or such Preliminary Prospectus).
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<PAGE> 11
(xviii) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), except as
otherwise stated therein:
(A) neither the Offeror nor the Bank has sustained any
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree which would
have a material adverse effect on the financial condition, earnings,
business, prospects or results of operations of the Offeror and the
Bank on a consolidated basis;
(B) there has not been any change in, or any development
which is likely to have a material adverse effect on, the financial
condition, earnings, business, prospects or results of operations of
the Offeror and the Bank on a consolidated basis, whether or not
arising in the ordinary course of business;
(C) neither the Offeror nor the Bank has incurred any
liabilities or obligations, direct or contingent, or entered into any
transactions, other than in the ordinary course of business which
would have a material adverse effect on the financial condition,
earnings, business, prospects or results of operations of the Offeror
and the Bank on a consolidated basis;
(D) the Offeror has not declared or paid any dividend and
neither the Offeror nor the Bank has become delinquent in the payment
of principal or interest on any outstanding borrowings; and
(E) there has not been any change in the capital stock,
equity securities, longterm debt, obligations under capital leases or,
other than in the ordinary course of business, short-term borrowings
of the Offeror or the Bank.
(xix) Except as set forth in the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), no investigation, action, suit or proceeding is
pending or, to the knowledge of the Offeror, threatened, against or
affecting the Offeror or the Bank or any of their respective properties
before or by any court or any regulatory, administrative or governmental
official, commission, board, agency or other authority or body, or any
arbitrator, wherein an unfavorable decision, ruling or finding would have a
material adverse effect on the consummation of this Agreement or the
transactions contemplated herein or the financial condition, earnings,
business, prospects or results of operations of the Offeror and the Bank on
a consolidated basis or which is required to be disclosed in the
Registration Statement or the Prospectus (or such Preliminary Prospectus)
and is not so disclosed.
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<PAGE> 12
(xx) There are no contracts or other documents required to be
filed as exhibits to the Registration Statement under the 1933 Act or the
1933 Act Regulations which have not been filed as exhibits or incorporated
by reference to the Registration Statement, or that are required to be
summarized in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) that are not so summarized.
(xxi) The Offeror has not taken, directly or indirectly, any
action designed to result in or which has constituted or which might cause
or result in stabilization or manipulation of the price of any security of
the Offeror to facilitate the sale or resale of the Common Shares, and the
Offeror is not aware of any such action taken or to be taken by any
affiliate of the Offeror.
(xxii) The Offeror and the Bank own, or possess adequate rights
to use, all patents, copyrights, trademarks, service marks, trade names and
other rights necessary to conduct the businesses now conducted by them or
as described in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) and neither the Offeror nor the
Bank has received any notice of infringement or conflict with asserted
rights of others with respect to any patents, copyrights, trademarks,
service marks, trade names or other rights which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the financial condition, earnings,
business, prospects or results of operations of the Offeror and the Bank on
a consolidated basis, and the Offeror does not know of any basis for any
such infringement or conflict.
(xxiii) Except as adequately disclosed in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus), no labor dispute involving the Offeror or the Bank exists or,
to the knowledge of the Offeror, is imminent which would reasonably be
expected to have a material adverse effect on the financial condition,
earnings, business, prospects or results of operations of the Offeror and
the Bank on a consolidated basis or which is required to be disclosed in
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). Neither the Offeror nor the Bank has received
notice of any existing or threatened labor dispute by the employees of any
of its principal suppliers, customers or contractors which might be
expected to have an adverse effect on the condition (financial or
otherwise), earnings, affairs, business, prospects or results of operations
of the Offeror and the Bank on a consolidated basis.
(xxiv) The Offeror and the Bank have timely and properly prepared
and filed all necessary federal, state, local and foreign tax returns which
are required to be filed and have paid all taxes shown as due thereon and
have paid all other taxes and assessments to the extent that the same shall
have become due, except such as are being contested in good faith or where
the failure to so timely and properly prepare and file would not have a
material adverse effect on the financial condition, earnings, business,
prospects or results of operations of the Offeror and
12
<PAGE> 13
the Bank on a consolidated basis. The Offeror has no knowledge of any tax
deficiency which has been or might be assessed against the Offeror or the
Bank which, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the financial condition, earnings,
business, prospects or results of operations of the Offeror and the Bank on
a consolidated basis.
(xxv) Each of the contracts, agreements and instruments
described or referred to in the Registration Statement or the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) and each contract, agreement and instrument filed as an exhibit
to the Registration Statement is in full force and effect and is the legal,
valid and binding agreement of the Offeror or the Bank, enforceable in
accordance with its terms, except as the enforcement thereof may be limited
by general principles of equity and by bankruptcy, moratorium,
reorganization, fraudulent transfer or other laws relating to or affecting
creditors, rights generally, except as such matters that would not have a
material adverse effect on the Offeror, the Bank or their financial
condition, earnings, business, prospects or results of operations. Except
as disclosed in the Prospectus (or such Preliminary Prospectus), to the
knowledge of the Offeror, no other party to any such agreement is (with or
without notice or lapse of time or both) in breach or default thereunder,
except as such matters that would not have a material adverse effect on the
Offeror, the Bank or their financial condition, earnings, business,
prospects or results of operations; provided however, that the foregoing
shall not apply to defaults by borrowers from the Bank.
(xxvi) No relationship, direct or indirect, exists between or
among the Offeror or the Bank, on the one hand, and the directors,
officers, trustees, shareholders, organizers, customers or suppliers of the
Offeror or the Bank, on the other hand, which is required to be described
in the Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) which is not
adequately described therein.
(xxvii) No person has the right to request or require the Offeror
or the Bank to register any securities for offering and sale under the 1933
Act by reason of the filing of the Registration Statement with the
Commission or the issuance and sale of the Common Shares except as
adequately disclosed in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(xxviii) Except as described in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
there are no contractual encumbrances or restrictions or legal restrictions
on the ability of the Bank (A) to pay dividends or make any other
distributions on its capital stock or to pay any indebtedness owed to the
Offeror, (B) to make any loans or advances to, or investments in, the
Offeror or (C) to transfer any of its property or assets to the Offeror.
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<PAGE> 14
(xxix) Neither the Offeror nor the Bank is an "investment
company" or a company "controlled" by an investment company as such terms
are defined in the Investment Company Act of 1940, as amended.
(xxx) Other than due diligence material distributed to the
Dealers, the Offeror has not distributed and will not distribute prior to
the Closing Date any prospectus in connection with the offering of the
Common Shares, other than a Preliminary Prospectus, the Prospectus, the
Registration Statement and the other materials permitted by the 1933 Act
and the 1933 Act Regulations and reviewed by the Dealers.
(b) Each Dealer, severally and not jointly, represents and warrants to
the Offeror that:
(i) It is a broker and dealer duly registered with the Commission
pursuant to the 1934 Act and no proceeding has been initiated to revoke its
registration, it is a member in good standing of the NASD, and it is duly
registered as a broker and dealer under the applicable statutes in each
state in which it proposes to offer or sell the Common Shares, where such
registration is required. It will maintain all necessary broker and dealer
registrations through the Closing Date.
(ii) Prior to the effective date of this Agreement, it and its
officers, directors, agents and employees (A) have not at any time, either
directly or indirectly, sold, offered for sale, solicited offers to
subscribe for or buy, or otherwise approached or negotiated the sale of any
Common Shares or any other interest in the Offeror, and (B) will not,
either directly or indirectly, sell, offer for sale, solicit offers to
subscribe for or buy, or otherwise approach or negotiate the sale of any
Common Shares or any other interest in the Offeror prior to the Sales
Termination Date, except as provided in this Agreement.
(iii) It will offer and sell the Common Shares only by means of the
Preliminary Prospectus, Prospectus and other material authorized by the
Offeror. It will not give any information or make any representation in
connection with the Offering which is not contained in the Preliminary
Prospectus, Prospectus or other material provided by persons authorized by
the Offeror. It will solicit purchasers of Common Shares only in the
jurisdictions in which it has been advised in a blue sky memorandum
prepared by counsel to the Managing Dealer (the "Blue Sky Memorandum") that
the solicitation can be made, and the solicitations will be made subject to
any conditions set forth by such counsel in the Blue Sky Memorandum.
(iv) This Agreement has been duly and validly authorized, executed
and delivered on the Dealer's behalf and constitutes the legal, valid and
binding agreement of the Dealer, enforceable against the Dealer in
accordance with its terms, except as the enforcement thereof may be limited
by general principles of equity and by bankruptcy, moratorium,
reorganization, fraudulent conveyance or
14
<PAGE> 15
other laws relating to or affecting creditors' rights generally and except
as any indemnification or contribution provisions thereof may be limited
under applicable securities laws or public policy.
(v) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) do not and will not
conflict with, constitute a breach or violation of, or constitute a default
under, with or without notice or lapse of time or both, any of the terms,
provisions or conditions of the charter or bylaws of the Dealer, any
contract or instrument by which the Dealer is bound or any order, decree,
judgment, rule or regulation of any court, arbitrator, government, or
governmental agency or instrumentality, domestic or foreign, having
jurisdiction over the Dealer. No authorization, approval, consent or order
of, or filing, registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is required
in connection with the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus, except such as may be required
by, and have been obtained under, the 1933 Act, state securities laws,
Interpretations or Rules of the NASD in connection with the offer and
distribution of the Common Shares by the Dealer.
(vi) Any statements in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) based upon and in conformity with information furnished to the
Offeror by the Dealer in writing for use in the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) are correct and do not contain an untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3. CERTAIN COVENANTS OF THE OFFEROR. The Offeror covenants with the
several Dealers as follows:
(a) The Offeror shall use its best efforts to cause the Registration
Statement and any amendments thereto, if not effective at the time of
execution of this Agreement, to become effective as promptly as possible.
If the Registration Statement has become or becomes effective pursuant to
Rule 430A and information has been omitted therefrom in reliance on Rule
430A, then the Offeror will prepare and file in accordance with Rule 430A
and Rule 424(b) copies of the Prospectus or, if required by Rule 430A, a
post-effective amendment to the Registration Statement (including the
Prospectus) containing all information so omitted and will provide evidence
satisfactory to the Managing Dealer of such timely filing.
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<PAGE> 16
(b) The Offeror shall notify the Managing Dealer immediately, and
confirm such notice in writing:
(i) when the Registration Statement, or any post-effective
amendment to the Registration Statement, has become effective, or when
the Prospectus or any supplement to the Prospectus or any amended
Prospectus has been filed with the Commission;
(ii) of the receipt of any comments or requests from the
Commission relating to the Registration Statement and any 1934 Act
documents incorporated by reference therein;
(iii) of any request of the Commission to amend or supplement the
Registration Statement, any Preliminary Prospectus, the Prospectus or
the 1934 Act documents incorporated therein by reference or for
additional information relating thereto; and
(iv) of the issuance by the Commission or any state or other
regulatory body of any stop order or other order suspending the
effectiveness of the Registration Statement, preventing or suspending
the use of any Preliminary Prospectus or the Prospectus, or suspending
the qualification of any of the Common Shares for offering or sale in
any jurisdiction or the institution or threat of institution of any
proceedings for any of such purposes. The Offeror shall use its best
efforts to prevent the issuance of any such stop order or of any other
such order and if any such order is issued, to cause such order to be
withdrawn or lifted as soon as possible.
(c) The Offeror shall furnish to the Dealers, from time to time without
charge, as soon as available, as many copies as the Dealers may reasonably
request of (i) the registration statement as originally filed and of all
amendments thereto, in executed form, including exhibits, whether filed
before or after the Registration Statement becomes effective, (ii) all
exhibits and documents incorporated therein or filed therewith, (iii) all
consents and certificates of experts in executed form, (iv) each Preliminary
Prospectus and all amendments and supplements thereto, and (v) the
Prospectus, and all amendments and supplements thereto.
(d) During the time when a prospectus is required to be delivered under
the 1933 Act, the Offeror shall comply with the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the rules and regulations under the 1934 Act
so as to permit the completion of the distribution of the Common Shares as
contemplated herein and in the Prospectus. Except as required by applicable
law as evidenced by a written opinion of counsel relating thereto, the
Offeror shall not file any amendment to the registration statement as
originally filed or to the Registration Statement and shall not file any
amendment thereto or make any amendment or supplement to any Preliminary
Prospectus or to the Prospectus of which the Managing Dealer shall not
previously have been advised in writing and provided a copy a reasonable
time prior to the proposed filings thereof or to which the Managing Dealer
or counsel to the Managing Dealer shall reasonably object.
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<PAGE> 17
If it is necessary, in the Managing Dealer's reasonable opinion or in the
reasonable written opinion of counsel to the Managing Dealer to amend or
supplement the Registration Statement or the Prospectus in connection with
the distribution of the Common Shares, the Offeror shall forthwith amend or
supplement the Registration Statement or the Prospectus, as the case may be,
by preparing and filing with the Commission and furnishing to the Managing
Dealer, such number of copies as the Managing Dealer reasonably may request
of an amendment or amendments of, or a supplement or supplements to, the
Registration Statement or the Prospectus, as the case may be (in form and
substance reasonably satisfactory to the Managing Dealer and counsel to the
Managing Dealer). If any event shall occur as a result of which it is
necessary to amend or supplement the Prospectus to correct an untrue
statement of fact or to include any fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or if for any reason it is necessary at any time to amend or
supplement the Prospectus to comply with the 1933 Act and the 1933 Act
Regulations, the Offeror shall, subject to the second sentence of this
subsection (d), forthwith amend or supplement the Prospectus by preparing
and filing with the Commission, and furnishing to the Managing Dealer, such
number of copies as the Managing Dealer may reasonably request of an
amendment or amendments of, or a supplement or supplements to, the
Prospectus (in form and substance satisfactory to the Managing Dealer and
counsel to the Managing Dealer) so that, as so amended or supplemented, the
Prospectus shall not contain an untrue statement of fact or omit to state
any fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(e) The Offeror shall cooperate with the Managing Dealer and counsel to
the Managing Dealer in order to qualify the Common Shares for offering and
sale under the securities or blue sky laws of such jurisdictions as the
Managing Dealer may reasonably request and shall continue such
qualifications in effect so long as may be advisable for distribution of the
Common Shares; provided, however, that the Offeror shall not be required to
qualify to do business as a foreign corporation or file a general consent to
service of process in any jurisdiction in connection with the foregoing. The
Offeror shall file such statements and reports as may be required by the
laws of each jurisdiction in which the Common Shares have been qualified as
above. The Offeror will notify the Managing Dealer immediately of, and
confirm in writing, the suspension of qualification of the Common Shares or
threat thereof in any jurisdiction.
(f) The Offeror shall make generally available to its security holders
in the manner contemplated by Rule 158 of the 1933 Act Regulations and
furnish to the Dealers as soon as practicable, but in any event not later
than 16 months after the Effective Date, a consolidated earnings statement
of the Offeror conforming with the requirements of Section 11(a) of the 1933
Act and Rule 158.
(g) The Offeror shall use the proceeds from the sale of the Common
Shares to be sold hereunder in the manner specified in the Prospectus under
the caption "Use of Proceeds."
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<PAGE> 18
(h) For five years from the Effective Date, the Offeror shall furnish
to the Managing Dealer copies of all reports and communications (financial
or otherwise) furnished by the Offeror to the holders of the Common Shares
as a class, copies of all reports and financial statements filed with or
furnished to the Commission (other than portions for which confidential
treatment has been obtained from the commission) or with any national
securities exchange.
(i) For a period of 180 days from the Effective Date, the Offeror shall
not, directly or indirectly, offer for sale, sell or agree to sell or
otherwise dispose of any Common Shares other than pursuant to this Agreement
and the Prospectus, any other beneficial interests in the assets of the
Offeror or any securities of the Offeror or the Bank that are substantially
similar to the Common Shares, including any guarantee of such beneficial
interests or substantially similar securities, or securities convertible
into or exchangeable for or that represent the right to receive any such
beneficial interest or substantially similar securities, without the
Managing Dealer's prior written consent.
(j) The Offeror shall not, for a period of 180 days after the date
hereof, without the Managing Dealer's prior written consent, purchase,
redeem or call for redemption, or prepay or give notice of prepayment (or
announce any redemption or call for redemption, or any repayment or notice
of prepayment) of the Offeror' securities; provided however, that the
foregoing shall not prevent an employee from delivering the Offeror's
securities in payment of the exercise price of options issued under the
Offeror's 1998 Incentive Stock Option Plan, Outside Director Stock Option
Plan or the Restricted Non-Statutory Stock Option Plan or in payment of the
exercise price of warrants issued to certain of the Offeror's organizers.
(k) The Offeror shall not take, directly or indirectly, any action
designed to result in or which has constituted or which might cause or
result in stabilization or manipulation of the price of any security of the
Offeror to facilitate the sale or resale of the Common Shares and the
Offeror is not aware of any such action taken or to be taken by any
affiliate of the Offeror.
(l) Prior to the Closing Date, the Offeror will not issue any press
release or other communication directly or indirectly or hold any press
conference with respect to the Offeror, the Bank or the Offering without the
Managing Dealer's prior written consent, which will not be unreasonably
withheld.
(m) The Offeror shall use its best efforts to become duly registered as
a bank holding company under the Bank Holding Company Act of 1956, as
amended.
(n) The Offeror shall use its best efforts to cause the Bank to become
a Florida-state chartered commercial bank, validly existing and in good
standing under the laws of its jurisdiction of organization. The Bank will
have full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in and contemplated by
the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) and as currently being
conducted. The Bank will have full corporate power and authority to issue
all of its
18
<PAGE> 19
common securities to the Offeror. The Bank will be a member of the Federal
Reserve System. The deposit accounts of the Bank will be insured by the Bank
Insurance Fund administered by the FDIC up to the maximum amount provided by
law.
(o) The Offeror shall use its best efforts to cause the Bank to be duly
qualified to transact business as a foreign corporation and be in good
standing in each other jurisdiction in which it owns or leases property or
conducts its business so as to require such qualification and in which the
failure to so qualify would, individually or in the aggregate, have a
material adverse effect on the financial condition, earnings, business,
prospects or results of operations of the Offeror and the Bank on a
consolidated basis.
(p) The capital stock of the Bank shall conform to the description
thereof contained in the Prospectus or the financial information included
therein (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). Except as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
there are no outstanding securities convertible into or exchangeable for any
capital stock of the Bank and no restrictions upon the voting or transfer of
any capital stock of the Bank pursuant to the Bank's corporate charter or
bylaws or any agreement or other instrument to which the Offeror or the Bank
is a party or by which the Offeror or the Bank is bound.
(q) The Offeror shall cause the Bank to comply with all federal, state
and local statutes, regulations, ordinances and rules applicable to the
ownership and operation of its properties or the conduct of its business as
described in and contemplated by the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and as currently being conducted except for such
matters as would not be expected to have a materially adverse effect
thereon.
4. PAYMENT OF EXPENSES. Whether or not this Agreement is terminated or
the Offering is consummated, the Offeror covenants and agrees that it will pay
or cause to be paid (directly or by reimbursement) all costs and expenses
incident to the performance of its obligations under this Agreement, including,
but not limited to:
(a) the preparation, printing, filing, delivery and shipping of
the initial registration statement, the Preliminary Prospectus or
Prospectuses, the Registration Statement and the Prospectus and any
amendments or supplements thereto, and the printing, delivery and shipping
of this Agreement and any other placement documents (including, without
limitation, selected dealers agreements), the certificates for the Common
Shares, all preliminary and final Blue Sky Memoranda and any legal
investment surveys and any supplements thereto;
(b) all fees, expenses and disbursements of the Offeror's counsel and
accountants;
(c) all fees and expenses incurred in connection with the
qualification of the Common Shares under the securities or blue sky laws of
such jurisdictions as the Managing Dealer may request, including all filing
fees and reasonable fees and
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<PAGE> 20
disbursements of counsel to the Managing Dealer in connection therewith,
including, without limitation, in connection with the preparation of any
preliminary and final Blue Sky Memoranda and any legal investment surveys
and any supplements thereto;
(d) payment to the Managing Dealer of its documented out-of-pocket
expenses incurred in connection with the Offering, up to a maximum of
$50,000;
(e) all fees and expenses incurred in connection with filings made
with the NASD;
(f) the cost of furnishing to the Dealers copies of the initial
registration statements, any Preliminary Prospectus, the Registration
Statement and the Prospectus and all amendments or supplements thereto;
(g) the costs and charges of any transfer agent or registrar and the
fees and disbursements of counsel to any transfer agent or registrar; and
(h) all costs and expenses (including stock transfer taxes) incurred in
connection with the printing, issuance and delivery of the Common Shares to
purchasers solicited by the Dealers.
If the offer and sale of Common Shares contemplated by this Agreement
is not completed due to a default of this Agreement by the Offeror (including a
termination pursuant to Section 8(a), (b) or (c)), the Offeror will pay the
Managing Dealer its accountable out-of-pocket expenses in connection herewith or
in contemplation of the performance of the Managing Dealer's obligations
hereunder, including without limitation travel expenses, reasonable fees,
expenses and disbursements of counsel or other out-of-pocket expenses incurred
by the Managing Dealer in connection with any discussion of the Offering or the
contents of the Registration Statement, any investigation of the Offeror and the
Bank, or any preparation for the marketing, sale or delivery of the Common
Shares, in each case following presentation of reasonably detailed invoices
therefor.
5. CONDITIONS OF THE DEALERS' OBLIGATIONS. The obligations of each of
the several Dealers to use their best efforts to solicit purchasers for the
Common Shares are subject to the accuracy of and compliance with the
representations and warranties and agreements of the Offeror herein as of the
date hereof and as of each applicable closing date, to the accuracy of the
written statements of the Offeror made pursuant to the provisions hereof, to the
performance by the Offeror of its covenants and obligations hereunder and to the
following additional conditions:
(a) If the Registration Statement or any amendment thereto filed prior
to the Closing Date has not been declared effective prior to the time of
execution hereof, the Registration Statement shall become effective not
later than 10:00 a.m., Miami time, on the first Business Day following the
time of execution of this Agreement, or at such later time and date as the
Managing Dealer may agree to in writing. If required, the Prospectus and any
amendment or supplement thereto shall have been timely filed in accordance
with Rule 424(b) and Rule 430A under the 1933 Act and Section 3(a) hereof.
No stop order suspending the effectiveness of the Registration Statement or
any amendment or supplement thereto shall have been issued under the 1933
Act or any
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applicable state securities laws and no proceedings for that purpose shall
have been instituted or shall be pending, or, to the knowledge of the
Offeror or the Managing Dealer, shall be contemplated by the Commission or
any state authority. Any request on the part of the Commission or any state
authority for additional information (to be included in the Registration
Statement or Prospectus or otherwise) shall have been disclosed to the
Managing Dealer and complied with to the Managing Dealer's reasonable
satisfaction and to the reasonable satisfaction of counsel to the Managing
Dealer.
(b) The Managing Dealer shall not have advised the Offeror at or before
the applicable closing date that the Registration Statement or any
post-effective amendment thereto, or the Prospectus or any amendment or
supplement thereto, contains an untrue statement of fact which, in the
Managing Dealer's opinion, is material or omits to state any fact which, in
the Managing Dealer's opinion, is material and is required to be stated
therein or is necessary to make statements therein (in the case of the
Prospectus or any amendment or supplement thereto, in light of the
circumstances under which they were made) not misleading or, if so advised,
the Offeror shall have cured such disclosure to the satisfaction of the
Managing Dealer.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement and the Common Shares,
and the authorization and form of the Registration Statement and Prospectus,
other than financial statements and other financial data, and all other
legal matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all respects to counsel to the
Managing Dealer, and the Offeror and the Bank shall have furnished to such
counsel all documents and information relating thereto that they may
reasonably request to enable them to pass upon such matters.
(d) Gunster, Yoakley, Valdes-Fauli & Stewart, P.A., counsel to the
Offeror, shall have furnished to the Managing Dealer their opinion, dated
the Effective Date, in form and substance reasonably satisfactory to counsel
to the Managing Dealer, to the effect that:
(i) The Offeror has been duly incorporated and is validly existing
and in good standing under the laws of the State of Florida. The Offeror
has full corporate power and authority to own or lease its properties
and to conduct its business as such business is described in the
Prospectus and is currently conducted.
(ii) The capital stock of the Offeror and the Bank conform in all
material respects to the descriptions thereof contained in the
Prospectus. The capital stock of the Offeror authorized and issued as of
December 31, 1998 is as set forth under the caption "Capitalization" in
the Prospectus, has been duly authorized and validly issued, and is
fully paid and nonassessable. The form of certificates to evidence the
Common Shares has been approved by or on behalf of the Offeror and is in
due and proper form and complies with all applicable requirements. There
are no outstanding rights, options or warrants to purchase
21
<PAGE> 22
from the Offeror, no other outstanding securities convertible into or
exchangeable for, and no commitments, plans or arrangements to issue,
any shares of capital stock of the Offeror or the Bank, except as
described in the Prospectus.
(iii) The Offeror has all requisite corporate power and authority to
issue, sell and deliver the Common Shares in accordance with and upon
the terms and conditions set forth in this Agreement, the Registration
Statement and the Prospectus. All corporate action required to be taken
by the Offeror for the authorization, issuance, sale and delivery of the
Common Shares in accordance with such terms and conditions has been
validly and sufficiently taken. All of the Common Shares have been duly
and validly authorized and, when sold and delivered in accordance with
this Agreement, will be duly and validly issued, fully paid and
nonassessable, and will conform in all material respects to the
description thereof in the Registration Statement and the Prospectus.
There are no preemptive or other rights to subscribe for or to purchase,
and other than as disclosed in the Prospectus no restrictions upon the
voting or transfer of, any shares of capital stock or equity securities
of the Offeror or the Bank pursuant to the corporate charter, bylaws or
other governing documents of the Offeror or the Bank, or, to such
counsel's knowledge, any agreement or other instrument to which either
Offeror or the Bank is a party or by which either Offeror or the Bank
may be bound.
(iv) The Offeror has all requisite corporate power to enter into
and perform its obligations under this Agreement, and this Agreement has
been duly and validly authorized, executed and delivered by the Offeror
and constitutes the legal, valid and binding obligations of the Offeror
enforceable in accordance with its terms, except as the enforcement
hereof or thereof may be limited by general principles of equity and by
bankruptcy, insolvency, reorganization, receivership, fraudulent
transfer, moratorium or other laws relating to or affecting creditors,
rights generally, and except as the indemnification and contribution
provisions hereof may be limited under applicable laws and public policy
and certain remedies may not be available in the case of a non-material
breach.
(v) To such counsel's knowledge, neither the Offeror nor the
Bank is in breach or violation of, or default under, with or without
notice or lapse of time or both, its corporate charter, bylaws or other
governing document. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement do not and will not conflict with, result in the creation or
imposition of any lien, claim, charge, encumbrance or restriction upon
any property or assets of the Offeror or the Bank or the Common Shares
pursuant to, or constitute a breach or violation of, or constitute a
default under, with or without notice or lapse of time or both, any of
the terms, provisions or conditions of the charter, bylaws or other
governing document of the Offeror or the Bank, or to such counsel's
knowledge, any material contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease, franchise, license or any other
agreement or instrument to which either the Offeror or the Bank is a
party or by which any of them or any of their respective properties may
be bound
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<PAGE> 23
or any order, decree, judgment, franchise, license, Permit, rule or
regulation of any court, arbitrator, government, or governmental agency
or instrumentality, domestic or foreign, known to such counsel having
jurisdiction over the Offeror or the Bank or any of their respective
properties. No authorization, approval, consent or order of, or filing,
registration or qualification with, any person (including, without
limitation, any court, governmental body or authority) is required under
Florida law in connection with the transactions contemplated by this
Agreement in connection with the sale of the Common Shares by the
Dealers.
(vi) To such counsel's knowledge, holders of securities of the
Offeror either do not have any right that, if exercised, would require
the Offeror to cause such securities to be included in the Registration
Statement or have waived such right. To such counsel's knowledge,
neither the Offeror nor the Bank is a party to any agreement or other
instrument which grants rights for or relating to the registration of
any securities of the Offeror.
(vii) Except as set forth in the Registration Statement and the
Prospectus, (A) no action, suit or proceeding at law or in equity is
pending or threatened in writing to which the Offeror or the Bank is or
may be a party, and (B) no action, suit or proceeding is pending or
threatened in writing against or affecting the Offeror or the Bank or
any of their properties, before or by any court or governmental
official, commission, board or other administrative agency, authority or
body, or any arbitrator, wherein an unfavorable decision, ruling or
finding would have a material adverse effect on the consummation of this
Agreement or the solicitation and sale of the Common Shares as
contemplated herein or the financial condition, earnings, business, or
results of operations of the Offeror and the Bank on a consolidated
basis or which is required to be disclosed in the Registration Statement
or the Prospectus and is not so disclosed.
(viii) No authorization, approval, consent or order of or filing,
registration or qualification with, any person (including, without
limitation, any court, governmental body or authority) is required in
connection with the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus, except such as may be
required by, and have been obtained under, the 1933 Act, state
securities laws, or Interpretations or Rules of the NASD in connection
with the sale and distribution of the Common Shares by the Dealers.
(ix) The Registration Statement and the Prospectus and any
amendments or supplements thereto and any documents incorporated therein
by reference (other than the financial statements or other financial
and/or statistical data included therein or omitted therefrom and Dealer
Information, as to which such counsel need express no opinion) comply as
to form with the requirements of the 1933 Act and the 1933 Act
Regulations as of their respective dates of effectiveness.
(x) There are no contracts, agreements, leases or other
documents of a character required to be disclosed in the Registration
Statement or Prospectus or
23
<PAGE> 24
to be filed as exhibits to the Registration Statement that are not so
disclosed or filed.
(xi) The statements under the captions "Capitalization,"
"Description of Capital Stock," and "Supervision and Regulation" in the
Prospectus, insofar as such statements constitute a summary of legal and
regulatory matters, documents, instruments or proceedings referred to
therein are accurate descriptions of the matters summarized therein and
fairly present in all material respects the information called for with
respect to such legal and regulatory matters, documents, instruments and
proceedings, other than financial and statistical data as to which said
counsel expresses no opinion or belief.
(xii) Such counsel has been advised by the staff of the Commission
that the Registration Statement has become effective under the 1933 Act;
any required filing of the Prospectus pursuant to Rule 424(b) has been
made within the time period required by Rule 424(b); to such counsel's
knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for a stop
order are pending or threatened by the Commission.
(xiii) Except as set forth in the Prospectus, to such counsel's
knowledge, there are no contractual encumbrances or restrictions, or
legal restrictions (excluding any encumbrances or restrictions of
general application to state banks contained in laws, rules and
regulations of applicable regulatory authorities) on the ability of the
Bank (A) to pay dividends or make any other distributions on its capital
stock or to pay indebtedness owed to the Offeror, (B) to make any loans
or advances to, or investments in, the Offeror or (C) to transfer any of
its property or assets to the Offeror.
In giving the above opinion, such counsel may state that, insofar as
such opinion involves factual matters, they have relied upon certificates of
officers of the Offeror including, without limitation, certificates as to
the identity of any and all contracts, indentures, mortgages, deeds of
trust, loans or credit agreements, notes, leases, franchises, licenses or
other agreements or instruments, and all permits, easements, consents,
licenses, franchises and government regulatory authorizations, for purposes
of paragraphs (v), (x) and (xiii) hereof and certificates of public
officials.
Such counsel shall also confirm that, in connection with the
preparation of the Registration Statement and Prospectus, such counsel has
participated in conferences with officers and representatives of the Offeror
and with their independent public accountants and with the Managing Dealer
and counsel to the Managing Dealer, at which conferences such counsel made
inquiries of such officers, representatives and accountants and discussed in
detail the contents of the Registration Statement and Prospectus and the
documents incorporated therein by reference and such counsel has no reason
to believe (A) that the Registration Statement or any amendment thereto
(except for the financial statements and related schedules and financial and
statistical data included therein or omitted therefrom or Dealer
Information, as to which such counsel need express no opinion), at the time
the Registration Statement or any such amendment became
24
<PAGE> 25
effective, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or (B) that the Prospectus or any amendment or
supplement thereto or the documents contained therein by reference (except
for the financial statements and related schedules and financial and
statistical data included therein or omitted therefrom or Dealer
Information, as to which such counsel need express no opinion), at the time
the Registration Statement became effective (or, if the term "Prospectus"
refers to the prospectus first filed pursuant to Rule 424(b) of the 1933 Act
Regulations, at the time the Prospectus was issued), at the time any such
amended or supplemented Prospectus was issued, and at the applicable closing
date, contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, or (C) that there is any amendment
to the Registration Statement required to be filed that has not already been
filed.
(e) Kutak Rock, counsel to the Managing Dealer, shall have furnished to
the Managing Dealer their opinion, dated the applicable closing date, with
respect to the sufficiency of all corporate procedures and other legal
matters relating to this Agreement, the validity of the Common Shares, the
Registration Statement, the Prospectus and such other related matters as the
Managing Dealer reasonably may request and there shall have been furnished
to such counsel such documents and other information as they may request to
enable them to pass on such matters. In giving such opinion, Kutak Rock may
rely as to matters of fact upon statements and certifications of officers of
the Offeror and of other appropriate persons.
(f) On the date of this Agreement and on each applicable closing date,
the Dealers shall have received from Morrison, Brown, Argiz & Co. a letter,
dated the date of this Agreement and the applicable closing date,
respectively, in form and substance satisfactory to the Managing Dealer,
confirming that they are independent public accountants with respect to the
Offeror, within the meaning of the 1933 Act and the 1933 Act Regulations,
and stating in effect that:
(i) In their opinion, the financial statements of the Offeror
audited by them and included in the Registration Statement comply as
to form with the applicable accounting requirements of the 1933 Act and
the 1933 Act Regulations.
(ii) On the basis of the procedures specified by the American
Institute of Certified Public Accountants as described in SAS No. 71,
"Interim Financial Information," inquiries of officials of the Offeror
responsible for financial and accounting matters, and such other
inquiries and procedures as may be specified in such letter, which
procedures do not constitute an audit in accordance with U.S. generally
accepted auditing standards, nothing came to their attention that caused
them to believe that, if applicable, the unaudited interim financial
statements of the Offeror included in the Registration Statement do not
comply as to form with the applicable accounting requirements of the
1933 Act and 1933 Act Regulations
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<PAGE> 26
or are not in conformity with U.S. generally accepted accounting
principles applied on a basis substantially consistent, except as noted
in the Registration Statement, with the basis for the audited financial
statements of the Offeror included in the Registration Statement.
(iii) On the basis of limited procedures, not constituting an
audit in accordance with U.S. generally accepted auditing standards,
consisting of a reading of the unaudited interim financial statements
and other information referred to below, a reading of the latest
available unaudited condensed financial statements of the Offeror,
inspection of the minute books of the Offeror since the date of the
latest audited financial statements of the Offeror included in the
Registration Statement, inquiries of officials of the Offeror
responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
capital stock, allowance for loan losses, or net loans
receivable of the Offeror, any increase in the long-term debt,
short term borrowings, obligations under capital leases or real
estate owned of the Offeror, any decreases in total assets or
shareholders equity of the Offeror, or any changes, decreases or
increases in other items specified by the Dealers, in each case
as compared with amounts shown in the latest unaudited interim
statement of financial condition of the Offeror included in the
Registration Statement except in each case for changes,
increases or decreases which the Registration Statement
specifically discloses, have occurred or may occur or which are
described in such letter; and
(B) for the period from the date of the latest unaudited
interim financial statements included in the Registration
Statement to the specified date referred to in clause (iii)(A),
there were any decreases in the interest income, net interest
income, other operating income or net income of the Offeror or
in the per share amount of net income of the Offeror, any
increase in other operating expense of the Offeror, or any
changes, decreases or increases in any other items specified by
the Dealers, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Dealers, except in each case for
increases or decreases which the Registration Statement
discloses have occurred or may occur, or which are described in
such letter.
(iv) In addition to the audit referred to in their report
included in the Registration Statement and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (ii) and (iii) above, they have carried out certain
specified procedures, not constituting an audit in accordance with U.S.
generally accepted auditing standards, with respect to
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<PAGE> 27
certain amounts, percentages and financial information specified by the
Dealers which are derived from the general accounting records and
financial statements of the Offeror which appear in the Registration
Statement specified by the Dealers in the Registration Statement, and
have compared such amounts, percentages and financial information with
the accounting records and the material derived from such records and
financial statements of the Offeror have found them to be in agreement.
In the event that the letters to be delivered referred to above set
forth any such changes, decreases or increases as specified in clauses
(iii)(A) or (iii)(B) above, or any exceptions from such agreement specified
in clause (iv) above, it shall be a further condition to the obligations of
the Dealers that the Dealers shall have determined, after discussions with
officers of the Offeror responsible for financial and accounting matters,
that such changes, decreases, increases or exceptions as are set forth in
such letters do not (x) reflect an adverse change in the items specified in
clause (iii)(A) above as compared with the amounts shown in the latest
unaudited statement of financial condition of the Offeror included in the
Registration Statement, (y) reflect an adverse change in the items specified
in clause (iii)(B) above as compared with the corresponding periods
specified by the Managing Dealer, or (z) reflect a material change in items
specified in clause (iv) above from the amounts shown in the Preliminary
Prospectus distributed by the Dealers in connection with the Offering or
from the amounts shown in the Prospectus.
(g) On the Initial Closing Date, any Subsequent Closing Date and the
Closing Date, the Managing Dealer shall have received certificates of the
chief executive officer and the chief financial and accounting officer of
the Offeror, which certificates shall be deemed to be made on behalf of the
Offeror dated as of such closing date, evidencing satisfaction of the
conditions of Section 5(a) and stating that (i) the representations and
warranties of the Offeror set forth in Section 2(a) hereof are accurate as
of such closing date and that the Offeror has complied in all material
respects with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to such closing date; (ii) since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any material adverse change
in the financial condition, earnings, business, prospects or results of
operations of the Offeror and the Bank on a consolidated basis; (iii) since
such dates there has not been any transaction entered into by the Offeror or
the Bank other than transactions in the ordinary course of business; and
(iv) they have carefully examined the Registration Statement and the
Prospectus as amended or supplemented and nothing has come to their
attention that would lead them to believe that either the Registration
Statement or the Prospectus, or any amendment or supplement thereto as of
their respective effective or issue dates, contained, and the Prospectus as
amended or supplemented at such closing date, contains any untrue statement
of a material fact, or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The
certificate of the officers of the Offeror shall further state that no stop
order affecting the Registration Statement is in effect or, to their
knowledge, threatened.
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<PAGE> 28
(h) The NASD, upon review of the terms of the public offering of the
Common Shares, shall not have objected to the Dealers' participation in such
offering.
(i) Prior to the Initial Closing Date, the Offeror shall have furnished
to the Managing Dealer and counsel to the Managing Dealer all such other
documents, certificates and opinions as they have reasonably requested.
All opinions, certificates, letters and other documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Managing Dealer. Any certificate signed by an
officer of the Offeror and delivered to the Managing Dealer pursuant hereto
shall also be deemed to be a representation and warranty of the Offeror to the
Dealers as to the statements made therein. The Offeror shall furnish to the
Managing Dealer conformed copies of such opinions, certificates, letters and
other documents as the Managing Dealer reasonably may request.
If any of the conditions referred to in this Section 5 shall not have
been fulfilled when and as required by this Agreement, this Agreement and all of
the several Dealers' obligations hereunder may be terminated by the Managing
Dealer on notice to the Offeror at, or at any time before, the Closing Date. Any
such termination shall be without liability of the Dealers to the Offeror or the
Bank.
6. CONDITIONS OF THE OFFEROR'S OBLIGATIONS. The obligations of the Offeror
hereunder are subject to the accuracy of and compliance with the representations
and warranties and agreements of the Managing Dealer herein as of the date
hereof and as of the applicable closing date and to the performance by the
Managing Dealer of its obligations hereunder.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Offeror agrees to indemnify and hold harmless each of the
Dealers, each of their directors, officers and agents, and each person, if
any, who controls any Dealer within the meaning of the 1933 Act and the 1934
Act, against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and reasonable attorney fees
and expenses), joint or several, arising out of or based upon (i) any untrue
statement or alleged untrue statement of fact made by the Offeror or the
Bank contained in the Registration Statement, any Preliminary Prospectus or
the Prospectus, or in any amendment or supplement thereto, (ii) any untrue
statement or alleged untrue statement of fact made by the Offeror or the
Bank upon any blue sky application or other document executed by the Offeror
or the Bank specifically for that purpose or based upon written information
furnished by the Offeror or the Bank filed in any state or other
jurisdiction in order to qualify any of the Common Shares under the
securities laws thereof (any such application, document or information being
hereinafter referred to as a "Blue Sky Application"), (iii) any omission or
alleged omission to state a material fact in the Registration Statement, any
Preliminary Prospectus or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application required to be stated therein or
necessary to make the statements therein not misleading, and against any and
all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation and attorney fees), arising out of or based upon any
untrue statement or
28
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alleged untrue statement of a material fact contained in any Preliminary
Prospectus or the Prospectus, or in any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, (iv) any breach of any representation or warranty
made by the Offeror in Section 2(a) hereof, (v) any sales efforts made by
the Offeror to sell its securities that are not made through the Dealers
pursuant to this Agreement, or (vi) the enforcement of this indemnification
provision or the contribution provisions of Section 7(d); and shall
reimburse each such indemnified party for any reasonable legal or other
expenses as incurred, but in no event less frequently than 30 days after
each invoice is submitted, incurred by them in connection with investigating
or defending against any such loss, claim, damage, liability or action,
notwithstanding the possibility that payments for such expenses might later
be held to be improper, in which case such payments shall be promptly
refunded; provided, however, that the Offeror shall not be liable in any
such case to the extent, but only to the extent, that any such losses,
claims, damages, liabilities and expenses arise out of or are based upon any
untrue statement or omission or allegation thereof that has been made
therein or omitted therefrom in reliance upon and in conformity the Dealer
Information; provided further, that the indemnification contained in this
paragraph with respect to any Preliminary Prospectus shall not inure to the
benefit of any Dealer (or of any person controlling such Dealer) to the
extent any such losses, claims, damages, liabilities or expenses results
from the fact that such Dealer sold Common Shares to a person to whom there
was not sent or given, at or prior to the written confirmation of such sale,
a copy of the Prospectus (as amended or supplemented if any amendments or
supplements thereto shall have been furnished to such Dealer in sufficient
time to distribute same with or prior to the written confirmation of the
sale involved), if required by law, and if such loss, claim, damage,
liability or expense would not have arisen but for the failure to give or
send such person such document. The foregoing indemnity agreement is in
addition to any liability the Offeror or the Bank may otherwise have to any
such indemnified party.
(b) Each Dealer severally agrees to indemnify and hold harmless the
Offeror, the Bank, each of their directors, each of their officers who
signed the Registration Statement and each person, if any, who controls the
Offeror or the Bank within the meaning of the 1933 Act, to the same extent
as required by the foregoing indemnity from the Offeror to the Dealers, but
only with respect to the Dealer Information or information furnished by a
Dealer in a Blue Sky Application and only for failure to deliver a final
prospectus to investors in accordance with the 1933 Act. The foregoing
indemnity agreement is in addition to any liability which any such Dealer
may otherwise have to any such indemnified party.
(c) If any action or claim shall be brought or asserted against any
indemnified party or any person controlling an indemnified party in respect
of which indemnity may be sought from the indemnifying party, such
indemnified party or controlling person shall promptly notify the
indemnifying party in writing, and the indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory
to the indemnified party and the payment of all expenses; provided, however,
that the failure so to notify the indemnifying party shall not relieve it
from any liability which it
29
<PAGE> 30
may have to an indemnified party otherwise than under such paragraph, and
further, shall only relieve it from liability under such paragraph to the
extent prejudiced thereby. Any indemnified party or any such controlling
person shall have the right to employ separate counsel in any such action
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such indemnified party or such
controlling person unless (i) the employment thereof as separate counsel and
the payment of such counsel's fees has been specifically authorized by the
indemnifying party in writing, (ii) the indemnifying party has failed to
assume the defense or to employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including
any impleaded parties) include both such indemnified party or such
controlling person and the indemnifying party and such indemnified party or
such controlling person shall have been advised in writing by such counsel
that the representation of both parties by the same counsel would be
inappropriate due to the actual or potential differing interests between
them (in which case, if such indemnified party or controlling person
notifies the indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party
shall not be required to assume the defense of such action on behalf of such
indemnified party or such controlling person) it being understood, however,
that the indemnifying party shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate
firm of attorneys at any time and for all such indemnified party and
controlling persons, which firm shall be designated in writing by the
indemnified party and shall be reasonably acceptable to the indemnifying
party. Each indemnified party and each controlling person, as a condition of
such indemnity, shall use reasonable best efforts to cooperate with the
indemnifying party in the defense of any such action or claim. The
indemnifying party shall not be liable for any settlement of any such action
effected without its prior written consent, but if there be a final judgment
for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party and any such controlling
person from and against any loss, claim, damage, liability or expense by
reason of such settlement or judgment.
An indemnifying party shall not, without the prior written consent of
each indemnified party, settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnity may be sought hereunder (whether or not such
indemnified party or any person who controls such indemnified party within
the meaning of the 1933 Act is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes a
release of each such indemnified party reasonably satisfactory to each such
indemnified party and each such controlling person from all liability
arising out of such claim, action, suit or proceeding or unless the
indemnifying party shall confirm in a written agreement with each
indemnified party, that notwithstanding any federal, state or common law,
such settlement, compromise or consent shall not alter the right of any
indemnified party or controlling person to indemnification or contribution
as provided in this Agreement.
30
<PAGE> 31
(d) If the indemnification provided for in this Section 7 is legally
unavailable or insufficient to hold harmless an indemnified party under
paragraphs (a), (b) or (c) hereof in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Offeror and the
Bank on the one hand and the Dealers on the other from the offering of the
Common Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Offeror and the Bank on the one hand and the Dealers
on the other in connection with the statements or omissions that resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Offeror and the Bank on the one hand and the Dealers on the other shall be
deemed to be in the same proportion as the total net proceeds from the
offering of the Common Shares (before deducting expenses) received by the
Offeror bear to the total underwriting discounts, commissions and
compensation received by the Dealers, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of the Offeror and
the Bank on the one hand and of the Dealers on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of fact or the omission or alleged omission to state a fact
relates to information supplied by the Offeror or by the Dealers and the
parties, relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The Offeror and
each of the Dealers agree that it would not be just and equitable if
contribution pursuant to this paragraph (d) were determined by pro rata
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities and expenses referred to in the first sentence of this paragraph
(d) shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this paragraph (d), a Dealer shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Common Shares sold by such Dealer and distributed to the
public were offered to the public exceeds the amount of any damages that
such Dealer has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
For purposes of this paragraph (d), each person who controls a Dealer
within the meaning of the 1933 Act shall have the same rights to
contribution as the Dealers, and each person who controls the Offeror within
the meaning of the 1933 Act and the 1934 Act, each officer of the Offeror
who shall have signed the Registration Statement and each director of the
Offeror shall have the same rights to contribution as the Offeror subject in
each case to the preceding sentence. The obligations of the Offeror under
this paragraph (d) shall be in addition to any liability which the Offeror
may otherwise have
31
<PAGE> 32
and the obligations of the Dealers under this paragraph (d) shall be in
addition to any liability that the Dealers may otherwise have.
(e) The indemnity and contribution agreements contained in this Section
7 and the representations and warranties of the Offeror set forth in this
Agreement shall remain operative and in full force and effect, regardless of
(i) any investigation made by or on behalf of the Dealers or any person
controlling a Dealer or by or on behalf of the Offeror, or such directors or
officers (or any person controlling the Offeror), (ii) any sale of any
Common Shares and payment of commissions thereon hereunder and (iii) any
termination of this Agreement. A successor of a Dealer or of the Offeror,
such directors or officers (or of any person controlling a Dealer or the
Offeror) shall be entitled to the benefits of the indemnity, contribution
and reimbursement agreements contained in this Section 7.
8. TERMINATION. The Managing Dealer shall have the right to terminate
this Agreement at any time at or prior to the Closing Date without liability on
the part of the Dealers to the Offeror, if:
(a) the Offeror has failed, refused, or been unable to perform any
agreement on its part to be performed under this Agreement, or any of the
conditions referred to in Section 5 shall not have been fulfilled, when and
as required by this Agreement;
(b) the Offeror or the Bank shall have sustained any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree which in the judgment of the
Managing Dealer impairs in any material respect the investment quality of
the Common Shares;
(c) there has been since the respective dates as of which information is
given in the Registration Statement or the Prospectus, any material adverse
change in, or any development which is likely to have a material adverse
effect on, the financial condition, earnings, business, prospects or results
of operations of the Offeror and the Bank on a consolidated basis, whether
or not arising in the ordinary course of business;
(d) there has occurred any outbreak of hostilities or other calamity or
crisis or change in general economic, political or financial conditions, or
internal conditions, the effect of which on the financial markets of the
United States is such as to make it, in the Managing Dealer's reasonable
judgment, impracticable to market the Common Shares or enforce contracts for
the sale of the Common Shares;
(e) trading generally on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market shall have been suspended, or minimum
or maximum prices for trading shall have been fixed, or maximum ranges for
prices for securities shall have been required, by any of said exchanges or
market system or by the Commission or any other governmental authority;
(f) a banking moratorium shall have been declared by either federal or
Florida authorities;
32
<PAGE> 33
(g) any action shall have been taken by any government in respect of
its monetary affairs which, in the Managing Dealer's reasonable judgment,
has an adverse effect on the United States securities markets; or
(h) the Offeror or the Bank receives written notice that the Bank will
not be granted the necessary approvals from the FDBF, the FDIC or FRBA, will
not be granted any necessary Permit or any necessary Permit will be revoked.
If this Agreement shall be terminated pursuant to this Section 8, the
Offeror shall not then be under any liability to the Dealers except as provided
in Sections 4 and 7 hereof.
9. EFFECTIVE DATE OF AGREEMENT. If the Registration Statement is not
effective at the time of execution of this Agreement, this Agreement shall
become effective on the Effective Date at the time the Commission declares the
Registration Statement effective. The Offeror shall immediately notify the
Managing Dealer when the Registration Statement becomes effective.
If the Registration Statement is effective at the time of execution of
this Agreement, this Agreement shall become effective at 11:00 a.m. Miami time,
on the first full Business Day following the day on which this Agreement is
executed. Until such time as this Agreement shall have become effective, it may
be terminated by the Offeror, by notifying the Managing Dealer, or by the
Managing Dealer, by notifying the Offeror, except that the provisions of
Sections 4 and 7 shall at all times be effective.
10. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
The representations, warranties, indemnities, agreements and other statements of
the Offeror and its officers and directors set forth in or made pursuant to this
Agreement and the agreements of the Dealers contained in Section 7 hereof shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Offeror or controlling persons of the Offeror, or by
or on behalf of the Dealers or controlling persons of the Dealers or any
termination or cancellation of this Agreement and shall survive sales of and
commission payments on the Common Shares.
11. NOTICES. Except as otherwise provided in this Agreement, all
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand, mailed by registered or
certified mail, return receipt requested, or transmitted by any standard form of
telecommunication and confirmed. Notices to the Offeror shall be sent to 255
Palm Avenue, Miami Beach, Florida 33139, Fax (305) 673-9407, Attention: Mr. Hans
Mueller (with a copy to Gunster, Yoakley, Valdes-Fauli & Stewart, P.A., One
Biscayne Tower, Two South Biscayne Blvd., Suite 3400, Miami, Florida 33131, Fax
(305) 376-6010, Attention: Richard J. Bischoff, Esq.); and notices to the
Dealers shall be sent c/o Coast Partners Securities, Inc., 601 California
Street, Suite 1400, San Francisco, California 94108, Fax (415) 781-1824,
Attention: Richard A. Sleight (with a copy to Kutak Rock, 717 Seventeenth
Street, Suite 2900, Denver, Colorado, 80202, Fax (303) 292-7799, Attention:
Robert J. Ahrenholz, Esq.).
12. PARTIES. The Agreement herein set forth is made solely for the
benefit of the Dealers and the Offeror and, to the extent expressed, directors,
and officers of the Offeror, any person controlling the Offeror or the Dealers,
and their respective successors and assigns. No
33
<PAGE> 34
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser, in
his status as such purchaser, from the Dealers of the Common Shares.
13. LIABILITY OF MANAGING DEALER. The Managing Dealer shall be under no
obligation to the Offeror or any other party hereto for any act or omission of
any other Dealer, and shall not be liable hereunder except for obligations
expressly assumed hereunder.
14. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California, without giving effect to the choice of law or conflicts of
law principles thereof.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and when a counterpart has been executed by each party hereto all
such counterparts taken together shall constitute one and the same Agreement.
34
<PAGE> 35
If the foregoing is in accordance with the Managing Dealer's
understanding of our agreement, please sign and return to us a counterpart
hereof, whereupon this shall become a binding agreement between the Offeror and
the Managing Dealer in accordance with its terms.
Very truly yours,
COASTAL COMMUNITY GROUP, INC.
By
--------------------------------------
Name
------------------------------------
Title
-----------------------------------
CONFIRMED AND ACCEPTED,
as of ________________________, 1999.
COAST PARTNERS SECURITIES, INC.
Acting on behalf of itself and the several
Dealers named in Schedule A
By
--------------------------------------
Name
------------------------------------
Title
-----------------------------------
<PAGE> 36
SCHEDULE A
LIST OF DEALERS
A-1
<PAGE> 37
APPENDIX A
COASTAL COMMUNITY GROUP, INC.
SUBSCRIPTION AGREEMENT
The undersigned hereby subscribers for shares of common stock, $.01 par
value, of Coastal Community Group, Inc. ("Coastal"), at a price of $10.00 per
share, with a minimum investment of $2,500 (250 shares) and a maximum investment
of $500,000 (50,000 shares), and encloses full payment herewith in the amount of
$ . This Subscription Agreement is irrevocable until the termination of the
offering of the common stock, unless otherwise provided by applicable law, and
subject to all the terms and conditions contained in the final prospectus of
Coastal (the "Prospectus").
PLEASE MAKE CHECKS PAYABLE TO "SUN TRUST BANK, MIAMI, N.A. AS ESCROW
AGENT - COASTAL COMMUNITY GROUP, INC."
The undersigned represents and warrants to Coastal as follows:
1. The undersigned acknowledges that he has received and reviewed the
Prospectus.
2. The undersigned recognizes that Coastal has no financial and operating
history and that its stock as an investment involves risks as set forth in the
Prospectus, and hereby confirms that the undersigned understands such risks.
3. The undersigned is aware that (i) this subscription may be rejected in
whole or in part by Coastal, in its sole discretion, and (ii) in any event the
subscription will be returned in full to the undersigned (with interest as
described in the Prospectus) if subscriptions for at least 900,000 shares (as
specified in the Prospectus) are not received prior to termination of the
offering, if Coastal does not receive the required banking regulatory approval
(as specified in the Prospectus), or if Coastal for any reason terminates this
offering.
4. If the undersigned is an individual, the undersigned is a citizen of the
United States and over 21 years of age. If the undersigned is a trust, the
trustee and each beneficiary are citizens of the United States. If the
undersigned is a partnership, each partner is a citizen of the United States and
over 21 years of age. If the undersigned is a corporation, it is authorized and
otherwise duly qualified to hold stock in a bank holding company.
5. If the undersigned is a corporation or a partnership, it has all right,
power and authority to execute and deliver this Subscription Agreement on its
behalf, and this Subscription Agreement is a valid and binding agreement of such
corporation or partnership. If the undersigned is a trustee of a trust, the
trust is a valid and enforceable trust and the undersigned has, in such
capacity, all right, power and authority to execute and deliver this
Subscription Agreement. If the undersigned is the executor, administrator or
personal representative of an estate, the undersigned, in such capacity, has all
right, power and authority to executed and deliver this Subscription Agreement.
IN ORDER TO INVEST, ALL ITEMS ON THIS SUBSCRIPTION AGREEMENT MUST BE COMPLETED.
INVESTORS WITH QUESTIONS REGARDING THE COMPLETION OF THIS AGREEMENT SHOULD CALL
THEIR BROKER-DEALER. ANY MISSING INFORMATION OR SIGNATURES MAY DELAY PROCESSING
OF THIS SUBSCRIPTION.
Name of Subscriber(s) (indicate name of trust, partnership or corporation, if
applicable). Give both names if jointly owned. Please print the exact name you
want on the account.
<TABLE>
<S> <C> <C> <C>
Last Name(s) First Name(s) Initial(s) Home Phone / Fax
Business Phone / Fax
</TABLE>
Social Security or Tax Identification Number(s). Give both if jointly owned.
SSN TIN
Mailing Address. Give both if jointly owned.
<PAGE> 38
Street City State
Zip Code
Indicate Type of Ownership (check one).
<TABLE>
<S> <C> <C>
[_] Individual (one signature) [_] Tenants in Common (all sign) [_] Corporation*
(two signatures)
[_] Joint Tenants (two signatures) [_] Trust (all Trustees sign; please provide name
names of trustees & beneficiaries) date of trust &
[_] Community Property (one [_] Partnership*
signature) (explain) [_] Other
*Please supply copy of document authorizing signatory
</TABLE>
Signature Signature
FOR BROKER-DEALER COMPLETION
Firm
NASD Member Who Solicited This Purchase Signature of Registered
Representative
Registered Representative
Branch Office Address
Telephone No. Fax No. DTC No.
ACCEPTED: Coastal Community Group, Inc.
By
Hans C. Mueller, President and CEO
Date: , 1999
INSTRUCTIONS FOR SUBSCRIPTION AGREEMENT
A. SUBSCRIBERS
1. All Subscribers. Please read the Subscription Agreement and these
instructions carefully. The completed and signed Subscription Agreement,
together with a check in the full amount of the subscription payable to "Sun
Trust Bank, Miami, N.A. as Escrow Agent - Coastal Community Group, Inc.," should
be delivered to the subscriber's broker.
2. Individual Subscribers. If the subscriber is an individual, he or she must
complete and sign the Subscription Agreement.
<PAGE> 39
3. Joint Subscribers. In the case of joint ownership, including a husband and
wife, both persons must complete and sign the Subscription Agreement.
4. Trust, Corporate, Partnership or Other Fiduciary Subscribers. If the
subscriber is a trust, corporation, partnership or other fiduciary, such
subscriber must complete and sign the Subscription Agreement. In the case of a
trust, all trustee(s) must sign the Subscription Agreement. In the case of a
corporation, two officers must sign. If the subscriber is a trust, please supply
the name and date of the trust, the names of all trustees and the names of all
beneficiaries. If the subscriber is a corporation or partnership, please supply
a copy of the document authorizing the signatories.
B. BROKERS
1. Complete the broker's information appearing on the Subscription Agreement and
review the information provided by the subscriber to ensure that the subscriber
has properly completed and signed the Subscription Agreement. Also ensure that
the subscriber's check is payable to "Sun Trust Bank, Miami, N.A. as Escrow
Agent - Coastal Community Group, Inc."
2. Immediately forward a copy of the complete Subscription Agreement, together
with the original subscriber's check in the full amount of the subscription, to:
Sun Trust Bank, Miami, N.A.
Commercial Trust Department
777 Brickell Avenue
Miami, Florida 33131
Attention: Ary C. Velasco, V.P.
phone (305) 579-7475 fax (305) 579-7023
3. Immediately forward a copy of the complete Subscription Agreement, together
with a copy of the subscriber's check, to:
Coast Partners Securities, Inc.
444 Brickell Avenue, Suite 805
Miami, Florida 33131
Attention: Evaldo F. Dupuy
phone (305) 358-7616 fax (305) 358-6362
4. Immediately forward the original Subscription Agreement, together with a copy
of the subscriber's check, to:
Coastal Community Group
c/o Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
One Biscayne Tower
Two South Biscayne Blvd., Suite 3400
Miami, Florida 33131
Attention: Richard J. Bischoff, Esq.
phone (305) 376-6000 fax (305) 376-6010
5. You should retain a copy for your records.
<PAGE> 1
================================================================================
EXHIBIT 1.2
ESCROW AGREEMENT
Between
COASTAL COMMUNITY GROUP, INC.,
a Florida corporation
(the "Company")
and
SUNTRUST BANK, MIAMI, N.A.
(the "Escrow Agent")
and
COAST PARTNERS SECURITIES, INC.
(the "Managing Dealer")
================================================================================
<PAGE> 2
RECITALS
THIS ESCROW AGREEMENT is made and entered into between the Company, the
Escrow Agent and the Managing Dealer as of ___________, 1999.
A. WHEREAS, the Company proposes to offer and sell through one or more
registered broker-dealers in a public offering (the "Offering") a minimum of
Nine Million Dollars ($9,000,000) and a maximum of Ten Million Dollars
($10,000,000) of shares of the Company's common stock, $0.01 par value (the
"Shares").
B. WHEREAS, the Managing Dealer intends to sell the Shares as the
Company's agent on a "best efforts all or none" basis as to 900,000 Shares (the
"Minimum Shares") and on a "best efforts" basis as to the remaining 100,000
Shares in the Offering.
C. WHEREAS, each Share will be sold at a price of Ten Dollars ($10.00),
as described in the Company's Registration Statement (as defined below).
D. WHEREAS, the Company has filed a Registration Statement on Form SB-2
and all amendments thereto (the "Registration Statement") with the Securities
and Exchange Commission (the "SEC") in accordance with the General Rules and
Regulations under the Securities Act of 1933, as amended (the "Act"), covering
the Offering of up to 1,000,000 Shares.
E. WHEREAS, the Company and the Managing Dealer propose to establish an
escrow account with the Escrow Agent in compliance with Rule 240.15c2-4 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, in which funds received from subscribers will be deposited pending
completion of the escrow period.
F. WHEREAS, the Escrow Agent is willing to establish an escrow account
on the terms and subject to the conditions hereinafter set forth.
G. WHEREAS, the term "Selected Dealer" as used herein shall include the
Managing Dealer and other selected dealers as part of the selling group. All
Selected Dealers shall be bound by this Agreement. However, for purposes of
communications and directives, the Escrow Agent need only accept instructions
from the Managing Dealer, as the representative of the Selected Dealers.
H. WHEREAS, the Company has agreed to reimburse the Escrow Agent in the
full amount for any items returned unpaid to the Escrow Agent, after all funds
held in escrow have been dispersed.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained and other good and valuable consideration, it is agreed as
follows:
1. RECITALS. All of the above recitals are true and correct.
<PAGE> 3
2. ESTABLISHMENT OF ESCROW AGREEMENT. Prior to the date on which
the Registration Statement is declared effective by the SEC (the "Effective
Date"), the parties hereto shall establish, and by execution of this Agreement
hereby agree to establish, an escrow account, which escrow account shall be
entitled "Coastal Community Group, Inc. - SunTrust Bank Miami, N.A. as Escrow
Agent" (the "Escrow Account").
3. ESCROW PERIOD. The "Escrow Period" shall begin with the
Effective Date and shall terminate upon the earlier of the following to occur
(the "Termination Date"):
(a) 5:00 p.m. (Miami time) on the 90th day after the
Effective Date unless extended in writing by the Company for an
aggregate 90 additional days as described in the Registration Statement
(as extended, the "Offering Termination Date"), if gross proceeds
representing the sale of the Minimum Shares have not been deposited by
the Offering Termination Date; or
(b) if (i) gross proceeds representing the sale of the
Minimum Shares have been deposited by the Offering Termination Date and
(ii) the Company receives a "Notice of Intent to Approve" from the
Florida Department of Banking and Finance within 180 days after the
Offering Termination Date, 5:00 p.m. (Miami time) on the date specified
as the "Initial Closing Date" by the Company and the Managing Dealer in
writing (which date shall be at least one but not more than 15 business
days after the conditions specified in (i) and (ii) have been
satisfied), provided that (y) the Escrow Agent has confirmed that it
has received in the Escrow Account gross proceeds of $9,000,000
representing completion of the sale of the Minimum Shares and (z) the
Company has provided the Escrow Agent with a copy of the Notice of
Intent to Approve; or
(c) 5:00 p.m. (Miami time) on the date on which the
Escrow Agent receives written notice from the Company and the Managing
Dealer of a determination to terminate the Offering, whether or not the
Minimum Shares are sold.
Promptly after the SEC declares the Registration Statement effective,
the Company shall advise the Escrow Agent in writing of the Effective Date. The
Escrow Agent need not accept checks, drafts, money orders or monies from
prospective purchases prior to the Effective Date.
On the Initial Closing Date, the Company will accept subscriptions for
an amount of Shares equal to at least $900,000, Shares will be issued to the
subscribers whose subscriptions have been accepted by the Company, and the funds
held in the Escrow Account shall be paid to the Company in accordance with
Section 5 hereof. To the extent that on the Initial Closing Date there are
subscriptions that have not been rejected by the Company and payment for the
Shares subscribed for in such subscriptions has been deposited in the Escrow
Account and constitute "collected funds" (meaning funds which have cleared
normal banking channels and are in the form of cash), then such subscriptions
shall be deemed accepted on the Initial Closing Date. Payments for any
subscriptions rejected on the Initial Closing Date shall be handled in
accordance with Section 6 hereof.
2
<PAGE> 4
The Company is aware and understands that during the Escrow Period it
will not be entitled to any funds received into escrow and no amounts deposited
in the Escrow Account shall become the property of the Company or any other
entity, or be subject to the debts of the Company or any other entity, and the
Escrow Agent shall not make any disbursements from the Escrow Account except as
expressly provided herein or pursuant to any lawful order issued to the Escrow
Agent by a tribunal of competent jurisdiction.
4. ESCROW DEPOSITS. The Company and the Managing Dealer have
included a statement in the Prospectus or supporting documents instructing
subscribers to make checks for the purchase of Shares payable to "SunTrust Bank
Miami, N.A. as Escrow Agent - Coastal Community Group, Inc." Any checks received
that are made payable to any party other than the Escrow Agent as provided in
the preceding sentence shall be returned, with the subscription agreement, to
the Selected Dealer who submitted the check.
The Escrow Agent agrees to deposit into the Escrow Account, upon
receipt thereof, any and all checks, drafts, money orders and other instruments
and monies payable to the Escrow Agent as escrow agent for the purchase of the
Shares. Simultaneously with the delivery to the Escrow Agent of a check, draft,
money order or other instrument or money received from a prospective purchaser
of the Shares, the Selected Dealer making such delivery shall provide the Escrow
Agent with a copy of the purchaser's subscription agreement containing the name,
address, and social security or tax identification number of the prospective
purchaser and of the amount paid and number of Shares subscribed for by such
purchaser. The Escrow Agent shall have the right to rely fully on the
subscription agreements so furnished to it by the Selected Dealers.
5. DISBURSEMENTS FROM THE ESCROW ACCOUNT.
(a) If on or before the Termination Date the Escrow Agent
has received in the Escrow Account gross proceeds of $9,000,000 in
deposited funds representing at least the Minimum Shares, the Escrow
Agent shall notify the Company and the Managing Dealer in writing of
this fact. Except as otherwise provided in this Agreement, the Escrow
Agent shall hold such monies, along with any additional proceeds
deposited in the Escrow Account from sales of Shares after the proceeds
from the Minimum Shares have been deposited, until given written
instructions by the Company and the Managing Dealer as to the
disbursement of the funds in the Escrow Account; provided that no funds
shall be disbursed to the Company unless it has provided the Escrow
Agent with a copy of a "Notice of Intent to Approve" issued by the
Florida Department of Banking and Finance; further provided that no
funds shall be disbursed to the Company until the Escrow Agent has
received $9,000,000 in "collected funds" (meaning funds which have
cleared normal banking channels and are in the form of cash). Any
interest earned on the funds in the Escrow Account shall be paid to the
Company, subject to the provisions of Section 7 below.
(b) In the event that the Escrow Agent does not receive
in accordance with this Agreement $9,000,000 representing the proceeds
from the sale of the Minimum Shares prior to the Termination Date, the
Escrow Agent shall refund in a timely manner to each prospective
purchaser the amount actually received from such purchaser, with
3
<PAGE> 5
interest thereon and without deduction therefrom, and the Escrow Agent
shall notify the Company and the Managing Dealer of its distribution of
the funds in the Escrow Account. Notwithstanding the provisions of
Section 7 below, any interest earned on the escrowed funds shall be
paid to prospective purchasers as equitably as possible pro rata in
accordance with each prospective purchaser's subscription amount and
the length of time such amount was held in the Escrow Account. The
purchase money returned to such purchasers shall be free and clear of
any and all claims of the Company, the Managing Dealer or any of their
creditors.
(c) Upon the disbursement of all or any portion of the
escrowed funds in accordance with either subsection (a) or (b) above,
the Escrow Agent will have no further responsibility with respect to
the escrow deposits so disbursed, and upon disbursement from the Escrow
Account in accordance with said subsections, will have no further
responsibility under this Agreement. In this regard it is expressly
agreed and understood that in no event shall the aggregate amount of
disbursements made by the Escrow Agent exceed the amounts deposited in
the Escrow Account.
6. COLLECTION PROCEDURE. The Escrow Agent is hereby authorized to
forward each check, draft or other instrument for collection and, upon
collection of the proceeds of each check, draft or other instrument deposit the
collected proceeds in the Escrow Account. Any check, draft or other instrument
returned unpaid to the Escrow Agent shall be returned to the Selected Dealer
that submitted the check. In such cases, the Escrow Agent will notify the
Company and the Managing Dealer of such return. If the Company rejects any
subscription for which the Escrow Agent has already collected funds, the Escrow
Agent shall issue a refund check to the rejected prospective purchaser. If the
Escrow Agent has not yet submitted a rejected purchaser's check, draft or other
instrument for collection, the Escrow Agent shall remit such purchaser's check,
draft or other instrument directly to the purchaser. It is understood and agreed
that should any check, draft or other instrument be returned unpaid for any
reason after the Escrow Period that would cause the collected aggregate proceeds
from the sale of the Shares to be less than $9,000,000, then no money shall be
payable to the Company or the Managing Dealer from the Escrow Account and the
Escrow Agent shall comply with Section 5(b) hereof.
7. INVESTMENT OF ESCROW AMOUNT. The Escrow Agent may invest the
funds deposited into the Escrow Account in such accounts or investments as the
Company may specify by written notice; provided that the Company only may
specify investments in (a) banks accounts, (b) bank money-market accounts, (c)
short-term certificates of deposit issued by a bank, or (d) short-term
securities issued or guaranteed by the United States government. Until otherwise
directed, the Escrow Agent shall invest the escrowed funds in repurchase
agreements collaterized with the United States government and government agency
bills, bonds and/or notes, so long as the contracted yield on such assets shall
be normally equivalent to the bid of the "Fed Funds Rate" as provided by the
Wall Street Journal less 75 basis points (the "Specified Rate"). As partial
compensation for its services and in addition to all other compensation to the
Escrow Agent provided for herein, the Escrow Agent shall be entitled to retain,
for its account, any earnings realized on the investments in the overnight
repurchase transactions in excess of the Specified Rate.
4
<PAGE> 6
8. REGISTRATION STATEMENT. The Company shall provide the Escrow
Agent with a copy of those pages of the Registration Statement and supporting
documents which reference the Escrow Agent or this Agreement ("Reference
Pages"). The Company will not file the Registration Statement with the SEC or
finalize the supporting documents until it has received the Escrow Agent's
approval of the Reference Pages. The Escrow Agent agrees to provide the Company,
by facsimile, with its approval of the Reference Pages or acceptable
modifications thereto within two (2) business days after receipt of the
Reference Pages. The Escrow Agent shall only review the Reference Pages and
shall not review or have any obligation to review any other portion of the
Registration Statement, the supporting documents or any of the other documents
delivered by purchasers in connection with their purchase of the Shares. The
Company shall not file or finalize amended Reference Pages until it has received
the Escrow Agent's approval of the amended Reference Pages in accordance with
this Section.
9. RIGHTS, DUTIES AND RESPONSIBILITIES OF ESCROW AGENT. It is
understood and agreed that the duties of the Escrow Agent are purely ministerial
in nature. It is further agreed that:
(a) The Escrow Agent shall not be liable for any action
taken or omitted hereunder except in the case of its bad faith, gross
negligence or willful misconduct. The Escrow Agent shall be entitled to
consult with counsel of its own choosing and shall not be liable for
any action taken, suffered or omitted by it in reasonable reliance upon
the advice of such counsel. Any reasonable expenses incurred by Escrow
Agent in connection with such consultation shall be reimbursed by the
Company.
(b) The Escrow Agent shall not be liable or responsible
to perform any act pertaining to the proposed offering of Shares, other
than as set forth in this Agreement, or because of the loss of any
monies arising through insolvency or the act or default or omission of
any person other than the Escrow Agent. The Escrow Agent shall not be
responsible for the application of the proceeds deposited with it and
paid out, withdrawn or transferred in accordance with this Agreement.
(c) The Escrow Agent shall have no responsibility at any
time to ascertain whether or not any security interest exists in the
funds in the Escrow Account or any part thereof or to file any
financing statement under the Uniform Commercial Code with respect to
the Escrow Account or any part thereof.
(d) The Escrow Agent will not be required to disburse any
funds from the Escrow Account, unless such funds have been on deposit
for a sufficient period that the Escrow Agent, in its sole discretion,
deems them to be clear.
(e) The Escrow Agent shall have no responsibility with
respect to the use or application of any funds or other property paid
or delivered by the Escrow Agent pursuant to the provisions hereof.
(f) The Escrow Agent shall under no circumstances be
required to furnish a formal accounting for the proceeds in the Escrow
Account other than to notify the Company as to each payment or
disbursement made to or from the Escrow Account.
5
<PAGE> 7
(g) The Escrow Agent shall have no responsibility to
determine the validity of any Notice of Intent to Approve obtained by
the Company and presented to the Escrow Agent.
(h) This Agreement sets forth exclusively the duties of
the Escrow Agent with respect to any and all matters pertinent hereto
and on implied duties or obligation shall be read into this Agreement
against the Escrow Agent.
10. NO INTERESTS CREATED IN FUND. The Escrow Agent shall not issue
any certificate of deposit, stock certificates or any other instrument or
document representing any interest in the Escrow Account, except that it may
send a written notice to the Company and/or the Managing Dealer acknowledging
receipt or disbursement of the deposited funds.
11. AMENDMENT; RESIGNATION. This Agreement may be altered or
amended only with the written consent of the Company, the Managing Dealer and
the Escrow Agent. The Escrow Agent may resign as Escrow Agent at any time upon
10 days' prior written notice to the Company and the Managing Dealer. In the
case of the Escrow Agent's resignation, its only duty shall be to hold and
dispose of the funds in the Escrow Account in accordance with the original
provisions of this Agreement until a successor Escrow Agent shall be appointed
and written notice of the name and address of such successor Escrow Agent shall
be given to the Escrow Agent by the Company and the Managing Dealer, whereupon
the Escrow Agent's only duty shall be to pay over to the successor Escrow Agent
the funds in the Escrow Account, less any portion thereof previously paid out in
accordance with this Agreement.
12. WARRANTIES. The Company warrants to and agrees with the Escrow
Agent that, unless otherwise expressly set forth in this Agreement, at the time
of this Agreement and upon disbursement of the funds in the Escrow Account in
accordance with this Agreement:
(a) no party other than the parties hereto and the
prospective purchasers have, or shall have, any lien, claim or security
interest in the Escrow Account or any part thereof;
(b) no financing statement under the Uniform Commercial
Code is on file in any jurisdiction claiming a security interest in or
describing (whether specially or generally) the Escrow Account or any
part thereof; and
(c) the Registration Statement complies with the Act and
the Offering has been and/or will be made in compliance with applicable
federal and state securities laws.
13. FEES AND EXPENSES. In addition to the compensation provided
for in Section 7 above and the indemnification provided for in Section 14 below,
without regard to the amount deposited in the Escrow Account pursuant to this
Agreement, the Escrow Agent shall be entitled to: (a) a fee determined in
accordance with, and payable by the Company as specified in, the Schedule of
Fees for Escrow Services, a copy of which is attached hereto as Schedule 1 and
incorporated herein by reference, which fee must be paid by the Company to the
Escrow Agent at the time of execution of this Agreement; and (b) be reimbursed
by the Company for any reasonable expenses for performing its obligations in
connection with this Agreement, including, but not limited to, costs, expenses
and legal fees incurred by the Escrow Agent relating to the
6
<PAGE> 8
review of documents pertaining to this Agreement. If, before the Termination
Date, the collected funds in the Escrow Account equal or exceed $9,000,000 and
the Company receives a "Notice of Intent to Approve" issued by the Florida
Department of Banking and Finance, the Escrow Agent may deduct from the funds in
the Escrow Account all amounts owed to it pursuant to this Agreement, whether or
not prior to or after any distribution from the Escrow Account. If the balance
in the Escrow Account does not reach $9,000,000 or if the Company does not
receive a "Notice of Intent to Approve" within 180 days after the Offering
Termination Date, no amounts owing to the Escrow Agent pursuant to this
Agreement shall be paid out of or chargeable to the funds on deposit in the
Escrow Account, notwithstanding the provisions of Section 7 above. However, this
shall not relieve the Company or the Managing Dealer, as the case may be, of any
of their obligations to the Escrow Agent under this Agreement.
14. INDEMNIFICATION. The Company agrees to indemnify the Escrow
Agent and its officers, agents, directors and stockholders (herein, the
"Indemnities") against, and hold them harmless of and from, any and all loss,
liability, cost, damage and expense, including without limitation, reasonable
attorneys' fees, which the Indemnities may suffer or incur by reason of any
action, claim or proceeding brought by any third party against the Indemnities,
arising out of or relating in any way to this Agreement or any transaction
contemplated by this Agreement, or in the performance of its duties hereunder
including, but not limited to any interpleader action.
15. GOVERNING LAW, JURISDICTION AND VENUE. This Agreement shall be
governed by and construed in accordance with the laws of the State of Florida
and the proper venue and jurisdiction for any action or claim with respect to
this Agreement or any document delivered pursuant hereto shall be in the Circuit
Court in Dade County, Florida. The parties agree that service of process in any
such action or claim shall be deemed valid if made by registered mail, return
receipt requested, sent to the addresses set forth in Section 17 hereof. Nothing
in this Agreement is intended to or shall confer upon anyone other than the
parties hereto any legal or equitable right, remedy or claim.
16. ASSIGNABILITY. This Agreement shall not be assignable without
the written consent of all of the parties hereto. All of the terms and
provisions of this Agreement shall be binding upon, shall inure to the benefit
of and shall be enforceable by the successors and permitted assigns of the
parties.
17. NOTICES. All notices and other communications given in
connection with this Agreement shall be in writing and shall be deemed to have
been duly given if (a) delivered by hand, (b) mailed by registered or certified
mail, return receipt required, or (c) transmitted by any standard form of
telecommunications and confirmed. All notices and communications shall be
addressed as follows:
If to the Company: Coastal Community Group, Inc.
255 Palm Avenue
Miami Beach, Florida 33139
Fax: (305) 673-9407
Attn: Hans C. Mueller, CEO
7
<PAGE> 9
with a copy to: Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
One Biscayne Tower
Two Biscayne Blvd., Suite 3400
Miami, Florida 33131-1897
Fax: (305) 376-6010
Attn: Richard J. Bischoff, Esq.
If to the Managing Dealer: Coast Partners Securities, Inc.
601 California Street, Suite 1400
San Francisco, California
Fax: (415) 781-1824
Attn: Richard A. Sleight
with a copy to: Kutak Rock
717 17th Street, Suite 2900
Denver, Colorado 80202
Fax: (303) 292-7799
Attn: Robert J. Ahrenholz, Esq.
If to the Escrow Agent: SunTrust Bank, Miami, N.A.
777 Brickell Avenue
Miami, Florida 33131
Fax: (305) 579-7023
Attn: Odalys del Oso, Commercial Trust
Department
18. SEVERABILITY. If any provision of the Agreement or the
application thereof to any person or circumstances shall be determined to be
invalid or unenforceable, the remaining provisions of the Agreement or the
application of such provision to persons or circumstances other than those to
which it is held invalid or unenforceable shall not be affected thereby and
shall be valid and enforceable to the fullest extent permitted by law.
19. EXECUTION IN SEVERAL COUNTERPARTS. This Agreement may be
executed in several counterparts or by separate instruments, and all of such
counterparts and instruments shall constitute one agreement, binding on all of
the parties hereto.
20. PRONOUNS. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
context may require.
21. CAPTIONS. All captions are for convenience only and shall not
limit or define the text hereof.
22. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understanding (written or oral) of the
parties in connection herewith.
[remainder of page left blank]
8
<PAGE> 10
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
"COMPANY"
By
---------------------------------------
Name
-------------------------------------
Title
------------------------------------
"MANAGING DEALER"
By
---------------------------------------
Name
-------------------------------------
Title
------------------------------------
"ESCROW AGENT"
By
---------------------------------------
Ary C. Velasco
Vice-President
9
<PAGE> 11
SCHEDULE I
SCHEDULE OF FEES
FOR ESCROW SERVICES
1. $1,000 Acceptance Fee for review of Escrow Agreement and set
up of the account (payable upon execution of Escrow Agreement).
2. Minimum $3,000 Annual Administration Fee, which includes
deposits of all Subscribers (payable upon execution of Escrow Agreement).
<PAGE> 1
Exhibit 3.1(a)
FAX AUDIT NO.: H99000010893
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
COASTAL BHC, INC.
The undersigned, HANS C. MUELLER, President of COASTAL BHC, INC. a
Florida corporation (the "Corporation") filed on October 6th, 1998, and
registered under document number P98000085707, hereby certifies:
1. The name of this corporation is COASTAL COMMUNITY GROUP, INC.
2. Pursuant to Article XI of the Corporation's Articles of Incorporation,
the first sentence of Article I is hereby deleted in its entirety and
a new first sentence is inserted in its place as follows:
The name of the corporation is COASTAL COMMUNITY GROUP, INC.
3. Except as above amended, the Articles of Incorporation of the
Corporation, as filed with the Florida Department of State, shall
remain in full force and effect.
4. The foregoing amendment was duly approved as of May 6th, 1999, by
unanimous written consent of the Board of Directors and the
Shareholders of the Corporation, which Shareholders own 100% of the
issued and outstanding shares of common stock of the Corporation,
making the number of votes cast for the amendment sufficient for the
approval of such amendment.
IN WITNESS WHEREOF, the undersigned, as President of the Corporation,
has executed these Articles of Amendment this 6th day of May, 1999.
/s/ HANS C. MUELLER
--------------------------------------
HANS C. MUELLER, President
THIS DOCUMENT PREPARED BY:
Richard J. Bischoff, Esq.
Gunster, Yoakley, Valdes-Fauli
& Stewart,P.A.
2 South Biscayne Blvd., Suite 3400
Miami, Florida 33131
Tel: (305) 376-6016
Florida Bar No.: 140232 FAX AUDIT NO.: H99000010893
<PAGE> 1
Exhibit 3.2(a)
AMENDED AND RESTATED
BYLAWS
OF
COASTAL COMMUNITY GROUP, INC.
===============================================================================
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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<PAGE> 3
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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<PAGE> 4
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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<PAGE> 5
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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<PAGE> 6
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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<PAGE> 7
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 affirma tive 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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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 inspect and copy, in person or by agent or attorney, during regular
business hours, for any proper purpose, any of the records of the Corporation
described in Section 607.1601(5), Fla. Stat. (1997).
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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<PAGE> 19
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: May 6, 1999
/s/ HANS C. MUELLER
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HANS C. MUELLER, President
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<PAGE> 1
EXHIBIT 4.2(a)
AMENDMENT TO THAT CERTAIN
WARRANT PLAN ADOPTED BY
THE BOARD OF DIRECTORS
OF COASTAL COMMUNITY GROUP, INC.
ON DECEMBER 9, 1998
The Board of Directors of COASTAL COMMUNITY GROUP, INC. ("Company") has
determined that it is in the best interests of the Company to amend Article 1 of
that certain Warrant Plan adopted by the Board of Directors of the Company on
December 9, 1998 ("Warrant Plan") in order to accomplish the following:
(1) Remove the name of Evaldo F. Dupuy from Article 1 of the Warrant
Plan since his guarantee of the third party loan has been
canceled and he will not be granted Organizer's Warrants; and
(2) Specify that Jerome J. Bushman has been granted 100,000 Organizer
Warrants and that Hans C. Mueller has been granted 50,000
Organizer Warrants.
Therefore, the Board of Directors, in order to provide for the above,
has adopted this Amendment to the Warrant Plan ("Amendment") on the date set
forth herein.
Article 1 of the Warrant Plan is amended by deletion of the entirety of the
existing Article 1 and replacement in its entirety, by the following Article I
as follows:
ARTICLE I
PURPOSE OF THE PLAN
The Board of Directors of COASTAL COMMUNITY GROUP, 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 organizer 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
<PAGE> 2
Company and the Bank. Hans C. Mueller and Jerome J. Bushman, 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 for the Bank and the Company. Mr. Bushman caused the
funds to be lent to the Company and has guaranteed the third party loans in the
amount of $300,000 and $350,000 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. Therefore, for theirs efforts, Mr. Bushman has
been granted 100,000 Organizer's Warrants and Mr. Mueller has been granted
50,000 Organizer's Warrants.
Adopted by the Board of Directors of Costal COMMUNITY GROUP, Inc. on
the 15th day of June, 1999.
PRESIDENT: ATTEST:
- ------------------------ --------------------------------
<PAGE> 1
Exhibit 5.1
June 18, 1999
Coastal Community Group, Inc.
255 Palm Avenue
Miami Beach, FL 33139
RE: COASTAL COMMUNITY GROUP, INC.
SEC File No. 333-75033
Ladies and Gentlemen:
We have acted as counsel to COASTAL COMMUNITY GROUP, 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- 75033, as amended (the "Registration Statement"), filed with
the U.S. Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act of 1933, (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 and identified to our satisfaction, originals or copies 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.
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
<PAGE> 2
Coastal Community Group, Inc.
June 17, 1999
Page 2
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.
<PAGE> 1
Exhibit 10.1(a)
EXECUTIVE EMPLOYMENT AGREEMENT
REVISED AS OF MAY 21, 1999
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "AGREEMENT") is made as of
September 1, 1998 by and between the organizers (the "ORGANIZERS") of COASTAL
COMMUNITY GROUP, 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
<PAGE> 2
United States Department of Labor, Bureau of Labor Statistics (the "Index").
The COLA 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).
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<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 and Chief Executive
Officer of the Bank and the Company. The Executive shall serve as Chairman of
the Board of the Company upon his re-election to that position by the Board and
shall serve as Chairman of the Board of the Bank upon his election to that
position. The Executive shall have the duties and responsibilities incumbent
with the positions of President, Chief Executive Officer and Chairman of the
Board if he is elected to that office 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 Board 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.
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<PAGE> 4
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 shall be entitled to receive on an annual
basis "INCENTIVE BONUS COMPENSATION" in an amount determined by the Board in
its sole discretion.
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<PAGE> 5
(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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<PAGE> 6
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 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 or the Company, as applicable 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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<PAGE> 7
shall be maintained in the minimum amount of ______________________________
($_______) during the Employment Period.
Section 8. 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 10 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
-7-
<PAGE> 8
(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 if termination shall have been the result of the Executive's (A)
conviction for an act or acts constituting dishonesty or fraud against the Bank
or the Company, (B) conviction of a felony, excluding minor traffic offenses,
(C) willful and continued failure 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 performed his duties, (D)
commission of a serious violation of the Bank's or the Company's personnel
policies, including but not limited to violations of policies against any form
of harassment, or (E) a material breach of this Agreement. 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 a majority of the Board at a meeting of the
Board called and held for that purpose (after not less than 10 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 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 the second sentence of
this paragraph and specifying the particulars thereof.
(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 Employment Termination Date at the rate in
effect at the time notice of termination is given to the 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 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
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<PAGE> 9
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 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
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<PAGE> 10
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.
(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.
(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
-10-
<PAGE> 11
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 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."
(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 of his
choice for assistance in 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
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<PAGE> 12
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 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)(1)(A) 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
-12-
<PAGE> 13
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:
If to the Bank or the Company: Coastal Community Group, Inc.
Coastal Community Bank
------------------------------------------
------------------------------------------
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.
-13-
<PAGE> 14
Section 13. GOVERNING LAW; SEVERABILITY. This Agreement is made and is
expected to be performed in the State of 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.
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
----------------------------------------
BANK:
COASTAL COMMUNITY BANK
By:
-------------------------------------
Name:
-----------------------------------
Title: *
----------------------------------
[CONTINUED ON NEXT PAGE]
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<PAGE> 15
COMPANY:
COASTAL COMMUNITY GROUP, INC.
By: /s/ James C. Merrill
------------------------------------
Name: James C. Merrill
---------------------------------
Title: * Secretary
---------------------------------
*On behalf of the Organizers.
-15-
<PAGE> 1
Exhibit 10.3
HEALTHSOUTH(R)
June 4, 1999
Mr. Hans C. Mueller, Chairman and CEO
Coastal Community Bank (in organization)
Coastal BHC, Inc.
225 Palm Avenue
Miami Beach, Florida 33139
RE: OPTION TO SUBLEASE SPACE AT 8700 NORTH KENDALL DRIVE, MIAMI, FLORIDA
Dear Mr. Mueller:
This letter is intended to memorialize the agreement between HEALTHSOUTH
Corporation ("HEALTHSOUTH") and Coastal BHC, Inc. ("Holding Company") on behalf
of Coastal Community Bank (in organization) ("Bank") with respect to the option
to sublease commercial office space. As you know, HEALTHSOUTH currently leases
14,000 square feet commercial space on the first floor of the Lennar Medical
Center, 8700 North Kendall Drive, Miami, Florida from MCH Properties, Inc.
("MCH"). The Holding Company on behalf of the Bank wishes to sublease 4,600
square feet of HEALTHSOUTH's space for use as a main office of the Bank
("Premises").
HEALTHSOUTH, hereby grants to the Holding Company on behalf of the Bank, an
option to sublease the Premises beginning on the first day of June, 1999 and
ending on the fourteenth (14th) day of September, 1999 ("Option Period")
subject to the following conditions:
o The Bank obtains the necessary federal and state regulatory
approvals to operate as a Florida state chartered commercial
bank.
o The lease between HEALTHSOUTH and MCH is in full force and
effect.
o MCH consents to the sublease of the Premises.
o The Holding Company on behalf of the Bank obtains all necessary
Miami-Dade County planning and zoning approvals to operate the
proposed bank on the Premises.
o Before the expiration of' the Option Period, HEALTHSOUTH and the
Holding Company on behalf of the Bank shall enter into a written
sublease agreement in form, terms, and
ONE HEALTHSOUTH PARKWAY O BIRMINGHAM, AL 35243
205 967-7116
HTTP://WWW.HEALTHSOUTH.COM
HRC
NYSE
<PAGE> 2
Mr. Hans C. Mueller
June 4, 1999
Page 2
conditions, and substance mutually satisfactory to HEALTHSOUTH,
the Holding Company on behalf of the Bank, and MCH.
This Option, if not accepted, will be automatically withdrawn and considered
null and void ten (10) days after the date hereof.
Sincerely,
HEALTHSOUTH Corporation
/s/ Thomas J. Perri
Thomas J. Perri
Regional Director
Real Estate
TJP/
Agreed and Accepted this 14th of June, 1999
By: /s/ Hans C. Mueller
-------------------------------
Its: /s/ Chairman & Ceo & Pres.
------------------------------
cc: Rick Byrd
<PAGE> 1
EXHIBIT 10.4
1,000,000 Shares Common Stock
Coastal Community Group, Inc.
_______, 1999
SELECTED DEALER AGREEMENT
Coast Partners Securities, Inc.
As representative of the several Dealers
601 California Street, Suite 1400
San Francisco, California 94108
SECTION 1. MANAGING DEALER AGREEMENT. We understand that Coastal
Community Group, Inc., a Florida corporation (the "Offeror"), proposes to enter
into a placement agreement in substantially the form attached (the "Managing
Dealer Agreement") with you, on your behalf and as representative of prospective
dealers (including us, collectively, the "Dealers"), pursuant to which the
Dealers will agree to use their best efforts to sell up to 1,000,000 shares (the
"Common Shares") of the Offeror's common stock, $0.01 par value per share
("Common Stock"), with a minimum purchase from any investor of 250 shares or
$2,500 and a maximum purchase of 50,000 shares or $500,000, unless waived by the
Offeror. Capitalized terms used herein and not otherwise defined herein have the
meanings assigned to such terms in the Managing Dealer Agreement.
SECTION 2. REGISTRATION STATEMENT AND PROSPECTUS. The Common Shares are
more particularly described in a Registration Statement on Form SB-2 (File
Number 333-75033) filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "1933 Act").
Amendments to such Registration Statement have been or are being filed, or a
form of Prospectus is being filed pursuant to Rule 424(b) and Rule 430A under
the 1933 Act, in which, with our consent hereby confirmed, we have been named as
one of the Dealers of the Common Shares. A copy of the Registration Statement as
filed and a copy of each amendment as filed (excluding exhibits) have heretofore
been delivered to us. We confirm that we have examined the Registration
Statement, including amendments thereto, relating to the Common Shares, as filed
with the Commission, that we are willing to accept the responsibilities of a
broker and dealer under the 1933 Act in respect of the Registration Statement,
and we are willing to proceed with a public offering of the Common Shares in the
manner contemplated. The Registration Statement and the related Prospectus may
be further amended, but no such amendment or change shall release or affect our
obligations hereunder or under the Managing Dealer Agreement.
SECTION 3. AUTHORITY AND POSITION OF REPRESENTATIVE.
(a) We hereby authorize you, acting on our behalf, as our
representative (1) to complete, execute, and deliver the Managing Dealer
Agreement, to determine the public offering price of the Common Shares, and to
negotiate a sales commission with respect to the sale of the Common Shares, (2)
to waive performance or satisfaction by the Offeror of obligations or conditions
included in the Managing Dealer Agreement if in your judgment such waiver will
not have a material adverse effect upon the interests of the Dealers, (3) to
postpone the Closing Date referred to in the Managing Dealer Agreement, and any
other time or date specified therein, (4) to exercise any right of cancellation
or termination, (5) to consent to such other changes in the Managing Dealer
<PAGE> 2
Agreement as in your judgment do not materially adversely affect the substance
of our rights and obligations thereunder and (6) to take such actions as in your
discretion may be necessary or advisable to carry out the Managing Dealer
Agreement, this Agreement, and the transactions contemplated thereby and hereby.
We also authorize you to determine all matters relating to the public
advertisement of the Common Shares.
(b) Except as otherwise specifically provided in this
Agreement, you shall have full authority to take such action as you may deem
advisable in respect of all matters pertaining to the Managing Dealer Agreement
and this Agreement and in connection with the sale and distribution of the
Common Shares (including authority to terminate the Managing Dealer Agreement as
provided therein). You shall be under no liability to us for or in respect of
the value of the Common Shares or the validity or the form thereof, the
Registration Statement, any preliminary prospectus, the Prospectus, the Managing
Dealer Agreement, or other instruments executed by the Offeror, or others; or
for or in respect of the issuance, transfer, or delivery of the Common Shares;
or for the performance by the Offeror or others of any agreement on its or their
part; nor shall you be liable under any of the provisions hereof or for any
matters connected herewith, except for your own want of good faith, for
obligations expressly assumed by you in this Agreement and for any liabilities
imposed upon you by the 1933 Act and the Securities Exchange Act of 1934, as
amended (the "1934 Act"). No obligations on your part shall be implied or
inferred herefrom. Authority with respect to matters to be determined by you, or
by you and the Offeror, pursuant to the Managing Dealer Agreement, shall survive
the termination of this Agreement.
(c) In taking all actions hereunder, except in the performance
of your own obligations hereunder and under the Managing Dealer Agreement, you
shall act only as the representative of each of the Dealers. The commitments and
liabilities of each of the several Dealers are several, not joint or joint and
several. Nothing contained herein shall constitute the Dealers as partners. If,
for federal income tax purposes, the Dealers should be deemed to constitute a
partnership, then each Dealer elects to be excluded from the application of
Subchapter K, Chapter 1, Subtitle A, of the Internal Revenue Code of 1986, as
amended, and agrees not to take any position inconsistent with such election.
Each Dealer authorizes Coast Partners Securities, Inc., in its discretion, on
behalf of such Dealer, to execute such evidence of such election as may be
required by the Internal Revenue Service.
SECTION 4. PUBLIC OFFERING.
(a) Each Dealer hereby agrees to use its best efforts to
solicit subscriptions for the Common Shares. Each Dealer hereby confirms that it
is a dealer actually engaged in the investment banking or securities business
and that it is a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD") or, if we are not such a member, that we
are a foreign dealer not eligible for membership in the NASD and that we will
not offer or sell any Common Shares in, or to persons who are nationals or
residents of, the United States of America. In making sales of Common Shares, if
we are such a member, we agree to comply with all applicable rules of the NASD,
including, without limitation, the NASD's Interpretation with respect to
Free-Riding and Withholding and Rule 2740 of the NASD's Conduct Rules, or if we
are a foreign dealer, we agree to comply with such Interpretation and Rules
2730, 2740 and 2750 as though we were such a member, and with Rule 2420 as that
Rule applies to a nonmember broker or dealer in a foreign country.
(b) The public offering price of the Common Shares is $10.00
per share. You will pay to us a commission of ____ percent (__%) of the gross
proceeds from the
<PAGE> 3
sale of each Common Share sold by the Offeror pursuant to a subscription
agreement in the form attached to the Managing Dealer Agreement (a
"Subscription") solicited by us; provided, that no commission shall be paid with
respect to Common Shares sold to investors who have been identified by the
Offeror in writing to you prior to the Closing Date, up to a maximum of 400,000
Common Shares. Payment will be made promptly on the Initial Closing Date or any
Subsequent Closing Date; provided, however, that in the event that a sale of
Common Shares for which you have solicited a Subscription shall not occur,
whether be reason of the failure of any condition specified herein or in the
Managing Dealer Agreement, no commission or payment in respect thereof shall be
due. Commissions will be payable only with respect to transactions lawful in the
jurisdiction where they occur and will be payable on the Closing Date.
(c) We agree to submit on behalf of each investor desiring to
purchase Common Shares, a Subscription in form and substance satisfactory to the
Offeror and all documents, if any, required under state securities laws. We
shall ascertain that each Subscription has been properly completed. All payments
for the Common Shares shall be made by check payable to the order of "Sun Trust
Bank, Miami, N.A. as Escrow Agent - Coastal Community Group, Inc." and if any
check is made payable to any other party, we promptly will return such check and
the accompanying Subscription to the tendering investor.
(d) We agree to submit, no later than noon of the first
Business Day after receipt thereof, copies of completed Subscriptions and
original checks received by us from investors to Sun Trust Bank, Miami, N.A.,
777 Brickell Avenue, Miami, Florida 33131 (the "Escrow Agent"). We agree to
submit, no later than noon of the second Business Day after receipt thereof,
copies of completed Subscriptions and copies of checks to you and original
completed Subscriptions and copies of checks to the Offeror c/o Gunster,
Yoakley, Valdes-Fauli & Stewart, P.A., One Biscayne Tower, Two South Biscayne
Blvd., Suite 3400, Miami, Florida 33131, Attention: Richard J. Bischoff, Esq.
Subscriptions for Common Shares shall be made only during the period beginning
on the date on which the Registration Statement becomes effective under the 1933
Act and ending on the Sales Termination Date.
(e) We shall have no reasonable grounds to believe, on the
basis of having received and examined the Prospectus, that all material facts
are not adequately and accurately disclosed and provide a basis for evaluating
an investment in the Offeror.
(f) All subscriptions solicited by us will be strictly subject
to confirmation by you and acceptance thereof by the Offeror. No person,
including us, is authorized to give any information, written or oral, or make
any representations, written or oral, in connection with the offer and sale of
the Common Shares other than those contained (1) in the Prospectus in connection
with the sale of any of the Common Shares or (2) in any supplemental sales
material supplied or prepared by the Offeror and delivered to us by the Offeror
for use in making offers of Common Shares. No Dealer is authorized to act as
agent for you when offering any of the Common Shares to the public or otherwise,
it being understood that each Dealer and Selected Dealer are independent
contractors with you. Nothing herein contained shall constitute you or any other
Selected Dealer an association or partner with you.
(g) Upon release by you, we may offer the Common Shares at the
public offering price, subject to the terms and conditions hereof.
(h) You, on behalf of the Offeror, will provide us with such
number of copies of the Prospectus and such number of copies of amendments and
supplements
<PAGE> 4
thereto as we reasonably may request. You also will provide us with certain
supplemental sales materials to be used by us in connection with the
solicitation of Subscriptions for Common Shares. In the event we elect to use
such supplemental sales material, we agree that such material shall not be used
in connection with the solicitations of Common Shares unless accompanied or
preceded by the prospectus as then currently in effect and as it may be amended
or supplemented in the future. We agree that we will deliver a copy of the
Prospectus, and any amendments or supplements thereto, to each person to whom we
make an offer of Common Shares and that we will not disseminate or publish any
advertisement (including, without limitation, any so-called tombstone
advertisement or any advertisement relating to seminars) relating to our
solicitation of subscribers for the Common Shares (1) the form of which has not
been submitted to the NASD by the Offeror and (2) that has not been approved in
writing by the Offeror.
(i) Upon application to you, you will inform us as to the
jurisdictions in which you believe the Common Shares have been qualified for
sale under, or are exempt from the requirements of, the respective securities
laws of such jurisdictions, but you assume no responsibility or obligation as to
our right to sell the Common Shares in any jurisdiction. We agree that you may
limit the number of offers and sales which may be made, or the number of Common
Shares which may be sold, by us in any jurisdiction. We agree not to sell the
Common Shares in any jurisdiction where such sale by us is prohibited.
(j) We warrant and represent that we and our agents and
employees are duly licensed to sell the Common Shares in those jurisdictions in
which we do so. We further agree that we promptly will notify you of any changes
in our status, or our agent's or employee's status, as a licensed broker-dealer
in any jurisdiction in which we or our agent or employee has been offering or
selling the Common Shares.
(k) We confirm that we are familiar with Securities Act
Release No. 4698 and Rule 15c2-8 under the 1934 Act, relating to the
distribution of preliminary and final prospectuses. We further confirm that we
have complied and will comply with Rule 15c2-8 concerning delivery of each
preliminary prospectus and the Prospectus, and that we will furnish to persons
who receive a confirmation of sale a copy of the Prospectus filed pursuant to
Rule 424(b) or Rule 424(c) under the 1933 Act. We are aware of our statutory
responsibilities under the 1933 Act, and you are authorized on our behalf to so
advise the Commission.
(l) We confirm that we are familiar with Rule 15c2-4 under the
1934 Act and NASD Notice to Members 98-4, relating to the offering of securities
distributed on a best-efforts basis. We further confirm that we have complied
and will comply with Rule 15c2-4 concerning the deposit of subscribers' checks
with the Escrow Agent. We are aware of our statutory responsibilities under the
1934 Act, and you are authorized on our behalf to so advise the Commission.
(m) In making any offer or sale of the Common Shares, we shall
comply with the provisions of the 1933 Act and the 1934 Act, we shall comply
with all of the provisions of this Agreement, and we shall take all necessary
actions pursuant to instructions given by counsel to the Offeror or you or
otherwise required to permit the offer and sale of the Common Shares to comply
with the securities or "blue sky" laws of the jurisdictions in which we make
offers or sales of the Common Shares.
SECTION 5. TERMINATION. The offering provisions contained in Section 4
of this Agreement shall terminate on the Sales Termination Date. Whether
extended or not, said
<PAGE> 5
provisions may be terminated in whole or in part by notice from you.
SECTION 6. PAYMENT OF COSTS AND EXPENSES. Each Dealer shall pay all
costs and expenses incident to the performance of its obligations under this
Agreement, including (1) all expenses incident to the preparation, printing and
filing of all advertising originated by it related to the sale of the Common
Shares and (2) all other costs and expenses incurred in connection with its
sales efforts related to the sale of the Common Shares which are not expressly
assumed by the Offeror in the Managing Dealer Agreement.
SECTION 7. INDEMNIFICATION AND FUTURE CLAIMS.
(a) Each Dealer, including you, agrees to indemnify, hold
harmless and reimburse each other Dealer and each person, if any, who controls
any other Dealer within the meaning of the 1933 Act and the 1934 Act, and any
successor of any other Dealer, to the extent that, and upon the terms upon
which, each Dealer will be obligated pursuant to the Managing Dealer Agreement
to indemnify, hold harmless and reimburse the Offeror, its directors, officers,
and controlling persons, therein specified.
(b) In the event that at any time any person other than a
Dealer asserts a claim against one or more of the Dealers or against you as
representative of the Dealers arising out of an alleged untrue statement or
omission in the Registration Statement (or any amendment thereto) or in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) or relating to any transaction contemplated by this Agreement, we
authorize you to make such investigation, to retain such counsel for the Dealers
and to take such action in the defense of such claim as you may deem necessary
or advisable. You may settle such claim with the approval of a majority in
interest of the Dealers. We will pay our proportionate share (based upon our
sales obligation) of all expenses incurred by you (including the fees and
expenses of counsel for the Dealers) in investigating and defending against such
claim and our proportionate share of the aggregate liability incurred by all
Dealers in respect of such claim (after deducting any contribution or
indemnification obtained pursuant to the Managing Dealer Agreement, or
otherwise, from persons other than Dealers), whether such liability is the
result of a judgment against one or more of the Dealers or the result of any
such settlement. There shall be credited against any amount paid or payable by
us pursuant to this paragraph any loss, damage, liability or expense which is
incurred by us as a result of any such claim asserted against us, and if such
loss, claim, damage, liability, or expense is incurred by us as a result of any
such claim against us, and if such loss, claim, damage, liability, or expense is
incurred by us subsequent to any payment by us pursuant to this paragraph,
appropriate provision shall be made to effect such credit, by refund or
otherwise. Any Dealer may retain separate counsel at its own expense. A claim
against or liability incurred by a person who controls a Dealer shall be deemed
to have been made against or incurred by such Dealer. In the event of default by
any Dealer in respect of its obligations under this Section, the non-defaulting
Dealers shall be obligated to pay the full amount thereof in the proportions
that their respective sales obligations bear to the sales obligations of all
non-defaulting Dealers, without relieving such defaulting Dealer of its
liability hereunder. Our agreements contained in this Section will remain in
full force and effect regardless of any investigation made by or on behalf of
such other Dealer or controlling person and will survive the delivery of and
payment for the Common Shares and the termination of this Agreement and the
similar agreements entered into with the other Dealers.
SECTION 8. BLUE SKY AND OTHER MATTERS.
<PAGE> 6
(a) You will not have any responsibility with respect to the
right of any Dealer or other person to sell the Common Shares in any
jurisdiction notwithstanding any information you may furnish in that connection.
We authorize you to file a New York Further State Notice, if required, and to
make and carry out on our behalf any agreements which you may deem necessary in
order to procure registration or qualification of any of the Common Shares in
any jurisdiction, and we will at your request make such payments, and furnish to
you such information, as you may deem required by reason of any such agreements.
(b) We authorize you to file on behalf of the several Dealers
with the NASD such documents and information, if any, which are available or
have been furnished to you for filing pursuant to the applicable rules,
statements, and interpretations of the NASD.
SECTION 9. ACKNOWLEDGMENT OF REGISTRATION STATEMENT, ETC. We hereby
confirm that we have examined the Registration Statement (including any
amendments or supplements thereto) and Prospectus relating to the Common Shares
filed with the Commission, that we are willing to accept the responsibilities of
a broker and dealer thereunder and that we are willing to proceed as therein
contemplated. We confirm that we have authorized you to advise the Offeror on
our behalf (a) as to the statements to be included in any preliminary prospectus
and in the Prospectus (including any supplement thereto) relating to the Common
Shares under the heading "Plan of Distribution," insofar as they relate to us,
and (b) that there is no information about us required to be stated in said
Registration Statement or said preliminary prospectus or the Prospectus
(including any supplement thereto) other than as set forth in the Dealers'
Questionnaire previously delivered by us to you and the Offeror. We understand
that the aforementioned documents are subject to further change and that we will
be supplied with copies of any amendment or amendments to the Registration
Statement and of any amended Prospectus promptly, if and when received by you,
but the making of such changes and amendments will not release us or affect our
obligations hereunder or under the Managing Dealer Agreement.
SECTION 10. NOTICES AND GOVERNING LAW. Any notice from you to us shall
be mailed, telephoned, or telegraphed to us at our address as set forth on the
signature page of this Agreement. Any notice from us to you shall be deemed to
have been duly given if mailed, telephoned or telegraphed to you at 601
California Street, Suite 1400, San Francisco, California 94108, Fax (415)
781-1824, Attention: Richard A. Sleight. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
SECTION 11. COUNTERPARTS. This Agreement may be signed in any number of
counterparts which, taken together, shall constitute one and the same
instrument, and you may confirm the execution of such counterparts by facsimile
signature.
[remainder of page intentionally left blank]
As Attorney-in-Fact for each of the several
Dealers named in Schedule A to the
Managing Dealer Agreement
<PAGE> 7
Confirmed as of the date first above written.
COASTAL PARTNERS SECURITIES, INC.
As Representative of the several Dealers
By
Name
Title
Signature of Selected Dealer
Address to which all communications are to
be sent
Fax No.
Phone No.
<PAGE> 1
EXHIBIT 10.5
1,000,000 Shares Common Stock
Coastal Community Group, Inc.
_________, 1999
LOCK-UP AGREEMENT
Coast Partners Securities, Inc.
As representative of the several Dealers
444 Brickell Avenue, Suite 805
Miami, Florida 33131
Dear Sirs:
Coastal Community Group, Inc., a Florida corporation (the "Offeror"),
proposes to issue and sell up to 1,000,000 shares (the "Common Shares") of the
Offeror's common stock, $0.01 par value per share, the terms of which are more
fully described in the prospectus filed as part of the registration statement on
Form SB-2 (File Number 333-75033) filed by the Offeror with the Securities and
Exchange Commission. Pursuant to the terms of a Managing Dealer Agreement of
even date herewith, Coast Partners Securities, Inc., acting for itself and on
behalf of the dealers named in Schedule A thereto, will agree to use its best
efforts to solicit subscriptions to purchase a minimum of 900,000 and a maximum
of 1,000,000 Common Shares at a purchase price of $10.00 per share (the
"Offering"). A substantial portion of the proceeds raised from the Offering will
be used by the Offeror to acquire shares of Coastal Community Bank, a
Florida-state chartered commercial bank (the "Bank"), making the Bank a
wholly-owned subsidiary of the Offeror.
In order to induce Coast Partners Securities, Inc. to enter into the
Managing Dealer Agreement, the Bank and the officers, directors and organizers
of the Offeror and the Bank (collectively, the "Insiders") have agreed to enter
into this agreement. The Bank and the Insiders recognize that the Offering will
be of benefit to them. All capitalized terms used herein and not otherwise
defined herein shall have the respective meanings given to them in the Managing
Dealer Agreement.
1. For a period of 180 days from the Effective Date, the Bank shall not,
directly or indirectly, offer for sale, sell, agree to sell, grant any option
for the sale of, or otherwise dispose of any of its securities other than to the
Offeror as contemplated in the Prospectus, or any other beneficial interest in
the assets of the Bank, without the prior written consent of Coast Partners
Securities, Inc.
2. For a period of 180 days from the Effective Date, no Insider shall, directly
or indirectly, offer for sale, sell, agree to sell, grant any option for the
sale of, or otherwise dispose of any securities of the Offeror or any interest
in such securities, without the prior written consent of Coast Partners
Securities, Inc.; provided however, that the foregoing shall not prevent an
Insider from exercising any option issued to him or her under the Offeror's 1998
Incentive Stock Option Plan, Outside Director Stock Option Plan or Restricted
Non-Statutory Stock Option Plan or exercising any warrant issued to him or her
as an organizer of the Offeror.
3. The Bank and each Insider confirms that it, he or she
understands that Coast Partners Securities, Inc. will rely upon the
representations set forth in this
<PAGE> 2
agreement in proceeding with the Offering. The Bank and each Insider further
confirms that its, his or her agreements set forth herein are irrevocable and
shall be binding upon its, his or her heirs, legal representatives, successors
and assigns. The Bank and each Insider agrees and consents to the entry of stop
transfer instructions with the Offeror's and the Bank's transfer agents against
the transfer of securities of the Offeror and the Bank held by it, him or her
except in compliance with this agreement.
4. This agreement shall become effective immediately upon (and
only upon) the effectiveness of the Managing Dealer Agreement and automatically
shall terminate immediately upon the termination of the Managing Dealer
Agreement.
5. This agreement shall be governed by the laws of the State of
California, without giving effect to the choice of law or conflicts of law
principles thereof.
[remainder of page left blank]
IN WITNESS WHEREOF, the parties have duly executed this agreement as of
the day and year first above written.
COASTAL COMMUNITY BANK
By
Hans C. Mueller, President and CEO
INDIVIDUAL OFFICERS, DIRECTORS
AND ORGANIZERS OF COASTAL
COMMUNITY BANK AND COASTAL
COMMUNITY GROUP, INC.
Jerome J. Bushman
Linda Marraccini
James C. Merrill
Hans C. Mueller
Alex Soto
Allen M. Voelz
<PAGE> 1
EXHIBIT 10.6
RESTATED PROMISSORY NOTE
$300,000.00 As of October 1, 1998
Miami, Florida
FOR VALUE RECEIVED, Coastal Community Group, Inc., a Florida
corporation with an address at 255 Palm Avenue, Miami Beach, Florida 33139
("Maker") promises to pay to the order of Bushmans' Inc. ("Payee"), on demand,
the principal sum of THREE HUNDRED THOUSAND AND 00/100 DOLLARS ($300,000.00),
together with interest on the principal balance thereof, from time to time
outstanding as follows:
This Note shall have an effective date of October 1, 1998 and shall
bear interest at a rate equal to two percent (2%) per annum in excess of the New
York Prime Rate as quoted daily in the Wall Street Journal (Eastern Edition),
provided that if more than one such rate is quoted then the highest such rate
shall be applicable. The interest rate shall change when and if such New York
Prime Rate changes and shall be computed on the actual number of days elapsed
over a 365-day year; i.e., 1/365th of a full year's interest shall accrue for
each day any portion of the principal evidenced by this Note is outstanding.
To the extent not sooner due and payable, the entire unpaid principal
balance of this Note, together with accrued and unpaid interest calculated as
aforesaid, shall be due and payable in full on demand.
This Note amends and restates in its entirety that certain promissory
note dated October 1, 1998 by Maker in favor of Payee in the original principal
amount of $300,000, and is issued in exchange for such note. Upon issuance of
this Note, the original note shall be returned to Maker and shall be canceled.
Maker shall have the right, at any time and from time to time, to
prepay the unpaid principal evidenced by this Note in whole or in part without
premium or penalty but with accrued interest to the date of such prepayment on
any amount prepaid. Any such prepayment shall be applied first to accrued
interest with the balance, if any, to be applied to the then outstanding and
remaining installments of principal hereof in the order of their maturities.
In the event that Maker fails to pay to Payee promptly when the same
shall become due (whether at maturity, upon acceleration or otherwise) any
portion of the indebtedness evidenced by this Note including, but not limited
to, any amount of principal or of interest due under this Note, and such failure
shall continue for more than ten (10) days, then the indebtedness evidenced by
this Note and/or any note(s) which may be taken in renewal, extension,
substitution or modification of all or any part of the indebtedness evidenced
hereby or thereby shall, at the option of Payee, immediately become due and
payable
<PAGE> 2
without demand upon or notice to Maker, and Payee shall be entitled to exercise
the other remedies set forth in this Note or as provided by law.
Maker hereby waives presentment for payment, demand, notice of dishonor
and protest.
Both principal and interest evidenced by this Note shall be payable in
lawful currency of the United States of America to Payee at P.O. Box 8, Highway
66, East, Rocholt, Wisconsin 54473, or at such other place designated by Payee
in writing.
Maker agrees that this Note shall be deemed to have been made under and
shall be governed by the laws of the State of Florida in all respects (except as
to interest rates which are or may be preempted by the laws of the United
States), including matters of construction, validity, and performance. If any
provision of this Note shall be deemed unenforceable under applicable law, such
provision shall be ineffective, but only to the extent of such unenforceability,
without invalidating the remainder of such provision or the remaining provisions
of this Note. All of the terms and provisions of this Note shall be applicable
to and be binding upon each and every maker, endorser, surety, guarantor, all
other persons who are or may become liable for the payment hereof and their
heirs, personal representatives, successors or assigns. Maker and Payee each
consents that jurisdiction and venue of any dispute arising from this Note shall
be in Dade County, Florida.
COASTAL COMMUNITY GROUP, INC.
By: /s/ Hans C. Mueller
-------------------------------------
Name: /s/ Hans C. Mueller
----------------------------------
Title: Chairman/CEO & Pres.
---------------------------------
-2-
<PAGE> 1
EXHIBIT 10.5
RESTATED PROMISSORY NOTE
$350,000.00 As of March 18, 1999
Miami, Florida
FOR VALUE RECEIVED, Coastal Community Group, Inc., a Florida
corporation with an address at 255 Palm Avenue, Miami Beach, Florida 33139
("Maker") promises to pay to the order of Bushmans' Inc. ("Payee"), on demand,
the principal sum of THREE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS
($350,000.00), together with interest on the principal balance thereof, from
time to time outstanding as follows:
This Note shall have an effective date of March 18, 1999 and shall bear
interest at a rate equal to two percent (2%) per annum in excess of the New York
Prime Rate as quoted daily in the Wall Street Journal (Eastern Edition),
provided that if more than one such rate is quoted then the highest such rate
shall be applicable. The interest rate shall change when and if such New York
Prime Rate changes and shall be computed on the actual number of days elapsed
over a 365-day year; i.e., 1/365th of a full year's interest shall accrue for
each day any portion of the principal evidenced by this Note is outstanding.
To the extent not sooner due and payable, the entire unpaid principal
balance of this Note, together with accrued and unpaid interest calculated as
aforesaid, shall be due and payable in full on demand.
Maker shall have the right, at any time and from time to time, to
prepay the unpaid principal evidenced by this Note in whole or in part without
premium or penalty but with accrued interest to the date of such prepayment on
any amount prepaid. Any such prepayment shall be applied first to accrued
interest with the balance, if any, to be applied to the then outstanding and
remaining installments of principal hereof in the order of their maturities.
This Note amends and restates in its entirety that certain promissory
note dated March 18, 1999 by Maker in favor of Payee in the original principal
amount of $350,000, and is issued in exchange for such note. Upon issuance of
this Note, the original note shall be returned to Maker and shall be canceled.
In the event that Maker fails to pay to Payee promptly when the same
shall become due (whether at maturity, upon acceleration or otherwise) any
portion of the indebtedness evidenced by this Note including, but not limited
to, any amount of principal or of interest due under this Note, and such failure
shall continue for more than ten (10) days, then the indebtedness evidenced by
this Note and/or any note(s) which may be taken in renewal, extension,
substitution or modification of all or any part of the indebtedness evidenced
hereby or thereby shall, at the option of Payee, immediately become due and
payable
<PAGE> 2
without demand upon or notice to Maker, and Payee shall be entitled to exercise
the other remedies set forth in this Note or as provided by law.
Maker hereby waives presentment for payment, demand, notice of dishonor
and protest.
Both principal and interest evidenced by this Note shall be payable in
lawful currency of the United States of America to Payee at P.O. Box 8, Highway
66, East, Rocholt, Wisconsin 54473, or at such other place designated by Payee
in writing.
Maker agrees that this Note shall be deemed to have been made under and
shall be governed by the laws of the State of Florida in all respects (except as
to interest rates which are or may be preempted by the laws of the United
States), including matters of construction, validity, and performance. If any
provision of this Note shall be deemed unenforceable under applicable law, such
provision shall be ineffective, but only to the extent of such unenforceability,
without invalidating the remainder of such provision or the remaining provisions
of this Note. All of the terms and provisions of this Note shall be applicable
to and be binding upon each and every maker, endorser, surety, guarantor, all
other persons who are or may become liable for the payment hereof and their
heirs, personal representatives, successors or assigns. Maker and Payee each
consents that jurisdiction and venue of any dispute arising from this Note shall
be in Dade County, Florida.
COASTAL COMMUNITY GROUP, INC.
By: /s/ Hans C. Mueller
----------------------------------
Name: /s/ Hans C. Mueller
--------------------------------
Title: /s/ Chairman/CEO & Pres.
-------------------------------
-2-
<PAGE> 1
EXHIBIT 10.8
GUARANTY
<TABLE>
<S> <C>
DATE: As of June 17, 1999
OBLIGOR: COASTAL COMMUNITY GROUP, INC., a Florida corporation, whose
address is at 255 Palm Avenue, Miami Beach, Florida 33139
OBLIGEE: BUSHMANS' INC., a Wisconsin corporation, whose address is at
P.O. Box 8, Highway 66, East, Rocholt, Wisconsin 54473.
NOTE: That certain Promissory Note dated as of October 1, 1998,
made by Obligor in favor of Obligee in the original
principal sum of $300,000.00.
DEBT: A debt in the original principal amount of the Note, from
Obligee to Obligor.
DEBT
DOCUMENTS: The Note and all other documents which evidence or secure
the Debt.
GUARANTOR: JEROME J. BUSHMAN, an individual, whose address is P.O. Box
11, Golloway, Wisconsin 54432.
</TABLE>
In consideration of the sum of Ten Dollars ($10.00) cash in hand paid and
other valuable considerations, as well as for the purpose of seeking to induce
Obligee to extend credit to Obligor, Guarantor, does hereby agree as follows:
1. Guarantor hereby guarantees to the Obligee, its successors and assigns:
(a) the full and prompt payment when due of any and all indebtedness of Obligor
to Obligee, whether now or hereafter due or arising, including, without
limitation, principal, interest and any other amounts due or to become due,
whether by acceleration or otherwise, under the Note or any of the Debt
Documents, all costs of collection, including reasonable attorney's fees,
whether incurred in connection with collection, trial, appeal or otherwise, all
other amounts which Obligor is obligated to pay Obligee under any instruments
evidencing, relating to or securing any indebtedness of Obligor to Obligee, and
any documentary stamp tax (including interest and penalties, if any) determined
to be due in connection with any promissory notes executed by Obligor in favor
of Obligee; and (b) the performance of any and all obligations of Obligor under
the Note and the other Debt Documents.
2. Guarantor agrees that this Guaranty may be enforced by the Obligee
against it without the necessity at any time of having recourse to the Note, and
Guarantor hereby waives the right to require the Obligee to proceed against
Obligor or any other person or any other property, or to require the Obligee to
pursue any other remedy or enforce any right. Guarantor further agrees that
nothing contained herein shall prevent the Obligee from suing on the Note or
from exercising any other rights available to it under the Note or any of the
Debt Documents, and the exercise of any of the aforesaid rights shall not
constitute a discharge of Guarantor's obligations hereunder, it being the
purpose and intent of the Guarantor that the Guarantor's obligations hereunder
shall be absolute,
<PAGE> 2
irrevocable, independent, unconditional and continuing, under any and all
circumstances. Neither the Guarantor's obligations under this Guaranty nor any
remedy for the enforcement thereof shall be impaired, modified, changed, or
released in any manner whatsoever by any impairment, modification, change,
release or limitation of the liability of the Obligor or by reason of Obligor's
bankruptcy, insolvency, reorganization, dissolution or by any discharge of
Obligor's obligations resulting from any bankruptcy or insolvency proceeding or
otherwise.
3. All claims and indebtedness, if any, of the Guarantor against Obligor
shall be subordinate to any instrument securing payment of the indebtedness
evidenced by the Note and to the claim of the Obligee under the Note and the
Debt Documents.
4. Guarantor hereby agrees to pay and reimburse the Obligee for all costs
and attorneys' fees which the Obligee may expend or incur in the enforcement of
any of Obligor's obligations under the Note or any of the Debt Documents, and/or
in the enforcement of this Guaranty.
5. The obligations of the Guarantor shall be binding upon its and their
heirs, executors, administrators, personal representatives, successors and
assigns, and shall inure to the benefit of the Obligee and its successors and
assigns. Without limiting the generality of the foregoing, the Obligee (or its
successors and assigns) may from time to time and without notice to the
undersigned, assign any or all of its rights under this Guaranty without in any
way affecting or diminishing the obligations of the Guarantor hereunder, who
shall continue to remain bound by and obligated to perform under and with
respect to this Guaranty as though there had been no such assignment.
6. If all or any portion of any provision of this Guaranty is declared or
found by a court of competent jurisdiction to be unenforceable or null and void,
such provision or portion thereof shall be deemed stricken and severed from this
Guaranty and the remaining provisions and portions hereof shall continue in full
force and effect.
7. Without limitation of any of the provisions hereof, no payments by
Guarantor under any provision of this Guaranty shall entitle Guarantor, by
subrogation or otherwise, to the rights of the Obligee, to any payment by
Obligor or to any payment from or rights in any applicable lands, title
insurance, indemnities or other security held by or for the benefit of the
Obligee except after payment in full to the Obligee of all amounts owing or
which may become owing to the Obligee under or with respect to the Note or any
of the other Debt Documents, and all costs, damages, fees and expenses incurred
or suffered by it under or by reason of the Debt.
8. Guarantor further acknowledges and agrees that the Obligee, in its sole
discretion, may at any time enter into agreements with Obligor to amend, modify
or change any of the Debt Documents, or waive or release any provision or
provisions thereof, and with reference thereto, may make and enter into all such
agreements as the Obligee may deem proper or desirable, without any notice or
further assent from the Guarantor and without in any manner impairing or
affecting this Guaranty or any of the Obligee's rights hereunder or any of the
Guarantor's obligations hereunder.
-2-
<PAGE> 3
9. Guarantor agrees that if at any time all or any part of any payment at
any time received by the Obligee from Obligor or Guarantor under or with respect
to this Guaranty is or must be rescinded or returned by the Obligee for any
reason whatsoever (including, but not limited to, the insolvency, bankruptcy or
reorganization of such person or entity) then such person's obligations
hereunder shall, to the extent of the payment rescinded or returned, be deemed
to have continued in existence, notwithstanding such previous receipt by the
Obligee, and the Guarantor's obligations hereunder shall continue to be
effective or be reinstated, as the case may be, as to such payment, all as
though such previous payment to the Obligee had never been made.
10. All of the obligations of the undersigned, and all of the rights of the
Obligee under this Guaranty are cumulative.
11. Time is of the essence of this Guaranty as to the performance of the
undersigned and the Obligor.
12. This Guaranty may not be modified, amended, revised, revoked,
terminated, changed or varied in any way whatsoever except by the express terms
of a writing signed by the Obligee and Guarantor.
13. This Guaranty shall be governed by, and construed in accordance with,
the laws of the State of Florida without regard to principles of conflict of
laws.
14. With respect to any claim arising out of or in any way relating to this
Guaranty, Guarantor unconditionally and irrevocably (a) submits to the
nonexclusive jurisdiction of the state and federal courts of the State of
Florida sitting in Miami, Florida, (b) waives any objection it may have at any
time to the laying of venue of any suit, action or proceeding arising out of or
relating to this Guaranty brought in any such court, (c) waives any claim that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum, and (d) waives the right to object, with respect to
such claim, suit, action or proceeding brought in any such court, that such
court does not have jurisdiction over it.
15. Any notices which Guarantor or the Obligee may desire to give hereunder
or otherwise shall be in writing and shall be deemed to have been given when
personally delivered or sent by United States registered or certified mail,
return receipt requested and addressed, in the case of the Guarantor, to the
address set forth above under its name; and, in the case of the Obligee to the
address set forth above or to such other address as the party to be served with
notice may have furnished to the other party as a place designated for the
service of notice. Any notice given in accordance with the foregoing shall be
deemed given when delivered personally or, if mailed, five (5) days after it
shall have been deposited in the United States mails, as aforesaid. Nothing
herein shall be construed as a requirement that Obligee give any notice
hereunder.
16. Notwithstanding anything to the contrary contained in this Guaranty
or in the Note or any of the other Debt Documents, it is the intent of the
parties that any interest for which the
-3-
<PAGE> 4
Guarantor is obligated hereunder shall not exceed the maximum amount of interest
permitted to be enforced against the Guarantor under the governing law specified
above.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
instrument as of the date first above written.
Signed, sealed and delivered
in the presence of: GUARANTOR:
/s/ Suzanne Kekar /s/ Jerome J. Bushman
- --------------------------------- ------------------------------------
Print Name: Suzanne Kekar JEROME J. BUSHMAN
----------------------
- ---------------------------------
Print Name:
----------------------
-4-
<PAGE> 1
EXHIBIT 10.9
GUARANTY
<TABLE>
<S> <C>
DATE: As of June 17, 1999
OBLIGOR: COASTAL COMMUNITY GROUP, INC., a Florida corporation, whose
address is at 255 Palm Avenue, Miami Beach, Florida 33139
OBLIGEE: BUSHMANS' INC., a Wisconsin corporation, whose address is at
P.O. Box 8, Highway 66, East, Rocholt, Wisconsin 54473.
NOTE: That certain Promissory Note dated as of March 18, 1999 made
by Obligor in favor of Obligee in the original principal sum
of $350,000.00.
DEBT: A debt in the original principal amount of the Note, from
Obligee to Obligor.
DEBT
DOCUMENTS: The Note and all other documents which evidence or secure
the Debt.
GUARANTOR: JEROME J. BUSHMAN, an individual, whose address is P.O. Box
11, Golloway, Wisconsin 54432.
</TABLE>
In consideration of the sum of Ten Dollars ($10.00) cash in hand paid and
other valuable considerations, as well as for the purpose of seeking to induce
Obligee to extend credit to Obligor, Guarantor, does hereby agree as follows:
1. Guarantor hereby guarantees to the Obligee, its successors and assigns:
(a) the full and prompt payment when due of any and all indebtedness of Obligor
to Obligee, whether now or hereafter due or arising, including, without
limitation, principal, interest and any other amounts due or to become due,
whether by acceleration or otherwise, under the Note or any of the Debt
Documents, all costs of collection, including reasonable attorney's fees,
whether incurred in connection with collection, trial, appeal or otherwise, all
other amounts which Obligor is obligated to pay Obligee under any instruments
evidencing, relating to or securing any indebtedness of Obligor to Obligee, and
any documentary stamp tax (including interest and penalties, if any) determined
to be due in connection with any promissory notes executed by Obligor in favor
of Obligee; and (b) the performance of any and all obligations of Obligor under
the Note and the other Debt Documents.
2. Guarantor agrees that this Guaranty may be enforced by the Obligee
against it without the necessity at any time of having recourse to the Note, and
Guarantor hereby waives the right to require the Obligee to proceed against
Obligor or any other person or any other property, or to require the Obligee to
pursue any other remedy or enforce any right. Guarantor further agrees that
nothing contained herein shall prevent the Obligee from suing on the Note or
from exercising any other rights available to it under the Note or any of the
Debt Documents, and the exercise of any of the aforesaid rights shall not
constitute a discharge of Guarantor's obligations hereunder, it being the
purpose and intent of the Guarantor that the Guarantor's obligations hereunder
shall be absolute,
<PAGE> 2
irrevocable, independent, unconditional and continuing, under any and all
circumstances. Neither the Guarantor's obligations under this Guaranty nor any
remedy for the enforcement thereof shall be impaired, modified, changed, or
released in any manner whatsoever by any impairment, modification, change,
release or limitation of the liability of the Obligor or by reason of Obligor's
bankruptcy, insolvency, reorganization, dissolution or by any discharge of
Obligor's obligations resulting from any bankruptcy or insolvency proceeding or
otherwise.
3. All claims and indebtedness, if any, of the Guarantor against Obligor
shall be subordinate to any instrument securing payment of the indebtedness
evidenced by the Note and to the claim of the Obligee under the Note and the
Debt Documents.
4. Guarantor hereby agrees to pay and reimburse the Obligee for all costs
and attorneys' fees which the Obligee may expend or incur in the enforcement of
any of Obligor's obligations under the Note or any of the Debt Documents, and/or
in the enforcement of this Guaranty.
5. The obligations of the Guarantor shall be binding upon its and their
heirs, executors, administrators, personal representatives, successors and
assigns, and shall inure to the benefit of the Obligee and its successors and
assigns. Without limiting the generality of the foregoing, the Obligee (or its
successors and assigns) may from time to time and without notice to the
undersigned, assign any or all of its rights under this Guaranty without in any
way affecting or diminishing the obligations of the Guarantor hereunder, who
shall continue to remain bound by and obligated to perform under and with
respect to this Guaranty as though there had been no such assignment.
6. If all or any portion of any provision of this Guaranty is declared or
found by a court of competent jurisdiction to be unenforceable or null and void,
such provision or portion thereof shall be deemed stricken and severed from this
Guaranty and the remaining provisions and portions hereof shall continue in full
force and effect.
7. Without limitation of any of the provisions hereof, no payments by
Guarantor under any provision of this Guaranty shall entitle Guarantor, by
subrogation or otherwise, to the rights of the Obligee, to any payment by
Obligor or to any payment from or rights in any applicable lands, title
insurance, indemnities or other security held by or for the benefit of the
Obligee except after payment in full to the Obligee of all amounts owing or
which may become owing to the Obligee under or with respect to the Note or any
of the other Debt Documents, and all costs, damages, fees and expenses incurred
or suffered by it under or by reason of the Debt.
8. Guarantor further acknowledges and agrees that the Obligee, in its sole
discretion, may at any time enter into agreements with Obligor to amend, modify
or change any of the Debt Documents, or waive or release any provision or
provisions thereof, and with reference thereto, may make and enter into all such
agreements as the Obligee may deem proper or desirable, without any notice or
further assent from the Guarantor and without in any manner impairing or
affecting this Guaranty or any of the Obligee's rights hereunder or any of the
Guarantor's obligations hereunder.
-2-
<PAGE> 3
9. Guarantor agrees that if at any time all or any part of any payment at
any time received by the Obligee from Obligor or Guarantor under or with respect
to this Guaranty is or must be rescinded or returned by the Obligee for any
reason whatsoever (including, but not limited to, the insolvency, bankruptcy or
reorganization of such person or entity) then such person's obligations
hereunder shall, to the extent of the payment rescinded or returned, be deemed
to have continued in existence, notwithstanding such previous receipt by the
Obligee, and the Guarantor's obligations hereunder shall continue to be
effective or be reinstated, as the case may be, as to such payment, all as
though such previous payment to the Obligee had never been made.
10. All of the obligations of the undersigned, and all of the rights of the
Obligee under this Guaranty are cumulative.
11. Time is of the essence of this Guaranty as to the performance of the
undersigned and the Obligor.
12. This Guaranty may not be modified, amended, revised, revoked,
terminated, changed or varied in any way whatsoever except by the express terms
of a writing signed by the Obligee and Guarantor.
13. This Guaranty shall be governed by, and construed in accordance with,
the laws of the State of Florida without regard to principles of conflict of
laws.
14. With respect to any claim arising out of or in any way relating to this
Guaranty, Guarantor unconditionally and irrevocably (a) submits to the
nonexclusive jurisdiction of the state and federal courts of the State of
Florida sitting in Miami, Florida, (b) waives any objection it may have at any
time to the laying of venue of any suit, action or proceeding arising out of or
relating to this Guaranty brought in any such court, (c) waives any claim that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum, and (d) waives the right to object, with respect to
such claim, suit, action or proceeding brought in any such court, that such
court does not have jurisdiction over it.
15. Any notices which Guarantor or the Obligee may desire to give hereunder
or otherwise shall be in writing and shall be deemed to have been given when
personally delivered or sent by United States registered or certified mail,
return receipt requested and addressed, in the case of the Guarantor, to the
address set forth above under its name; and, in the case of the Obligee to the
address set forth above or to such other address as the party to be served with
notice may have furnished to the other party as a place designated for the
service of notice. Any notice given in accordance with the foregoing shall be
deemed given when delivered personally or, if mailed, five (5) days after it
shall have been deposited in the United States mails, as aforesaid. Nothing
herein shall be construed as a requirement that Obligee give any notice
hereunder.
16. Notwithstanding anything to the contrary contained in this Guaranty or
in the Note or any of the other Debt Documents, it is the intent of the parties
that any interest for which the
-3-
<PAGE> 4
Guarantor is obligated hereunder shall not exceed the maximum amount of interest
permitted to be enforced against the Guarantor under the governing law specified
above.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
instrument as of the date first above written.
Signed, sealed and delivered
in the presence of: GUARANTOR:
/s/ Suzanne Kekar /s/ Jerome J. Bushman
- ---------------------------------- ------------------------------
Print Name: Suzanne Kekar JEROME J. BUSHMAN
----------------------
- ----------------------------------
Print Name:
-----------------------
-4-
<PAGE> 1
EXHIBIT 23.3
Coastal Community Group, Inc.
(f/k/a Coastal BHC, Inc.)
(A Development Stage Company)
Financial Statements
April 30, 1999 and
December 31, 1998
CONSENT OF MORRISON, BROWN, ARGIZ & COMPANY
To the Board of Directors
Coastal Community Group, Inc. (f/k/a Coastal BHC, Inc.)
We have audited the accompanying balance sheets of Coastal Community Group, Inc.
(f/k/a Coastal BHC, Inc.) (a development stage company) (the "Company") as of
April 30, 1999 and December 31, 1998, and the related statements of operations,
changes in stockholder's deficit, and cash flows for the four month period ended
April 30, 1999 and 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Coastal Community Group, Inc.
(f/k/a Coastal BHC, Inc.) as of April 30, 1999 and December 31, 1998, and the
results of its operations and its cash flows for the four month period ended
April 30, 1999 and 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
May 14, 1999
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> APR-30-1999
<CASH> 275,359
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 372,972
<DEPOSITS> 0
<SHORT-TERM> 673,586
<LIABILITIES-OTHER> 81,750
<LONG-TERM> 0
0
0
<COMMON> 5,000
<OTHER-SE> (387,364)
<TOTAL-LIABILITIES-AND-EQUITY> 372,972
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 2,440
<INTEREST-TOTAL> 2,440
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 20,151
<INTEREST-INCOME-NET> (17,711)
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 174,079
<INCOME-PRETAX> (191,790)
<INCOME-PRE-EXTRAORDINARY> (191,790)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (191,790)
<EPS-BASIC> (383.58)
<EPS-DILUTED> (383.58)
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
