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As filed with the Securities and Exchange Commission on March 24, 1999
Registration No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
(Name of small business issuer in its charter)
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FLORIDA 6712 59-3535315
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(State or other (Primary Standard Industrial (IRS Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
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3411 TAMIAMI TRAIL NORTH, SUITE 200
NAPLES, FLORIDA 34103
(941) 643-4646
(Address and telephone number
of principal executive offices)
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POLLY M. ROGERS
3411 TAMIAMI TRAIL NORTH, SUITE 200
NAPLES, FLORIDA 34103
(941) 643-4646
(Name, address and telephone
number of agent for service)
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Copies Requested to:
ROBERT C. SCHWARTZ, ESQ.
SMITH, GAMBRELL & RUSSELL, LLP
SUITE 3100, PROMENADE II
1230 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309
(404) 815-3758
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering aggregate offering price(1) registration fee
price per share(1)
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Common Stock,
$.01 par value 1,200,000 $10.00 $12,000,000 $3336
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(1) Estimated solely for the purpose of calculating the fee pursuant to Rule
457(a) under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement filed
with the SEC is effective. This preliminary prospectus is not an offer to sell
nor does it seek an offer to buy these securities in any jurisdiction where the
offer or sales are not permitted.
SUBJECT TO COMPLETION, DATED MARCH 24, 1999
1,200,000 SHARES COMMON STOCK
CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
A BANK HOLDING COMPANY FOR
CITIZENS NATIONAL BANK OF SOUTHWEST FLORIDA
A PROPOSED NATIONAL BANK
We are Citizens Bancshares of Southwest Florida, Inc., and we are
offering 1,200,000 shares of our common stock at $10.00 per share to raise
capital to form and capitalize Citizens National Bank of Southwest Florida, a
proposed national bank.
We will deposit all subscription funds in an escrow account until we
receive subscriptions for 1,000,000 shares. If we do not receive subscriptions
for 1,000,000 shares by August ___, 1999, we will terminate the offering and
promptly return all subscription funds to subscribers, along with any interest
earned on the funds. We may, however, at our option and without giving notice to
subscribers, extend the offering for three consecutive 90-day periods until May
___, 2000. We may reject all or part of any subscription for any reason.
Investors must purchase a minimum of 500 shares and may purchase up to 20,000
shares.
We are conducting this offering through several of our directors and
officers. These individuals will devote appropriate time and energy to marketing
and selling the shares, but there is no guarantee that we will be able to sell
the 1,000,000 shares necessary to complete the offering.
At the $10.00 offering price, we will receive total proceeds of between
$10,000,000 and $12,000,000 in this offering. Because there is no underwriter
involved in this offering and the directors and officers who will be selling the
shares will not receive any commissions, we will receive the full proceeds of
this offering.
There is currently no public market for our common stock.
INVESTING IN THESE SECURITIES INVOLVES RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER
BEFORE INVESTING IN OUR COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR SAVINGS DEPOSITS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY.
The date of this prospectus is ___________, 1999
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PROSPECTUS SUMMARY
This summary highlights some of the information contained in this
prospectus. It does not contain all of the information that you should consider
before investing in our common stock. To fully understand this offering, you
should read the entire prospectus carefully, including the risk factors and the
financial statements.
THE COMPANY
We plan to operate as a bank holding company and to be the sole
shareholder of Citizens National Bank of Southwest Florida, a proposed national
bank. We will use the proceeds of this offering primarily to purchase all of the
common stock to be issued by Citizens Bank. This will provide Citizens Bank
sufficient capital to pay its pre-opening and organizational expenses and to
begin operations. Citizens Bank will operate as a full service community bank
emphasizing prompt, personalized customer service to meet the financial needs of
individuals and small to medium-sized businesses in and around western Collier
County, Florida. We anticipate that we will receive all necessary regulatory
approvals and be able to begin operations of Citizens Bank in June of 1999. The
main office of Citizens Bancshares and Citizens Bank will be located in the Park
Shore area of Naples in Collier County, Florida. The address of our operations
office, which is located adjacent to the site of our future main office, is 3411
Tamiami Trail North, Suite 200, Naples, Florida 34103, and our telephone number
is (941) 643-4646.
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THE OFFERING
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Common Stock Offered.................... 1,200,000 shares. A minimum of 1,000,000 must be sold in
this offering. Investors must purchase a minimum of 500
shares and may purchase a maximum of 20,000 shares. We
may, however, waive these minimum and maximum
subscription amounts in our sole discretion. See "Terms of
the Offering" at page 7.
Common Stock to be Outstanding
after this Offering..................... Between 1,018,000 and 1,218,000 shares
Price to Public......................... $10.00 per share
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Offering Conditions..................... This offering is subject to the following conditions:
- investors must subscribe for a total of at least 1,000,000
shares
- the Federal Reserve Board must approve our application
to become a bank holding company
- the FDIC must approve Citizens Bank's application for
deposit insurance
- we must not have canceled this offering, which we
reserve the right to do at any time before we
withdraw funds from the subscription escrow account
Escrow Arrangements..................... Until the offering conditions are satisfied, we will deposit all
subscription funds in a subscription escrow account with
First National Bank of Naples. If the offering conditions are
not satisfied by August __, 1999, we will promptly return all
subscription funds, along with any interest earned on the
subscription funds, to the subscribers.
If all of the offering conditions are satisfied, the
escrow agent will at that time release the subscription funds
to us and the escrow account will be closed. Any subscription
funds we receive after the offering conditions have been
satisfied will be immediately available to us. See "Terms of
The Offering -- Escrow of Subscription Funds" at page 8.
Plan of Distribution.................... Several of our directors and officers will market the common
stock. Although these individuals will devote appropriate
time and energy to marketing and selling the shares, there is
no guarantee that the required minimum of 1,000,000 shares
will be sold. These individuals will not receive any
commissions on the sales. If the offering conditions are not
satisfied by August __, 1999, we may engage an underwriter
to sell the shares. The underwriter would receive a
commission on sales which would not exceed 10%. See
"Terms of The Offering-- Plan of Distribution" at page 10.
Use of Proceeds......................... We will use the proceeds of this offering to pay expenses
associated with the organization of Citizens Bancshares and
Citizens Bank, to pay expenses associated with this offering,
and to purchase all of the issued and outstanding capital
stock of Citizens Bank. Citizens Bank will, in turn, use the
proceeds from the sale of its stock to begin its operations.
See "Use of Proceeds" at page 11.
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RISK FACTORS
An investment in our common stock involves a significant degree of
risk. You should not invest in our common stock unless you can afford to lose
your entire investment. You should consider carefully these risk factors
together with all of the other information included in this prospectus before
you decide to purchase shares of our common stock.
IF WE FAIL TO RECEIVE NECESSARY REGULATORY APPROVALS, YOU COULD LOSE A
PORTION OF YOUR INVESTMENT. If and when the stock subscription funds are
released from the subscription escrow account, we will use a portion of the
funds to pay start-up expenses. If we then fail to receive final regulatory
approval, we would seek to dissolve and liquidate Citizens Bancshares. Upon
liquidation, we would return to subscribers all subscription funds, with any
interest earned on the funds, less all expenses we had incurred. See "Terms of
the Offering -- Failure of Bank to Open for Business" at page 9.
WE HAVE NO OPERATING HISTORY UPON WHICH TO BASE AN ESTIMATE OF OUR
FUTURE SUCCESS. Citizens Bank, which initially will be the sole subsidiary of
Citizens Bancshares, is in organization, and neither Citizens Bank nor Citizens
Bancshares has any operating history on which to base any estimate of future
performance. The likelihood of our future success must be evaluated in light of
the expenses, complications, and delays frequently encountered in connection
with the development of a new bank. Because of our lack of operating history,
you do not have access to the type and amount of information that would be
available to a purchaser of the securities of a financial institution with an
operating history.
WE WILL INCUR SUBSTANTIAL START-UP EXPENSES AND WE DO NOT EXPECT TO BE
PROFITABLE FOR SEVERAL YEARS. Initially, we will merely act as the sole
shareholder of Citizens Bank. Thus, our profitability will be dependent upon the
successful operation of Citizens Bank. Typically, new banks are not profitable
in the first year of operation and sometimes are not profitable for several
years. We will incur substantial expenses in establishing Citizens Bank as a
going concern, and we can offer no assurance that Citizens Bank will be
profitable or that future earnings, if any, will meet the levels of earnings
prevailing in the banking industry.
WE WILL BE COMPETING IN COLLIER COUNTY, FLORIDA WITH MANY OTHER,
LARGER, FINANCIAL INSTITUTIONS. Citizens Bank will be a full service community
bank in Collier County, Florida. Competition among financial institutions in
Collier County is intense, and we will compete with other state and national
banks, savings and loan associations, consumer finance companies, credit unions,
money market mutual funds, and other financial institutions which have far
greater financial resources than are available to us. Our relatively small size
may impact our ability to compete effectively with these larger institutions in
offering financial services. In addition, the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 has further increased competition by
eliminating interstate branching barriers for certain financial institutions,
making it easier for out-of-state financial institutions to more easily access
the market to be served by Citizens Bank. If we are unable to successfully
compete for deposit, loan and other banking customers effectively, this
inability would have an adverse effect on our potential for growth and
profitability. See "Business of Citizens Bank -- Market Area and Competition" at
page 15.
IF OUR PROPOSED CHIEF EXECUTIVE OFFICER, MICHAEL MCMULLAN, WERE TO
BECOME UNAVAILABLE, IT COULD DELAY OR PREVENT THE OPENING OF CITIZENS BANK.
Regulatory approval to establish and operate a national bank partially
depends upon the approval by the Office of the Comptroller of the Currency (OCC)
of the bank's proposed chief executive officer. Generally, the chief executive
officer of a start-up financial institution is considered vital to the potential
success of the new institution. In our
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charter application to the OCC, we proposed Michael McMullan as Citizens Bank's
chief executive officer. If Mr. McMullan were to become unavailable for any
reason, final regulatory approval to begin banking operations would be delayed
until the OCC approved a suitable replacement. It is possible that we would not
be able to find a suitable replacement for Mr. McMullan. See "Management" at
page 25.
INTEREST RATE VOLATILITY COULD SIGNIFICANTLY HARM OUR BUSINESS. Our
results of operations, like those of most other banks and bank holding
companies, will be significantly affected by changes in market interest rates.
Our profitability will depend substantially on our net interest income, which is
the difference between the interest income earned on interest-bearing assets,
such as loans, and the interest paid on interest-bearing liabilities, such as
deposits and borrowings. To the extent that the maturities of these assets and
liabilities differ, rapidly rising or falling interest rates could have a
material effect on our earnings. See "Business of Citizens Bank --
Asset/Liability Management" at page 18.
OUR RELATIVELY LOW LENDING LIMIT MAY LIMIT OUR GROWTH. At least during
our first years of operation, our legally mandated lending limit will be lower
than that of many of our competitors because during this period we will have
less capital than many of our competitors. Initially, we will have a legal
lending limit for unsecured loans of up to $1,455,000 to any one borrower. This
relatively low lending limit may discourage potential borrowers who have greater
borrowing needs, which may restrict our ability to grow. We may try to serve the
needs of these borrowers by selling loan participations to other institutions,
but this strategy may not succeed.
BOTH CITIZENS BANCSHARES AND CITIZENS BANK WILL OPERATE IN A HIGHLY
REGULATED ENVIRONMENT AND WILL BE SUBJECT TO SUPERVISION AND EXAMINATION BY
SEVERAL REGULATORY AGENCIES. As a bank holding company, Citizens Bancshares will
be subject to regulation and supervision by the Federal Reserve Board. As a
national bank, Citizens Bank will be subject to regulation and supervision
primarily by the OCC and, to a lesser extent, by the FDIC. Both Citizens
Bancshares and Citizens Bank will be subject to changes in federal and state
law, regulations, governmental policies, income tax laws and accounting
principles. In particular, legislation and regulations deregulating the banking
industry and allowing interstate expansion of financial services firms could
adversely affect our business along with that of the entire banking industry.
See "Supervision and Regulation" at page 21.
OUR SUCCESS WILL DEPEND SIGNIFICANTLY UPON GENERAL ECONOMIC CONDITIONS
IN COLLIER COUNTY. A prolonged economic dislocation or recession affecting
Collier County could cause Citizens Bank's non-performing assets to increase,
causing operating losses, impaired liquidity and the erosion of capital. Such an
economic dislocation or recession could result from a variety of causes,
including natural disasters such as hurricanes, floods or tornadoes, or a
prolonged downturn in various industries upon which the economy of Collier
County depends.
THE OPERATION OF CITIZENS BANK MAY IN THE FUTURE REQUIRE MORE CAPITAL
THAN WE WILL RAISE IN THIS OFFERING. Although we anticipate that the $10,000,000
minimum amount of capital to be raised by this offering will be sufficient to
support Citizens Bank's immediate capital needs, we may in the future need to
obtain additional capital to comply with regulatory capital requirements. We can
give no assurance that we will be able to access the capital markets in the
future in order to obtain additional capital. See "Supervision and Regulation"
at page 21.
IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, YOU MAY NOT BE ABLE
TO SELL YOUR SHARES. Since the size of the offering is relatively small, it is
unlikely that an active and liquid trading market will develop and be
maintained. You should only invest in the common stock if you have a long-term
investment intent. If an active market does not develop, you may not be able to
sell your shares
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promptly or perhaps at all. At this time, we do not intend to list the common
stock on any national securities exchange or on the Nasdaq Stock Market.
WE DO NOT EXPECT TO PAY DIVIDENDS ON OUR COMMON STOCK FOR AT LEAST
SEVERAL YEARS. We intend to retain our future earnings, if any, to enhance
Citizens Bank's capital structure or to defray its operating costs. Dividend
distributions of national banks are restricted by statute and regulation. Our
future dividend policy will depend on the earnings, capital requirements,
financial conditions and other factors considered relevant by our board of
directors. See "Dividend Policy" at page 13.
THE OFFERING PRICE WAS ARBITRARILY SET BY THE ORGANIZERS AND MAY NOT
ACCURATELY REFLECT THE VALUE OF AN INVESTMENT IN OUR COMMON STOCK. There is no
established market for our common stock, nor was there an established market
prior to this offering. The offering price was arbitrarily determined by the
organizers, and does not bear any relationship to Citizens Bancshares' assets,
book value, net worth, or any other recognized criteria of value. In determining
the offering price of the common stock, the organizers considered the OCC bank
capital requirements and general market conditions for the sale of securities.
THE DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP WILL BE ABLE TO
EXERCISE GREATER CONTROL OVER CITIZENS BANCSHARES' MANAGEMENT AND AFFAIRS THAN
WILL ANY INDIVIDUAL INVESTOR. Upon completion of the minimum offering, the
directors and executive officers will own 180,000 shares, which will equal 17.7%
of the 1,018,000 shares then issued and outstanding. The maximum number of
shares that may be purchased by a single investor is 20,000 shares, or 2.0% of
the number of shares to be outstanding upon completion of the minimum offering,
although we reserve the right to waive this maximum. See "Management" at page
25.
THE ORGANIZERS OF CITIZENS BANCSHARES AND CITIZENS BANK WILL BE ISSUED
WARRANTS, WHICH, IF EXERCISED, WOULD REDUCE YOUR PERCENTAGE OWNERSHIP AND WOULD
INCREASE THE ORGANIZERS' CONTROL OF THE COMPANY AND THE BANK. In consideration
of their efforts in organizing Citizens Bancshares and Citizens Bank and the
attendant personal financial risks assumed by them, the organizers will be
issued warrants to purchase an aggregate of 113,330 shares of Citizens
Bancshares common stock. The warrants will be exercisable at a price of $10.00
per share and will expire at the end ten years. See "Terms of the Offering --
Grant of Warrants to Organizers" at page 9.
OUR ARTICLES OF INCORPORATION CONTAIN PROVISIONS WHICH COULD SERVE TO
DETER OR PREVENT TAKEOVER ATTEMPTS BY A POTENTIAL PURCHASER OF SHARES OF OUR
COMMON STOCK WHO WOULD BE WILLING TO PAY A PREMIUM OVER THE MARKET PRICE. The
Articles of Incorporation of Citizens Bancshares contain provisions which give
the board of directors the ability to deter or prevent a merger with, or a sale
of control to, a third party, even if the owners of a majority of the common
stock were to favor of such a transaction. Our Articles of Incorporation
authorize the board of directors to issue a series of preferred stock without
shareholder action. Such an issuance of preferred stock could discourage a third
party from attempting to acquire, or make it more difficult for a third party to
acquire, a controlling interest in Citizens Bancshares, and could adversely
affect the voting power or other rights of holders of the common stock. In
addition, the Articles of Incorporation establish a board of directors
classified such that only one-third of the members of our board of directors is
elected each year and each director serves for a term of three years. These
provisions make it difficult for a third party to achieve a change in control of
Citizens Bancshares through the acquisition of a large block of common stock
without approval of the board of directors. As a result of these anti-takeover
provisions, you may be deprived of opportunities to sell some or all of your
shares at prices exceeding market prices. See "Description of Capital Stock --
Anti-Takeover Provisions" at page 32.
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IT IS POSSIBLE THAT OUR COMPUTER SYSTEMS, OR THOSE OF OUR DATA
PROCESSING VENDOR OR LOAN CUSTOMERS, WILL FAIL TO OPERATE PROPERLY BEGINNING
JANUARY 1, 2000. As the year 2000 approaches, an important business issue has
emerged regarding existing application software programs and operating systems.
Many existing application software products were designed to accommodate a
two-digit year. For example, "98" is stored on the system to represent 1998. As
a result, any computer programs or equipment that are date dependent may, for
example, recognize a date stored as "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing a
significant disruption of operations. We will utilize a third party vendor to
provide primary banking applications for Citizens Bank, including its core
processing systems. If we, our data processing vendor, or our loan customers do
not successfully and timely achieve Year 2000 compliance, our business, future
prospects, financial condition or results of operations could be materially
adversely affected. See "Business of Citizens Bank--Year 2000" at page 19.
This prospectus contains forward-looking statements. These statements
can be identified by the use of forward-looking words such as "may," "will,"
"expect," "anticipate," "estimate," "continue," or other similar words. These
statements discuss future expectations, contain projections of results of
operations or of financial condition or state other "forward-looking"
information. When reading these forward-looking statements, you should keep in
mind the risk factors and other cautionary statements in this prospectus. The
risk factors noted in this section and other factors noted throughout this
prospectus, including certain risks and uncertainties, could cause our actual
results to differ materially from those described in any forward-looking
statement.
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THE COMPANY
Citizens Bancshares was incorporated under the laws of the State of
Florida on September 15, 1998, to operate as a bank holding company under the
federal Bank Holding Company Act of 1956. Citizens Bancshares will use the
proceeds of this offering to purchase all of the authorized capital stock of
Citizens Bank, which will conduct a general banking business in Collier County,
Florida. All of the organizers reside in Collier County and all of the
organizers will serve on the initial board of directors of both Citizens
Bancshares and Citizens Bank. See "Management."
In order to become a bank holding company, Citizens Bancshares will
file an application with the Federal Reserve Board. Upon obtaining regulatory
approval, Citizens Bancshares will be a registered bank holding company subject
to regulation by the Federal Reserve Board. See "Supervision and Regulation." It
is anticipated that Citizens Bank will open for business in June of 1999, or as
soon thereafter as practicable.
Citizens Bancshares has purchased a former NationsBank branch office
located at 3401 Tamiami Trail North, Naples, Florida 34103. This facility will
serve as the main office of Citizens Bank and of Citizens Bancshares. Citizens
Bancshares has also leased office space adjacent to the main office to serve as
an operations office for both Citizens Bancshares and Citizens Bank. See
"Business of Citizens Bancshares -- Premises." Citizens Bancshares' telephone
number is (941) 643-4646.
TERMS OF THE OFFERING
GENERAL
Citizens Bancshares is offering 1,200,000 shares of its common stock
for cash at a price of $10.00 per share. Investors must purchase a minimum of
500 shares and may purchase a maximum of 20,000 shares, or 1.67% of the total
number of shares being offered. The minimum and maximum subscription amounts may
be waived by Citizens Bancshares in its sole discretion. The purchase price
shall be paid in full upon execution and delivery of a subscription agreement.
All subscriptions tendered by investors are subject to acceptance by the board
of directors of Citizens Bancshares, and Citizens Bancshares reserves the
absolute and unqualified right to reject or reduce any subscription for any
reason prior to acceptance. Subscriptions which are rejected by Citizens
Bancshares will be returned to the subscriber without interest. Any investor
whose subscription is reduced by Citizens Bancshares may withdraw his or her
subscription within ten days after being notified of such reduction by Citizens
Bancshares. Citizens Bancshares reserves the right to cancel this offering for
any reason whatsoever at any time prior to the time it withdraws funds from the
subscription escrow account.
Prior to this offering there has been no established public market for
the shares of the common stock and we can offer no assurance that an established
market for the stock will develop. The offering price has been arbitrarily
determined and is not a reflection of Citizens Bancshares' book value, net worth
or any other recognized criteria of value. In determining the offering price of
the common stock, the organizers considered the capital requirements imposed by
the OCC and the general market conditions for the sale of the securities. There
can be no assurance that, if a market should develop for the common stock, the
post-offering market price will equal or exceed the offering price.
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CONDITIONS OF THE OFFERING
This offering will expire at 5:00 p.m. Eastern Time 90 days from the
date of this prospectus, on August __, 1999, unless the offering is extended by
Citizens Bancshares. The expiration date may be extended by Citizens Bancshares
without notice to subscribers for up to three consecutive 90-day periods, or not
later than May __, 2000. The offering is expressly conditioned upon fulfillment
of the following conditions on or prior to the expiration date, as extended. The
offering conditions, which may not be waived, are as follows:
(a) at least $10,000,000 must be deposited with the escrow agent in
the subscription escrow account;
(b) the Federal Reserve Board must approve Citizens Bancshares'
application to become a bank holding company;
(c) the FDIC must approve Citizens Bank's application for deposit
insurance; and
(d) Citizens Bancshares must not have canceled this offering prior
to the time funds are withdrawn from the subscription escrow
account.
ESCROW OF SUBSCRIPTION FUNDS
Until the offering conditions above have been satisfied, Citizens
Bancshares will place all subscription funds and documents tendered by investors
in an escrow account with First National Bank of Naples. The escrow agreement, a
copy of which is included in this prospectus at Appendix A, provides that the
escrow agent will release all subscription funds, along with any interest earned
on the funds, to Citizens Bancshares at such time Citizens Bancshares certifies
to the escrow agent that all of the offering conditions have been met. The
subscription funds will not be insured by the FDIC or any other governmental
agency.
Pending disposition of the subscription escrow account, the escrow
agent is authorized, upon instructions to be given by Polly M. Rogers, the
President of Citizens Bank, to invest subscription funds in investments of the
United States Government and United States Government-backed securities.
Citizens Bancshares will invest the subscription funds and any additional funds
obtained after breaking escrow and prior to the time that Citizens Bancshares
purchases the common stock of Citizens Bank in a similar manner.
If the offering conditions are not satisfied by the expiration date,
the escrow agent will promptly return to the subscribers their proportionate
share of the funds from the escrow account. Citizens Bancshares will also return
to the subscribers their proportionate share of any interest earned on the
funds. If the offering conditions are not satisfied, the expenses incurred by
Citizens Bancshares will be borne by the organizers and not by the subscribers.
No assurance can be given that subscription funds can or will be
invested at the highest rate of return available or that any profits will be
realized from the investment of subscription funds.
If all of the offering conditions are satisfied, and Citizens
Bancshares withdraws the subscription funds from the subscription escrow
account, any and all profits and earnings on the escrow account will belong to
Citizens Bancshares.
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First National Bank of Naples, by accepting appointment as escrow agent
under the escrow agreement, in no way endorses the purchase of securities of
Citizens Bancshares by any person.
FAILURE OF BANK TO OPEN FOR BUSINESS
The OCC requires that a new national bank receive final approval of its
charter and open for business within eighteen months after receiving preliminary
approval from the OCC. The organizers received preliminary approval to charter
Citizens Bank on February 12, 1999. The organizers anticipate that Citizens Bank
will open for business in June of 1999, or as soon thereafter as is practicable.
Because final approval of Citizens Bank's charter is conditioned on Citizens
Bancshares raising $9,700,000 of funds to capitalize Citizens Bank, Citizens
Bancshares expects to issue the shares of common stock before Citizens Bank has
obtained all final regulatory approvals. If Citizens Bancshares issues the
shares of common stock and the OCC does not grant Citizens Bank final regulatory
approval to open for business within eighteen months of Citizens Bank's receipt
of preliminary approval from the OCC, Citizens Bancshares will solicit
shareholder approval to dissolve and liquidate the company. If this were to
occur, Citizens Bancshares would return to subscribers all subscription funds
together with any interest earned thereon, less all expenses incurred by
Citizens Bancshares, including the expenses of this offering and the
organizational and pre-opening expenses of Citizens Bancshares and Citizens
Bank. Therefore, if Citizens Bancshares and Citizens Bank do not receive final
regulatory approvals, subscribers whose funds were originally placed in escrow
and subscribers whose funds were immediately available to Citizens Bancshares
face the risk of loss of a portion of their subscription funds. It is possible
that this return may be further reduced by amounts paid to satisfy claims of
creditors, as discussed in the following paragraph.
Once Citizens Bancshares issues the shares of common stock, the
offering proceeds will be considered part of general corporate funds and thus
may be subject to the claims of creditors of Citizens Bancshares, including
claims against Citizens Bancshares that may arise out of actions of Citizens
Bancshares' officers, directors or employees. It is possible, therefore, that
one or more creditors may seek to attach the proceeds of the offering prior to
Citizens Bank's opening for business. If such an attachment occurred and it
became necessary to pay the offering proceeds to be shareholders because of
failure to obtain all necessary regulatory approvals, the payment process might
be delayed, and if it became necessary to pay creditors from the subscription
funds, the payment to shareholders might be further reduced.
PURCHASES BY DIRECTORS AND EXECUTIVE OFFICERS OF CITIZENS BANCSHARES
Upon completion of the minimum offering, the directors and executive
officers will own 180,000 shares of Citizens Bancshares' common stock, or 17.7%
of the 1,018,000 shares to be then issued and outstanding. The directors and
executive officers have represented to Citizens Bancshares that these purchases
will be made for investment purposes only and not with a view to resell the
shares. See "Management."
GRANT OF WARRANTS TO ORGANIZERS
In consideration of their efforts in organizing Citizens Bancshares and
Citizens Bank and the attendant personal financial risks assumed by them, the
organizers will be issued warrants to purchase an aggregate of 113,330 shares of
Citizens Bancshares common stock. Twenty percent of the warrants issued to each
organizer will become exercisable on the date that Citizens Bank opens for
business and twenty percent will become exercisable on each of the four
succeeding anniversaries of the date Citizens
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<PAGE> 12
Bank opens for business. The warrants will have an exercise price of $10.00 per
share and all of the warrants will expire ten years from the date Citizens Bank
opens for business. The following table sets forth the number of shares
underlying the warrants to be issued to each of the organizers:
<TABLE>
<CAPTION>
Shares
Underlying
Organizer Warrants
--------- --------
<S> <C>
Joe B. Cox.................. 13,333
Earl L. Frye................ 13,333
Stanley W. Hole............. 6,666
John B. James............... 13,333
LaVonne Johnson............. 13,333
Luc C. Mazzini.............. 13,333
Polly M. Rogers............. 13,333
Bernard L. Turner........... 13,333
Lorenzo Walker.............. 13,333
</TABLE>
PLAN OF DISTRIBUTION
Citizens Bancshares may cancel this offering for any reason at any time
prior to the release of subscription funds from the subscription escrow account,
and accepted subscriptions are subject to cancellation in the event that
Citizens Bancshares elects to cancel the offering in its entirety. If the
offering conditions have not been satisfied by the expiration date, this
offering will be terminated and subscription funds promptly returned to the
subscribers, together with their allocated share of profits, if any, earned on
the investment of the subscription funds as described above. See "Terms of the
Offering -- Escrow of Subscription Funds."
Shares of the common stock of Citizens Bancshares will be marketed
exclusively through a number of the directors and officers of Citizens
Bancshares, none of whom will receive any commissions or other form of
remuneration based on the sale of the shares. However, if the offering
conditions have not been satisfied by August ___, 1999, Citizens Bancshares may
engage an underwriter to sell the shares and the underwriter would receive a
commission based upon the sales. It is anticipated that commissions paid to the
underwriter would not exceed 10% of the $10.00 per share sales price and that
other expenses of the underwriting would not exceed an aggregate of $50,000.
Subscriptions to purchase shares of common stock can be made by
completing the subscription agreement attached to this prospectus and delivering
the same to Citizens Bancshares at 3411 Tamiami Trail North, Suite 200, Naples,
Florida 34101 or mailing the same in the enclosed self-addressed, stamped
envelope. Full payment of the purchase price must accompany the subscription.
Unless otherwise agreed by Citizens Bancshares, all subscription amounts must be
paid in United States currency by check, bank draft or money order payable to
"First National Bank of Naples, Escrow Agent for Citizens Bancshares of
Southwest Florida, Inc." Failure to pay the full subscription price will entitle
Citizens Bancshares to disregard the subscription.
No subscription agreement is binding until accepted by Citizens
Bancshares. Citizens Bancshares may refuse to accept any subscription for
shares, in whole or in part, for any reason whatsoever. As soon as practicable,
but no more than ten business days after receipt of a subscription, Citizens
Bancshares will accept or reject the subscription. Subscriptions not rejected by
Citizens Bancshares within this ten
10
<PAGE> 13
day period shall be deemed accepted. If Citizens Bancshares refuses to accept
all or part of a subscription, a refund, without interest, of the payment for
shares in excess of the number of shares allocated to the subscriber will be
issued by mail to the subscriber within ten days of the date of the rejection.
After a subscription is accepted and proper payment received, Citizens
Bancshares will not cancel the subscription unless all accepted subscriptions
are canceled. Once a subscription is accepted by Citizens Bancshares, it cannot
be withdrawn by the subscriber. A subscription will be accepted in writing by
Citizens Bancshares in the Form of Acceptance included in this prospectus at
page B-4.
Certificates representing shares of common stock of Citizens
Bancshares, duly authorized and fully paid, will be issued as soon as
practicable after subscription funds are released to Citizens Bancshares from
the subscription escrow account.
USE OF PROCEEDS
The gross proceeds from the sale of shares of common stock offered by
Citizens Bancshares are estimated to be $10,000,000 assuming the sale of a
minimum of 1,000,000 shares, and $12,000,000 assuming the sale of a maximum of
1,200,000 shares. The estimated expenses of this offering are as follows:
<TABLE>
<S> <C>
Registration fees, including state securities
registrations fees and expenses.......................................... $ 5,000
Legal fees and expenses...................................................... 18,000
Accounting fees and expenses................................................. 15,000
Printing and engraving expenses.............................................. 6,000
Advertising.................................................................. 3,500
Mailing and distribution..................................................... 5,000
Miscellaneous................................................................ 4,000
-----------
Total expenses ......................................................... $ 56,500
===========
Net proceeds (minimum offering)........................................ $ 9,943,500
Net proceeds (maximum offering)........................................ $11,943,500
</TABLE>
The net proceeds of this offering, as well as any interest earned on
the subscription funds, will be used by Citizens Bancshares, after breaking
escrow, primarily for the purchase all of the issued and outstanding capital
stock of Citizens Bank. Citizens Bank will, in turn, use the funds as capital to
begin its business operations and to pay expenses incurred in the organization
of Citizens Bancshares and Citizens Bank.
As indicated in the charter application of Citizens Bank filed by the
organizers with the OCC, Citizens Bancshares intends to capitalize Citizens Bank
at $9,700,000. Accordingly, any net proceeds of this offering in excess of
$9,700,000 will be retained by Citizens Bancshares for growth of Citizens Bank
in compliance with OCC regulations regarding the ratio that Citizens Bank's
total assets may bear to its total capital. Although management of Citizens
Bancshares anticipates that the proceeds of this offering will be sufficient to
support Citizens Bank's immediate capital needs, if Citizens Bank experiences
greater growth than anticipated it may require the infusion of capital in
addition to the proceeds of this
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<PAGE> 14
offering. In that event, management of Citizens Bancshares would seek to support
such growth through debt financing; however, such financing might not be
available on terms acceptable to management.
The following is a schedule of the estimated use by Citizens Bank of
the proceeds from the sale of its common stock to Citizens Bancshares, including
Citizens Bank's estimated operating expenses for its first twelve months of
operation.
<TABLE>
<S> <C>
Organizational and pre-opening expenses
of Citizens Bank including salaries,
lease of operations office and legal
and accounting fees (1)............................ $ 265,000 *
Purchase of land and building for
main office(2)..................................... 1,325,000 *
Furniture, fixtures and equipment (3)................. 558,000 *
Lease expense associated with
operations office.................................. 53,000 +
Salaries and benefits (4)............................. 1,080,000 +
Occupancy expenses (5)
(utilities, property insurance, etc.).............. 55,000 +
General and administrative expenses,
composed primarily of data processing,
marketing and advertising, telephone
and casualty and deposit insurance (5)............. 233,000 +
Investment and loan portfolio (6)..................... 6,131,000
--------------
Total capital......................................... $ 9,700,000
==============
</TABLE>
- -----------------
* Represents expenses which will be incurred prior to the opening of Citizens
Bank.
+ Represents operating expenses which will be incurred during Citizens Bank's
first twelve months of operations.
(1) These expenses will be incurred prior to the opening of Citizens Bank and
are being funded by a credit line in the amount of $300,000 with
NationsBank, N.A. and capital contributions from the organizers in the
aggregate amount of $180,000. A portion of these costs may be allocated to
and expensed by Citizens Bancshares, in which event the funds available for
inclusion in Citizens Bank's investment and loan portfolio would be
increased by an equal amount.
(2) Citizens Bancshares has entered into a loan agreement with NationsBank,
N.A. to fund the purchase of Citizens Bank's main office facility.
(3) Furniture and equipment cost is based on the organizers' estimates and upon
information from suppliers of bank equipment of the costs required to
furnish and equip Citizens Bank for the expected level of operations.
(4) Salaries and benefits are based on management's estimates of the number and
types of employees which will be required during the first twelve months of
operations of Citizens Bank. It is presently anticipated that Citizens Bank
will initially employ 21 individuals, including nine officers.
(5) These expenses are based on the experiences of similar size banks in the
region and on management's previous banking experience.
(6) Although the exact composition of Citizens Bank's investment portfolio has
not been determined, it is currently anticipated that any remaining
proceeds will be used to fund investments in loans, U.S. government and
agency securities, and Federal Funds sold.
The expenses described above are estimates only and assume Citizens
Bank will open for business in June of 1999. Actual expenses may exceed these
amounts. A portion of these expenses will be offset by revenues generated by
Citizens Bank during its first year of operation.
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<PAGE> 15
DIVIDEND POLICY
As Citizens Bancshares and Citizens Bank are both start-up operations,
the board of directors of Citizens Bancshares intends to reinvest earnings for
such period of time as is necessary to ensure the success of the operations of
Citizens Bancshares and Citizens Bank. There are no current plans to initiate
payment of cash dividends, and future dividend policy will depend on Citizens
Bank's earnings, capital requirements, financial condition and other factors
considered relevant by the board of directors of Citizens Bancshares.
Citizens Bank will be restricted in its ability to pay dividends by the
national banking laws and OCC regulations. 12 U.S.C. ss. 56 provides that a
national bank may not pay dividends from its capital. In addition, no dividends
may be made in an amount greater than a national bank's undivided profits,
subject to other applicable provisions of law. Payments of dividends out of
undivided profits is further limited by 12 U.S.C. ss. 60(a), which prohibits a
bank from declaring a dividend on its shares of common stock until its surplus
equals its stated capital, unless there has been transferred to surplus not less
than 1/10 of the bank's net income of the preceding two consecutive half-year
periods (in the case of an annual dividend). 12 U.S.C. ss. 60(b) provides that
the approval of the OCC is required if the total of all dividends declared by
Citizens Bank in any calendar year exceeds the total of its net income for that
year combined with its retained net income for the preceding two years, less any
required transfers to surplus or a fund for the retirement of any preferred
stock.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Citizens Bancshares is still in the development stage, and will remain
in that stage until the offering of the common stock is complete. Citizens
Bancshares has funded its start-up and organization costs to date through a
$300,000 credit line with NationsBank, N.A. and capital contributions from the
organizers in the amount of $180,000. Total organizational costs, paid and
accrued, as of February 22, 1999 amounted to approximately $145,000. These costs
include consultant fees, legal fees and regulatory application fees. In
addition, the Company has entered into a $1,500,000 loan agreement with
NationsBank to fund the purchase of Citizens Bank's main office facility.
Subscription funds received during this offering will be placed in a
subscription escrow account and invested in investments of the United States
Government and United States Government-backed securities.
In the opinion of Citizens Bancshares, the proceeds of $10,000,000 from
the minimum offering will be adequate to support the growth of both Citizens
Bancshares and Citizens Bank for the first five years of operation. It is not
anticipated that Citizens Bancshares will find it necessary to raise additional
funds to meet expenditures required to operate the business of Citizens
Bancshares and Citizens Bank over the next twelve months. All anticipated
material expenditures for such period have been provided for out of the proceeds
of this offering. See "Use of Proceeds."
The plan of operations for Citizens Bancshares and Citizens Bank is
described in detail elsewhere in this prospectus. See "Business of Citizens
Bancshares" and "Business of Citizens Bank."
13
<PAGE> 16
BUSINESS OF CITIZENS BANCSHARES
Citizens Bancshares was incorporated under the laws of the State of
Florida on September 15, 1998, for the purpose of organizing and purchasing all
of the outstanding capital stock of Citizens Bank. The organizers received
preliminary approval to charter Citizens Bank on February 12, 1999. Citizens
Bancshares has been organized as a mechanism to enhance Citizens Bank's ability
to serve its future customers' requirements for financial services. Citizens
Bancshares will file an application with the Federal Reserve Board to operate as
a bank holding company, which will provide flexibility for expansion of Citizens
Bancshares' banking business through acquisition of other financial institutions
and provision of additional banking-related services which the traditional
commercial bank may not provide under present laws. For example, banking
regulations require that Citizens Bank maintain a minimum ratio of capital to
assets. In the event that Citizens Bank's growth is such that this minimum ratio
is not maintained, Citizens Bancshares may borrow funds, subject to the capital
adequacy guidelines of the Federal Reserve Board, and contribute them to the
capital of Citizens Bank and otherwise raise capital in a manner which would be
unavailable to Citizens Bank under existing banking regulations.
Citizens Bancshares has no present plans to acquire any operating
subsidiaries other than Citizens Bank; however, it is expected that Citizens
Bancshares may make additional acquisitions in the event that Citizens Bank
becomes profitable and such acquisitions are deemed to be in the best interests
of Citizens Bancshares and its shareholders. Such acquisitions, if any, will be
subject to certain regulatory approvals and requirements. See "Supervision and
Regulation."
BUSINESS OF CITIZENS BANK
GENERAL
The organizers received preliminary approval from the OCC to charter
Citizens Bank on February 12, 1999. The organizers expect to receive FDIC
approval of Citizens Bank's application for deposit insurance in April of 1999.
Citizens Bank anticipates that it will begin operations in June of
1999, or as soon thereafter as is practicable. Citizens Bank plans to be a full
service commercial bank, except that it will not have trust powers. Citizens
Bank will offer a full range of interest bearing and non-interest bearing
accounts, including commercial and retail checking accounts, money market
accounts, individual retirement accounts, regular interest bearing statement
savings accounts, certificates of deposit, commercial loans, real estate loans,
home equity loans and consumer/installment loans. In addition, Citizens Bank
will provide such consumer services as U.S. Savings Bonds, travelers checks,
cashiers checks, safe deposit boxes, bank by mail services, direct deposit and
automatic teller services.
The philosophy of management of Citizens Bank will be to emphasize
prompt and responsive personal service to members of the business and
professional community of western Collier County, Florida, in order to attract
customers and acquire market share now controlled by other financial
institutions in Citizens Bank's market area. Citizens Bank's prime location and
range of banking services, as well as its emphasis on personal attention and
service, prompt decision making and consistency in banking personnel, will be
major tools in Citizens Bank's efforts to capture market share. In addition,
Citizens Bank's executive officers have substantial banking experience, which
will be an asset in providing both products and services designed to meet the
needs of Citizens Bank's customer base. All of the organizers are active members
of the business community in and around the Collier
14
<PAGE> 17
County area, and continued active community involvement will provide an
opportunity to promote Citizens Bank and its products and services. The
organizers intend to utilize target marketing and superior selling efforts in
order to build a distinct institutional image for Citizens Bank and to establish
a customer base.
MARKET AREA AND COMPETITION
Citizens Bank will be located in the Park Shore section of Naples,
Florida, which is approximately three miles north of downtown Naples. The
organizers have identified Citizens Bank's primary service area, the area from
which it is expected that 75% of bank's customer base will be drawn, as western
Collier County, Florida. This area is defined by the Gulf of Mexico to the west,
the Collier County line to the north, State Road 951 to the east, and the
Intercoastal Waterway to the south.
Collier County represents one of the fastest growing metropolitan areas
in the United States. According to information compiled by the Collier County
Community Development & Environmental Services Division, the county population
more than quadrupled from 1975 to 1995. The county's estimated 1997 population
of 202,900 was expected to increase another 30% by the year 2000.
Collier County's economic base is built on services, retail trade,
tourism, finance, insurance, real estate, construction and agriculture. While
historically employment in the county has been seasonal, as a result of winter
tourism, recent population growth has added greater diversity to the county's
economy.
Competition in Citizens Bank's primary service area is intense. At June
30, 1997, Collier County reported total bank and thrift institution deposits of
$3.5 billion and the market was served by 21 financial institutions with a total
of 90 branches in Collier County. The 21 financial institutions represent
seventeen commercial banks and four savings banks. Thirteen regional holding
companies are represented in the county. Of these, NationsBank is the largest,
with a deposit market share of 29.5%, and First Union National Bank of Florida
is second in size, with a market share of 16.5%. The independent community banks
are represented by Community Bank of Naples, Village Bank of Naples, Pelican
National Bank, Gulf Coast National Bank and First National Bank of Naples. In
addition, numerous brokerage firms compete in the market for deposits and
services.
Financial institutions compete with one another primarily for deposits.
A bank's deposit base directly affects the bank's loan activities and general
growth. Primary methods of competition include interest rates on deposits and
loans, service charges on deposit accounts and the offering of unique financial
services products. Citizens Bank will be competing with financial institutions
which have much greater financial resources than Citizens Bank, and which may be
able to offer more and unique services and possibly better terms to their
customers. However, the organizers believe that Citizens Bank will be able to
attract sufficient deposits to enable it to compete effectively with other area
financial institutions. The organizers believe that Citizens Bank will have the
advantage of being locally owned and managed, enabling it to benefit from the
high visibility and excellent business contacts of its organizers.
Citizens Bank will be in competition with existing area financial
institutions other than commercial banks and savings and loan associations,
including insurance companies, consumer finance companies, brokerage houses,
credit unions and other business entities which have recently been invading the
traditional banking markets. Due to the continuing growth of Collier County, it
is anticipated that additional competition will continue from new entrants to
the market.
15
<PAGE> 18
DEPOSITS
Citizens Bank will offer a full range of interest bearing and
non-interest bearing accounts, including commercial and retail checking
accounts, money market accounts, individual retirement accounts, regular
interest bearing statement savings accounts and certificates of deposit with
fixed and variable rates and a range of maturity date options. The sources of
deposits will be residents, businesses and employees of businesses within
Citizens Bank's market area, obtained through the personal solicitation of
Citizens Bank's officers and directors, direct mail solicitation and
advertisements published in the local media. Citizens Bank will pay competitive
interest rates on time and savings deposits up to the maximum permitted by law
or regulation. In addition, Citizens Bank will implement a service charge fee
schedule competitive with other financial institutions in Citizens Bank's market
area, covering such matters as maintenance fees on checking accounts, per item
processing fees on checking accounts, returned check charges and the like.
LOAN PORTFOLIO
Citizens Bank will engage in a full complement of lending activities,
including commercial, consumer/installment and real estate loans. Although
management believes that real estate loans will be Citizens Bank's primary
product, constituting approximately 80% of Citizens Bank's loan portfolio,
commercial and consumer/installment loans are expected to comprise significant
portions of Citizens Bank's loan portfolio as well (15% and 5%, respectively).
While adjustable rates for Citizens Bank's real estate loans will be emphasized,
fixed rates will also be offered. Initially, Citizens Bank will have a legal
lending limit for unsecured loans of up to $1,455,000 to any one person.
Management intends to originate loans and to participate with other banks with
respect to loans which exceed Citizens Bank's lending limits. Management does
not believe that loan participations will necessarily pose any greater risk of
loss than loans which Citizens Bank originates. See "Supervision and
Regulation."
Lending will be directed principally towards individuals and businesses
whose demands for funds fall within Citizens Bank's legal lending limits and
which are potential deposit customers of Citizens Bank. Citizens Bank does not
anticipate any foreign loans in Citizens Bank's loan portfolio. The following is
a description of each of the major categories of loans anticipated in Citizens
Bank's loan portfolio and the anticipated risks associated with each type of
loan:
Commercial and Industrial Loans
Commercial lending will be directed principally towards businesses
whose demands for funds fall within Citizens Bank's legal lending limits and
which are potential deposit customers of Citizens Bank. This category of loans
includes loans made to individual, partnership, or corporate borrowers, for a
variety of business purposes. Particular emphasis will be placed on loans to
small and medium-sized businesses and professionals. Risks of these types of
loans depend on the general business conditions of the local economy and the
local business borrower's ability to sell its products and services in order to
generate sufficient business profits to repay Citizens Bank under the agreed
upon terms and conditions. The value of the collateral held by Citizens Bank as
a measure of safety against loss is most volatile in this loan category.
Consumer Loans
Citizens Bank's consumer loans will consist primarily of installment
loans to individuals for personal, family and household purposes, including
automobile loans. Citizens Bank will also offer lines
16
<PAGE> 19
of credit and term loans secured by second mortgages on the residences of
borrowers for a variety of purposes including home improvements, education, and
other personal expenditures. Loss or decline of income by the borrower due to
layoff, divorce or unexpected medical expenses represent unplanned occurrences
that may represent risk of default to Citizens Bank. In the event of default, a
shortfall in the value of the collateral may pose a loss to Citizens Bank in
this loan category.
Real Estate Loans
Citizens Bank's real estate loans will consist of residential first and
second mortgage loans, residential construction loans and commercial real estate
loans to a limited degree. These loans will be made consistent with Citizens
Bank's appraisal policy and real estate lending policy which will detail maximum
loan-to-value ratios and maturities. Citizens Bank expects that these
loan-to-value ratios will be sufficient to compensate for fluctuations in the
real estate market to minimize the risk of loss to Citizens Bank.
Residential Mortgage. These loans will be granted to qualified
individuals for the purchase of existing single family residences in Citizens
Bank's market area. Both fixed and variable rate loans will be offered with
competitive terms and fees consistent with national mortgage investor
guidelines. These loans will be made consistent with Citizens Bank's appraisal
policy and real estate lending policy which will detail maximum loan-to-value
ratios and maturities. Management of Citizens Bank expects that these
loan-to-value ratios, which generally will not exceed 80%, will be sufficient to
compensate for fluctuations in the real estate market to minimize the risk of
loss. Mortgage loans that do not conform to Citizens Bank's asset/liability mix
policies will be sold by Citizens Bank in the secondary markets. The risk of
this type of activity depends on the salability of the loan to national
investors and interest rate changes. Delivering these loans to the end investor
on a mandatory basis and meeting the investor's quality control procedures
limits Citizens Bank's risk of making fixed rate mortgage loans. The risk
assumed by Citizens Bank will be conditioned upon Citizens Bank's internal
controls, loan underwriting and market conditions in the national mortgage
market. Citizens Bank will retain loans for its portfolio when it has sufficient
liquidity to fund the needs of the established customers and when rates are
favorable to retain the loans. Although Citizens Bank has not formally adopted
any underwriting or loan policies, the loan underwriting standards and policies
will generally be the same for both loans sold in the secondary market and those
retained in Citizens Bank's portfolio.
Residential Construction. These loans will be made for the
construction of single family residences in Citizens Bank's market area. The
loans will be granted to qualified individuals with down payments of at least
20% of the appraised value or contract price, whichever is less. The interest
rates are expected to fluctuate at 1% to 2% above Citizens Bank's prime interest
rate during the six month construction period. Citizens Bank will also charge a
fee of 1% to 2% in addition to the normal closing costs. These loans generally
command higher rates and fees commensurate with the risk warranted in the
construction lending field. The risk in construction lending is dependent upon
the performance of the builder in building the project to the plans and
specifications of the borrower and Citizens Bank's ability to administer and
control all phases of the construction disbursements. Upon completion of the
construction period, management anticipates that the mortgage would be converted
to a permanent loan and normally sold to an investor in the secondary mortgage
market.
Commercial Real Estate. To a limited extent, Citizens Bank
anticipates that it will also offer commercial real estate loans to developers
of both commercial and residential properties. In making these loans, Citizens
Bank intends to manage its credit risk by actively monitoring such measures as
advance rate, cash flow, collateral value and other appropriate credit factors.
Management will
17
<PAGE> 20
attempt to reduce credit risk in the commercial real estate portfolio be
emphasizing loans on owner-occupied office and retail buildings where the
loan-to-value ratio, established by independent appraisals, does not exceed 80%.
In addition, Citizens Bank may require personal guarantees of the principal
owners.
While risk of loss in Citizens Bank's loan portfolio is primarily tied
to the credit quality of the various borrowers, risk of loss may also increase
due to factors beyond Citizens Bank's control, such as local, regional and/or
national economic downturns. General conditions in the real estate market may
also impact the relative risk in Citizens Bank's real estate portfolio. Of
Citizens Bank's target areas of lending activities, commercial loans are
generally considered to have greater risk than real estate loans or consumer
installment loans.
The above description of Citizens Bank's loan portfolio represents
management's best estimate as to the types of loans which will comprise its
portfolio and the risks associated with such loans. The board of directors of
Citizens Bank has not adopted any specific loan policies and procedures as of
the date of this prospectus.
INVESTMENTS
In its first year of operation, management of Citizens Bank anticipates
that investment securities will comprise approximately 12% of Citizens Bank's
assets, loans will comprise approximately 45% of Citizens Bank's assets, and
other investments will comprise approximately 31% of Citizens Bank's assets.
Citizens Bank intends to invest primarily in direct obligations of the United
States, obligations guaranteed as to principal and interest by the United
States, obligations of agencies of the United States and certificates of deposit
issued by commercial banks. In addition, Citizens Bank will enter into Federal
Funds transactions with its principal correspondent banks, and anticipates that
it will primarily act as a net seller of such funds. The sale of Federal Funds
amounts to a short-term loan from Citizens Bank to another bank.
ASSET/LIABILITY MANAGEMENT
It will be the objective of Citizens Bank to manage its assets and
liabilities to provide a satisfactory, consistent level of profitability.
Citizens Bank's executive officers and the Asset/Liability Committee of the
board of Directors of the bank will be responsible for monitoring
interest-bearing assets and interest-bearing liabilities to ensure stability of
earnings. It is the overall philosophy of management to support asset growth
primarily through growth of core deposits, which include deposits of all
categories made by individuals, partnerships and corporations. Management will
seek to invest the largest portion of Citizens Bank's assets in real estate,
commercial and consumer loans.
Citizens Bank's asset/liability mix likely will be monitored on a daily
basis with a monthly report reflecting interest-sensitive assets and
interest-sensitive liabilities being prepared and presented to the board of
directors. The objective of this policy is to control interest-sensitive assets
and liabilities so as to minimize the impact of substantial movements in
interest rates on First National Bank's earnings.
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<PAGE> 21
CORRESPONDENT BANKING
Correspondent banking involves the providing of services by one bank to
another bank which cannot provide that service for itself from an economic or
practical standpoint. Citizens Bank will be required to purchase correspondent
services offered by larger banks, including check collections, purchase of
Federal Funds, security safekeeping, investment services, coin and currency
supplies, over line and liquidity loan participations and sales of loans to or
participations with correspondent banks.
Citizens Bank anticipates that it will sell loan participations to
correspondent banks with respect to loans which exceed Citizens Bank's lending
limit. As compensation for services provided by a correspondent, Citizens Bank
may maintain certain balances with such correspondents in non-interest bearing
accounts.
DATA PROCESSING
Citizens Bank expects to enter into a data processing servicing
agreement with The BISYS Group, Inc., which will provide for Citizens Bank to
receive a full range of data processing services, including an automated general
ledger, deposit accounting, commercial, real estate and installment lending data
processing , central information file and ATM processing services. Citizens Bank
anticipates entering into an agreement with ADP to provide payroll services, and
anticipates entering into an agreement with another third party vendor to
provide investment portfolio accounting.
YEAR 2000
As the year 2000 approaches, an important business issue has emerged
regarding existing application software programs and operating systems. Many
existing application software products were designed to accommodate a two-digit
year. For example, the number "98" is stored on the system to represent the year
1998. As a result, these systems may mistakenly recognize dates beyond 1999. For
example, the number "00" could be interpreted as the year 1900 rather than the
year 2000. This could result in a system failure or miscalculations, which could
in turn result in a potentially significant disruption of normal business
activities.
Communications and information systems, including systems which monitor
deposit and lending accounts, are critical to Citizens Bancshares' and Citizens
Bank's business. Software and hardware developed by independent third parties
will be installed to provide primary banking applications, including core
processing systems. Citizens Bank intends to choose a source for these systems
that has modified or upgraded its computer applications to become Year 2000
compliant. In addition, Citizens Bancshares and Citizens Bank intend to
implement a Year 2000 compliance program whereby Citizens Bank will review the
Year 2000 issues that may be faced by its other third-party vendors and loan and
deposit customers. Under this program, Citizens Bank will examine the need for
modifications or replacement of all non-Year 2000 compliant pieces of software.
Citizens Bank does not currently expect that the cost of its Year 2000
compliance program will be material to its financial conditions and expects that
it will complete the compliance program without material disruption of its
operations. Management intends to evaluate the potential effect on its
third-party vendor's data processing systems resulting from Year 2000 issues and
to obtain a representation from such vendor that its core processing systems
will be fully Year 2000 compliant prior to the opening of Citizens Bank for
business. In the event that Citizens Bancshares, Citizens Bank, such vendor or
its other significant vendors or loan customers do not
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<PAGE> 22
successfully and timely achieve Year 2000 compliance, Citizens Bank's business,
future prospects, financial condition or results of operations could be
materially adversely affected.
Another area of concern to Citizens Bancshares, Citizens Bank, and
their primary regulator, the OCC, is the effect of Year 2000 issues on Citizens
Bank's loan customers. Failure to address Year 2000 related issues could have a
significant impact on the ability of certain customers of Citizens Bank to
continue operations. Citizens Bank's loan portfolio could be negatively impacted
if customers are unable to honor loan agreements and defaults occur as a result
of failure to address Year 2000 issues. These customer relationships will be
monitored to ensure that the necessary modifications to systems will be made on
a timely basis. In addition, Citizens Bank will review Year 2000 related issues
as part of its normal underwriting criteria and loan approval process. Citizens
Bank also will include Year 2000 compliance requirements and covenants requiring
compliance within its standard loan agreements. Although Citizens Bancshares and
Citizens Bank will take extensive steps to address Year 2000 customer related
issues, there can be no assurance that all customers will be Year 2000
compliant. Failure of certain customers to adequately address these issues could
result in loan defaults which would reduce Citizens Bancshares' earnings.
Although Citizens Bancshares and Citizens Bank will take extensive
steps to address Year 2000 related issues, there can be no assurance that all
necessary modifications will be identified and corrected or that unforeseen
difficulties or costs will not arise. In addition, there can be no assurance
that the failure of Citizens Bank's internal systems or the systems provided by
its data processing vendor or other companies on which Citizens Bank's systems
rely will not have a negative impact Citizens Bank's systems or operations.
EMPLOYEES
In its first year of operation, Citizens Bancshares and Citizens Bank
expect to employ 21 individuals on a full-time basis, including nine officers.
Citizens Bank will hire additional persons as needed, including additional
tellers and financial service representatives.
PREMISES
Citizens Bancshares has purchased the facility which will be used as
Citizens Bank's main office site. The facility, a former NationsBank office, is
a single story, 4,500 square foot building located on an approximately 1.05-acre
parcel of land at 3401 Tamiami Trail North. Citizens Bancshares has entered into
a $1,500,000 loan agreement with NationsBank, N.A. to fund the purchase of the
land and building. The facility will have a vault, four offices, four teller
stations, five drive-through lanes, a boardroom conference facility and a loan
operations area.
Citizens Bancshares has also entered into a contract to lease
approximately 3,000 square feet of office space to serve as the operations
offices of Citizens Bancshares and Citizens Bank. The leased premises are
located at 3411 Tamiami Trail North, which is adjacent to the property on which
Citizens Bank's main office facility will be located. Monthly payments of
$4,438.50 are due under the lease agreement.
The organizers plan to open a branch facility in the third quarter of
Citizen's Bank's third year of operations to access projected growth in the
northern portion of Collier County.
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<PAGE> 23
MONETARY POLICIES
The results of operations of Citizens Bank will be affected by credit
policies of monetary authorities, particularly the Federal Reserve Board. The
instruments of monetary policy employed by the Federal Reserve Board include
open market operations in U.S. Government securities, changes in the discount
rate on member bank borrowings, changes in reserve requirements against member
bank deposits and limitations on interest rates which member banks may pay on
time and savings deposits. In view of changing conditions in the national
economy and in the money markets, as well as the effect of action by monetary
and fiscal authorities, including the Federal Reserve Board, no prediction can
be made as to possible future changes in interest rates, deposit levels, loan
demand or the business and earnings of Citizens Bank.
SUPERVISION AND REGULATION
GENERAL
Citizens Bancshares and Citizens Bank will operate in a highly
regulated environment, and the business activities of Citizens Bancshares and
Citizens Bank will be supervised by a number of federal regulatory agencies,
including the Federal Reserve Board, the OCC, the Florida Banking Department and
the FDIC.
Citizens Bancshares will be regulated by the Federal Reserve Board
under the federal Bank Holding Company Act of 1956, which requires every bank
holding company to obtain the prior approval of the Federal Reserve Board before
acquiring more than 5% of the voting shares of any bank or all or substantially
all of the assets of a bank, and before merging or consolidating with another
bank holding company. The Federal Reserve Board, through its regulations and
published policy statements, has maintained that a bank holding company must
serve as a source of financial strength to its subsidiary banks. In adhering to
the Federal Reserve Board policy, Citizens Bancshares may be required to provide
financial support to its subsidiary bank at a time when, absent such Federal
Reserve Board policy, Citizens Bancshares may not deem it advisable to provide
such assistance.
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994, the restrictions on interstate acquisitions of banks by bank holding
companies were repealed as of September 29, 1995, such that Citizens Bancshares
and any other bank holding company located in Florida is able to acquire a bank
located in any other state, and a bank holding company located outside Florida
can acquire any Florida-based bank, in either case subject to certain deposit
percentage and other restrictions. Beginning on June 1, 1997, the legislation
provides that unless an individual state has elected to prohibit out-of-state
banks from operating interstate branches within its territory, adequately
capitalized and managed bank holding companies will be able to consolidate their
multi-state bank operations into a single bank subsidiary and to branch
interstate through acquisitions. De novo branching by an out-of-state bank would
be permitted only if it is expressly permitted by the laws of the host state.
Florida does not permit de novo banking by an out-of-state bank. Therefore, the
only method by which an out-of-state bank or bank holding company may enter
Florida is through an acquisition. The authority of a bank to establish and
operate branches within a state will continue to be subject to applicable state
branching laws.
A bank holding company is generally prohibited from acquiring control
of any company which is not a bank and from engaging in any business other than
the business of banking or managing and controlling banks. However, there are
certain activities which have been identified by the Federal Reserve Board to be
so closely related to banking as to be a proper incident thereto and thus
permissible
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<PAGE> 24
for bank holding companies. Effective April 21, 1997, the Federal Reserve Board
revised and expanded the list of permissible non-banking activities, which
includes the following activities: extending credit and servicing loans; acting
as investment or financial advisor to subsidiaries and certain outside
companies; leasing personal and real property or acting as a broker with respect
thereto; providing management and employee benefits consulting advice and career
counseling services to nonaffiliated banks and nonbank depository institutions;
operating certain nonbank depository institutions; performing certain trust
company functions; providing certain agency transactional services, including
securities brokerage services, riskless principal transactions, private
placement services, and acting as a futures commission merchant; providing data
processing and data transmission services; acting as an insurance agent or
underwriter with respect to limited types of insurance; performing real estate
appraisals; arranging commercial real estate equity financing; providing
check-guaranty, collection agency and credit bureau services; engaging in asset
management, servicing and collection activities; providing real estate
settlement services; acquiring certain debt which is in default; underwriting
and dealing in obligations of the United States, the states and their political
subdivisions; engaging as a principal in foreign exchange trading and dealing in
precious metals; providing other support services such as courier services and
the printing and selling of checks; and investing in programs designed to
promote community welfare.
In determining whether an activity is so closely related to banking as
to be permissible for bank holding companies, the Federal Reserve Board is
required to consider whether the performance of such activities by a bank
holding company or its subsidiaries can reasonably be expected to produce such
benefits to the public as greater convenience, increased competition and gains
in efficiency that outweigh such possible adverse effects as undue concentration
of resources, decreased or unfair competition, conflicts of interest and unsound
banking practices. Generally, bank holding companies are required to obtain
prior approval of the Federal Reserve Board to engage in any new activity not
previously approved by the Federal Reserve Board.
Citizens Bancshares is also regulated, to a limited extent, by the
Florida Banking Department under the Florida Financial Institutions Code, which
requires every bank holding company to obtain the prior approval of the Florida
Commissioner of Banking before acquiring more than 5% of the voting shares of
any Florida bank or all or substantially all of the assets of a Florida bank, or
before merging or consolidating with any Florida bank holding company. A bank
holding company is generally prohibited from acquiring ownership or control of
5% or more of the voting shares of any Florida bank or Florida bank holding
company unless the Florida bank or all subsidiaries of the Florida bank holding
company to be acquired have been in existence and continuously operating, on the
date of such acquisition, for a period of three years or more. However, approval
of the Florida Banking Department is not required if the bank to be acquired or
all bank subsidiaries of the Florida bank holding company to be acquired are
national banks.
Citizens Bank, as a subsidiary of Citizens Bancshares, is subject to
restrictions under federal law in dealing with Citizens Bancshares and other
affiliates, if any. These restrictions apply to extensions of credit to an
affiliate, investments in the securities of an affiliate and the purchase of
assets from an affiliate.
Loans and extensions of credit by national banks are subject to legal
lending limitations. Under federal law, a national bank's total outstanding
loans and extensions of credit to one borrower may not exceed 15% of its capital
and surplus, plus an additional 10% of its capital and surplus, if such
additional amount is fully secured by readily marketable collateral. Loans and
extensions of credit may exceed the general lending limit if they qualify under
one of several exceptions. Such exceptions include certain
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<PAGE> 25
loans or extensions of credit arising from the discount of commercial or
business paper, the purchase of bankers' acceptances, loans secured by documents
of title, loans secured by U.S. obligations and loans to or guaranteed by the
federal government.
CAPITAL ADEQUACY REQUIREMENTS
Both Citizens Bancshares and Citizens Bank are subject to regulatory
capital requirements imposed by the Federal Reserve Board and the OCC. The
Federal Reserve Board and the OCC have issued risk-based capital guidelines for
bank holding companies and banks which make regulatory capital requirements more
sensitive to differences in risk profiles of various banking organizations. The
capital adequacy guidelines issued by the Federal Reserve Board are applied to
bank holding companies on a consolidated basis with Citizens Banks owned by the
holding company. The OCC's risk capital guidelines apply directly to national
banks regardless of whether they are a subsidiary of a bank holding company.
Both agencies' requirements, which are substantially similar, provide that
banking organizations must have capital equivalent to 8% of risk weighted
assets. The risk weights assigned to assets are based primarily on credit risks.
Both the Federal Reserve Board and the OCC have also implemented new minimum
capital leverage ratios to be used in tandem with the risk-based guidelines in
assessing the overall capital adequacy of banks and bank holding companies.
Under these rules, banking institutions are required to maintain a ratio of 4%
"Tier 1" capital to total assets (net of goodwill). Tier 1 capital includes
common shareholders equity, noncumulative perpetual preferred stock and minority
interests in the equity accounts of consolidated subsidiaries, less certain
intangible assets.
Both the risk-based capital guidelines and the leverage ratio are
minimum requirements, applicable only to top-rated banking institutions.
Institutions operating at or near these levels are expected to have
well-diversified risk, high asset quality, high liquidity, good earnings and in
general, have to be considered strong banking organizations, rated composite 1
under the CAMELS rating system for banks. Institutions with lower ratings and
institutions with high levels of risk or experiencing or anticipating
significant growth would be expected to maintain ratios 100 to 200 basis points
above the stated minimums.
The OCC has amended the risk-based capital guidelines applicable to
national banks in an effort to clarify certain questions of interpretation and
implementation, specifically with regard to treatment of originated and
purchased mortgage servicing rights and other intangible assets. The OCC's
guidelines provide that intangible assets are generally deducted from Tier 1
capital in calculating a bank's risk-based capital ratio. However, certain
intangible assets which meet specified criteria ("qualifying intangibles") such
as mortgage servicing rights are retained as a part of Tier 1 capital. The OCC
currently maintains that only mortgage servicing rights and purchased credit
card relationships meet the criteria to be considered qualifying intangibles.
The OCC's guidelines formerly provided that the amount of such qualifying
intangibles that may be included in Tier 1 capital was strictly limited to a
maximum of 25% of total Tier 1 capital. The OCC has amended its guidelines to
increase the limitation on such qualifying intangibles from 25% to 50% of Tier 1
capital and further to permit the inclusion of purchased credit card
relationships as a qualifying intangible asset.
In addition, the OCC has adopted rules which clarify treatment of asset
sales with recourse not reported on a bank's balance sheet. Among assets
affected are mortgages sold with recourse under Fannie Mae, Freddie Mac and
Farmer Mac programs. The rules clarify that even though those transactions are
treated as asset sales for bank Call Report purposes, those assets will still be
subject to a capital charge under the risk-based capital guidelines.
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<PAGE> 26
The OCC, the Federal Reserve Board and the FDIC have adopted
regulations revising their risk-based capital guidelines to ensure that the
guidelines take adequate account of interest rate risk. Interest rate risk is
the adverse effect that changes in market interest rates may have on a bank's
financial condition and is inherent to the business of banking. Under these
regulations, when evaluating a bank's capital adequacy, the agencies' capital
standards now explicitly include a bank's exposure to declines in the economic
value of its capital due to changes in interest rates. The exposure of a bank's
economic value generally represents the change in the present value of its
assets, less the change in the value of its liabilities, plus the change in the
value of its interest rate off-balance sheet contracts. Concurrently, the
agencies issued a joint policy statement, effective June 26, 1996, to provide
guidance on sound practices for managing interest rate risk. In the policy
statement, the agencies emphasize the necessity of adequate oversight by a
bank's board of directors and senior management and of a comprehensive risk
management process. The policy statement also describes the critical factors
affecting the agencies' evaluations of a bank's interest rate risk when making a
determination of capital adequacy. The agencies' risk assessment approach used
to evaluate a bank's capital adequacy for interest rate risk relies on a
combination of quantitative and qualitative factors. Banks that are found to
have high levels of exposure and/or weak management practices will be directed
by the agencies to take corrective action. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
PROMPT CORRECTIVE ACTION
The Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA), enacted on December 19, 1991, provides for the development of a
regulatory monitoring system requiring prompt corrective action on the part of
banking regulators with regard to certain classes of undercapitalized
institutions. While the FDICIA does not change any of the minimum capital
requirements, it directs each of the federal banking agencies to issue
regulations putting the monitoring plan into effect. The FDICIA creates five
"capital categories" ("well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized") which are defined in the FDICIA and which will be used to
determine the severity of corrective action the appropriate regulator may take
in the event an institution reaches a given level of undercapitalization. For
example, an institution which becomes "undercapitalized" must submit a capital
restoration plan to the appropriate regulator outlining the steps it will take
to become adequately capitalized. Upon approving the plan, the regulator will
monitor the institution's compliance. Before a capital restoration plan will be
approved, any entity controlling a bank (i.e., holding companies) must guarantee
compliance with the plan until the institution has been adequately capitalized
for four consecutive calendar quarters. The liability of the holding company is
limited to the lesser of five percent of the institution's total assets or the
amount which is necessary to bring the institution into compliance with all
capital standards. In addition, "undercapitalized" institutions will be
restricted from paying management fees, dividends and other capital
distributions, will be subject to certain asset growth restrictions and will be
required to obtain prior approval from the appropriate regulator to open new
branches or expand into new lines of business. Based on a capitalization of
$9,700,000, management of Citizens Bank believes that Citizens Bank will be a
"well capitalized" institution.
As an institution's capital levels decline, the extent of action to be
taken by the appropriate regulator increases, restricting the types of
transactions in which the institution may engage and ultimately providing for
the appointment of a receiver for certain institutions deemed to be critically
undercapitalized.
In order to comply with the FDICIA, the Federal Reserve Board, the OCC
and the FDIC have adopted regulations defining operational and managerial
standards relating to internal controls, loan
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<PAGE> 27
documentation, credit underwriting criteria, interest rate exposure, asset
growth, and compensation, fees and benefits.
<TABLE>
<CAPTION>
TOTAL RISK - TIER 1 RISK - TIER 1
BASED CAPITAL BASED CAPITAL LEVERAGE
RATIO RATIO RATIO
------------- ------------- --------
<S> <C> <C> <C>
Well capitalized(1)............................. >=10.0% >= 6.0% >= 5.0%
Adequately Capitalized(1)....................... >= 8.0% >= 4.0% >= 4.0%(2)
Undercapitalized(3)............................. < 8.0% < 4.0% < 4.0%(4)
Significantly Undercapitalized(3)............... < 6.0% < 3.0% < 3.0%
Critically Undercapitalized..................... -- -- < 2.0%(5)
</TABLE>
- ---------------------------
(1) An institution must meet all three minimums.
(2) 3.0% for composite 1-rated institutions, subject to appropriate federal
banking agency guidelines.
(3) An institution falls into this category if it is below the specified capital
level for any of the three capital measures.
(4) Less than 3.0% for composite 1-rated institutions, subject to appropriate
federal banking agency guidelines.
(5) Ratio of tangible equity to total assets.
The scope of regulation and permissible activities of Citizens
Bancshares and Citizens Bank is subject to change by future federal and state
legislation. In addition, regulators sometimes require higher capital levels on
a case-by-case basis based on such factors as the risk characteristics or
management of a particular institution. Citizens Bancshares and Citizens Bank
are not aware of any attributes of their operating plan that would cause
regulators to impose higher requirements.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF CITIZENS BANCSHARES AND CITIZENS BANK
Citizens Bancshares' directors and executive officers and Citizens
Bank's proposed directors and executive officers are as follows:
<TABLE>
<CAPTION>
Position with
Name Company and Bank
---- ----------------
<S> <C>
Michael L. McMullan Chief Executive Officer
and Director
Polly M. Rogers President and Director
Joe B. Cox Chairman
Earl L. Frye Director
Stanley W. Hole Director
John B. James Director
LaVonne Johnson Director
Luc C. Mazzini Director
Bernard L. Turner Director
Lorenzo Walker Director
</TABLE>
Each of the directors listed above other than Mr. McMullan has been a
director of Citizens Bancshares since September 15, 1998 and is an organizer of
Citizens Bancshares and Citizens Bank.
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<PAGE> 28
Mr. McMullan has served as the Chief Executive Officer of and a director of
Citizens Bancshares since February 28, 1999. All of the directors reside in
Collier County, Florida.
Citizens Bancshares has a classified board of directors whereby
one-third of the members will be elected each year at Citizens Bancshares'
Annual Meeting of Shareholders. Upon election, each director of Citizens
Bancshares serves for a term of three years. See "Description of Capital Stock
- -- Board of Directors." Citizens Bancshares' officers are appointed by the board
of directors and hold office at the will of the board.
Each of Citizens Bank's proposed directors will serve until Citizens
Bank's first shareholders' meeting, which meeting will be held shortly after
Citizens Bank receives its charter. As Citizens Bancshares will be the sole
shareholder of Citizens Bank, it is expected that each interim director will be
elected to serve as a director of Citizens Bank. After the first shareholders'
meeting, directors of Citizens Bank will serve for a term of one year and will
be elected each year at Citizens Bank's Annual Meeting of Shareholders. Citizens
Bank's officers will be appointed by its board of directors and will hold office
at the will of the board.
MICHAEL L. MCMULLAN, 44, began his career in banking in 1976,
completing the Management Trainee Program at First Tennessee National Bank,
Memphis. He became President of the Mississippi Bank, Canton Division, in 1981.
Subsequently, he managed the retail banking division of Mississippi Bank from
1982 to 1983. He became President of First Mississippi National Bank, Jackson
Division, in 1983. In 1984, he accepted the position of Executive Vice President
and Manager of the Lending Division at Republic Bank of South Austin in Austin,
Texas. In 1990, Mr. McMullan became the commercial banking executive for C & S
Bank of Florida's Jacksonville bank. He was transferred to Naples in 1991, where
he was named Chief Operating Officer of C & S Bank of Florida's Collier County
bank. Subsequent to the merger with NCNB, he was named Senior Banking Executive
and Commercial Banking Manager of NationsBank, Collier County. In 1993, he
accepted the position of Commercial Banking Executive for NationsBank's Broward
County Division and since then has managed the Broward County and Palm Beach
divisions and was Florida Market Manager for NationsBank's Financial Strategies
Group. His most recent position with NationsBank was that of Manager of the
Economic Development Office for the state of Florida. He has served on the board
of directors of the United Way of Jackson, Mississippi and Broward County,
Florida; the Boys and Girls Club of Broward County; the advisory board of the
Economic Development Councils in Collier County and Broward County; and the
Board and Executive Committees of Boy Scouts of America, Central Texas and
Central Mississippi regions. Mr. McMullan received a BBS from the Chair of
Banking at the University of Mississippi in 1976, and in 1979 received an MBA in
Finance and Monetary Policy from Columbia University, New York. He is married
with four children.
POLLY M. ROGERS, 60, is the proposed President of the Citizen Bank and
as such will have as one of her primary responsibilities Private Banking. Her
banking career began in 1970 at The Vanderbilt Bank in Naples. The Vanderbilt
Bank was purchased in 1979 by Exchange Bancorporation, Tampa, Florida, which was
in turn purchased in 1981 by NCNB, now NationsBank, for which Mrs. Rogers served
as Vice President until 1986. In 1986, she was employed by Citizens National
Bank of Naples, a $310 million community bank in Naples, Florida. Mrs. Rogers
served as an Executive Vice President of the bank until April, 1994 when
Citizens Bank merged with Amsouth Bancorporation. While at Citizens Bank, she
managed three banking locations with combined private banking deposits in excess
of $110 million. In July, 1994, Mrs. Rogers became an organizer of Gulf Coast
National Bank. Mrs. Rogers served as President and as a director of Gulf Coast
until July 1996. Mrs. Rogers is very involved in the
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<PAGE> 29
community and has served on numerous charitable boards and locally sponsored
organizations. She is a member of Royal Poinciana Golf Club and an active member
of The First Baptist Church of Naples.
JOE B. COX, 59, is a practicing attorney in Naples. Mr. Cox received a
J.D. degree from the University of Tulsa Law School in July 1966. In July 1978,
he opened the Naples branch office of Cummings & Lockwood. As Senior Partner,
Mr. Cox oversees a staff of 23 attorneys and paralegals and a support staff of
28 employees. Mr. Cox is a member of the Oklahoma and Florida Bar Associations,
American Bar Association, and the American College of Trust & Estate Counsel,
and is a well-regarded lecturer and author. Mr. Cox's civil activities include
serving as Vice Chairman of the Board of Naples Community Hospital, Chairman of
the Board of Naples Day Surgery, Director of the Naples Area Chamber of
Commerce, President of the Greater Naples Civic Association, Chairman of the
Florida Chamber Foundation Board of Trustees, and Vice Chairman of the Federal
Judicial Selection Committee, to which he was appointed by Senator Connie Mack.
EARL L. FRYE, 70, is a banker, realtor and developer who moved to
Naples in 1962 from Cincinnati, Ohio. He joined Wesley G. Downing Real Estate
and one year later became a full partner, changing the name of the company to
Downing-Frye & Associates, Inc. From 1989 to 1992, Mr. Frye was also a broker
and partner of USF&G Realty near Baltimore, Maryland. Mr. Frye was responsible
for developing the first gated community in Naples, Wilderness Country Club. He
also developed one of the first high-rise condominiums in Naples, the 21-story
Meridian, in Park Shore. Mr. Frye is a past President of the Naples Area Board
of Realtors and Director of the Florida Association of Realtors, as well as past
President of the Collier County Society of Real Estate Appraisers. His banking
career began in 1968 when he served as a director of First National Bank and
Trust Company of Collier County, which later merged with Southwest Florida Banks
of Ft. Myers. Southwest Florida Bank later merged with Sovran of Norfolk,
Virginia, which became C&S Sovran. C&S Sovran then merged with NCNB of
Charlotte, North Carolina. Mr. Frye served on all of the above parent boards and
state boards, and was also elected Chairman of First National Bank of Collier
County. He also served on various committees. After the merger of C&S Sovran and
NCNB, which became NationsBank, Mr. Frye served on the Florida/Georgia board of
directors and chaired the trust committee. He has served as Trustee for Naples
Community Hospital, co-chaired a fundraiser to build a satellite known as North
Collier Hospital, Community Foundation of Collier County, and Collier County
Conservancy. Furthermore, he has chaired the commercial United Way Fund Drive
and was instrumental in the formation of Youth Haven.
STANLEY W. HOLE, 67, is Chairman Emeritus of Hole, Montes & Associates,
a Naples-based civil engineering firm of which Mr. Hole was President when he
retired in 1997 after serving for 32 years. The firm's primary emphasis is on
water and wastewater projects. Hole, Montes & Associates was instrumental in the
development of Collier County's Water and Wastewater Master Plans, East and
South Naples Sewer Evaluation Survey, and South Collier County Regional
Wastewater Transmission and Effluent Reuse Systems. Mr. Hole has also served as
the Chairman of the South Florida Water Management District and as Chairman of
the Florida Keys Aqueduct Authority. Throughout his career as a civil engineer,
Mr. Hole has been an active teacher and lecturer, an author of numerous
professional articles and books and has accepted gubernatorial appointments to
various legislative committees concerned with water use and management issues.
His involvement in the community includes membership on several boards of
directors, such as the American Heart Association, Chamber of Commerce, Economic
Development Council, and Collier County Education Foundation. Mr. Hole received
his undergraduate degree from the University of Miami.
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<PAGE> 30
JOHN B. JAMES, 57, retired from NationsBank on December 31, 1997 after
30 years in banking. After receiving a degree from Florida State University, Mr.
James joined Citizens and Southern National Bank, Atlanta, as a management
trainee. He was elected a Vice President of Retail Banking in 1972. In 1978, Mr.
James was promoted to Senior Vice President and Senior Credit Officer for
Georgia affiliate banks. In 1982, he was promoted to Executive Vice President
with responsibility for Corporate and Correspondent Banking in the southeastern
United States. Mr. James transferred to Tampa in 1989 and served as President of
the C&S Hillsborough County Bank. Mr. James has been involved in many civic
activities, including Collier County Educational Foundation Board, The Economic
Development Council of Collier County, Pelican Bay Business Association Board,
has served as a member of the Chamber of Southwest Florida Board, the Lee County
Public School Foundation Board, and the Tampa Committee of 100, and has
participated in the Leadership Lee and Leadership Southwest Florida Programs.
LAVONNE JOHNSON, 66, is a retired Planner and Project Director for
Allegheny County, Pennsylvania. She and her husband maintain residences in both
Pittsburgh, Pennsylvania and Marco Island, Florida. Mrs. Johnson began investing
in real estate in Collier County in 1974 and in 1980 constructed a home on Marco
Island. Currently, Mrs. Johnson is a member of the Art League of Marco and the
Association of University Women, as well as a Certified Tutor through the
literacy program of the Collier County Library system. Mrs. Johnson has served
in various elected capacities in Minnesota, including member of the Board of
Education, County Chairwoman of a political party and delegate to a National
Political Convention. In Pennsylvania, Mrs. Johnson served on several civic
Boards, including those of the Shakespeare Festival, the Opera Theater in
Pittsburgh, the Civil Light Opera Guild and Project Rediscovery, a program whose
focus is on capable minority children at risk to drop out of school. Mrs.
Johnson received a B.A. degree in Political Science and Sociology from the
University of Pennsylvania and received a Master of Public Administration
degree, also from the University of Pennsylvania.
LUC C. MAZZINI, DDS, 43, is a licensed dentist in both Florida and
Texas and has been practicing General Dentistry for eighteen years. His area of
specialty is cosmetic and implant dentistry. Dr. Mazzini has maintained an
active dental practice in Collier County since 1990. Dr. Mazzini has at various
times served as a member of the Noon Rotary Club of Marco Island, a member of
the Marco Island Chamber of Commerce and a member of the board of directors of
the San Marco Condominium Association. Dr. Mazzini has also enjoyed memberships
in several professional organizations, including the Texas Dental Association,
Greater Houston Dental Society, American Dental Association, Florida Dental
Association and Collier County Dental Association. Dr. Mazzini received a B.S.
degree from the University of Texas and a D.D.S. from Baylor College of
Dentistry.
BERNARD L. TURNER, 72, a businessman and developer, has been a resident
of Naples for over 28 years and currently serves as Chairman of the Board of the
Florida Coastal School of Law, Jacksonville, Florida, which he co-founded in
1994. From 1970 to 1994, Mr. Turner served as President and Chancellor at Walden
University, Minneapolis, Minnesota, a fully accredited doctorate level
institution. Locally, Mr. Turner has been involved in a health club partnership,
a land trust, and has developed an office complex valued in excess of
$3,000,000. Mr. Turner was also an organizing director of the former Citizens
National Bank. He has served as Trustee of the Collier County Economic
Development Committee, was the founding Chairman of Creative Living, a
non-profit corporation to provide housing for the needy elderly, and was
appointed by former Florida Governor Bob Graham as a member of the Board of the
State Board of Independent Colleges and Universities. Mr. Turner has previously
taught high school, lectured at various universities, and served as an economist
for the National Industrial Conference Board.
28
<PAGE> 31
LORENZO WALKER, 78, has been a lifelong member of the Naples community.
After serving in the military, Mr. Walker returned to Naples in 1946 and
assisted in developing the zoning plan for the City of Naples. Along with his
father and brother, Mr. Walker formed Walker Construction Company and began
developing waterfront properties in Naples and Bonita Springs. Mr. Walker later
formed James L. Walker Real Estate Inc., a local real estate brokerage firm. He
has served the community in many different capacities, including Founding
Director of Naples Community Hospital, member of Lee University, member of
Advisory Council of the Lorenzo Walker Institute of Technology, the largest
school in Collier County and is Director Emeritus of International College of
Naples. Mr. Walker has also been active in local and state politics. He has
served on the Board of County Commissioners, as a representative to the Florida
House of Representatives, as Speaker Pro Tem, and as Dean of the Florida House,
the position he held when he retired in 1974. Mr. Walker has significant bank
board experience, having been a founding director and director of FNB Naples
from 1955-1976, a founding director and the Chairman of Citizens National Bank,
Naples, in 1968, a founding director of Vanderbilt Bank and director of the
second Citizens National Bank in 1987.
There are no family relationships between any director or executive
officer and any other director or executive officer of Citizens Bancshares.
EXECUTIVE COMPENSATION
Citizens Bancshares, Citizens Bank and Michael McMullan entered into a
three-year employment agreement dated as of March 18, 1999, pursuant to which
Mr. McMullan serves as Chief Executive Officer of Citizens Bank and Citizens
Bancshares. The employment contract provides that Mr. McMullan will receive a
salary at an annual rate of $140,000, which may be increased from time to time
in the sole discretion of the board of directors of Citizens Bancshares. Mr.
McMullan will also be eligible to receive a bonus which will not exceed 40% of
his annual base salary.
The employment agreement provides that Mr. McMullan will receive
options to purchase 30,000 shares of common stock of Citizens Bancshares at a
price of $10.00 per share pursuant to an incentive stock option plan to be
adopted by Citizens Bancshares. Twenty percent of these options will become
exercisable on December 31, 1999 and twenty percent will become exercisable on
December 31 of each of the four succeeding years. All options will be
exercisable for a period of ten years.
The employment agreement also provides that Mr. McMullan will receive
health, disability, and term life insurance, and be eligible to participate in
Citizens Bank's employee benefit plan, if one is adopted by the board of
directors of Citizens Bank. Mr. McMullan will also be entitled to four weeks
vacation each year during which time his salary will be paid in full.
In the event of a "change of control" of Citizens Bancshares, as
defined in the employment contract, Mr. McMullan will be entitled to give
written notice to Citizens Bancshares of termination of his employment agreement
and to receive a cash payment equal to 250% of his annual salary, and an
additional cash payment equal to the excess, if any, of the aggregate market
value of the number of shares of common stock of Citizens Bancshares subject to
options held by Mr. McMullan over the aggregate exercise price of all such
options.
The employment agreement provides that Citizens Bank may terminate the
employment of Mr. McMullan with or without cause, but that in the latter case
Mr. McMullan will receive a severance payment equal to that he would be entitled
to in the event of a change in control, as described above.
29
<PAGE> 32
In addition, the employment agreement contains a non-compete provision which
provides that in the event the employment contract is terminated by Citizens
Bancshares or Citizens Bank without cause, or by Mr. McMullan, Mr. McMullan may
not, without the prior written consent of Citizens Bank, either directly or
indirectly serve as an employee of any financial institution within Collier or
Lee County for a period of twelve months after such termination.
STOCK OPTION PLANS
Citizens Bancshares' board of directors will adopt an Incentive Stock
Option Plan (the "Plan") to provide for the issuance of stock options to
employees who are contributing significantly to the management or operation of
the business of Citizens Bancshares or its subsidiaries as determined by the
committee administering the Plan. The Plan will be contingent upon approval by
the shareholders of Citizens Bancshares. The Plan will provide for the grant of
options at the discretion of a committee designated by the board of directors to
administer the Plan. The committee must at all times consist of at least two
non-employee directors. 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 at any time prior to their expiration
in accordance with the terms of the Plan. Stock options granted pursuant to the
Plan will expire on or before (i) the date which is the tenth anniversary of the
date the option is granted, or (ii) the date which is the fifth anniversary of
the date the option is granted in the event that the option is granted to a key
employee who owns more than 10% of the total combined voting power of all
classes of stock of Citizens Bancshares or any subsidiary of Citizens
Bancshares.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the ownership of the common stock of
Citizens Bancshares by its directors and executive officers both before and
after completion of the minimum offering of 1,000,000 shares.
<TABLE>
<CAPTION>
After Completion of
Before Offering Minimum Offering
--------------- ----------------
Number of Percent of Number of Percent of
Name of Beneficial Owner Shares Total Shares Total
- ------------------------ ------ ----- ------ -----
<S> <C> <C> <C> <C>
Joe B. Cox.......................... 2,000 11.1% 20,000 2.0%
Earl L. Frye........................ 2,000 11.1% 20,000 2.0%
Stanley W. Hole..................... 2,000 11.1% 10,000 1.0%
John B. James....................... 2,000 11.1% 20,000 2.0%
LaVonne Johnson..................... 2,000 11.1% 20,000 2.0%
Luc C. Mazzini...................... 2,000 11.1% 20,000 2.0%
Michael L. McMullan................. 0 0.0 % 10,000 1.0%
Polly M. Rogers..................... 2,000 11.1% 20,000 2.0%
Bernard L. Turner................... 2,000 11.1% 20,000 2.0%
Lorenzo Walker...................... 2,000 11.1% 20,000 2.0%
------ ----- ------- ----
Total 18,000 100.0% 180,000 17.7%
</TABLE>
30
<PAGE> 33
CERTAIN TRANSACTIONS
Once Citizens Bank opens for business, it may from time to time extend
loans to certain of Citizens Bancshares' directors, their associates, and
members of the immediate families of the directors and executive officers of
Citizens Bancshares. These loans will be made in the ordinary course of business
on substantially the same terms, including interest rates, collateral
requirements, and repayment terms, as those prevailing at the time for
comparable transactions with persons not affiliated with Citizens Bancshares or
Citizens Bank, and will not involve more than the normal risk of collectibility
or present other unfavorable features.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Citizens Bancshares consists of
20,000,000 shares of common stock, $.01 par value, and 1,000,000 shares of
preferred stock, $.01 par value per share. There are presently 18,000 shares of
common stock issued and outstanding, all of which are held by the organizers. No
shares of the preferred stock are issued and outstanding.
COMMON STOCK
The holders of common stock are entitled to elect the members of the
board of directors of Citizens Bancshares and are entitled to vote as a class on
all matters required or permitted to be submitted to the shareholders of
Citizens Bancshares.
No holder of any class of stock of Citizens Bancshares has preemptive
rights with respect to the issuance of shares of any class of stock, and the
common stock does not carry cumulative voting rights with respect to the
election of directors.
The holders of common stock are entitled to dividends and other
distributions if, as, and when declared by the board of directors out of assets
legally available therefor. Upon the liquidation, dissolution, or winding up of
Citizens Bancshares, the holder of each share of common stock will be entitled
to share equally in the distribution of Citizens Bancshares' assets. The holders
of common stock are not entitled to the benefit of any sinking fund provision.
The shares of common stock of Citizens Bancshares are not subject to any
redemption provisions, nor are they convertible into any other security or
property of Citizens Bancshares. All outstanding shares of each class of common
stock are, and the shares to be outstanding upon completion of this offering
will be, fully paid and nonassessable.
PREFERRED STOCK
The board of directors may, without approval of Citizens Bancshares'
shareholders, from time to time authorize the issuance of preferred stock in one
or more series for such consideration and, within certain limits, with such
relative rights, preferences and limitations as the board of directors may
determine. The relative rights, preferences and limitations that the board of
directors has the authority to determine as to any such series of preferred
stock include, among other things, dividend rights, voting rights, conversion
rights, redemption rights and liquidation preferences. Because the board of
directors has the power to establish the relative rights, preferences and
limitations of each series of preferred stock, it may afford to the holders of
any such series preferences and rights senior to the rights of the holders of
shares of common stock. Although the board of directors has no intention at the
present time of doing so, it could cause the issuance of preferred stock that
could discourage an acquisition attempt or other transactions that some, or a
majority of, the shareholders might believe to be in their best interests
31
<PAGE> 34
or in which the shareholders might receive a premium for their shares of common
stock over the market price of such shares.
BOARD OF DIRECTORS
The board of directors of Citizens Bancshares consists of ten
directors. The directors are divided into three classes, designated Class I,
Class II and Class III. The term of the initial Class I directors expires at
Citizens Bancshares' first Annual Meeting of Shareholders; the term of the
initial Class II directors expires at Citizens Bancshares' second Annual Meeting
of Shareholders; and the term of the initial Class III directors expires at
Citizens Bancshares' third Annual Meeting of Shareholders. At each Annual
Meeting of Shareholders, successors to the class of directors whose term expires
at the Annual Meeting will be elected for a three-year term. If the number of
directors is changed, an increase or decrease will be apportioned among the
classes so as to maintain the number of directors in each class as nearly equal
as possible, and any additional director of any class elected to fill a vacancy
resulting from an increase in such class will hold office for a term that will
coincide with the remaining term of that class, but in no event will a decrease
in the number of directors shorten the term of any incumbent director. Any
director elected to fill a vacancy not resulting from an increase in the number
of directors will have the same remaining term as that of his predecessor.
Except in the case of removal from office, any vacancy on the board of directors
will be filled by a majority vote of the remaining directors then in office.
Any director may be removed, with or without cause, at any regular or
special meeting of shareholders called for that purpose, and his position filled
by another person nominated and elected for that purpose by the holders of 75%
of the outstanding shares of Citizens Bancshares' common stock.
The effect of the classified board of directors is to make it more
difficult for a person, entity or group to effect a change in control of
Citizens Bancshares through the acquisition of a large block of Citizens
Bancshares' voting stock.
ANTI-TAKEOVER PROVISIONS
Citizens Bancshares' Articles of Incorporation contain provisions
requiring supermajority shareholder approval to effect certain extraordinary
corporate transactions which are not approved by the board of directors. The
Articles of Incorporation require the affirmative vote or consent of the holders
of at least two-thirds of the shares of each class of common stock of Citizens
Bancshares entitled to vote in elections of directors to approve any merger,
consolidation, disposition of all or a substantial part of the assets of
Citizens Bancshares or a subsidiary of Citizens Bancshares, exchange of
securities requiring shareholder approval or liquidation of Citizens Bancshares
("Covered Transaction"), if any person who together with his affiliates and
associates owns beneficially 5% or more of any voting stock of Citizens
Bancshares ("Interested Person") is a party to the transaction; provided that
75% of the entire board of Directors of Citizens Bancshares has not approved the
transaction. In addition, the Articles of Incorporation require the separate
approval by the holders of a majority of the shares of each class of stock of
Citizens Bancshares entitled to vote in elections of directors which are not
beneficially owned, directly or indirectly, by an Interested Person, of any
merger, consolidation, disposition of all or a substantial part of the assets of
Citizens Bancshares or a subsidiary of Citizens Bancshares, or exchange
32
<PAGE> 35
of securities requiring shareholder approval ("Business Combination"), if an
Interested Person is a party to such transaction; provided, that such approval
is not required if :
- the consideration to be received by the holders of the stock
of Citizens Bancshares meets certain minimal levels determined
by a formula under the Articles of Incorporation (generally
the highest price paid by the Interested Person for any shares
which he has acquired),
- there has been no reduction in the average dividend rate from
that which was obtained prior to the time the Interested
Person became such, and
- the consideration to be received by shareholders who are not
Interested Persons shall be paid in cash or in the same form
as the Interested Person previously paid for shares of such
class of stock. These Articles, as well as the Article
establishing a classified board of directors, may be amended,
altered, or repealed only by the affirmative vote or consent
of the holders of at least 75% of the shares of each class of
stock of Citizens Bancshares entitled to vote in elections of
directors.
The effect of these provisions is to make it more difficult for a
person, entity or group to effect a change in control of Citizens Bancshares
through the acquisition of a large block of Citizens Bancshares' voting stock.
STATUTORY ANTI-TAKEOVER PROVISIONS
The State of Florida has statutory provisions relating to business
combinations between a Florida corporation and an "interested shareholder" that
outline the statutory requirements to effect such transactions. In its Articles
of Incorporation, Citizens Bancshares has elected not to be governed by these
provisions and, therefore, these statutory anti-takeover provisions do not apply
to Citizens Bancshares.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION
OF OFFICERS AND DIRECTORS
As allowed under Florida law, Citizens Bancshares' Articles of
Incorporation provide that a director shall not be personally liable to Citizens
Bancshares or its shareholders for monetary damages for breach of duty of care
or any other duty owed to Citizens Bancshares as a director, except that such
provision shall not eliminate or limit the liability of a director (a) for any
appropriation, in violation of his duties, of any business opportunity of
Citizens Bancshares, (b) for acts or omissions which involve intentional
misconduct or a knowing violation of law, (c) for unlawful corporate
distributions, or (d) for any transaction from which the director received an
improper personal benefit.
Article VI of Citizens Bancshares' Bylaws provides that Citizens
Bancshares shall indemnify a director who has been successful in the defense of
any proceeding to which he was a party or in defense of any claim, issue or
matter therein because he is or was a director of Citizens Bancshares, against
reasonable expenses incurred by him in connection with such defense.
Citizens Bancshares' Bylaws also provide that Citizens Bancshares is
required to indemnify any director, officer, employee or agent made a party to a
proceeding because he is or was a director, employee or agent against liability
incurred in the proceeding if he acted in a manner he believed in good faith or
to be in or not opposed to the best interests of Citizens Bancshares and, in the
case of any
33
<PAGE> 36
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. Determination concerning whether or not the applicable standard of
conduct has been met can be made by:
- a disinterested majority of the board of directors,
- a majority of a committee of disinterested directors,
- independent legal counsel, or
- an affirmative vote of a majority of shares held by
disinterested shareholders.
No indemnification may be made to or on behalf of a director, officer, employee
or agent:
- in connection with a proceeding by or in the right of
Citizens Bancshares in which such person was adjudged liable
to Citizens Bancshares, or
- in connection with any other proceeding in which such person
was adjudged liable on the basis that personal benefit was
improperly received by him.
Citizens Bancshares may, if authorized by its shareholders by a
majority of votes which would be entitled to be cast in a vote to amend Citizens
Bancshares' Articles of Incorporation, indemnify or obligate itself to indemnify
a director, officer, employee or agent made a party to a proceeding, including a
proceeding brought by or in the right of Citizens Bancshares.
To the extent that indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of Citizens Bancshares by the provisions described above, or otherwise,
Citizens Bancshares has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which Citizens
Bancshares or Citizens Bank is a party or of which any of their properties are
subject; nor are there material proceedings known to Citizens Bancshares or
Citizens Bank to be contemplated by any governmental authority; nor are there
material proceedings known to Citizens Bancshares or Citizens Bank, pending or
contemplated, in which any director, officer or affiliate or any principal
security holder of Citizens Bancshares or Citizens Bank, or any associate of any
of the foregoing is a party or has an interest adverse Citizens Bancshares or
Citizens Bank.
LEGAL MATTERS
Certain legal matters in connection with the shares of common stock
offered hereby have been passed upon for Citizens Bancshares by Smith, Gambrell
& Russell, LLP, Atlanta, Georgia, counsel to Citizens Bancshares.
EXPERTS
The financial statements of Citizens Bancshares of Southwest Florida,
Inc. as of February 22, 1999 included in this prospectus have been audited by
Hill, Barth & King, Inc., independent auditors, as stated in their report, which
is included herein, and has been so included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
34
<PAGE> 37
ADDITIONAL INFORMATION
Citizens Bancshares has filed with the Securities and Exchange
Commission, Washington, D.C. 20549, a Registration Statement under the
Securities Act of 1933 with respect to the shares of common stock offered
hereby. This prospectus does not contain all of the information included in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to Citizens Bancshares and the common stock, please
refer to the Registration Statement and the exhibits and schedules thereto. You
may request a copy of the Registration Statement by contacting Citizens
Bancshares either at its address at 3411 Tamiami Trail North, Suite 200, Naples,
Florida 34103, or at its telephone number at (941) 643-4646.
Citizens Bancshares intends to furnish its shareholders annual reports
containing audited financial statements.
35
<PAGE> 38
FINANCIAL STATEMENTS
CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
(A Development Stage Company)
February 22, 1999
C O N T E N T S
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report ......................... F-2
Balance Sheet ........................................ F-3
Statement of Operations .............................. F-4
Statement of Shareholders' Equity .................... F-5
Statement of Cash Flows .............................. F-6
Notes to Financial Statements ........................ F-7-9
</TABLE>
F-1
<PAGE> 39
Board of Directors
Citizens Bancshares of Southwest Florida, Inc.
Naples, Florida
Independent Auditors' Report
We have audited the accompanying balance sheet of Citizens Bancshares of
Southwest Florida, Inc. (the Company) as of February 22, 1999 and the related
statements of operations, shareholders' equity and cash flows for the period
from June 15, 1998 (date of inception) to February 22, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Citizens Bancshares
of Southwest Florida, Inc. as of February 22, 1999 and the results of its
operations and its cash flows for the period from June 15, 1998 (date of
inception) to February 22, 1999 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming the
company will continue as a going concern. As discussed in Note G to the
financial statements, the company's ability to continue as a going concern is
dependent on approval from the Office of the Comptroller of the Currency for a
National Banking Charter and a successful public offering of the Company's
common stock. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ HILL, BARTH & KING, INC.
Certified Public Accountants
Naples, Florida
February 22, 1999
F-2
<PAGE> 40
CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
(A Development Stage Company)
BALANCE SHEET
February 22, 1999
<TABLE>
<CAPTION>
<S> <C>
A S S E T S
CURRENT ASSETS
Cash $ 206,330
Prepaid expenses 17,622
Deferred offering costs 16,905
-----------
TOTAL CURRENT ASSETS 240,857
-----------
NET PROPERTY AND EQUIPMENT - NOTE B 1,429,237
OTHER ASSET
Deposits 5,320
-----------
$ 1,675,414
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable $ 8,577
Loans payable - NOTE C 1,600,000
Accrued interest payable 34,309
-----------
TOTAL LIABILITIES 1,642,886
Shareholders' Equity - NOTE F
Preferred stock, par value $.01 per share,
1,000,000 shares authorized; 0 shares
issued and outstanding 0
Common stock, par value $.01 per share,
20,000,000 shares authorized; 18,000 shares issued
and outstanding 180
Additional paid-in capital 179,820
Deficit accumulated during the development stage (147,472)
-----------
TOTAL SHAREHOLDERS' EQUITY 32,528
-----------
$ 1,675,414
===========
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE> 41
CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Period from June 15, 1998 (date of inception) to February 22, 1999
<TABLE>
<S> <C>
INCOME
Interest income $ 2,220
EXPENSES
Consulting fees 24,500
Interest expense 4,475
License and permits 18,881
Rent 22,633
Professional fees 57,998
Legal fees 5,865
Insurance expense 4,597
Other expenses 10,743
---------
TOTAL EXPENSES 149,692
---------
NET LOSS $(147,472)
=========
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE> 42
CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY
Period from June 15, 1998 (date of inception) to February 22, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Paid-in Development
Stock Capital Stage Total
------ ---------- ----------- ---------
<S> <C> <C> <C> <C>
Balance
June 15, 1998 $ 0 $ 0 $ 0 $ 0
(date of inception)
Proceeds from
issuance of
common stock 180 179,820 0 180,000
Net loss 0 0 (147,472) (147,472)
---- -------- --------- ---------
Balance (deficit)
February 22, 1999 $180 $179,820 $(147,472) $ 32,528
==== ======== ========= =========
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE> 43
CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Period from June 15, 1998 (date of inception) to February 22, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (147,472)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 80
Increase in prepaid expenses (17,622)
Increase in other assets (22,225)
Increase in accounts payable 8,577
Increase in accrued interest payable 34,309
-----------
NET CASH USED IN OPERATING ACTIVITIES (144,353)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (1,429,317)
-----------
NET CASH USED IN INVESTING ACTIVITIES (1,429,317)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on short-term notes 1,600,000
Proceeds from sale of stock 180,000
-----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,780,000
-----------
NET INCREASE IN CASH 206,330
CASH
Beginning of period 0
-----------
End of period $ 206,330
===========
</TABLE>
See accompanying notes to financial statements
F-6
<PAGE> 44
CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
February 22, 1999
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization:
Citizens Bancshares of Southwest Florida, Inc. (the Company) was
incorporated under the laws of the State of Florida. The Company's activities to
date have been limited to the organization of Citizens National Bank of
Southwest Florida (the Bank), as well as preparation for a $12,000,000 common
stock offering (the Offering). A substantial portion of the proceeds of the
Offering will be used by the Company to provide the initial capitalization of
the Bank. The start-up of the Bank is contingent upon receiving the approval of
various banking regulatory authorities and also a successful completion of the
Offering.
Nature of Business:
The Bank intends to offer a full range of commercial and consumer
banking services primarily within the Naples, Florida area.
Use of 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.
Deferred Offering Costs:
Deferred offering costs consist primarily of legal and accounting fees
related to the initial public stock offering and will be offset against the
offering proceeds when received.
NOTE B - PROPERTY AND EQUIPMENT
Property and equipment at February 22, 1999 consists of the following:
<TABLE>
<S> <C>
Building $1,361,137
Leasehold improvements 350
Furniture and fixtures 60,639
Equipment 7,191
----------
1,429,317
Less accumulated depreciation 80
----------
TOTAL $1,429,237
==========
</TABLE>
Depreciation is computed on the straight-line method over the estimated
useful lives of the depreciable assets. Depreciation expense was $80 for the
period ended February 22, 1999. For the period ended February 22, 1999, the
Company capitalized interest of approximately $30,190 related to the purchase
and renovation of the facility to ready the premise for operations.
F-7
<PAGE> 45
CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 22, 1999
NOTE C - LOANS PAYABLE
The Company has obtained a $300,000 line of credit payable to a bank, guaranteed
by the organizers of the Company to pay organizational and pre-opening expenses
of the Bank and the Company. As of February 22, 1999, the Company had borrowed
$100,000 under this agreement. The line of credit bears interest at the LIBOR
rate plus 2.25% (7.493% as of 2/17/99) and varies as LIBOR varies and matures in
October 1999. The foregoing line of credit and any unpaid accrued interest will
be repaid from the offering proceeds.
The Company has also obtained a $1,500,000 loan payable to a bank,
secured by a building that was purchased with the proceeds. The loan bears
interest at a fixed rate of 7.125% per annum. The foregoing loan and unpaid
accrued interest are due in April 1999.
NOTE D - INCOME TAXES
Deferred taxes are recognized for temporary differences between the
basis of assets and liabilities for financial statement and income tax purposes.
The tax effect of the differences that gave rise to a deferred tax asset of
$51,615 and corresponding valuation allowance of ($51,615) at February 22, 1999
relate primarily to the capitalization of preoperating start-up costs which are
amortized over a five year term from the date operations commence for tax
purposes.
NOTE E - COMMITMENTS AND CONTINGENCIES
The Company has entered into an operating lease for 2,959 square feet of
space for its executive offices. The base annual lease payment is $53,262 plus
applicable sales tax; increased annually by 4% on the anniversary date of the
lease during the initial term on any option period agreed to under the lease.
The lease has an initial term of three years and may be renewed for two
additional terms of three years. The company has also entered into a thirty-six
month lease on the bank's phone system. Lease payments under this lease
arrangement are $615 per month.
Future minimum rental commitments as of February 22, 1999 are as
follows:
<TABLE>
<S> <C>
Year ending -
December 31, 1999 $ 51,250
December 31, 2000 63,573
December 31, 2001 55,819
December 31, 2002 1,302
--------
TOTAL $171,944
========
</TABLE>
F-8
<PAGE> 46
CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 22, 1999
NOTE F - STOCK OPTIONS AND WARRANTS
The Board of Directors of the Company intend to adopt an Incentive
Stock Option Plan to provide for the issuance of stock options to employees who
are contributing significantly to the management or operation of the company.
Options will be granted at 100% of the market value of the stock on the date the
option is granted. No shares have been reserved for issuance under this plan
thus far.
The Board of Directors of the Company have entered into a Stock
Purchase Warrant Agreement in consideration for the organizer's efforts in
organizing the Company and the Bank and the attendant personal financial risks
assumed by each organizer. The Company intends to issue warrants to purchase two
shares of Common Stock for each three shares of Common Stock purchased by each
organizer prior to completion of the Offering. Warrants will vest in equal
increments over a five year period commencing on the date the Bank opens for
business. Warrants will be exercisable at $10.00 per share and will expire 10
years from date of issue. The company has reserved 113,330 shares of its Common
Stock for issuance thereunder.
NOTE G - GOING CONCERN
As shown in the accompanying financial statements, the Company incurred
a net loss of $147,472 during the development stage, from June 15, 1998 (date of
inception) to February 22, 1999. The ability of the Company to continue as a
going concern is dependent on approval from the Office of the Comptroller of the
Currency for a National Banking Charter and a successful public offering of the
Company's common stock. The financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern.
F-9
<PAGE> 47
APPENDIX A
[ESCROW AGREEMENT]
Citizens Bancshares of Southwest Florida, Inc.
3411 Tamiami Trail North, Suite 200
Naples, Florida 34103
February 5, 1999
First National Bank of Naples
2150 Goodlette Road
Naples, Florida 34102
Attention: Garrett S. Richter
President and CEO
Gentlemen:
Citizens Bancshares of Southwest Florida, Inc., a Florida corporation
(the "Company"), proposes to offer for sale up to 1,200,000 shares of its $.01
par value common stock (the "Common Stock"), which shares shall be registered
under the Securities Act of 1933, as amended, by the filing of a Registration
Statement on Form SB-2 with the Securities and Exchange Commission. Shares will
be offered at a price of $10.00 each. The minimum subscription per subscriber is
500 shares.
(1) The Company hereby appoints and designates you as Escrow Agent for the
purposes set forth herein. By your signature hereto, you acknowledge
and accept said appointment and designation and agree to be bound by
the terms of this agreement (the "Escrow Agreement"). The Company
understands that you, by accepting said appointment and designation, in
no way endorse the merits of the offering of the shares described
herein. The Company agrees to notify any person acting on its behalf
that your position as Escrow Agent does not constitute such an
endorsement, and to prohibit said persons from the use of your name as
an endorser of such offering. The Company further agrees to allow you
to review any sales literature in which your name appears and which is
used in connection with such offering.
(2) The Company shall deliver all payments received in purchase of the
shares (the "Subscription Funds") to you in the form in which they are
received by noon of the next business day after their receipt by the
Company, and the Company shall deliver to you within five calendar days
copies of written acceptances of the Company for shares in the Company
for which the Subscription Funds represent payment. Upon receipt of
such written acceptance by the Company, you shall deposit such funds
into the escrow account. The Company shall also deliver to you copies
of completed Subscription Agreements for each subscriber, along with
such subscriber's name, address, number of shares subscribed and social
security or taxpayer identification number.
A-1
<PAGE> 48
(3) Subscription Funds shall be held and disbursed by you in accordance
with the terms of this Agreement.
(4) In the event any Subscription Funds are dishonored for payment for any
reason, you agree to orally notify the Company immediately thereof and
to confirm same in writing and to return the dishonored Subscription
Funds to the Company in the form in which they were delivered to you.
(5) (a) As used herein, the term "Total Receipts" shall mean the sum
of all Subscription Funds delivered to you pursuant to
Paragraph 2 hereof, less all Subscription Funds returned
pursuant to Paragraph 4 hereof.
(b) As used herein, the term "Expiration Date" shall mean the date
which marks the 90th day after the date of the Prospectus;
provided, however, in the event that you are given oral
notification, followed in writing, by the Company that it has
elected to extend the offering for an additional period of 90
days after the initial period, then the Expiration Date shall
mean the date which marks the 180th day after the date of the
Prospectus; provided further, in the event that you are given
oral notification, followed in writing, by the Company that it
has elected to extend the offering for an additional period of
90 days after the first extension, then the Expiration Date
shall mean the date which marks the 270th day after the date
of the Prospectus; provided further, in the event that you are
given oral notification, followed in writing, by the Company
that it has elected to extend the offering for an additional
period of 90 days after the second extension, then the
Expiration Date shall mean the date which marks the 360th day
after the date of the Prospectus.
(6) (a) If Total Receipts equal $10,000,000 on or before the
Expiration Date, you shall, on the Closing Date, no later than
10:00 A.M., Eastern Daylight Time, upon receipt of 24-hour
written instructions from the Company, remit all amounts
representing Subscription Funds, plus any profits or earnings
thereon after deducting your fees, if any, held by you
pursuant hereto in accordance with such instructions.
(b) If (i) Total Receipts are less than $10,000,000 as of 5:00
P.M., Eastern Daylight Time on the Expiration Date, or (ii)
the offering is canceled by the Company at any time prior to
the Expiration Date, then you shall promptly remit to each
subscriber at the address set forth in his Subscription
Agreement an amount equal to the amount of his Subscription
Funds thereunder, adjusted for his allocated share of any net
profits earned on the investment of the Subscription Funds as
set forth in Paragraph 7, below. The Company hereby agrees to
provide to you in writing the specific allocations of net
profits attributable to each subscriber hereunder and the
names and addresses of each subscriber.
(7) Pending disposition of the Subscription Funds under this Agreement, you
are authorized, upon oral instructions, followed in writing, given by
Polly M. Rogers, to invest Subscription Funds in Federal Funds, in
short-term direct obligations of the United States government, in
short-term FDIC or FSLIC insured certificates of deposit, but in any
case with maturities of 90 days or less. For purposes of Paragraph 6
above, the specific allocations of net profits attributable to each
subscriber shall be determined by the Company as follows: each
subscriber's allocated share of earnings on the Subscription Funds,
after deducting your fees, if any, shall be that fraction (i) the
numerator of which is the dollar amount of such subscriber's accepted
subscription multiplied by the number of days between the date of
acceptance of the purchaser's subscription and the date of the
offering's
** Interest will be paid at the rate of daily Federal Funds less 75 basis points
A-2
<PAGE> 49
termination, inclusive (the subscriber's "Time Subscription Factor"),
and (ii) the denominator of which is the aggregate Time Subscription
Factors of all purchasers depositing Subscription Funds in the escrow
account.
(8) Your obligations as Escrow Agent hereunder shall terminate upon your
transferring all funds you hold hereunder pursuant to the terms of
Paragraphs (4) through (6) herein, as applicable.
(9) As used herein, "Closing Date" shall mean the third business day
following the date of receipt by you of Total Receipts aggregating
$10,000,000 and executed Subscription Agreements and copies of written
acceptances of the Company in connection therewith.
(10) You shall be protected in acting upon any written notice, request,
waiver, consent, certificate, receipt, authorization, or other paper or
document which you believe to be genuine and what it purports to be.
(11) You shall not be liable for anything which you may do or refrain from
doing in connection with this Escrow Agreement, except your own gross
negligence or willful misconduct.
(12) You may confer with legal counsel in the event of any dispute or
question as to the construction of any of the provisions hereof, or
your duties hereunder, and you shall incur no liability and you shall
be fully protected in acting in accordance with the opinions and
instructions of such counsel. Any and all expenses and legal fees in
this regard are payable from the Subscription Funds unless paid by the
Company.
(13) In the event of any disagreement between the Company and any other
person resulting in adverse claims and demands being made in connection
with any Subscription Funds involved herein or affected hereby, you
shall be entitled to refuse to comply with any such claims or demands
as long as such disagreement may continue, and in so refusing, shall
make no delivery or other disposition of any Subscription Funds then
held by you under this Agreement, and in so doing you shall be entitled
to continue to refrain from acting until (a) the right of adverse
claimants shall have been finally settled by binding arbitration or
finally adjudicated in a court assuming and having jurisdiction of the
Subscription Funds involved herein or affected hereby or (b) all
differences shall have been adjusted by agreement and you shall have
been notified in writing of such agreement signed by the parties
thereto. In the event of such disagreement, you may, but need not,
tender into the registry or custody of any court of competent
jurisdiction all money or property in your hands under the terms of
this Agreement, together with such legal proceedings as you deem
appropriate and thereupon to be discharged from all further duties
under this Escrow Agreement. The filing of any such legal proceeding
shall not deprive you of your compensation earned prior to such filing.
You shall have no obligation to take any legal action in connection
with this Agreement or towards its enforcement, or to appear in,
prosecute or defend any action or legal proceeding which would or might
involve you in any cost, expense, loss or liability unless
indemnification shall be furnished.
(14) You may resign for any reason, upon thirty days written notice to the
Company. Upon the expiration of such thirty day notice period, you may
deliver all Subscription Funds and copies of Subscription Agreements in
your possession under this Escrow Agreement to any successor Escrow
Agent appointed by the Company, or if no successor Escrow Agent has
been appointed, to any court of competent jurisdiction. Upon either
such delivery, you shall be released from any and all liability under
this Escrow Agreement. A termination under this paragraph shall in no
way change the terms of paragraphs 12 and 13 affecting reimbursement of
expenses, indemnity and fees. You shall have
A-3
<PAGE> 50
the right to deduct from the Subscription Funds transferred to any
successor Escrow Agent any outstanding and unpaid expenses or fees.
(15) You agree to charge your customary and normal fee for your services
hereunder. A copy of the current schedule is attached hereto. The fee
schedule may be modified from time to time. The acceptance fee and
expenses shall be paid in advance or at closing by the Company. Any
subsequent fees and expenses will be paid by the Company upon receipt
of invoice.
(16) All notices and communications hereunder shall be in writing and shall
be deemed to be duly given if sent by registered or certified mail,
return receipt requested, to the respective addresses set forth herein.
You shall not be charged with knowledge of any fact, including but not
limited to performance or non-performance of any condition, unless you
have actually received written notice thereof from the Company or its
authorized representative clearly referring to this Escrow Agreement.
(17) The rights created by this Escrow Agreement shall inure to the benefit
of, and the obligations created hereby shall be binding upon the
successors and assigns of you and the parties hereto. Notwithstanding
the foregoing, the Company may not assign its rights hereunder without
your prior written consent.
(18) This Escrow Agreement shall be construed and enforced according to the
laws of the State of Florida.
(19) This Escrow Agreement shall terminate and you shall be discharged of
all responsibility hereunder at such time as you shall have completed
your duties hereunder.
(20) This Escrow Agreement may be executed in several counterparts, which
taken together shall constitute a single document.
(21) This Escrow Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the transactions
described herein and supersedes all prior agreements or understandings,
written or oral, between the parties with respect thereto. Further,
this Escrow Agreement may only be amended by a written amendment signed
by the parties hereto.
(22) If any provision of this Escrow Agreement is declared by a court of
competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and
effect without being impaired or invalidated in any way.
(23) The Company shall provide you with its Employer Identification Number
as assigned by the Internal Revenue Service. Additionally, the Company
shall complete and return to you any and all tax forms or reports
required to be maintained or obtained by you. In the event that
Subscription Funds are returned to subscribers pursuant to paragraph 6
hereof, you shall, based upon the information available to you, file
with the Internal Revenue Service and send to each subscriber a Form
1099-INT with respect to contributions of interest to subscribers. All
interest or other income earned under this Escrow Agreement which is
payable to the Company pursuant to paragraph 6 hereof shall be
allocated and paid as directed by the Company and reported to the
Internal Revenue Service as having been so allocated and paid.
A-4
<PAGE> 51
(24) Your signature hereto is your consent that a signed copy hereof may be
filed with the various regulatory authorities of the State of Florida
and with any Federal Government agencies or regulatory authorities.
Please indicate your acceptance of this Agreement by executing a copy
of this letter and returning it to the undersigned.
Respectfully,
CITIZENS BANCSHARES OF
SOUTHWEST FLORIDA, INC.
By: /s/ Polly M. Rogers
-----------------------------------
Polly M. Rogers, President
Attest:
- -------------------------
(CORPORATE SEAL)
ACCEPTED AND AGREED:
First National Bank of Naples
By: /s/ Garrett Richter
-----------------------------------
Name: Garrett S. Richter
Title: President & CEO
A-5
<PAGE> 52
APPENDIX B
CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
SUBSCRIPTION AGREEMENT
To: Citizens Bancshares of Southwest Florida, Inc.
3411 Tamiami Trail North, Suite 200
Naples, Florida 34103
Gentlemen:
You have informed me that Citizens Bancshares of Southwest Florida,
Inc. (the "Company"), is offering up to 1,200,000 shares of its $.01 par value
Common Stock (the "Common Stock") at a price of $10.00 per share as described in
and offered pursuant to the Prospectus furnished to the undersigned herewith
(the "Prospectus"). In addition, you have informed me that the minimum
subscription is 500 shares.
i. SUBSCRIPTION. Subject to the terms and conditions
hereof, the undersigned hereby tenders this subscription, together with payment
in United States currency by check, bank draft or money order payable to "First
National Bank of Naples, Escrow Agent for Citizens Bancshares of Southwest
Florida, Inc." or any other consideration satisfactory to the Company (the
"Funds"), representing the payment of $10.00 per share for the number of shares
of the Common Stock indicated below.
ii. ACCEPTANCE OF SUBSCRIPTION. It is understood and
agreed that the Company shall have the right to accept or reject this
subscription in whole or in part, for any reason whatsoever. The Company shall
reject this subscription, if at all, in writing within ten business days after
receipt of this subscription. The Company may reduce the number of shares for
which the undersigned has subscribed, indicating acceptance of less than all of
the shares subscribed on its written form of acceptance.
iii. ACKNOWLEDGMENTS. The undersigned hereby acknowledges
that he or she has received a copy of the Prospectus and agrees to be bound by
the terms of this Agreement and the Escrow Agreement.
iv. REVOCATION. The undersigned agrees that once this
Subscription Agreement is accepted by the Company, it may not be withdrawn by
him or her. Therefore, until the earlier of the expiration of five business days
after receipt by the Company of this Subscription Agreement or acceptance of
this Subscription Agreement by the Company, the undersigned may withdraw this
subscription and receive a full refund of the subscription price. The
undersigned agrees that, except as provided in this Section 4, he or she shall
not cancel, terminate or revoke this Subscription Agreement or any agreement of
the undersigned made hereunder and that this Subscription Agreement shall
survive the death or disability of the undersigned.
By executing this Subscription Agreement, the subscriber is not waiving any
rights he or she may have under federal securities laws, including the
Securities Act of 1933 and the Securities Exchange Act of 1934.
B-1
<PAGE> 53
Please fill in the information requested below, make your check payable
to "First National Bank of Naples, Escrow Agent for Citizens Bancshares of
Southwest Florida, Inc." and mail the Subscription Agreement, the Stock
Certificate Registration Instructions and your check to the attention of Polly
M. Rogers, President, Citizens Bancshares of Southwest Florida, Inc., 3411
Tamiami Trail North, Suite 200, Naples, Florida 34103.
- ------------------------ --------------------------------------
No. of Shares Subscribed (Signature of Subscriber)
$
----------------------- --------------------------------------
Funds Tendered ($10.00 Name (Please Print or Type)
per share subscribed)
Date:
----------------------------------
Phone Number:
(Home)
---------------------------------
(Office)
-------------------------------
Residence Address:
---------------------------------------
---------------------------------------
---------------------------------------
City, State and Zip Code
---------------------------------------
Social Security Number or other
Taxpayer Identification Number
B-2
<PAGE> 54
STOCK CERTIFICATE REGISTRATION INSTRUCTIONS
Name _________________________________________
Additional Name if Tenant in Common or Joint Tenant ____________________________
Mailing Address: _________________________________________
_________________________________________
_________________________________________
Social Security Number or other Taxpayer Identification Number ________________
Number of Shares to be registered in above name(s): _____________
Legal form of ownership:
<TABLE>
<S> <C>
___ Individual ___ Joint Tenants with Rights of Survivorship
___ Tenants in Common ___ Uniform Gift to Minors
___ Other _____________________
</TABLE>
INFORMATION AS TO BANKING INTERESTS
1. As a prospective shareholder I would be interested in the following
services checked below:
<TABLE>
<CAPTION>
PERSONAL BUSINESS
<S> <C> <C> <C>
(a) Checking Account ___ ___
(b) Savings Account ___ ___
(c) Certificates of Deposit ___ ___
(d) Individual Retirement Accounts ___ ___
(e) Checking Account Overdraft Protection ___ ___
(f) Consumer Loans (Auto, etc.) ___ ___
(g) Commercial Loans ___ ___
(h) Equity Line of Credit ___ ___
(i) Mortgage Loans ___ ___
(j) Revolving Personal Credit Line ___ ___
(k) Safe Deposit Box ___ ___
(l) Automatic Teller Machines (ATM's) ___ ___
</TABLE>
2. I would like our new bank to provide the following additional services:
(a)
(b)
B-3
<PAGE> 55
FORM OF ACCEPTANCE
Citizens Bancshares of Southwest Florida, Inc.
3411 Tamiami Trail North, Suite 200
Naples, Florida 34103
[Date]
To: [Subscriber]
Dear Subscriber:
Citizens Bancshares of Southwest Florida, Inc. (the "Company")
acknowledges receipt of your subscription for _____ shares of its $.01 par value
common stock and your check for $__________.
The Company hereby accepts your subscription for the purchase of _____
shares of its common stock, at $10.00 per share, for an aggregate of
$__________, effective as of the date of this letter.
Your stock certificate(s) representing shares of common stock duly
authorized and fully paid will be issued to you as soon as practicable after all
subscription funds are released to the Company from the subscription escrow
account, all as described in the Subscription Agreement executed by you and in
the prospectus furnished to you. In the event that (i) the offering is canceled,
or (ii) the minimum number of subscriptions (1,000,000 shares) is not obtained,
or (iii) the Company shall not have received approval from the Federal Reserve
Board to become a bank holding company, or (iv) Citizens National Bank of
Southwest Florida shall not have received approval for deposit insurance from
the Federal Deposit Insurance Corporation, your subscription funds will be
returned to you, adjusted for net profits from the investment of such funds, if
any, as described in the prospectus.
If this acceptance is for a lesser number of shares than that number
subscribed by you as indicated in your Subscription Agreement, your payment for
shares of common stock in excess of the number of shares accepted hereby will be
refunded to you by mail, without interest, within ten days of the date hereof.
Respectfully,
CITIZENS BANCSHARES OF
SOUTHWEST FLORIDA, INC.
By:
-----------------------------------
Polly M. Rogers, President
B-4
<PAGE> 56
================================================================================
THE ONLY INFORMATION AUTHORIZED BY CITIZENS BANCSHARES REGARDING THIS OFFERING
IS CONTAINED IN THIS PROSPECTUS. ANY OTHER STATEMENTS OR REPRESENTATIONS MADE TO
YOU BY A DEALER, SALESMAN, ORGANIZER OF CITIZENS BANCSHARES, OR ANY OTHER
INDIVIDUAL MUST NOT BE RELIED UPON AS BEING AUTHORIZED BY CITIZENS BANCSHARES.
THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF _____________, 1999.
THIS PROSPECTUS IS NOT AN OFFER TO SELL, NOR IS IT
SEEKING AN OFFER TO BUY SECURITIES OF CITIZENS
BANCSHARES IN ANY JURISDICTION WHERE THE OFFER
OR SALES ARE NOT PERMITTED.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................................................................................................1
Risk Factors......................................................................................................3
The Company.......................................................................................................7
Terms of the Offering.............................................................................................7
Use of Proceeds..................................................................................................11
Dividend Policy..................................................................................................13
Management's Discussion and Analysis
of Financial Condition and
Results of Operations.........................................................................................13
Business of Citizens Bancshares..................................................................................14
Business of Citizens Bank........................................................................................14
Supervision and Regulation.......................................................................................21
Management.......................................................................................................25
Security Ownership of Certain Beneficial
Owners and Management.........................................................................................30
Certain Transactions.............................................................................................31
Description of Capital Stock.....................................................................................31
Limitations on Liability and Indemnification
of Officers and Directors.....................................................................................33
Legal Proceedings................................................................................................34
Legal Matters....................................................................................................34
Experts..........................................................................................................34
Additional Information...........................................................................................35
Index to Financial Statements...................................................................................F-1
Appendix A - Escrow Agreement
Appendix B - Subscription Materials
</TABLE>
---------------------------
UNTIL AUGUST __ (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS THAT
EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE
DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS,
1,200,000 SHARES
CITIZENS
BANCSHARES OF
SOUTHWEST
FLORIDA, INC.
A Bank Holding Company for
CITIZENS NATIONAL BANK OF
SOUTHWEST FLORIDA
A Proposed National Bank
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
_______________, 1999
================================================================================
<PAGE> 57
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850(1) of the Florida Business Corporation Act ("FBCA")
permits a Florida corporation to indemnify any person who may be a party to any
third party proceeding by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, against liability
incurred in connection with such proceeding (including any appeal thereof) if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
Section 607.0850(2) of the FBCA permits a Florida corporation to
indemnify any person who may be a party to a derivative action if such person
acted in any of the capacities set forth in the preceding paragraph, against
expenses and amounts paid in settlement not exceeding, in the judgement of the
board of directors, the estimated expenses of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding (including appeals), provided that the person
acted under the standards set forth in he preceding paragraph. However, no
indemnification shall be made for any claim, issue or matter for which such
person is found to be liable unless, and only to the extent that, the court.
determines that, despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses which the court deems proper.
Section 607.0850(4) of the FCBA provides that any indemnification made
under the above provisions, unless pursuant to a court determination, may be
made only after a determination that the person to be indemnified has met the
standard of conduct described above. This determination is to be made by a
majority vote of a quorum consisting of the disinterested directors of the board
of directors, by duly selected independent legal counsel, or by a majority vote
of the disinterested shareholders. The board of directors also may designate a
special committee of disinterested directors to make this determination.
Section 607.0850(3), however, provides that a Florida corporation must
indemnify any director, or officer, employee or agent of a corporation who has
been successful in the defense of any proceeding referred to in Section
607.0850(1) or (2), or in the defense of any claim, issue or matter therein,
against expenses actually and reasonably incurred by him in connection
therewith.
Expenses incurred by a director or officer in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition thereof upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it is ultimately determined that
such director or officer is not entitled to indemnification under Section
607.0850. Expenses incurred by other employees or agents in such a proceeding
may be paid in advance of final disposition thereof upon such terms or
conditions that the board of directors deems appropriate.
The FBCA further provides that the indemnification and advancement of
payment provisions contained therein are not exclusive and it specifically
empowers a corporation to make any other further indemnification or advancement
of expenses under any bylaw, Agreement, vote of shareholders or disinterested
actions taken in other capacities while holding an office. However, a
corporation cannot indemnify or advance expenses if a judgment or other final
adjudication establishes that the actions of the director or officer were
material to the adjudicated cause of action and the director or officer (a)
violated criminal law, unless the director or officer had reasonable cause to
believe his conduct was unlawful, (b) derived an improper personal benefit from
a transaction, (c) was or is a director in a circumstance where the liability
under Section 607.0834 (relating to unlawful distributions) applies, or (d)
engages in willful misconduct or conscious disregard for the best interests of
the corporation in a proceeding by or in right of the corporation to procure a
judgment in its favor or in a proceeding by or in right of a shareholder.
II-1
<PAGE> 58
Article XI of the Company's Articles of Incorporation provides that the
Company shall indemnify any director or officer or any former director or
officer against any liability arising from any action or suit to the full extent
permitted by Florida law as referenced above.
Article VI of the Company's By-Laws provides that the Company shall
indemnify a director, officer, employee or agent who has been successful on the
merits or otherwise in the defense of any action, suit or proceeding to which he
was a party or in defense of any claim, issue or matter therein because he is or
was a director, officer, employee or agent of the Company, against reasonable
expenses incurred by him in connection with such defense.
The Company's By-Laws also provide that the Company is required to
indemnify any director, officer, employee or agent made a party to a proceeding
because he is or was a director, employee or agent against liability incurred in
the proceeding if he acted in a manner he believed in good faith or to be in or
not opposed to the best interests of the Company and, in the case of any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. Determination concerning whether or not the applicable standard of
conduct has been met can be made by (a) a disinterested majority of the board of
directors, (b) a majority of a committee of disinterested directors, (c)
independent legal counsel, or (d) an affirmative vote of a majority of shares
held by disinterested shareholders. No indemnification may be made to or on
behalf of a director, officer, employee or agent (i) in connection with a
proceeding by or in the right of the Company in which such person was adjudged
liable to the Company unless the court in which the action, suit or proceeding
was brought, upon application, determines indemnification is fair and
reasonable.
The Company may, if authorized by its shareholders by a majority of
votes which would be entitled to be cast in a vote to amend the Company's
Articles of Incorporation, indemnify or obligate itself to indemnify a director,
officer, employee or agent made a party to a proceeding, including a proceeding
brought by or in the right of the Company.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses expected to be incurred in
connection with the issuance and distribution of the securities being
registered, other than the underwriting discounts and commissions. All of the
amounts shown are estimated except for the registration fees of the Securities
and Exchange Commission.
<TABLE>
<S> <C>
Registration fees, including state securities
registrations fees and expenses.................................... $ 5,000
Legal fees and expenses................................................ 18,000
Accounting fees and expenses........................................... 15,000
Printing and engraving expenses........................................ 6,000
Advertising............................................................ 3,500
Mailing and distribution............................................... 5,000
Miscellaneous.......................................................... 4,000
---------
Total expenses ................................................... $ 56,500
=========
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
On February 22, 1999, the Company issued 2,000 shares, at $10.00 per
share, to each of the following organizers: Joe B. Cox, Earl L. Frye, Stanley W.
Hole, John B. James, LaVonne Johnson, Luc C. Mazzini, Polly M. Rogers, Bernard
L. Turner and Lorenzo Walker. These shares were issued without registration
under the Securities Act of 1933, as amended (the "Securities Act") in reliance
on the exemption from registration provided by Section 4(2) of the Securities
Act.
II-2
<PAGE> 59
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed as part of this Registration
Statement:
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
3.1 Amended and Restated Articles of Incorporation
of Citizens Bancshares.
3.2 Bylaws of Citizens Bancshares.
4.1* Specimen Common Stock Certificate.
4.2 Escrow Agreement dated February 5, 1999 between Citizens Bancshares
of Southwest Florida, Inc. and First National Bank of Naples.
5.1 Opinion of Smith, Gambrell & Russell, LLP.
10.1 Employment Agreement dated as of March 18,
1999 by and between Citizens Bancshares of
Southwest Florida, Inc. and Michael L.
McMullan.
10.2 Form of contract for sale and purchase of land dated August 12, 1998.
23.1 Consent of Hill, Barth & King, Inc.
23.2 Consent of Smith, Gambrell & Russell, LLP (contained in their opinion
filed as Exhibit 5.1 hereto)
24.1 Power of Attorney (included in signature page to this Registration
Statement).
27.1 Financial Data Schedule (for SEC use only).
</TABLE>
--------------------------
* To be filed by amendment.
ITEM 28. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or
sells securities, a post-effective amendment to this
Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information in the registration
statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered
(if the total dollar volume of securities offered
would not exceed that which was registered) and any
deviation from the low or high end of the estimated
maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, changes in the
volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the
effective registration statement.
II-3
<PAGE> 60
(iii)Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration of the
securities offered, and the offering of the securities at
the time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at
the end of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the 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 the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-4
<PAGE> 61
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of Naples,
State of Florida on March 24, 1999.
CITIZENS BANCSHARES OF SOUTHWEST
FLORIDA, INC.
Date: March 24, 1999 By: /s/ Michael L. McMullan
------------------------------------
Michael L. McMullan
Chief Executive Officer
(Principal Executive Officer)
Date: March 24, 1999 By: /s/ Polly M. Rogers
------------------------------------
Polly M. Rogers
President
(Principal Financial and Accounting
Officer)
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael L. McMullan and Polly M. Rogers,
and each of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for him or her, in his or her
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 the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents 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 or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents 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 was signed by the following persons in the capacities and
on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael L. McMullan Chief Executive Officer, March 24, 1999
- --------------------------------- Director
Michael L. McMullan
/s/ Polly M. Rogers President, Director March 24, 1999
- ---------------------------------
Polly M. Rogers
/s/ Joe B. Cox Director March 24, 1999
- ---------------------------------
Joe B. Cox
/s/ Earl L. Frye Director March 24, 1999
- ---------------------------------
Earl L. Frye
/s/ Polly M. Rogers Director March 24, 1999
- ---------------------------------
Stanley W. Hole
/s/ John B. James Director March 24, 1999
- ---------------------------------
John B. James
</TABLE>
<PAGE> 62
<TABLE>
<S> <C> <C>
/s/ LaVonne Johnson Director March 24, 1999
- ---------------------------------
LaVonne Johnson
/s/ Luc C. Mazzini Director March 24, 1999
- ---------------------------------
Luc C. Mazzini
/s/ Bernard L. Turner Director March 24, 1999
- ---------------------------------
Bernard L. Turner
/s/ Lorenzo Walker Director March 24, 1999
- ---------------------------------
Lorenzo Walker
</TABLE>
<PAGE> 63
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
3.1 Amended and Restated Articles of Incorporation
of Citizens Bancshares.
3.2 Bylaws of Citizens Bancshares.
4.1* Specimen Common Stock Certificate.
4.2 Escrow Agreement dated February 5, 1999 between Citizens Bancshares
of Southwest Florida, Inc. and First National Bank of Naples.
5.1 Opinion of Smith, Gambrell & Russell, LLP.
10.1 Employment Agreement dated as of March 18,
1999 by and between Citizens Bancshares of
Southwest Florida, Inc. and Michael L.
McMullan.
10.2 Form of contract for sale and purchase of land dated August 12, 1998.
23.1 Consent of Hill, Barth & King, Inc.
23.2 Consent of Smith, Gambrell & Russell, LLP (contained in their opinion
filed as Exhibit 5.1 hereto)
24.1 Power of Attorney (included in signature page to this Registration
Statement).
27.1 Financial Data Schedule (for SEC use only).
</TABLE>
- -----------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
Pursuant to Sections 607.1003, 607.0821 and 607.0704 of the Florida
Business Corporation Act, these Amended and Restated Articles of Incorporation
were recommended by the Board of Directors of Citizens Bancshares of Southwest
Florida, Inc. (the "Corporation"), and approved by shareholders of the
Corporation, on January , 1999.
I.
The corporate name that satisfies the requirements of 607.0401 is
Citizens Bancshares of Southwest Florida, Inc.
II.
The Corporation is organized for the following purpose or purposes:
To act as a bank holding company and, to the extent permitted under
applicable federal and state laws, now or hereafter existing, to engage in such
business as related to banks and to bank holding companies and their activities;
To acquire, own, hold, sell, exchange, assign, transfer, create
security interests in, pledge or otherwise dispose of shares, voting trust
certificates, depository receipts for shares, capital stock, bonds, notes,
debentures or other evidence of indebtedness, options, warrants, or other
securities issued by any other business of any lawful character, including, but
not limited to, banks and other businesses providing goods or services related
to banking;
To acquire and hold other investment assets and to engage in any lawful
activities related thereto;
To acquire, own interest in, and otherwise participate in and exercise
ownership rights in joint ventures, partnerships, limited partnerships, trusts,
corporations, unincorporated associations and other entities for the furtherance
of all corporate activities; to borrow and to lend money and to buy, sell,
guarantee and otherwise deal in the obligations of others and conduct financing,
brokerage, and discount and factoring businesses in connection with the
foregoing or otherwise;
In general, to carry on any other lawful business whatsoever, and to
have, enjoy and exercise all the rights, powers and privileges which are now or
which may hereafter be conferred upon corporations organized under the Florida
Business Corporation Act.
<PAGE> 2
III.
The corporation shall have authority to issue 21,000,000 shares of
capital stock, which shall be divided into classes and shall have the following
designations, preferences, limitations and relative rights:
A. Common Stock. One class shall consist of 20,000,000 shares of
common stock of $.01 par value, designated "Common Stock." The
holders of Common Stock shall be entitled to elect all of the
members of the Board of Directors of the Corporation, and such
holders shall be entitled to vote as a class on all matters
required or permitted to be submitted to the shareholders of
the Corporation.
B. Preferred Stock. One class shall consist of 1,000,000 shares
of preferred stock of $.01 par value, designated "Preferred
Stock." The Board of Directors of the Corporation shall be
empowered to divide any and all shares of the Preferred Stock
into series and to fix and determine the relative rights and
preferences of the shares of any series so established in
accordance with Section 607.0602 of the Florida Business
Corporation Act, including (i) the distinctive designation of
such series and the number of shares which shall constitute
such series; (ii) the annual rate of dividends payable on
shares of such series, whether dividends shall be cumulative
and conditions upon which and the date when such dividends
shall be accumulated on all shares of such series issued prior
to the record date for the first dividend of such series;
(iii) the time or times when and the price or prices at which
shares of such series shall be redeemable at the option of the
holder or of the Corporation and the sinking fund provisions,
if any, for the purchase or redemption of such shares; (iv)
the amount payable on shares of such series in the event of
any liquidation, dissolution or winding up of the affairs of
the Corporation, whether all or a portion is paid before any
amount is paid on the Common Stock; (v) the rights, if any, of
the holders of shares of such series to convert such shares
into, or exchange such shares for, shares of Common Stock or
shares of any other series of Preferred Stock and the terms
and conditions of such conversion or exchange; and (vi)
whether the shares of such series have voting rights and the
extent of such voting rights, if any.
The Board of Directors shall have the power to reclassify any unissued
shares of any series of Preferred Stock from time to time by setting or changing
the preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption, including but not limited to, but subject to the limitations
described in, the above provisions.
Any action by the Board of Directors in authorizing the issuance of
Preferred Stock and fixing and determining the provisions thereof is hereby
ratified and approved.
-2-
<PAGE> 3
IV.
The street address of the registered office of the Corporation is 3001
Tamiami Trail North, 4th Floor, Naples, Florida 34101, and the name of its
initial registered agent at such address is Polly M. Rogers.
V.
The street address and mailing address of the initial principal office
of the Corporation is 3001 Tamiami Trail North, 4th Floor, Naples, Florida
34101.
VI.
A. The number of directors of the Corporation shall be fixed from time
to time by resolution of the Board of Directors; provided, however that the
number of directors fixed by the Board of Directors shall not be less than two
or more than twenty-five.
B. Concurrent with the adoption of these Articles of Incorporation, the
Board of Directors, other than those who may be elected by the holders of
preferred stock or any class or series of stock having a preference over the
common stock as to dividends or upon liquidation or any resolution or
resolutions providing for the issue of such class or series of stock adopted by
the Board, shall be classified, with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
possible: (i) one class ("Class I") of directors to be originally elected for a
term expiring at the annual meeting of shareholders to be held in 1999, (ii)
another class of directors ("Class II") to be originally elected for a term
expiring at the annual meeting of shareholders to be held in 2000, and (iii)
another class of directors ("Class III") to be originally elected for a term
expiring at the annual meeting of shareholders to be held in 2001, with each
member of each class to hold office until his successor is elected and
qualified. At each annual meeting of the shareholders of the Corporation the
date of which shall be fixed by or pursuant to the By-Laws of the Corporation,
the successors of the class of directors whose terms expire at that meeting
shall be elected to hold office for a term expiring at the annual meeting of
shareholders held in the third year following the year of their election.
C. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, if any vacancy shall occur in the membership of the
Board by reason of newly created directorships or resulting from the
resignation, disqualification, retirement or death of a director, the remaining
directors shall continue to act, and such vacancies may be filled by the
affirmative vote of the majority of the directors then in office, although less
than a quorum of the Board, and if not therefore filled by action of the
directors, may be filled by the shareholders at any meeting held during the
existence of such vacancy. If any vacancy shall occur among the directors by
reason of the removal from office of a director, such vacancy shall be filled by
the vote of three-fourths (3/4) of the outstanding shares of each class of stock
entitled to vote in elections of directors. A director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in office. No
decrease in the number of directors constituting the Board shall shorten the
term of any incumbent director. Any increase or decrease in the number of
directors shall be so apportioned among the classes of directors as to make all
classes as nearly equal in number as possible.
-3-
<PAGE> 4
D. Notwithstanding the foregoing provisions of this Article VI, any
director whose term of office has expired shall continue to hold office until
his successor shall be elected and qualified.
E. Notwithstanding any other provisions of these Articles of
Incorporation or the ByLaws of the Corporation (and notwithstanding the fact
that some lesser percentage may be specified by law, these Articles of
Incorporation or the By-Laws of the Corporation), the affirmative vote of the
holders of at least three-fourths (3/4) of the total number of votes entitled to
be cast by the holders of all of the shares of capital stock of the Corporation
then entitled to vote generally in the election of directors shall be required
to amend, alter, change or repeal, or to adopt any provision as part of these
Articles of Incorporation inconsistent with, this Article VI. The holder of each
share of capital stock entitled to vote thereon shall be entitled to cast the
same number of votes as the holder of such shares is entitled to cast generally
in the election of each director.
VII.
The Corporation expressly elects not to be governed by Section 607.0901
of the Florida Business Corporation Act, relating to affiliated transactions.
VIII.
In addition to any approval of the Board of Directors or any
shareholder vote or consent required by the laws of the State of Florida or any
other provision of these Articles of Incorporation or otherwise, the affirmative
vote or consent of the holders of not less than two-thirds (2/3) of the shares
of each class of stock of the Corporation entitled to vote in elections of
directors shall be required to authorize, adopt or approve a Covered
Transaction; however, the provisions of this Article VIII shall not apply to any
Covered Transaction referred to in this Article VIII with any Interested Person
if the Covered Transaction is approved by three-fourths (3/4) of the entire
membership of the Board of Directors of the Corporation, in which event the
affirmative vote of not less than a majority of the holders of each class of
stock of the Corporation entitled to vote in elections of directors shall be
required.
For the purpose of this Article VIII:
1. "Affiliate" and "associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as
amended, as in effect on the date hereof.
2. A person shall be the "beneficial owner" and "beneficially
owns" shares of stock of the Corporation (other than shares of
the Corporation's stock held in its treasury) (a) which such
person and its affiliates and associates beneficially own,
directly or indirectly, whether of record or not, (b) which
such person or any of its affiliates or associates has the
right to acquire, pursuant to any agreement upon the exercise
of conversion rights, warrants
-4-
<PAGE> 5
or options, or otherwise, (c) which such person or any of its
affiliates or associates has the right to sell or vote
pursuant to any agreement, or (d) which are beneficially
owned, directly or indirectly, by any other person with which
such first mentioned person or any of its affiliates or
associates has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of
securities of the Corporation.
3. "Covered Transaction" is:
(a) any merger or consolidation of the Corporation or any
subsidiary of the Corporation with or into any
Interested Person (regardless of the identity of the
surviving corporation);
(b) any sale, lease or other disposition of all or any
substantial part (assets having an aggregate fair
market value of twenty-five percent (25%) of the
total assets of the Corporation) of the assets of the
Corporation or any subsidiary of the Corporation to
any Interested Person for cash, real or personal
property, including securities, or any combination
thereof;
(c) any issuance or delivery of securities of the
Corporation or a subsidiary of the Corporation (which
the beneficial owner shall have the right to vote, or
to vote upon exercise, conversion or by contract) to
an Interested Person in consideration for or in
exchange of any securities or other property
(including cash); or
(d) the liquidation of the Corporation.
4. "Interested Person" is any person which, as of the record date
for the determination of shareholders entitled to notice of
any Covered Transaction and to vote thereon or consent
thereto, or as of the date of any such vote or consent, or
immediately prior to the consummation of any Covered
Transaction, beneficially owns, directly or indirectly, five
percent (5%) or more of the shares of stock of the Corporation
entitled to vote in elections of directors.
5. "Person" is any individual, partnership, corporation or other
entity.
6. "Subsidiary of the Corporation" is any corporation of which
fifty percent (50%) or more of any class of stock is
beneficially owned, directly or indirectly, by the
Corporation.
-5-
<PAGE> 6
No amendment to these Articles of Incorporation shall amend, alter, change
or repeal any of the provisions of this Article VIII, unless such amendment, in
addition to receiving any shareholder vote or consent required by the laws of
the State of Florida in effect at the time, shall receive the affirmative vote
or consent of the holders of three-fourths (3/4) of the outstanding shares of
each class of stock of the Corporation entitled to vote in elections of
directors.
IX.
A. In addition to any approval of the Board of Directors or any
shareholder vote or consent required by the laws of the State
of Florida or any other provision of these Articles of
Incorporation or otherwise, there shall be required for the
approval, adoption or authorization of a Business Combination
with an Interested Person the affirmative vote or consent of
the holders of a majority of the shares of each class of stock
of the Corporation entitled to vote in elections of directors
considered separately for the purposes of this Article IX,
which are not beneficially owned, directly or indirectly, by
such Interested Person; provided, however, that said majority
voting requirements shall not be applicable if all of the
conditions specified in subparagraphs (1), (2) and (3) below
are met:
1. The consideration to be received per share for each
class of stock in such Business Combination by
holders of the stock of the Corporation is payable in
cash or Acceptable Securities, or a combination of
both, and such consideration has a fair market value
per share with respect to each class of the
Corporation's stock of not less than either:
(a) the highest price (including the highest per
share brokerage commissions, transfer tax
and soliciting dealers fees) paid by said
Interested Person in acquiring any of the
Corporation's stock of that class; or
(b) a price per share obtained by multiplying
the aggregate earnings per share of stock of
the Corporation (appropriately adjusted for
any subdivision of shares, stock dividend or
combination of shares during the period) for
the four full consecutive fiscal quarters
immediately preceding the record date for
solicitation of votes or consents on such
Business Combination by the figure obtained
by dividing the highest per share price
(including the highest per share brokerage
commissions, transfer tax and soliciting
dealers fees) paid by such Interested Person
in acquiring any of the Corporation's stock
by the aggregate
-6-
<PAGE> 7
earnings per share of the Corporation for
the four full consecutive fiscal quarters
immediately preceding the time when the
Interested Person shall have become the
beneficial owner of five percent (5%) or
more of the outstanding stock of the
Corporation entitled to vote in elections of
directors.
If any securities were issued by an Interested Person in exchange for
stock of the Corporation prior to the proposed Business Combination, the fair
market value of said securities at the time of issue shall be used in
determining the per share price paid for said stock.
2. After the Interested Person has become the beneficial owner of
five percent (5%) or more of the stock of the Corporation
entitled to vote in the election of directors and prior to the
consummation of such Business Combination, there shall have
been no reduction in the rate of dividends payable on the
Corporation's stock which would result in a quarterly dividend
rate per share which is less than the average quarterly
dividend rate per share for the four full consecutive fiscal
quarters immediately preceding the time when the Interested
Person shall have become the beneficial owner of said five
percent (5%) or more of the stock of the Corporation, unless
such reduction in the rate of dividends has been approved by
three-fourths (3/4) of the entire membership of the Board of
Directors of the Corporation. For the purposes of this
paragraph, "quarterly dividend rate per share" for any
quarterly dividend shall be equal to the percentage said
quarterly dividend per share bears to the earnings per share
for the four full fiscal quarters immediately preceding the
declaration of said quarterly dividend.
3. The consideration to be received by shareholders who are not
Interested Persons shall be in cash or in the same form as the
Interested Person has previously paid for shares of such class
of stock; if the Interested Person has paid for shares of any
class of any stock with varying forms of consideration, the
form of consideration for such class of stock shall be either
cash or the form used to acquire the largest number of shares
of such class of stock previously acquired by it.
-7-
<PAGE> 8
B. For the purposes of this Article IX:
1. "Acceptable Securities" shall mean (a) securities of the same
class or series, with the same rights, powers and benefits and
of the same denomination, term and interest, or dividend, if
any, as the securities issued and delivered by the Interested
Person in exchange for the majority of the stock of the
corporation acquired by the Interested Person, or (b) the
class of common stock of the Interested Person which is
beneficially owned by most persons.
2. "Affiliate" and "associate" shall have the respective meanings
given those terms in Rule l2b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as
amended, as in effect on the date hereof.
3. A person shall be the "beneficial owner" and "beneficially
own" shares of stock of the Corporation (other than shares of
the Corporation's stock held in its treasury) (a) which such
person and its affiliates or associates beneficially own,
directly or indirectly, whether of record or not, (b) which
such person or any of its affiliates or associates has the
right to acquire, pursuant to any agreement upon the exercise
of conversion rights, warrants, or options, or otherwise, (c)
which such person or any of its affiliates or associates has
the right to sell or vote pursuant to any agreement, or (d)
which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of
its affiliates or associates has any agreement, arrangement or
understanding for the purposes of acquiring, holding, voting
or disposing of securities of the Corporation.
4. "Business Combination" is:
a. any merger or consolidation of the Corporation or any
subsidiary of the Corporation with or into any
Interested Person (regardless of the identity of the
surviving corporation);
b. any sale, lease or other disposition of all or any
substantial part (assets having a fair market value
of twenty-five percent (25%) of the total assets of
the Corporation) of the assets of the Corporation or
any subsidiary of the Corporation to any Interested
Person for cash, real or personal property, including
securities, or any combination thereof; or
c. any issuance or delivery of securities of the
Corporation or a subsidiary of the Corporation (which
the beneficial owner shall have the right to vote, or
to vote upon exercise, conversion or by contract) to
an Interested Person in consideration of or in
exchange for any securities or other property
(including cash).
-8-
<PAGE> 9
5. "Interested Person" is any person which, as of the record date
for the determination of shareholders entitled to notice of
any Business Combination and to vote thereon or consent
thereto, or as of the date of any such vote or consent,
immediately prior to the consummation of any Business
Combination, beneficially owns, directly or indirectly, five
percent (5%) or more of the shares of stock of the Corporation
entitled to vote in elections of directors.
6. "Person" is an individual, partnership, corporation or other
entity.
7. "Subsidiary of the Corporation" is any corporation of which
fifty percent (50%) or more of any class of stock is
beneficially owned, directly or indirectly, by the
Corporation.
C. No amendment to these Articles of Incorporation shall amend, alter,
change or repeal any of the provisions of this Article IX, unless such
amendment, in addition to receiving any shareholder vote or consent
required by the laws of the State of Florida in effect at the time,
shall receive the affirmative vote or consent of the holders of
three-fourths (3/4) of the outstanding shares of each class of stock of
the Corporation entitled to vote in elections of directors.
X.
A. The Board of Directors of the Corporation, when evaluating any offer of
another individual, firm, corporation or other entity ("Person") (a) to
make a tender or exchange offer for any equity security of the
Corporation, (b) to merge or consolidate the Corporation with such
other Person, or (c) to purchase or otherwise acquire all or
substantially all of the properties and assets of the Corporation (such
offers individually referred to as an "Acquisition Proposal"), shall,
in connection with the exercise of its business judgment in determining
what is in the best interest of the Corporation and its Shareholders,
give due consideration to all relevant factors, including without
limitation, the consideration being offered in the Acquisition Proposal
in relation to the then-current market price of the Corporation's
stock, but also in relation to the then-current value of the
Corporation in a freely negotiated transaction and in relation to the
Board of Directors' then-estimate of the future value of the
Corporation as an independent entity, the social and economic effects
on the employees, customers, suppliers, and other constituents of the
Corporation and on the communities in which the Corporation operates or
is located and the desirability of maintaining independence from any
other business or business entity; provided, however, that this Article
shall be deemed solely to grant discretionary authority to the
directors and shall not be deemed to provide any constituency any right
to be considered.
-9-
<PAGE> 10
B. No amendment to these Articles of Incorporation shall amend, alter,
change or repeal any of the provisions of this Article X, unless such
amendment, in addition to receiving any shareholder vote or consent
required by the laws of the State of Florida in effect at the time,
shall receive the affirmative vote or consent of the holders of
three-fourths (3/4) of the outstanding shares of each class of stock of
the Corporation entitled to vote in elections of directors.
XI.
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for breach of duty of care
or other duty as a director if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; provided, however, that to
the extent required by applicable law, this Article shall not eliminate or limit
the liability of a director (i) for a violation of the criminal law, unless the
director had reasonable cause to believe his conduct was lawful or had no
reasonable cause to believe his conduct was unlawful, (ii) for any transaction
from which the director derived an improper personal benefit, (iii) for unlawful
distributions to shareholders of the Corporation in violation of Section
607.06401 of the Florida Business Corporation Act, or (iv) for willful
misconduct or a conscious disregard for the best interests of the Corporation in
a proceeding by or in the right of the Corporation to procure judgment in its
favor or in a proceeding by or in the right of a shareholder. If applicable law
is amended to authorize corporate action further eliminating or limiting the
liability of directors, then the liability of each director of the Corporation
shall be eliminated or limited to the fullest extent permitted by applicable
law, as amended. Neither the amendment or repeal of this Article, nor the
adoption of any provision of these Articles of Incorporation inconsistent with
this Article, shall eliminate or reduce the effect of this Article in respect of
any acts or omissions occurring prior to such amendment, repeal or adoption of
an inconsistent provision.
XII.
Except as otherwise specifically provided herein, these Articles of
Incorporation may be amended, altered, changed or repealed only by the
affirmative vote or consent of the holders of at least one-half (1/2) of the
shares of each class of stock of the Corporation entitled to vote in elections
of directors.
-10-
<PAGE> 1
EXHIBIT 3.2
BY-LAWS
OF
CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
<PAGE> 2
BY-LAWS
OF
CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I.
DEFINITIONS ..............................................................................................1
ARTICLE II.
GENERAL PROVISIONS REGARDING NOTICES......................................................................1
Section 1. NOTICES.......................................................................................1
Section 2. WAIVER OF NOTICE..............................................................................2
ARTICLE III.
SHAREHOLDERS' MEETINGS....................................................................................3
Section 1. PLACE OF MEETING..............................................................................3
Section 2. ANNUAL MEETING................................................................................3
Section 3. SPECIAL MEETINGS..............................................................................3
Section 4. NOTICE TO SHAREHOLDERS........................................................................4
Section 5. FIXING OF RECORD DATE.........................................................................4
Section 6. QUORUM AND VOTING REQUIREMENTS................................................................5
Section 7. PROXIES.......................................................................................6
Section 8. ACTION OF SHAREHOLDERS WITHOUT A MEETING......................................................6
ARTICLE IV.
DIRECTORS.................................................................................................6
Section 1. GENERAL POWERS................................................................................6
Section 2. NUMBER AND QUALIFICATIONS.....................................................................7
Section 3. VACANCIES, HOW FILLED.........................................................................7
Section 4. PLACE OF MEETING..............................................................................7
Section 5. COMPENSATION..................................................................................7
Section 6. REGULAR MEETINGS..............................................................................7
Section 7. SPECIAL MEETINGS..............................................................................7
Section 8. GENERAL PROVISIONS REGARDING NOTICE AND WAIVER................................................7
Section 9. QUORUM........................................................................................7
Section 10. MANNER OF ACTING.............................................................................8
Section 11. COMMITTEES...................................................................................8
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C>
Section 12. ACTION WITHOUT FORMAL MEETING................................................................8
Section 13. CONFERENCE CALL MEETINGS.....................................................................9
ARTICLE V.
OFFICERS..................................................................................................9
Section 1. GENERALLY.....................................................................................9
Section 2. COMPENSATION.................................................................................10
Section 3. VACANCIES....................................................................................10
Section 4. CHAIRMAN OF THE BOARD........................................................................10
Section 5. CHIEF EXECUTIVE OFFICER......................................................................10
Section 6. PRESIDENT....................................................................................10
Section 7. SECRETARY....................................................................................10
Section 8. THE CHIEF FINANCIAL OFFICER..................................................................11
Section 9. DEPUTY OFFICERS..............................................................................11
Section 10. ASSISTANT OFFICERS..........................................................................11
ARTICLE VI.
INDEMNIFICATION..........................................................................................11
Section 1. ACTION BY PERSONS OTHER THAN THE CORPORATION.................................................11
Section 2. ACTIONS BY OR IN THE NAME OF THE CORPORATION.................................................12
Section 3. SUCCESSFUL DEFENSE...........................................................................12
Section 4. AUTHORIZATION OF INDEMNIFICATION.............................................................12
Section 5. REASONABLENESS OF EXPENSES...................................................................13
Section 6. PREPAYMENT OF EXPENSES.......................................................................13
Section 7. NON-EXCLUSIVE RIGHT..........................................................................13
Section 8. SUCCESSORS...................................................................................14
Section 9. JUDICIAL DETERMINATION.......................................................................14
Section 10. INSURANCE...................................................................................14
Section 11. INFORMATION TO SHAREHOLDERS.................................................................14
ARTICLE VII.
FISCAL YEAR..............................................................................................15
ARTICLE VIII.
ANNUAL STATEMENTS........................................................................................15
ARTICLE IX.
CAPITAL STOCK............................................................................................15
Section 1. FORM.........................................................................................15
Section 2. TRANSFER.....................................................................................16
Section 3. RIGHTS OF HOLDER.............................................................................16
Section 4. LOST OR DESTROYED CERTIFICATES...............................................................16
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE X.
SEAL.....................................................................................................16
ARTICLE XI.
REGISTERED OFFICE AND REGISTERED AGENT...................................................................16
ARTICLE XII.
AMENDMENTS ..............................................................................................17
Section 1. AMENDMENTS GENERALLY.........................................................................17
Section 2. BY-LAW INCREASING QUORUM OR VOTING REQUIREMENTS..............................................17
</TABLE>
(iii)
<PAGE> 5
BY-LAWS
OF
CITIZENS BANCSHARES OF SOUTHWEST FLORIDA, INC.
ARTICLE I.
DEFINITIONS
As used in these By-Laws, the terms set forth below shall have the
meanings indicated, as follows:
"Act" shall mean the Florida Business Corporation Act, as amended from
time to time.
"Articles of Incorporation" means the Articles of Incorporation of the
Corporation, as amended from time to time.
"Board" shall mean the Board of Directors of the Corporation.
"Chairman of the Board" shall mean the Chairman of the Board of
Directors, or such other officer as shall be designated by the Board as having
the duties of the Chairman of the Board, as described in Section 4 of Article V
of these By-Laws.
"Corporation" shall mean Citizens Bancshares of Southwest Florida,
Inc., a Florida corporation.
"Secretary" shall mean the Secretary of the Corporation, or such other
officer as shall be designated by the Board as having the duties of the
corporate Secretary as described in Section 7 of Article V of these By-Laws.
"Secretary of State" shall mean the Secretary of State of Florida.
"Voting group" shall have the meaning set forth in subsection (a) of
Section 6 of Article III of these By-Laws.
ARTICLE II.
GENERAL PROVISIONS REGARDING NOTICES
Section 1. NOTICES. Except as otherwise provided in the Articles of
Incorporation or these By- Laws, or as otherwise required by applicable law:
(a) Any notice required by these By-Laws or by law shall be in writing
unless oral notice is reasonable under the circumstances.
(b) Notice may be communicated in person; by telephone, telegraph,
teletype, or other form of electronic communication; or by mail.
(c) Written notice by the Corporation to any shareholder is effective
when deposited in the mail, if mailed with first-class postage prepaid and
correctly addressed to the shareholder's address shown in the
<PAGE> 6
Corporation's current stock transfer books; provided that it may utilize a class
of mail other than first class if the notice of the meeting is mailed, with
adequate postage prepaid, not less than 30 days before the date of the meeting.
(d) Written notice to the Corporation may be addressed to its
registered agent at its registered office or to the Corporation or its Secretary
at its principal office shown in its most recent annual registration with the
Secretary of State.
(e) Except as provided in subsection (c) of this Section 1, written
notice, if in a comprehensible form, is effective at the earliest of the
following:
(1) When received;
(2) Five days after its deposit in the mail, as evidenced by the
postmark, if mailed with first-class postage prepaid and
correctly addressed; or
(3) On the date shown on the return receipt, if sent by registered
or certified mail, return receipt requested, and the receipt
is signed by or on behalf of the addressee.
(f) Oral notice is effective when communicated if communicated directly
to the person to be notified in a comprehensible manner.
(g) In calculating time periods for notice under these By-Laws, when a
period of time measured in days, weeks, months, years, or other measurement of
time is prescribed for the exercise of any privilege or the discharge of any
duty, the first day shall not be counted but the last day shall be counted.
Section 2. WAIVER OF NOTICE. Except as otherwise provided or required
by the Articles of Incorporation, these By-Laws or applicable law:
(a) A shareholder may waive any notice required to be given to such
shareholder, before or after the date and time stated in the notice. The waiver
must be in writing, be signed by the shareholder entitled to the notice, and be
delivered to the Corporation for inclusion in the minutes or filing with the
Corporation's corporate records.
(b) A shareholder's attendance at a meeting:
(1) Waives objection to lack of notice or defective notice of the
meeting, unless the shareholder at the beginning of the
meeting objects to holding the meeting or transacting business
at the meeting; and
(2) Waives objection to consideration of a particular matter at
the meeting that is not within the purpose or purposes
described in the meeting notice, unless the shareholder
objects to considering the matter when it is presented.
(c) Neither the business transacted nor the purpose of the meeting need
be specified in the waiver, except that any waiver by a shareholder of the
notice of a meeting of shareholders with respect to an amendment of the Articles
of Incorporation, a plan of merger or share exchange, a sale of assets or any
other action which would entitle the shareholder to exercise statutory
dissenter's rights under the Act and obtain payment for his/her shares shall not
be effective unless:
<PAGE> 7
(1) Prior to the execution of the waiver, the shareholder shall
have been furnished the same material that under the Act would
have been required to be sent to the shareholder in a notice
of the meeting, including notice of any applicable dissenters'
rights as provided in the Act; or
(2) The waiver expressly waives the right to receive the material
required to be furnished.
(d) A director may waive any notice required to be given to such
director by the Act, the Articles of Incorporation, or these By-Laws before or
after the date and time stated in the notice. Except as provided by subsection
(e) of this Section 2, the waiver must be in writing, signed by the director
entitled to the notice, and delivered to the Corporation for inclusion in the
minutes or filing with the Corporation's corporate records.
(e) A director's attendance at or participation in a meeting waives any
required notice to him of the meeting unless the director at the beginning of
the meeting (or promptly upon his/her arrival) objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for or assent
to action taken at the meeting.
ARTICLE III.
SHAREHOLDERS' MEETINGS
Section 1. PLACE OF MEETING. The Board may designate any place within
or outside the State of Florida as the place of meeting for any annual or
special shareholders' meeting. A waiver of notice signed by all shareholders
entitled to vote at a meeting may designate any place within or outside the
State of Florida as the place for the holding of such meeting. If no designation
is made, or if a special meeting be otherwise called, the place of meeting shall
be the principal office of the Corporation.
Section 2. ANNUAL MEETING. An annual meeting of the shareholders shall
be held on the fourth Friday in April of each year, if not a legal holiday (and
if such is a legal holiday, then on the next following business day not a legal
holiday), at such time and place as the Board shall determine, at which time the
shareholders shall elect a Board and transact such other business as may be
properly brought before the meeting. Notwithstanding the foregoing, the Board
may cause the annual meeting of shareholders to be held on such other date in
any year as the Board shall determine to be in the best interests of the
Corporation, and any business transacted at that meeting shall have the same
validity as if transacted on the date designated herein. If the annual meeting
is not held within any 13-month period, the circuit court of the circuit in
which the principal office of the Corporation is located may, on application of
any shareholder, summarily order a meeting to be held.
Section 3. SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes, except to the extent otherwise prescribed by statute or
the Articles of Incorporation, may be called by the Chief Executive Officer, or
by the presiding officer of the Board, if any. The Chief Executive Officer or
the Secretary shall call a special meeting when: (1) requested in writing by any
three or more of the directors; or (2) requested in writing by shareholders
owning not less than one tenth of all shares entitled to vote on any such issue
to be considered at such meeting. Any such written request shall be signed and
dated and shall state the purpose or purposes of the proposed meeting.
<PAGE> 8
Section 4. NOTICE TO SHAREHOLDERS.
(a) Except as otherwise specifically provided in this Section 4,
requirements with respect to the giving of notice and waiver of notice shall be
governed by the provisions of Article II of these By-Laws.
(b) The Corporation shall give notice to each shareholder entitled to
vote thereat of the date, time and place of each annual and special
shareholders' meeting not less than ten (10) nor more than sixty (60) days
before the meeting date.
(c) Unless otherwise required by the Act with respect to meetings at
which specified actions will be considered (including but not limited to
mergers, certain share exchanges, certain asset sales by the Corporation, and
dissolution of the Corporation), notice of an annual meeting need not contain a
description of the purpose or purposes for which the meeting is called.
(d) Notice of a special meeting must include a description of the
purpose or purposes for which the meeting is called.
(e) Unless a new record date is set (or is required by law or by the
terms of these By-Laws to be set) therefor, notice of the date, time and place
of any adjourned meeting need not be given otherwise than by the announcement at
the meeting before adjournment. If a new record date for the adjourned meeting
is or must be fixed, however, notice of the adjourned meeting must be given in
accordance with these By-Laws as if such adjourned meeting were a newly-called
meeting.
(f) If any corporate action proposed to be considered at a meeting of
shareholders would or might give rise to statutory dissenters' rights under the
Act, the notice of such meeting shall state that the meeting is to include
consideration of such proposed corporate action, and that the consummation of
such action will or might give rise to such dissenters' rights, and shall
include the description of such statutory dissenters' rights required by the
Act.
Section 5. FIXING OF RECORD DATE.
(a) For the purpose of determining shareholders entitled to notice of
or to vote at any meeting of shareholders, or shareholders entitled to demand a
special meeting of shareholders, or shareholders entitled to take any other
action, the Board may fix in advance (but not retroactively from the date the
Board takes such action) a date as the record date for any such determination of
shareholders, such date in any case to be not more than seventy (70) days prior
to the meeting or action requiring such determination of shareholders. If no
record date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting of shareholders, the close of business on the last
business day before the first notice of such meeting is delivered to
shareholders shall be the record date. If no record date is fixed for
determining shareholders entitled to take action without a meeting, the date the
first shareholder signs the consent shall be the record date for such purpose.
If no record date is fixed for determining shareholders entitled to demand a
special meeting, or to take other action, the date of receipt of notice by the
Corporation of demand for such meeting, or the date on which such other action
is to be taken by the shareholders, shall be the record date for such purpose.
(b) A separate record date may be established for each voting group
entitled to vote separately on a matter at a meeting.
<PAGE> 9
(c) A determination of shareholders entitled to notice of or to vote at
a shareholders meeting is effective for any adjournment of the meeting unless
the meeting is adjourned to a date more than 120 days after the date fixed for
the original meeting, in which event, a new record date shall be set.
(d) For the purpose of determining shareholders entitled to a
distribution by the Corporation (other than one involving a purchase, redemption
or other acquisition of the Corporation's shares), the record date shall be the
date fixed for such purpose by the Board, or if the Board does not fix such a
date, the date on which the Board authorizes such distribution.
Section 6. QUORUM AND VOTING REQUIREMENTS.
(a) Except as otherwise provided by the Articles of Incorporation or
the Act:
(i) A "voting group" with respect to any given matter
means all shares of one or more class or series
which, under the Articles of Incorporation or the
Act, are entitled to vote and be counted together
collectively on that matter, and unless specified
otherwise in the Articles of Incorporation, the Act
or these By-Laws, all shares entitled to vote on a
given matter shall be deemed to be a single voting
group for purposes of that matter.
(ii) Each outstanding share, regardless of class, is
entitled to one vote on each matter voted on at a
shareholders' meeting.
(iii) A majority of the votes entitled to be cast on the
matter by a voting group constitutes a quorum of that
voting group for action on that matter.
(iv) The presence of a quorum of each voting group
entitled to vote thereon shall be the requisite for
transaction of business on a given matter.
(v) Action on a matter other than election of directors
is approved by a voting group if a quorum of such
voting group exists and the number of votes cast
within such voting group in favor of such action
exceeds the number of votes cast within such voting
group against such action.
(vi) Except as otherwise provided in these By-Laws, all
shares entitled to vote for election of directors
shall vote thereon as a single voting group, and
directors shall be elected by a plurality of votes
cast by shares entitled to vote in the election in a
meeting at which a quorum of such voting group is
present.
(b) Once a share is represented for any purpose other than solely to
object to holding a meeting or transacting business at the meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is, or is required by law
or these By-Laws to be, set for that adjourned meeting.
(c) If a quorum for transaction of business shall not be present at a
meeting of shareholders, the shareholders entitled to vote thereat, present in
person or by proxy, shall have the power to adjourn the meeting from time to
time, until the requisite amount of voting stock shall be present. No notice
other than announcements at the meeting before adjournment shall be required of
the new date, time or place of the adjourned meeting, unless a new record date
for such adjourned meeting is, or is required by law or these
<PAGE> 10
By-Laws to be, fixed. At such adjourned meeting (for which no new record date
is, or is required to be, set) at which a quorum shall be present in person or
by proxy, any business may be transacted that might have been transacted at the
meeting originally called.
Section 7. PROXIES. At every meeting of the shareholders, any
shareholder having the right to vote shall be entitled to vote in person or by
proxy, but no proxy shall be: (i) effective unless given in writing and signed,
either personally by the shareholder or his/her attorney-in-fact; (ii) effective
until received by the Secretary or other officer or agent authorized to tabulate
votes; or (iii) valid after eleven months from its date, unless said proxy
expressly provides for a longer period.
Section 8. ACTION OF SHAREHOLDERS WITHOUT A MEETING. Unless otherwise
provided in the Articles of Incorporation, any action required or permitted to
be taken at any annual or special meeting of shareholders of the Corporation,
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 of each voting group entitled to vote thereon
having not less than the minimum number of votes with respect to each voting
group that would be necessary to authorize or take such action at a meeting at
which all voting groups and shares entitled to vote thereon were present and
voted.
Within ten (10) days after obtaining such authorization by written
consent, notice must be given to those shareholders who have not consented in
writing or who are not entitled to vote on the action. The notice shall fairly
summarize the material features of the authorized action and, if the action be
such for which dissenters rights are provided under Florida law, 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 Florida law regarding the rights of dissenting shareholders.
ARTICLE IV.
DIRECTORS
Section 1. GENERAL POWERS. Except as may be otherwise provided by any
legal agreement among shareholders, the property and business of the Corporation
shall be managed by its Board of Directors. In addition to the powers and
authority expressly conferred by these By-Laws, the Board of Directors may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by law, or by any legal agreement among shareholders, or by
the Articles of Incorporation or by these ByLaws directed or required to be
exercised or done by the shareholders.
Section 2. NUMBER AND QUALIFICATIONS. The Board of Directors shall
consist of not less than two (2) nor more than twenty-five (25) members, the
precise number to be determined from time to time by affirmative vote of a
majority of the entire Board of Directors. Directors shall be natural persons
who are eighteen (18) years of age or older, but need not be shareholders or
residents of Florida unless the Articles of Incorporation require otherwise.
Section 3. VACANCIES, HOW FILLED. If any vacancy shall occur in the
membership of the Board by reason of the resignation, removal or death of a
director, the remaining directors shall continue to act, and such vacancies may
be filled by the affirmative vote of the majority of the directors then in
office, though less than a quorum, and if not therefore filled by action of the
directors, may be filled by the shareholders at any meeting held during the
existence of such vacancy. If any vacancy shall occur among the directors by
reason of the removal from office of a director, such vacancy shall be filled by
the
<PAGE> 11
vote of seventy-five percent (75%) of the outstanding shares of each class of
stock entitled to vote in elections of directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his/her predecessor in
office.
Section 4. PLACE OF MEETING. The Board may hold its meetings at such
place or places within or without the State of Florida as it may from time to
time determine.
Section 5. COMPENSATION. Directors may be allowed such compensation for
attendance at regular or special meetings of the Board and of any special or
standing committees thereof as may be from time to time determined by resolution
of the Board.
Section 6. REGULAR MEETINGS. A regular annual meeting of the Board
shall be held, without other notice than this By-Law, immediately after the
annual meeting of shareholders. The Board may provide, by resolution, the time
and place within or without the State of Florida, for the holding of additional
regular meetings without other notice than such resolution.
Section 7. SPECIAL MEETINGS. Special meetings of the Board may be
called by the Chief Executive Officer or the presiding officer of the Board, if
different from the Chief Executive Officer, on not less than two (2) days'
notice to each director by mail, telegram, cablegram or other form of wire or
wireless communication, or personal delivery or other form of communication
authorized under the circumstances by the Act, and shall be called by the Chief
Executive Officer or the Secretary in like manner and on like notice on the
written request of any two (2) or more members of the Board. Such notice shall
state the time, date and place of such meeting, but need not describe the
purpose of the meeting. Any such special meeting shall be held at such time and
place as shall be stated in the notice of the meeting.
Section 8. GENERAL PROVISIONS REGARDING NOTICE AND WAIVER. Except as
otherwise expressly provided in this Article IV, matters relating to notice to
directors and waiver of notice by directors shall be governed by the provisions
of Article II of these By-Laws.
Section 9. QUORUM. At all meetings of the Board, unless otherwise
provided in the Articles of Incorporation or other provisions of these By-Laws,
the presence of a majority of the Directors shall constitute a quorum for the
transaction of business. In the absence of a quorum a majority of the Directors
present at any meeting may adjourn from time to time until a quorum is obtained.
Notice of the time and place of any adjourned meeting need only be given by
announcement at the meeting at which adjournment is taken.
Section 10. MANNER OF ACTING. Except as expressly otherwise provided by
the Articles of Incorporation or other provisions of these By-Laws, if a quorum
is present when a vote is taken, the affirmative vote of a majority of directors
present is the act of the Board. A director who is present at a meeting when
corporate action is taken is deemed to have assented to the action unless:
(1) He/she objects at the beginning of the meeting (or promptly
upon his/her arrival) to holding it or transacting business at
the meeting; or
(2) His/her dissent or abstention from the action taken is entered
in the minutes of the meeting and his/her reason(s) for
abstention is submitted in writing to the Board.
<PAGE> 12
Section 11. COMMITTEES.
(a) Except as otherwise provided by the Articles of Incorporation, the
Board may create an Executive Committee and one or more committees and appoint
members of the Board to serve on them. Each committee may have two or more
members, who serve at the pleasure of the Board.
(b) The provisions of these By-Laws and of the Act which govern
meetings, action without meetings, notice and waiver of notice, and quorum and
voting requirements of the Board, shall apply as well to committees created
under this Section 11 and their members.
(c) To the extent specified by the Articles of Incorporation, these
By-Laws and the resolution of the Board creating such committee, each committee
may exercise the authority of the Board, provided that a committee may not:
(1) Approve, or propose to shareholders for approval, action
required by the Act to be approved by shareholders;
(2) Fill vacancies on the Board or on any of its committees;
(3) Authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the Board
of Directors;
(4) Adopt, amend, or repeal by-laws; or
(5) Authorize or approve the issuance or sale or contract for the
sale of shares, or determine the designation and relative
rights, preferences, and limitations of a voting group except
that the Board of Directors may authorize a committee (or a
senior executive officer of the Corporation) to do so within
limits specifically prescribed by the Board of Directors.
Section 12. ACTION WITHOUT FORMAL MEETING. Except as expressly
otherwise provided in the Articles of Incorporation, any action required or
permitted to be taken at any meeting of the Board or of any committee thereof
may be taken without a meeting if written consent thereto (which may take the
form of one or more counterparts) is signed by all members of the Board or of
such committee, as the case may be, and such written consent is filed with the
minutes of the proceedings of the Board or committee. A consent executed in
accordance herewith has the effect of a meeting vote and may be described as
such in any document.
Section 13. CONFERENCE CALL MEETINGS. Members of the Board, or any
committee of the Board, may participate in a meeting of the Board or committee
by means of conference, telephone or similar communications equipment by means
of which all persons participating in the meeting can simultaneously hear each
other during the meeting, and participation in a meeting pursuant to this
Section shall constitute presence in person at such meeting.
ARTICLE V.
OFFICERS
Section 1. GENERALLY. The Board shall from time to time elect or
appoint such officers as it shall deem necessary or appropriate to the
management and operation of the Corporation, which officers
<PAGE> 13
shall hold their offices for such terms as shall be determined by the Board and
shall exercise such powers and perform such duties as are specified in these
By-Laws or in a resolution of the Board. Except as specifically otherwise
provided in resolutions of the Board, the following requirements shall apply to
election or appointment of officers:
(a) The Corporation shall have, at a minimum, the following officers,
which offices shall bear the titles designated therefor by resolution of the
Board, but in the absence of such designation shall bear the titles set forth
below:
<TABLE>
<CAPTION>
Office Title
------ -----
<S> <C>
Chairman of the Board Chairman
Chief Executive Officer Chief Executive Officer
President President
Chief Financial Officer Treasurer
Secretary Secretary
</TABLE>
(b) All officers of the Corporation shall serve at the pleasure of the
Board, and in the absence of specification otherwise in a resolution of the
Board, each officer shall be elected to serve until the next succeeding annual
meeting of the Board and the election and qualification of his/her successor,
subject to his/her earlier death, resignation or removal.
(c) Any person may hold two or more offices simultaneously, and no
officer need be a shareholder of the Corporation.
(d) If so provided by resolution of the Board, any officer may be
delegated the authority to appoint one or more officers or assistant officers,
which appointed officers or assistant officers shall have the duties and powers
specified in the resolution of the Board.
Section 2. COMPENSATION. The salaries of the officers of the
Corporation shall be fixed by the Board, except that the Board may delegate to
any officer or officers the power to fix the compensation of any other officer.
Section 3. VACANCIES. A vacancy in any office, because of resignation,
removal or death may be filled by the Board for the unexpired portion of the
term, or if so provided by resolution of the Board, by an officer of the
Corporation to whom has been delegated the authority to appoint the holder of
such vacated office.
Section 4. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors shall, when present, preside at all meetings of the shareholders and
the Board, either annual or special. The Chairman shall assist the Board in the
formulation of policies to be pursued by the executive management of the
Corporation, and he/she shall study and make reports and recommendations with
respect to major problems, policies, and activities of the Corporation, and it
shall be his/her responsibility to see that the policy established by the Board
is carried into effect by the executive officers. The Chairman may sign and
deliver on behalf of the Corporation any deed, mortgages, bonds, contracts,
powers of attorney, or
<PAGE> 14
other instruments which the Board have authorized to be executed, except in
cases where the signing and execution thereof shall be expressly delegated by
the Board or by these By-Laws to some other officer or agent of the Corporation
or shall be required by law to be otherwise signed or executed, and he/she shall
perform such other duties as may be prescribed by the Board from time to time.
Section 5. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall
have such title or titles designated by the Board and shall be the principal
executive officer of the Corporation. Subject to the control of the Board, the
Chief Executive Officer shall in general manage, supervise and control all of
the business and affairs of the Corporation. He/she shall, when present, preside
at all meetings of all of the stockholders. He/she may sign, individually or in
conjunction with any other proper officer of the Corporation thereunto
authorized by the Board, certificates for shares of the Corporation, any deeds,
mortgages, bonds, policies of insurance, contracts, investment certificates, or
other instruments which the Board has authorized to be executed, except in cases
where the execution thereof shall be expressly delegated by the Board or by the
By-Laws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of the Chief Executive Officer of the Corporation
and such other duties as may be prescribed by the Board from time to time.
Section 6. PRESIDENT. The President shall have such title or titles
designated by the Board and shall have such powers and duties as may be assigned
by the board of directors. In the absence of the Chief Executive Officer, the
President shall be designated by the Board of Directors to perform all the
duties of the Chief Executive Officer.
Section 7. SECRETARY. The Secretary may be designated by any such title
as determined by resolution of the Board, and shall: (a) attend and keep the
Minutes of the shareholders' meetings and of the Board's meetings in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these By-Laws or as otherwise required by law
or the provisions of the Articles of Incorporation; (c) be custodian of the
corporate records and of the seal of the Corporation and see that the seal of
the Corporation is affixed to all documents, the execution of which on behalf of
the Corporation under its seal is duly authorized; (d) maintain, or cause an
agent designated by the Board to maintain, a record of the Corporation's
shareholders in a form that permits the preparation of a list of the names and
addresses of all shareholders in alphabetical order by class of shares, showing
the number and class of shares held by each; (e) have general charge of the
stock transfer books of the Corporation or responsibility for supervision, on
behalf of the Corporation, of any agent to which stock transfer responsibility
has been delegated by the Board; (f) have responsibility for the custody,
maintenance and preservation of those corporate records which the Corporation is
required by the Act or otherwise to create, maintain or preserve; (g) in general
perform all duties incident to the office of Secretary and such other duties as
from time to time may be assigned to him by the Board.
Section 8. THE CHIEF FINANCIAL OFFICER. The Chief Financial Officer,
unless otherwise determined by the Board, shall: (a) have charge and custody of
and be responsible for all funds and securities of the Corporation; receive and
give receipts for monies due and payable to the Corporation from any source
whatsoever, and deposit all such monies in the name of the Corporation in such
banks, trust companies or other depositories as shall be selected by the Board;
and (b) in general perform all the duties incident to the office of Chief
Financial Officer and such other duties as from time to time may be assigned by
the Board.
Section 9. DEPUTY OFFICERS. The Board may create one or more deputy
officers whose duties shall be, among any other designated thereto by the Board,
to perform the duties of the officer to which
<PAGE> 15
such office has been deputized in the event of the unavailability, death or
inability or refusal of such officer to act. Deputy officers may hold such
titles as designated therefor by the Board; however, any office designated with
the prefix "Vice" or "Deputy" shall be, unless otherwise specified by resolution
of the Board, automatically a deputy officer to the office with the title of
which the prefix term is conjoined. Deputy officers shall have such other duties
as prescribed by the Board from time to time.
Section 10. ASSISTANT OFFICERS. The Board may appoint one or more
officers who shall be assistants to principal officers of the Corporation, or
their deputies, and who shall have such duties as shall be delegated to such
assistant officers by the Board or such principal officers, including the
authority to perform such functions of those principal officers in the place of
and with full authority of such principal officers as shall be designated by the
Board or (if so authorized) by such principal officers. The Board may by
resolution authorize appointment of assistant officers by those principal
officers to which such appointed officers will serve as assistants.
ARTICLE VI.
INDEMNIFICATION
Section 1. ACTION BY PERSONS OTHER THAN THE CORPORATION. Under the
circumstances prescribed in Sections 3 and 4 of this Article, the Corporation
shall indemnify any person who was or is a party to any, threatened, pending or
completed action, suit or other type of proceeding, whether civil, criminal,
administrative or investigative, and whether formal or informal (other than an
action by or in the right of the Corporation) by reason of the fact that he/she
is or was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees), judgments, fines,
penalties and amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding, including any appeal
thereof, if he/she acted in good faith and in a manner which he/she reasonably
believed to be in or not opposed to the best interests of the Corporation and,
with respect to criminal action or proceeding, he/she had no reasonable cause to
believe his/her conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he/she reasonably
believed to be in or not opposed to the best interests of the corporation, or
with respect to any criminal action or proceeding, had reasonable cause to
believe that his/her conduct was unlawful.
Section 2. ACTIONS BY OR IN THE NAME OF THE CORPORATION. Under the
circumstances prescribed in Sections 3 and 4 of this Article, the Corporation
shall indemnify and hold harmless any person who was or is a party to any,
threatened, pending or completed action, suit or other type of proceeding,
whether civil, criminal, administrative or investigative, and whether formal or
informal, by or in the right of the Corporation to procure a judgment in its
favor by reason of the fact that he/she is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorney's fees) and amounts paid in settlement not exceeding, in the
judgment of the Board of Directors, the estimated expense of litigating the
action, suit or proceeding to conclusion, actually and reasonably incurred in
connection with the defense or settlement of such action, suit or proceeding,
including any appeal thereof. Such indemnification shall be authorized if such
person acted in good faith and in a manner he/she reasonably believed to be in
or not opposed to the best interests of the Corporation; except that no
indemnification shall be made in respect
<PAGE> 16
to any claim, issue or matter as to which such person shall have been adjudged
to be liable to the Corporation, unless and only to the extent that, the court
in which such action, suit or proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 3. SUCCESSFUL DEFENSE. To the extent that a director, officer,
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Sections 1
and 2 of this Article, or in defense of any claim, issue or matter therein,
he/she shall be indemnified against expenses (including attorney's fees)
actually and reasonably incurred by him in connection therewith.
Section 4. AUTHORIZATION OF INDEMNIFICATION. Except as provided in
Section 3 of this Article and except as may be ordered by a court, any
indemnification under Sections 1 and 2 of this Article shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he/she has met the applicable standard of conduct set
forth in Sections 1 and 2. Such determination shall be made:
(a) by the Board of Directors by a majority vote of a quorum
consisting of Directors who were not parties to such action, suit or
proceeding;
(b) if such a quorum is not obtainable, or, even if
obtainable, by majority vote of a committee duly designated by the
Board of Directors (in which directors who are a party may participate)
consisting solely of two or more directors not at the time parties to
the action, suit or proceeding;
(c) by independent legal counsel (i) selected by the Board of
Directors prescribed in paragraph (a) of this Section or the committee
prescribed in paragraph (b) of this Section; or (ii) if a quorum of the
directors cannot be obtained for paragraph (a) of this Section and the
committee cannot be designated under paragraph (b) of this Section,
selected by a majority vote of the full Board of Directors (in which
directors who are a party may participate); or
(d) by the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such action, suit or
proceeding or, if no such quorum is obtainable, by a majority vote of
shareholders who were not parties to such action, suit or proceeding.
Section 5. REASONABLENESS OF EXPENSES. Evaluation of the reasonableness
of expenses and authorization of indemnification shall be made in the same
manner as the determination that indemnification is permissible. However, if the
determination of permissibility is made by independent legal counsel, persons
specified by Section 4(c) shall evaluate the reasonableness of expenses and may
authorize indemnification.
Section 6. PREPAYMENT OF EXPENSES. Expenses incurred by a director or
officer in defending a civil or criminal action, suit or proceeding may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he/she is
not entitled to be indemnified by the Corporation as authorized in this Article.
Expenses incurred by other employees and agents may be paid in advance upon such
terms or conditions that the Board of Directors deems appropriate.
<PAGE> 17
Section 7. NON-EXCLUSIVE RIGHT. The indemnification and advancement of
expenses provided by this Article are not exclusive, and the Corporation may
make any other or further indemnification or advancement of expenses of any of
its directors, officers, employees or agents, under any Bylaw, agreement, vote
of shareholders or disinterested directors, or otherwise, both as to action in
his/her official capacity and as to action in another capacity while holding
such office. However, indemnification or advancement of expenses shall not be
made to or on behalf of any director, officer, employee or agent if a judgment
or other final adjudication establishes that his/her actions, or omissions to
act, were material to the cause of action so adjudicated and constitute:
(a) A violation of the criminal law, unless the director,
officer, employee or agent had reasonable cause to believe his/her
conduct was lawful or had no reasonable cause to believe his/her
conduct was unlawful;
(b) A transaction from which the director, officer, employee
or agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under which the
liability provisions of Florida Business Corporation Act ss. 607.0834
are applicable; or
(d) Willful misconduct or a conscious disregard for the best
interests of the Corporation in a proceeding by or in the right of the
Corporation to procure a judgment in its favor or in a proceeding by or
in the right of a shareholder.
(e) 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 in a
proceeding by or in the right of someone other than the Corporation or
a shareholder.
Section 8. SUCCESSORS. Indemnification and advancement of expenses as
provided in this Article shall continue as, unless otherwise provided when
authorized or ratified, to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person, unless otherwise provided when authorized or
ratified.
Section 9. JUDICIAL DETERMINATION. Unless the Articles of Incorporation
provide otherwise, notwithstanding the failure of the Corporation to provide
indemnification, and despite any contrary determination of the Board or of the
shareholders in the specific case, a director, officer, employee or agent of the
Corporation who is or was a party to a proceeding may apply for indemnification
or advancement of expenses, or both, to the court conducting the proceeding, to
the circuit court, or to another court of competent jurisdiction. On receipt of
an application, the court, after giving any notice that it considers necessary,
may order indemnification and advancement of expenses, including expenses
incurred in seeking court-ordered indemnification or advancement of expenses, if
it determines that:
(a) The director, officer, employee or agent is entitled to
mandatory indemnification under Section 3, in which case the court
shall also order the Corporation to pay the director reasonable
expenses incurred in obtaining court-ordered indemnification or
advancement of expenses;
<PAGE> 18
(b) The director, officer, employee or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the
exercise by the Corporation of its power pursuant to Section 7; or
(c) The director, officer, employee or agent is fairly and
reasonably entitled to indemnification or advancement of expenses, or
both, in view of all the relevant circumstances, regardless of whether
such person met the standard of conduct set forth in Section 1, Section
2 or Section 7.
Section 10. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another Corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
him and incurred by him in any such capacity, or arising out of his/her status
as such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article.
Section 11. INFORMATION TO SHAREHOLDERS. If any expenses or other
amounts are paid by way of indemnification, otherwise than by court order or
action by the shareholders or by an insurance carrier pursuant to insurance
maintained by the Corporation, the Corporation shall report the indemnification
or advance in writing to the shareholders with or before the notice of the next
shareholders meeting, or prior to such meeting if the indemnification or advance
occurs after the giving of such notice but prior to the time such meeting is
held, which report shall include a statement specifying the persons paid, the
amount paid, and the nature and status at the time of such payment of the
litigation or threatened litigation.
ARTICLE VII.
FISCAL YEAR
The fiscal year of the Corporation shall be established by the Board
or, in the absence of Board action establishing such fiscal year, by the Chief
Executive Officer.
ARTICLE VIII.
ANNUAL STATEMENTS
No later than 120 days after the close of each fiscal year, the
Corporation shall furnish its shareholders the following financial statements:
(a) A balance sheet as of the end of the fiscal year;
(b) An income statement for that year; and
(c) A statement of cash flows for that year.
In addition, upon written request, the Corporation shall mail promptly
to any shareholder of record a copy of the most recent such balance sheet,
income statement and statement of cash flows.
<PAGE> 19
ARTICLE IX.
CAPITAL STOCK
Section 1. FORM.
(a) Except as otherwise provided for in paragraph (b) of this Section
1, the interest of each shareholder shall be evidenced by a certificate
representing shares of stock of the Corporation, which shall be in such form as
the Board may from time to time adopt and shall be numbered and shall be entered
in the books of the Corporation as they are issued. Each certificate shall
exhibit the holder's name, the number of shares and class of shares and series,
if any, represented thereby, the name of the Corporation, a statement that the
Corporation is organized under the laws of the State of Florida, the par value
of each share or a statement that the shares are without par value and a summary
of the designations, relative rights, preferences, and limitations applicable to
each class and the variations in rights, preferences, and limitations determined
for each series (and the authority of the Board of Directors to determine
variations for future series) or a statement that the Corporation will furnish
the shareholder a full statement of this information on request and without
charge. Each certificate shall be signed by one or more officers of the
Corporation specified by resolution of the Board, but in the absence of such
specifications, shall be valid if executed by the Chief Executive Officer or any
Deputy or Assistant thereto, or the President or any Deputy or Assistant
thereto, and such execution is countersigned by the Secretary, or any Deputy or
Assistant thereto. Each stock certificate may but need not be sealed with the
seal of the Corporation.
(b) If authorized by resolution of the Board, the Corporation may issue
some or all of the shares of any or all of its classes or series without
certificates. The issuance of such shares shall not affect shares already
represented by certificates until they are surrendered to the Corporation.
Within a reasonable time after the issuance or transfer of any shares not
represented by certificates, the Corporation shall send to the holder of such
shares a written statement setting forth, with respect to such shares (i) the
name of the Corporation as issuer and the Corporation's state of incorporation,
(ii) the name of the person to whom such shares are issued, (iii) the number of
shares and class of shares and series, if any, and (iv) the terms of any
restrictions on transfer which, were such shares represented by a stock
certificate would be required to be noted on such certificate, by law, by the
Articles of Incorporation or these By-Laws, or by any legal agreement among the
shareholders of the Corporation.
Section 2. TRANSFER. Transfers of stock shall be made on the books of
the Corporation only by the person named in the certificate, or, in the case of
shares not represented by certificates, the person named in the Corporation's
stock transfer records as the owner of such shares, or, in either case, by
attorney lawfully constituted in writing. In addition, with respect to shares
represented by certificates, transfers shall be made only upon surrender of the
certificate therefor, or in the case of a certificate alleged to have been lost,
stolen or destroyed, upon compliance with the provisions of Section 4, Article
IX of these By-Laws.
Section 3. RIGHTS OF HOLDER. The Corporation shall be entitled to treat
the holder of record of any share of the Corporation as the person entitled to
vote such share (to the extent such share is entitled to vote), to receive any
distribution with respect to such share, and for all other purposes and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by law.
<PAGE> 20
Section 4. LOST OR DESTROYED CERTIFICATES. Any person claiming a
certificate of stock to be lost, stolen or destroyed shall make an affidavit or
affirmation of the fact in such manner as the Board may require and shall if the
Board so requires, give the Corporation a bond of indemnity in the form and
amount and with one or more sureties satisfactory to the Board, whereupon an
appropriate new certificate may be issued in lieu of the one alleged to have
been lost, stolen or destroyed.
ARTICLE X.
SEAL
The corporate seal shall be in such form as shall be specified in the
minutes of the organizational meeting of the Corporation, or as the Board may
from time to time determine.
ARTICLE XI.
REGISTERED OFFICE AND REGISTERED AGENT
The address of the initial registered office of the corporation is 3001
Tamiami Trail North, 4th Floor, Naples, Florida 34101 and the name of the
initial registered agent is Pauline M. Rogers. The corporation may amend this
Article XI at any time to change its registered office or registered agent,
without further action of its officers or directors, by filing with the
Secretary of State a notice of such change, in accordance with Section 607.0502
of the Act, or any successor statute.
The corporation may have other offices at such places within or without
the State of Florida as the Board may from time to time designate or the
business of the Corporation may require or make desirable.
ARTICLE XII.
AMENDMENTS
Section 1. AMENDMENTS GENERALLY.
(a) Except as otherwise provided in the Articles of Incorporation or by
applicable law, the By-Laws of the Corporation may be altered or amended and new
By-Laws may be adopted by the shareholders or by the Board of Directors at any
regular or special meeting of the Board of Directors; provided, however, that,
if such action is to be taken at a meeting of the shareholders, notice of the
general nature of the proposed change in the By-Laws shall have been given in
the notice of a meeting. Except as otherwise provided in this Article XII,
action by the shareholders with respect to By-Laws shall be taken by an
affirmative vote of seventy-five percent (75%) of each class of stock entitled
to elect directors, and action by the directors with respect to By-Laws shall be
taken by an affirmative vote of a majority of all directors then holding office.
Section 2. BY-LAW INCREASING QUORUM OR VOTING REQUIREMENTS.
(a) Any By-Law which sets a greater quorum or voting requirement for
shareholders (or voting groups of shareholders) than the minimum required by the
Act may not be adopted, amended or repealed by the Board.
<PAGE> 21
(b) Except as otherwise provided in the Articles of Incorporation, a
By-Law that fixes a greater quorum or voting requirement for the Board than the
minimum required by the Act:
(1) May be amended or repealed only by the shareholders if
originally adopted by the shareholders;
(2) May be amended or repealed either by the directors or the
shareholders if originally adopted by the Board of Directors.
(c) A By-Law adopted or amended by the shareholders that fixes a
greater quorum or voting requirement for the Board may be amended or repealed
only by a specified vote of either the shareholders or the Board, if such By-Law
provision so provides.
<PAGE> 1
EXHIBIT 4.2
Citizens Bancshares of Southwest Florida, Inc.
3411 Tamiami Trail North, Suite 200
Naples, Florida 34101
February 5, 1999
First National Bank of Naples
2150 Goodlette Road
Naples, Florida 34102
Attention: Garrett S. Richter
President and CEO
Gentlemen:
Citizens Bancshares of Southwest Florida, Inc., a Florida corporation
(the "Company"), proposes to offer for sale up to 1,200,000 shares of its $.01
par value common stock (the "Common Stock"), which shares shall be registered
under the Securities Act of 1933, as amended, by the filing of a Registration
Statement on Form SB-2 with the Securities and Exchange Commission. Shares will
be offered at a price of $10.00 each. The minimum subscription per subscriber is
500 shares.
(1) The Company hereby appoints and designates you as Escrow Agent for the
purposes set forth herein. By your signature hereto, you acknowledge
and accept said appointment and designation and agree to be bound by
the terms of this agreement (the "Escrow Agreement"). The Company
understands that you, by accepting said appointment and designation, in
no way endorse the merits of the offering of the shares described
herein. The Company agrees to notify any person acting on its behalf
that your position as Escrow Agent does not constitute such an
endorsement, and to prohibit said persons from the use of your name as
an endorser of such offering. The Company further agrees to allow you
to review any sales literature in which your name appears and which is
used in connection with such offering.
(2) The Company shall deliver all payments received in purchase of the
shares (the "Subscription Funds") to you in the form in which they are
received by noon of the next business day after their receipt by the
Company, and the Company shall deliver to you within five calendar days
copies of written acceptances of the Company for shares in the Company
for which the Subscription Funds represent payment. Upon receipt of
such written acceptance by the Company, you shall deposit such funds
into the escrow account. The Company shall also deliver to you copies
of completed Subscription Agreements for each subscriber, along with
such subscriber's name, address, number of shares subscribed and social
security or taxpayer identification number.
(3) Subscription Funds shall be held and disbursed by you in accordance
with the terms of this Agreement.
<PAGE> 2
(4) In the event any Subscription Funds are dishonored for payment for any
reason, you agree to orally notify the Company immediately thereof and
to confirm same in writing and to return the dishonored Subscription
Funds to the Company in the form in which they were delivered to you.
(5) (a) As used herein, the term "Total Receipts" shall mean the sum
of all Subscription Funds delivered to you pursuant to
Paragraph 2 hereof, less all Subscription Funds returned
pursuant to Paragraph 4 hereof.
(b) As used herein, the term "Expiration Date" shall mean the date
which marks the 90th day after the date of the Prospectus;
provided, however, in the event that you are given oral
notification, followed in writing, by the Company that it has
elected to extend the offering for an additional period of 90
days after the initial period, then the Expiration Date shall
mean the date which marks the 180th day after the date of the
Prospectus; provided further, in the event that you are given
oral notification, followed in writing, by the Company that it
has elected to extend the offering for an additional period of
90 days after the first extension, then the Expiration Date
shall mean the date which marks the 270th day after the date
of the Prospectus; provided further, in the event that you are
given oral notification, followed in writing, by the Company
that it has elected to extend the offering for an additional
period of 90 days after the second extension, then the
Expiration Date shall mean the date which marks the 360th day
after the date of the Prospectus.
(6) (a) If Total Receipts equal $10,000,000 on or before the
Expiration Date, you shall, on the Closing Date, no later than
10:00 A.M., Eastern Daylight Time, upon receipt of 24-hour
written instructions from the Company, remit all amounts
representing Subscription Funds, plus any profits or earnings
thereon after deducting your fees, if any, held by you
pursuant hereto in accordance with such instructions.
(b) If (i) Total Receipts are less than $10,000,000 as of 5:00
P.M., Eastern Daylight Time on the Expiration Date, or (ii)
the offering is canceled by the Company at any time prior to
the Expiration Date, then you shall promptly remit to each
subscriber at the address set forth in his Subscription
Agreement an amount equal to the amount of his Subscription
Funds thereunder, adjusted for his allocated share of any net
profits earned on the investment of the Subscription Funds as
set forth in Paragraph 7, below. The Company hereby agrees to
provide to you in writing the specific allocations of net
profits attributable to each subscriber hereunder and the
names and addresses of each subscriber.
(7) Pending disposition of the Subscription Funds under this Agreement, you
are authorized, upon oral instructions, followed in writing, given by
Polly M. Rogers, to invest Subscription Funds in Federal ** Funds, in
short-term direct obligations of the United States government, in
short-term FDIC or FSLIC insured certificates of deposit, but in any
case with maturities of 90 days or less. For purposes of Paragraph 6
above, the specific allocations of net profits attributable to each
subscriber shall be determined by the Company as follows: each
subscriber's allocated share of earnings on the Subscription Funds,
after deducting your fees, if any, shall be that fraction (i) the
numerator of which is the dollar amount of such subscriber's accepted
subscription multiplied by the number of
** Interest will be paid at the rate of daily Federal Funds less 75 basis
points.
<PAGE> 3
days between the date of acceptance of the purchaser's subscription and
the date of the offering's termination, inclusive (the subscriber's
"Time Subscription Factor"), and (ii) the denominator of which is the
aggregate Time Subscription Factors of all purchasers depositing
Subscription Funds in the escrow account.
(8) Your obligations as Escrow Agent hereunder shall terminate upon your
transferring all funds you hold hereunder pursuant to the terms of
Paragraphs (4) through (6) herein, as applicable.
(9) As used herein, "Closing Date" shall mean the third business day
following the date of receipt by you of Total Receipts aggregating
$10,000,000 and executed Subscription Agreements and copies of written
acceptances of the Company in connection therewith.
(10) You shall be protected in acting upon any written notice, request,
waiver, consent, certificate, receipt, authorization, or other paper or
document which you believe to be genuine and what it purports to be.
(11) You shall not be liable for anything which you may do or refrain from
doing in connection with this Escrow Agreement, except your own gross
negligence or willful misconduct.
(12) You may confer with legal counsel in the event of any dispute or
question as to the construction of any of the provisions hereof, or
your duties hereunder, and you shall incur no liability and you shall
be fully protected in acting in accordance with the opinions and
instructions of such counsel. Any and all expenses and legal fees in
this regard are payable from the Subscription Funds unless paid by the
Company.
(13) In the event of any disagreement between the Company and any other
person resulting in adverse claims and demands being made in connection
with any Subscription Funds involved herein or affected hereby, you
shall be entitled to refuse to comply with any such claims or demands
as long as such disagreement may continue, and in so refusing, shall
make no delivery or other disposition of any Subscription Funds then
held by you under this Agreement, and in so doing you shall be entitled
to continue to refrain from acting until (a) the right of adverse
claimants shall have been finally settled by binding arbitration or
finally adjudicated in a court assuming and having jurisdiction of the
Subscription Funds involved herein or affected hereby or (b) all
differences shall have been adjusted by agreement and you shall have
been notified in writing of such agreement signed by the parties
thereto. In the event of such disagreement, you may, but need not,
tender into the registry or custody of any court of competent
jurisdiction all money or property in your hands under the terms of
this Agreement, together with such legal proceedings as you deem
appropriate and thereupon to be discharged from all further duties
under this Escrow Agreement. The filing of any such legal proceeding
shall not deprive you of your compensation earned prior to such filing.
You shall have no obligation to take any legal action in connection
with this Agreement or towards its enforcement, or to appear in,
prosecute or defend any action or legal proceeding which would or might
involve you in any cost, expense, loss or liability unless
indemnification shall be furnished.
<PAGE> 4
(14) You may resign for any reason, upon thirty days written notice to the
Company. Upon the expiration of such thirty day notice period, you may
deliver all Subscription Funds and copies of Subscription Agreements in
your possession under this Escrow Agreement to any successor Escrow
Agent appointed by the Company, or if no successor Escrow Agent has
been appointed, to any court of competent jurisdiction. Upon either
such delivery, you shall be released from any and all liability under
this Escrow Agreement. A termination under this paragraph shall in no
way change the terms of paragraphs 12 and 13 affecting reimbursement of
expenses, indemnity and fees. You shall have the right to deduct from
the Subscription Funds transferred to any successor Escrow Agent any
outstanding and unpaid expenses or fees.
(15) You agree to charge your customary and normal fee for your services
hereunder. A copy of the current schedule is attached hereto. The fee
schedule may be modified from time to time. The acceptance fee and
expenses shall be paid in advance or at closing by the Company. Any
subsequent fees and expenses will be paid by the Company upon receipt
of invoice.
(16) All notices and communications hereunder shall be in writing and shall
be deemed to be duly given if sent by registered or certified mail,
return receipt requested, to the respective addresses set forth herein.
You shall not be charged with knowledge of any fact, including but not
limited to performance or non-performance of any condition, unless you
have actually received written notice thereof from the Company or its
authorized representative clearly referring to this Escrow Agreement.
(17) The rights created by this Escrow Agreement shall inure to the benefit
of, and the obligations created hereby shall be binding upon the
successors and assigns of you and the parties hereto. Notwithstanding
the foregoing, the Company may not assign its rights hereunder without
your prior written consent.
(18) This Escrow Agreement shall be construed and enforced according to the
laws of the State of Florida.
(19) This Escrow Agreement shall terminate and you shall be discharged of
all responsibility hereunder at such time as you shall have completed
your duties hereunder.
(20) This Escrow Agreement may be executed in several counterparts, which
taken together shall constitute a single document.
(21) This Escrow Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the transactions
described herein and supersedes all prior agreements or understandings,
written or oral, between the parties with respect thereto. Further,
this Escrow Agreement may only be amended by a written amendment signed
by the parties hereto.
(22) If any provision of this Escrow Agreement is declared by a court of
competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and
effect without being impaired or invalidated in any way.
<PAGE> 5
(23) The Company shall provide you with its Employer Identification Number
as assigned by the Internal Revenue Service. Additionally, the Company
shall complete and return to you any and all tax forms or reports
required to be maintained or obtained by you. In the event that
Subscription Funds are returned to subscribers pursuant to paragraph 6
hereof, you shall, based upon the information available to you, file
with the Internal Revenue Service and send to each subscriber a Form
1099- INT with respect to contributions of interest to subscribers. All
interest or other income earned under this Escrow Agreement which is
payable to the Company pursuant to paragraph 6 hereof shall be
allocated and paid as directed by the Company and reported to the
Internal Revenue Service as having been so allocated and paid.
(24) Your signature hereto is your consent that a signed copy hereof may be
filed with the various regulatory authorities of the State of Florida
and with any Federal Government agencies or regulatory authorities.
Please indicate your acceptance of this Agreement by executing a copy
of this letter and returning it to the undersigned.
Respectfully,
CITIZENS BANCSHARES OF
SOUTHWEST FLORIDA, INC.
By: /s/ Polly M. Rogers
--------------------------
Polly M. Rogers, President
Attest:
- ----------------------
(CORPORATE SEAL)
ACCEPTED AND AGREED:
First National Bank of Naples
By: /s/ Garrett Richter
--------------------------
Name: Garrett S. Richter
Title: President & CEO
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF SMITH, GAMBRELL & RUSSELL, LLP]
March 24, 1999
Board of Directors
Citizens Bancshares of Southwest Florida, Inc.
3411 Tamiami Trail North
Suite 200
Naples, Florida 34101
RE: Citizens Bancshares of Southwest Florida, Inc.
Registration Statement on Form SB-2
1,200,000 Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel for Citizens Bancshares of Southwest Florida,
Inc. (the "Company") in connection with the proposed public offering of the
shares of its $.01 par value Common Stock covered by the above-described
Registration Statement.
In connection therewith, we have examined the following:
(1) The Articles of Incorporation of the Company, as amended,
certified by the Secretary of State of the State of Florida;
(2) The Bylaws of the Company, certified as complete and correct
by the Secretary of the Company;
(3) The minute book of the Company, certified as correct and
complete by the Secretary of the Company;
(4) Certificate of Active Status with respect to the Company,
issued by the Secretary of State of the State of Florida; and
<PAGE> 2
Board of Directors
Citizens Bancshares of Southwest Florida, Inc.
March 22, 1999
Page 2
(5) The Registration Statement, including all exhibits thereto.
Based upon such examination and upon examination of such other
instruments and records as we have deemed necessary, we are of the opinion that:
(A) The Company has been duly incorporated and is validly existing
under the laws of the State of Florida.
(B) The 1,200,000 shares of $.01 par value Common Stock covered by
the Registration Statement have been legally authorized and
when issued in accordance with the terms described in said
Registration Statement, will be validly issued, fully paid and
nonassessable.
We consent to the filing of this opinion as an exhibit to the
aforementioned Registration Statement on Form SB-2 and to the reference to this
firm under the caption "Legal Matters" in the Prospectus. In giving this
consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, or the
rules and regulations of the Securities and Exchange Commission thereunder.
Sincerely,
SMITH, GAMBRELL & RUSSELL, LLP
/s/ Robert C. Schwartz
------------------------------
Robert C. Schwartz
<PAGE> 1
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
FOR
CHIEF EXECUTIVE OFFICER
THIS AGREEMENT, dated as of the 18th day of March, 1999, by
and among Citizens Bancshares of Southwest Florida, Inc., a Florida corporation
(the "Employer"), Citizens National Bank of Southwest Florida (Proposed), a
proposed national bank to be organized under the laws of the United States (the
"Bank") (the Employer and the Bank are collectively referred to herein as the
"Employer"), and Michael L. McMullen, ("Executive").
W I T N E S S E T H:
WHEREAS, the directors of the Employer, as organizers of the
Bank, are seeking approval from the Comptroller of the Currency ("OCC") and the
Federal Deposit Insurance Corporation ("FDIC") to charter a national bank in
Collier County, Florida; and
WHEREAS, as of the date of this Agreement the Employer has
obtained preliminary approval from the OCC and is currently seeking approval
from the FDIC;
WHEREAS, Executive is willing to assist the directors of the
Employer in the organization of the Bank and to become the Chief Executive
Officer of the Bank and the Employer in accordance with the terms and conditions
hereinafter set forth;
NOW, THEREFORE, for and in consideration of the mutual
premises and covenants herein contained, the parties hereto agree as follows:
1. EMPLOYMENT. Employer employs Executive and Executive
accepts employment upon the terms and conditions set forth in this Agreement.
2. TERM. Unless earlier terminated under the provisions
of this Agreement the term of employment of Executive under this Agreement shall
be the three-year period
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commencing on February 28, 1999 ("Commencement Date"), and ending on
February 28, 2002.
3. COMPENSATION. For all services to be rendered by
Executive during the term of this Agreement, Employer agrees to pay Executive in
accordance with the terms outlined in Exhibit "A" net of applicable
withholdings.
4. TITLE AND DUTIES. Executive shall serve as Chief
Executive Officer of the Bank commencing on the Commencement Date. Executive's
duties are described on attached Exhibit "B".
5. EXTENT OF SERVICES. Commencing on the Commencement
Date, Executive shall devote his full business time, attention and energies to
the business of Employer and shall not during the term of this Agreement be
engaged in any other career which requires the attention or participation of
Executive during normal business hours of Employer, recognition being given to
the fact that Executive is expected on occasion to participate in client
development after normal business hours. However, Executive may invest his
assets in such form or manner as Executive so desires, so long as such
investments do not require his services during normal business hours in the
operation of the affairs of the companies in which such investments are made.
Executive shall notify Employer of any significant participation by him in any
trade association or similar organization.
6. EXPENSES. Executive may incur reasonable expenses for
promoting the business of the Bank, including expenses for entertainment,
travel, and similar items. Executive will be reimbursed for all such expenses
upon Executive's periodic presentation of an itemized account of such
expenditures. Executive's reimbursable expenses are further detailed on Exhibit
"A".
7. VACATIONS. Executive shall be entitled each year to a
vacation in accordance with the personnel policy established by the Bank's Board
of Directors, during which
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<PAGE> 3
time Executive's compensation shall be paid in full. Executive's vacation
allowance is further detailed on Exhibit "A".
8. EXECUTIVE BENEFITS. Without limiting or reducing any
of the Executive's rights and benefits available to Executive as an employee
under state and/or federal law, so long as Executive is employed, Executive will
be entitled to participate in the employee benefit programs offered to
Employer's employees and covering the Executive's employment and duties
including, without limitation, those rights and benefits described in Exhibit
"A" of this Agreement.
9. CONFIDENTIALITY. In Executive's position as an
employee of Employer, Executive has had and will have access to confidential
information, trade secrets and other proprietary information of vital importance
to Employer and has and will also develop relationships with customers,
employees and others who deal with Employer which are of value to Employer.
Employer requires as a condition to Executive's employment with Employer that
Executive agrees to certain restrictions as set forth below on Executive's use
of the proprietary information and valuable relationships developed during
Executive's employment with Employer. In consideration of the terms and
conditions contained herein, the parties hereby agree as follows:
9.1 Employer and Executive mutually agree and
acknowledge that Employer may entrust Executive with highly sensitive
confidential, restricted and proprietary information concerning various Business
Opportunities (as hereinafter defined), customer lists, and personnel matters.
Executive acknowledges that during Executive's employment by the Employer, he
shall bear a responsibility to Employer to protect such information from use or
disclosure that is not necessary for the performance of Executive's duties
hereunder, as an essential incident of Executive's employment with Employer.
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<PAGE> 4
9.2 For the purposes of this Section, the
following definitions shall apply.
9.2.1 "TRADE SECRET" shall mean the identity of
customers of Employer, the whole or any portion or phase of any scientific or
technical information, design, process, procedure, formula or improvement that
is valuable and secret (in the sense that it is not generally known to
competitors of Employer) and which is defined as a "trade secret" under Florida
law.
9.2.2 "CONFIDENTIAL INFORMATION" shall mean any
data or information, other than Trade Secrets, which is material to Employer and
not generally known by the public. Confidential Information shall include, but
not be limited to, Business Opportunities of Employer (as hereunder defined),
the details of this Agreement, Employer's business plans and financial
statements and projections, and the costs of the services Employer may offer or
provide to the customers they serve, to the extent such information is material
to Employer and not generally known by the public.
9.2.3 "BUSINESS OPPORTUNITIES" shall mean any
specialized information or plans of Employer concerning the provision of
financial services to the public, together with all related information
concerning the specifics of any contemplated financial services regardless of
whether Employer has contacted or communicated with such target person or
business.
9.2.4 Notwithstanding the definitions of Trade
Secrets, Confidential Information, and Business Opportunities set forth above,
Trade Secrets, Confidential Information, Business Opportunities and the
information generally subject to this Paragraph 9 and its subparts shall not
include any information:
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<PAGE> 5
(i) that is or becomes generally known
to the public;
(ii) that is already known by Executive
or is developed by Executive after termination of employment through entirely
independent efforts;
(iii) that Executive obtains from an
independent source having a bona fide right to use and disclose such
information;
(iv) that is required to be disclosed by
law, except to the extent eligible for special treatment under an appropriate
protective order; or
(v) that Employer's Board of Directors
approves for release.
9.3 Executive shall not, without the prior
approval of Employer's Board, during his employment with Employer and for a
period of one (1) year from the last day of his providing full services under
his employment with the Employer use or disclose, to any unauthorized person who
is not an employee of Employer, any Trade Secrets and/or Confidential
Information of Employer, its subsidiaries or affiliates, or of any other person
or entity making Trade Secrets and/or Confidential Information available for
Employer's use unless said Trade Secrets and/or Confidential Information ceases
to be a Trade Secret and/or unless the Employer ceases to do business in Collier
County, Florida, in which case these restrictions on disclosure and use shall
not apply.
10. OBSERVANCE OF SECURITY MEASURES. During Executive's
employment with Employer, Executive is required to observe all security measures
adopted to protect Trade Secrets, Confidential Information, and Business
Opportunity of Employer.
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<PAGE> 6
11. CHANGE IN CONTROL OF THE EMPLOYER.
11.1 In the event of a "change in control" of the
Employer, as defined hereinafter, Executive shall be entitled at any time up to
thirty (30) days prior to the date of closing of the transaction (the "Election
Date") which will affect such change in control (the "Change-in-Control Date")
and at his election, to give written notice to Employer of termination of this
Agreement, and Executive shall be paid, in addition to all accrued but unpaid
Base Salary (which is to be paid as earned) and Performance Bonuses (which are
to be paid as provided in this Agreement), a lump sum cash payment in the amount
stated in Paragraph J of Exhibit "A" (the "Change-in-Control Payment"). The
Change-in-Control payment provided for in this Section 11.1 shall be
unconditional and without setoff of any kind and paid in cash, not later than
ten (10) days after the date of notice of termination by Executive under this
Section 11.1 or on the Change-in-Control Date, whichever is later provided;
however, that such Change-in-Control Payment shall in no event be paid later
than ninety (90) days from the date of the notice of termination by Executive.
Additionally, the Change-in-Control Payment shall be made to Executive as a
condition precedent to the closing of the transaction which will effect the
change in control, and prior to the Change-in-Control Date Employer shall notify
representatives of the acquiring or successor entity, as the case may be, of
Executive's rights and Employer's obligations under this Agreement, including
without limitation this paragraph, and without effecting Employer's obligations
to pay Executive hereunder, any such acquiring or successor entity shall become
obligated to forthwith pay to Executive for such part of the Change-in-Control
Payment as has not been paid by the Employer as of the Change-in-Control Date.
11.2 In addition to the foregoing and
notwithstanding any provision to the contrary or otherwise in this Agreement, in
the event of a change in control of Employer (as defined hereinafter), all
options and other stock rights of the Executive, whether under this Agreement or
otherwise (including, but not limited to the accrual of stock options not yet
issued
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<PAGE> 7
to Executive, but to which Executive is entitled), shall be automatically and
without further documentation immediately vest in executive, and Executive shall
have the immediate and unfettered right to take any and all actions as Executive
shall deem appropriate with regard to said options and/or rights, including
without limitation the immediate right to receive unissued, but accrued stock
options, exercise stock options and/or transfer or sell stock. Employer shall
take all actions necessary to promptly issue any stock options not already
issued.
11.3 If Executive elects to terminate this
Agreement pursuant to this Section 11, then Executive shall further be entitled,
in lieu of the receipt of shares of Common Stock of the Employer issuable upon
exercise of Executive's stock options, whether such options arose under this
Agreement or otherwise, to receive from Employer an amount in cash or Common
Stock of the Employer (or any combination thereof) as Executive shall in his
sole discretion designate (hereinafter "like-kind election") equal to the excess
of the fair market value (hereinafter defined) as of the Change-in-Control Date
of each share of Common Stock over the exercise price(s) of each share
represented by Executive's options, times the number of shares of Common Stock
represented by such options. The "fair market value" of each share of the Common
Stock shall be equal to the higher of (i) the value as determined by the Board
of Directors of the Employer if there is no organized trading market for the
shares at the time such determination is made, or (ii) the closing price per
share as of the date of the like-kind election (or the average of the bid and
asked prices if no closing price is available) on any nationally recognized
securities exchange or association on which the Employer's shares may be quoted
or listed, or (iii) the highest per share price actually paid for Common Stock
in connection with any change in control of the Employer, or (iv) the book value
of the shares of the Common Stock as determined by Sheshukoff or Keefe, Bruyette
and Woods, or similar entity or (v) the price being paid for each share of
Common Stock as part of the Change-in-Control. The payment provided for in this
Section 11.2 shall be paid in full not later than ten (10) days after the date
of notice of
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termination by Executive under this Section 11 or on the Change-of-Control Date,
whichever is later.
11.4 For purposes of this Section 11, "change in
control" of the Employer shall mean the first to occur of any one or more of the
following:
(i) any transaction, whether by merger,
consolidation, asset sale,
recapitalization, reorganization,
combination, stock purchase, tender
offer, reverse stock split, or
otherwise, which results in the
acquisition of, or beneficial
ownership (as such term is defined
under rules and regulations
promulgated under the Securities
Exchange Act of 1934, as amended)
by, any person or entity or any
group of persons or entities acting
in concert, of 50% or more of the
outstanding shares of Common Stock
of the Employer, or
(ii) the sale of all or substantially
all of the assets of the Employer;
or
(iii) the liquidation of the Employer or
a material amount of Employer's
assets; or
(iv) the takeover or control of all or
substantially all of the operations
of Employer through any of the
means specified in 11.4 (i) above;
or
(v) the approval by the Board of
Directors and the holders of a
majority of the Common Shares then
outstanding of any of the events or
transactions listed in 11.4 (i) -
(iv) above.
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<PAGE> 9
12. RETURN OF MATERIALS Upon the termination of his
employment with Employer, Executive shall deliver to Employer all memoranda,
notes, records, manuals or other documents, including all copies of such
materials, pertaining to the performance of Executive's services hereunder or
containing Trade Secrets or Confidential Information, whether made or compiled
by Executive or furnished to him from any source by virtue of his employment
with Employer.
13. SEVERABILITY. Executive acknowledges and agrees that
the covenants contained in Sections 9 through 12 of this Agreement shall be
construed as covenants independent of one another and distinct from the
remaining terms and conditions of this Agreement, and severable from every other
contract and course of business between Employer and Executive, and that the
existence of any claim, suit or action by Executive against Employer, whether
predicated upon this or any other agreement, shall not constitute a defense to
Employer's enforcement of any covenant contained in Sections 9 through 12 of
this Agreement. Likewise, the existence of any claim, suit and/or action by
Employer against Executive, whether predicated on this or any other agreement,
shall not act as, constitute or permit a setoff or defense to Employer's
obligations under this Agreement.
14. SPECIFIC PERFORMANCE. Executive acknowledges and
agrees that except as otherwise stated, the covenants contained in Sections 9
and 12 of this Agreement shall survive any termination of employment, as
applicable, with or without Cause, at the instigation or upon the initiative of
either party. Executive further acknowledges and agrees that the ascertainment
of damages in the event of Executive's breach of any covenant contained in
Sections 9 and 12 of this Agreement would be difficult, if at all possible.
Executive therefore acknowledges and agrees that Employer shall be entitled in
addition to and not in limitation of any other rights, remedies, or damages
available to Employer in arbitration, at law or in equity, upon submitting
whatever affidavit the law may require, and posting any necessary bond, to have
a court of
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competent jurisdiction enjoin Executive from committing any such breach of the
covenants stated in paragraphs 9 and 12.
15. TERMINATION.
15.1 FOR CAUSE. This Agreement may be terminated
by the Board of Directors of the Employer "for cause," but only after giving
Executive written notice of the Board's intent to terminate Executive setting
forth all matters constituting "cause" and further giving thirty (30) days or,
if cure is not able to be completed in thirty (30) days after the exercise of
due diligence, such longer period as is reasonably necessary, to cure the
matters giving rise to the "for cause" termination for any of the following
reasons:
(i) gross negligence or willful
misconduct of Executive materially
damaging to the business of the
Employer during the term of this
Agreement, or at any time while he
was employed by the Employer prior
to the term of this Agreement, if
not disclosed to the Employer prior
to the commencement of the term of
this Agreement; or
(ii) conviction of Executive during the
term of this Agreement of a crime
involving breach of trust or moral
turpitude.
In the event that the Employer discharges Executive
alleging "cause" under this Section 15.1 and it is subsequently determined
judicially that the termination was "without cause," then such discharge shall
be deemed a discharge without cause subject to the provisions of Section 15.2
hereof. In the event that Executive fails to cure those matters giving rise to
the "for cause" termination, then upon Employer's discharge of Executive for
"cause" under this Section 15.1, such notice of discharge shall be accompanied
by a written and specific description of the circumstances constituting such
"cause."
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Upon termination for cause, Executive shall be paid not later
than the thirtieth day following the date of the written notice of discharge for
cause, without setoff or deduction all accrued but unpaid Base Salary and
Performance Bonuses, and Executive shall further have those rights stated in
Section 15.3 below.
15.2 WITHOUT CAUSE.
(i) The Employer may, upon thirty (30)
days' written notice to Executive,
terminate this Agreement without
cause at any time during the term
of this Agreement upon the
condition that Executive shall be
paid without setoff or deduction
(i) all Base Salary and Performance
Bonuses accrued, but not yet paid,
plus, (ii), as liquidated damages
in lieu of any claim by Executive
for damages arising out of early
termination an amount equal to the
Change-in-Control Payments as
provided in Paragraph J of Exhibit
"A" hereof, and Executive shall
have the right to a like-kind
election as described in 11.2
above; provided, however, that for
purposes of determining the fair
market value of Common Stock, such
fair market value shall be
determined as of the date of notice
of termination without cause of
this Agreement given by the
Employer to Executive.
Additionally, in the event of a
without cause termination,
Executive shall have all of the
rights and benefits provided for in
Section 15.3 below.
The payment provided for in
this Section 15.2 shall be made not
later than the thirtieth day
following the date
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of the written notice to Executive
of termination without cause of
employment of Executive. In the
event of termination by Employer
without cause, Employer shall have
no right to enforce the terms and
conditions of the non-competition
and non-solicitation covenants in
Section 17 hereof and such
provisions shall not be binding
upon Executive.
(ii) Executive may upon thirty (30)
days' written notice to Employer
terminate this Agreement without
cause at any time during the term
of this Agreement. In the event of
termination of this Agreement by
Executive, then Executive shall
have all of the same rights that
Executive would have had if
Employer had terminated without
cause except that the Employer
shall have no obligation to pay to
Executive an amount equal to the
Change-in-Control Payment. However,
Employer shall be obligated to pay,
within thirty (30) days of
Executive's notice of termination
without cause all Base Salary and
Performance Bonuses accrued, but
not yet paid to Executive, and the
Employer shall be entitled to
enforcement of the non-competition
and non-solicitation covenants
contained in Section 17 hereof.
Executive shall have and retain
those rights specified in Section
15.3 below.
15.3 In the event this Agreement is
terminated with or without cause,
and, if without cause whether by
Executive or by the
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Employer, all of the Executive's
stock options including any options
which have accrued but not yet been
issued to Executive ("Accrued
Options"), and any unexercised
portion thereof, granted pursuant
to this Agreement or otherwise
whether or not vested on the date
of termination, may be exercised by
Executive within thirty (30) days
from the date of termination, at
which time all such options that
have not been so exercised shall
expire; provided, however, that in
the case of Accrued Options,
Executive shall have 30 days from
the date of issuance of the options
to exercise the same.
16. DEATH OR DISABILITY. In the event of Executive's
disability or death, Executive shall have all of the same rights as if he had
been terminated "without cause" and Employer shall pay to Executive (in the case
of disability) or (in the case of death), Executive's designated beneficiary,
or, if Executive has failed to designate a beneficiary, to his estate those
amounts specified under Section 15.2 (i) and (ii) above for a "without cause"
termination and Executive shall also have all of the benefits provided under
15.3 except that in the case of death, the time for exercising the options shall
be within ninety (90) days from the date of death, or in the case of disability,
thirty (30) days from the one hundred and eightieth day following the
disability. In the event of a change in control of the Employer after
Executive's death or disability as defined herein, Executive or Executive's
designated beneficiary or his estate, as the case may be, shall be entitled to
the rights, payments, and benefits of Sections 11.1, 11.2 and 11.3 hereof. The
Employer may maintain insurance on its behalf to satisfy in whole or in part the
obligations of Employer under this Section 16.
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Executive shall be deemed disabled if, by reason of physical
or mental impairment, he is incapable of performing his duties hereunder for a
period of 180 consecutive days.
17. NON-COMPETITION AND NON-SOLICITATION.
17.1 Executive acknowledges that he has performed
services or will perform services hereunder which directly affect Employer's
business. Accordingly, the parties deem it necessary to enter into the
protective agreement set forth below, the terms and conditions of which have
been negotiated by and between the parties hereto.
17.2 In the event of termination of employment
under this Agreement pursuant to Section 15 prior to the expiration of the term
of this Agreement, Executive agrees with Employer that through the actual date
of termination of the Agreement, and for a period of twelve (12) months after
such termination date, Executive shall not, without the prior written consent of
Employer, within Collier and Lee County, Florida either directly or indirectly,
serve as an officer, independent contractor, employee, Director of any bank,
bank holding company or other financial institution.
17.3 The covenants of Executive set forth in this
Section 17 are separate and independent covenants for which valuable
consideration has been paid, the receipt, adequacy and sufficiency of which are
acknowledged by Executive, and have also been made by Executive to induce
Employer to enter into this Agreement. Further, each of the aforesaid covenants
may be availed of or relied upon by Employer in any court of competent
jurisdiction, and shall form the basis of injunctive relief and damages
including expenses of litigation (including but not limited to reasonable
attorney's fees) suffered by Employer arising out of any breach of the aforesaid
covenants by Executive. The covenants of Executive set forth in this Section 17
are cumulative to each other and to all other covenants of Executive in favor of
Employer contained in this Agreement and shall survive the termination of this
Agreement for the purposes intended.
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Should any covenant, term, or condition contained in this Section 17 become or
be declared invalid or unenforceable by a court of competent jurisdiction, then
the parties may request that such court judicially modify such unenforceable
provision consistent with the intent of this Section 17 so that it shall be
enforceable as modified, and in any event the invalidity of any provision of
this Section 17 shall not affect the validity of any other provision in this
Section 17 or elsewhere in this Agreement.
17.4 Notwithstanding anything to the contrary in
this Section 17, this Agreement or otherwise, in the event that Employer ceases
to operate as a Bank in Collier County, then the provisions of Section 17.1 -
17.3 shall no longer apply to Executive.
18. NOTICES. Any notice required or desired to be given
under this Agreement shall be deemed given if in writing sent by certified mail
to his residence in the case of Executive, or to its principal office in the
case of Employer.
19. WAIVER OF BREACH. The waiver by Employer or
Executive, as the case may be, of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach by the
breaching party. No waiver shall be valid unless in writing and signed by an
authorized officer of Employer or Executive, as the case may be.
20. ASSIGNMENT. Executive acknowledges that the services
to be rendered by him are unique and personal. Accordingly, Executive may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of Executive under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of
Employer.
21. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Florida.
22. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto regarding employment of Executive, and
supersedes and replaces any prior
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agreement relating thereto. It may not be changed orally but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, extension, or discharge is sought.
EMPLOYER
Dated: 3/22/99 /s/ Joe B. Cox
------------- ----------------------------------------
EXECUTIVE
Dated: 3/22/99 /s/ Michael L. McMullan
-------------- ----------------------------------------
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<PAGE> 17
EXHIBIT "A"
EXECUTIVE COMPENSATION
FOR
CHIEF EXECUTIVE OFFICER
A. SALARY. For all services rendered by Executive, Executive shall receive
a minimum annual base salary of $140,000.00 ("Base Salary"), payable in equal
semi-monthly installments during the term of this Agreement. Base Salary
payments shall be subject to withholding and other applicable taxes. Annual
salary reviews shall take place on each anniversary of this Agreement during the
term hereof.
B. BONUS. Beginning December 31, 1999, and at the end of each calendar
year of the Employer, in addition to Executive's Base Salary, Executive shall be
paid performance bonuses ("Performance Bonuses") based upon good faith written
annual goals for Executive established with Executive's input by the Board of
Directors and given to the Executive at least 30 days before January 1st of the
year for which the goals apply (hereinafter "Performance Goals") except that for
the year 1999, such goals shall be established and given to Executive by no
later than March 31, 1999. The payment of Performance Bonuses pursuant to this
Section (B) shall be contingent upon the following:
(a) As of the calendar year end in question, the overall condition
of the Bank must be "satisfactory" in the opinion of the OCC as set forth in the
most current OCC Report of Supervisory Activity provided to the Board of
Directors of the Bank and the Uniform Financial Institution Rating of the Bank
shall not be less than a "3"; and
(b) As of the calendar year end in question, the Bank shall be
"adequately capitalized" as defined under regulations promulgated by the OCC
pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991;
and
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(c) The Bank shall be profitable, and
(d) No bonus shall exceed 40% of the Executive's Base Salary.
When the contingencies stated in sub-paragraphs B (a), (b) and
(c) above have been met, but in no instance beyond 45 days from each calendar
year-end, the Employer shall set the Performance Bonus amounts based upon the
following criteria:
1. Goals being set by the Board of Directors and goals met;
2. Deposit goals set by the Board of Directors and goals met;
3. Loan goals set by the Board of Directors and goals met;
4 Expense control goals set by the Board of Directors and
goals met. The Performance Goals shall be part of the annual business plans
prior to the expiration of each calendar year for the next ensuing calendar
year, except that the business plan and Performance Goals for 1999 shall be
completed prior to March 31, 1999. In each business plan, each of the above
criteria will be assigned specific percentage bonus (in relation to the
Executive's Base Salary) and each percentage (or, such portion of each
percentage if a specific criteria has not been fully met) shall be paid to
Executive annually, but in no event beyond fifty (50) days from each calendar
year end.
C. STOCK OPTION PLAN: Upon the Commencement Date, Employer shall grant and
transfer to Executive options to purchase 30,000 shares of Common Stock of
Employer at an exercise price of ten dollars ($10.00) per share. Unless sooner
vested as a result of other terms of this or any other Agreement, twenty percent
(20%) of these options shall vest on December 31, 1999 and twenty percent (20%)
shall vest on December 31st of each of the successive four years. All
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options shall be exercisable for a period of 10 years from the date of grant.
The provisions of this paragraph shall not in any way limit the availability of
additional options to Executive.
D. AUTO ALLOWANCE: Executive will be given $650.00 per month for the cost
of his automobile operations and normal maintenance.
E. CLUB MEMBERSHIP: Golf membership at a country club to be determined.
F. EXPENSE ACCOUNT: Legitimate and customary business related expenses.
G. VACATION: FOUR: Four weeks paid vacation.
H. HEALTH INSURANCE:* Family coverage comparable to or better than
Executive's health insurance coverage while Executive employed at Nationsbank,
N.A.
I. CONTINUING EDUCATION: Required continuing education shall be paid for
by Employer. Payment for optional education for Executive shall be determined
annually.
J. CHANGE IN CONTROL PAYMENTS: Two and one-half (2 1/2) times the
then-applicable annual Base Salary.
K. LIFE INSURANCE:* Death benefit equal to two (2) times Executive's
annual Base Salary.
L. DISABILITY INSURANCE: * Coverage comparable to or better than
Executive's coverage while Executive employed at Nationsbank, N.A.
* All insurance policies shall be issued by companies which are not insurance
trusts (or their equivalent) and which are A rated or the equivalent of an A
rating or better.
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EXHIBIT "B"
EXECUTIVE'S DUTIES
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<PAGE> 1
EXHIBIT 10.2
Property Name: Collier Parkshore
PURCHASE AND SALE AGREEMENT
(IMPROVED PROPERTY)
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made between
NATIONSBANK, N.A., A NATIONAL BANKING ASSOCIATION ("Seller"), and STANLEY J.
LIEBERFARB, TRUSTEE U/T/A DATED AUGUST 12, 1998, a _____________________
("Purchaser").
In consideration of the mutual covenants herein contained, Seller and
Purchaser agree as follows:
1. PURCHASE AND SALE
1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, Seller hereby agrees to sell and convey to Purchaser, and Purchaser
hereby agrees to purchase from Seller, the following, described property (herein
collectively called the "Property"):
(a) Land. That certain tract of land (the "Land") located in
Collier County, Florida, being more particularly described on Exhibit A,
attached hereto and incorporated herein by reference together with all
improvements, if any, located thereon;
(b) Easements. All easements, if any, benefitting the Land;
(c) Rights and Appurtenances. All rights and appurtenances
pertaining to the foregoing, if any, including any right, title and interest of
Seller, if any, in and to adjacent streets, alleys or rights-of-way;
(d) Improvements. All improvements (the "Improvements") in and
on the Land;
(e) Tangible Personal Property. Subject to the provisions of
Section 9.2 hereinafter, all of Seller's right, title and interest in all
appliances, fixtures, equipment, machinery, furniture, carpet, drapes and other
personal property, if any, located on or about the Land and the Improvements
(the "Tangible Personal Property") and
2. Purchase Price
2.1 Purchase Price. The purchase price (the "Purchase Price") for the
Property shall be One Million Two Hundred Fifty Thousand and No/100 Dollars
($1,250,000.00) and shall be paid by Purchaser to Seller at the Closing (as
defined in Section 6.1). The Purchase Price shall be payable at Closing in
United States currency as provided in Section 6.6(a) below.
<PAGE> 2
3. EARNEST MONEY
3.1 Earnest Money. Within forty-eight (48) hours after notice to
Purchaser that Purchaser's bid has been accepted by Seller and Seller has
executed this Agreement, Purchaser shall deliver to Roetzel & Andress, a Legal
Professional Association, (the "Escrow Agent") as escrow agent, by cashier's
check or wired funds, a deposit in an amount equal to ten percent (10%) of the
Purchase Price in cash (such amount, together with all interest, if any, earned
thereon being referred to as the "Earnest Money"), to be invested by the Escrow
Agent in an account as Purchaser and Seller shall direct, together with a W-9
form. If the sale of the Property is consummated pursuant to the terms of this
Agreement, the Earnest Money shall be paid to Seller and applied to the payment
of the Purchase Price. If Purchaser terminates this Agreement in accordance with
any right to terminate that Purchaser is granted by the terms of this Agreement,
the Earnest Money shall be immediately returned to Purchaser, and no party
hereto shall have any further obligations under this Agreement except for the
obligations specified in Section 4.2 and Section 10.2. Simultaneously herewith,
Purchaser and Seller shall enter into with Escrow Agent an Escrow Agreement in
the form attached hereto as Exhibit B, with regard to the Earnest Money.
4. CONDITIONS TO CLOSING
4.1 Title Commitment, Survey and Phase I Environmental Site Assessment.
(a) Prior to the execution of this Agreement, Seller has
delivered to Purchaser for Purchaser's review, (i) a commitment for title
insurance (the "Title Commitment") for an Owner's Policy of Title Insurance
issued by Chicago Title Insurance Company ("Title Company"); (ii) a current
survey of the Property (the "Survey"); and (iii) a Phase I Environmental Site
Assessment of the Property (the "Environmental Audit").
(b) Seller shall deliver to Purchaser within twenty (20) days
after the execution of this Agreement, (i) an endorsement to the Title
Commitment (the "Endorsement"), naming Purchaser as the insured and updating the
effective date of the Title Commitment; (ii) an update Survey certifying the
Survey to Purchaser and updating the effective date of the Survey; and (iii) a
certificate executed by the environmental consultant certifying the
Environmental Audit to Purchaser and authorizing Purchaser to rely upon the
Environmental Audit.
(c) Purchaser shall have five (5) days after receipt of the
Endorsement and updated Survey (the "Approval Period") within which to review
the Endorsement and updated Survey and to object to any material change to the
Title Commitment and Survey as disclosed by the Endorsement and updated Survey.
If Purchaser fails to object to any such change by written notice to Seller
within the Approval Period, Purchaser shall be deemed to have approved any such
change. If Purchaser objects to any such change by written notice to Seller
during the Approval Period, Seller shall have the right (without any obligation
to do so) to cure or attempt to cure Purchaser's objection to such change within
ten (10) days after Purchaser's notice of objection, or, if sooner, by the
Closing Date, as hereinafter defined. In the event Seller is unable to or elects
not
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<PAGE> 3
to cure any one or more of Purchaser 's objections, Seller shall notify
Purchaser in writing of such election (the "Election Notice"), and Purchaser may
at its option terminate this Agreement by notifying Seller in writing within
three (3) days after receiving the Election Notice, in which event the Escrow
Agent shall return the Earnest Money to Purchaser and the parties shall have no
further liability to one another, except as specifically set forth herein. If
Purchaser fails to terminate the Agreement within three (3) days after receiving
the Election Notice, Purchaser shall be deemed to have waived such objection and
the Agreement shall proceed to Closing. The term "Permitted Exceptions", as used
herein, shall mean (i) the title exceptions listed in Schedule B of the Title
Commitment which Purchaser approves or is deemed to approve pursuant to this
Section 4.1, (ii) any general exceptions and exclusions contained in the
standard owner's policy of the Title Company that are not deleted pursuant to
the Owner's Affidavit, and (iii) the exceptions listed on the Special Warranty
Deed attached as Exhibit C hereto.
4.2 Confidentiality. All information provided by Seller to Purchaser or
obtained by Purchaser relating to the Property in the course of its review,
including, without limitation, any environmental assessment or audit, shall be
treated as confidential information by Purchaser and Purchaser shall instruct
all of its employees, agents, representatives and contractors as to the
confidentiality of all such information. Purchaser will not, except, with the
express prior written consent of Seller, directly or indirectly, (a) disclose or
permit the disclosure of any information to any person or entity, except persons
who are bound to observe the terms hereof, or (b) use or permit the use of all
information pertaining to the Property (1) in any way detrimental to the Seller
or (2) for any purpose other than evaluating the contemplated purchase of the
Property. Purchaser agrees, that if the closing does not occur, Purchaser will
promptly return to the Seller or its authorized agent all written or tangible
information pertaining to the Property, including all copies or extracts thereof
and all notes based upon the information. Neither the Seller, nor any of its
officers, directors, employees, agents or representatives, shall be deemed to
make or have made any representation or warranty as to the accuracy or
completeness of any information pertaining to the Property or whether or not the
information provided constitutes all of the information available to the Seller,
and neither the Seller nor any of its officers, directors, employees,
representatives or agents shall have any ,liability resulting from Purchaser's
use of any information pertaining to the Property. Notwithstanding anything to
the contrary set forth in this Agreement, the obligations of Purchaser set forth
in this Section 4.2 shall survive the Closing or the termination of this
Agreement, as applicable.
4.3 Termination. If this Agreement is terminated pursuant to Section
4.1 above, the Earnest Money will be promptly refunded to Purchaser and neither
party shall have any further obligations under this Agreement except with
respect to the obligations specified in Section 4.2, this Section 4.3 and
Section 10.2. Purchaser shall, within ten (10) days of such termination, deliver
to Seller copies of the Title Commitment, Survey, Environmental Audit and any
updates, all feasibility studies, engineering reports and all other information
obtained by Purchaser with respect to the Property.
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<PAGE> 4
5. NO REPRESENTATIONS OR WARRANTIES BY SELLER; ACCEPTANCE OF PROPERTY
5.1 Disclaimer. PURCHASER ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT
MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS,
WARRANTIES (OTHER THAN THE WARRANTY OF TITLE AS SET OUT IN, THE SPECIAL WARRANTY
DEED, AS DEFINED BELOW), PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY
KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST,
PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO (A) THE VALUE,
NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION, THE
WATER, SOIL AND GEOLOGY, (B) THE INCOME TO BE DERIVED FROM THE PROPERTY, (C) THE
SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH PURCHASER
MAY CONDUCT THEREON, (D) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION
WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL
AUTHORITY OR BODY, (E) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY,
PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY, (F) THE
MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO
THE PROPERTY, (G) THE MANNER, QUALITY, STATE OR REPAIR OR LACK OF REPAIR OF THE
PROPERTY, OR (H) ANY OTHER MATTER WITH RESPECT TO THE PROPERTY, AND
SPECIFICALLY, THAT SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY DISCLAIMS
ANY REPRESENTATIONS REGARDING COMPLIANCE WITH ANY ENVIRONMENTAL PROTECTION,
POLLUTION OR LAND USE, OR ZONING OR DEVELOPMENT OF REGIONAL IMPACT LAWS, RULES,
REGULATIONS, ORDERS OR REQUIREMENTS, INCLUDING THE EXISTENCE IN OR ON THE
PROPERTY OF HAZARDOUS MATERIALS (AS DEFINED BELOW). PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE
PROPERTY, PURCHASER IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE PROPERTY
AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY SELLER AND AT THE
CLOSING AGREES TO ACCEPT THE PROPERTY AND WAIVE ALL OBJECTIONS OR CLAIMS AGAINST
SELLER (INCLUDING, BUT, NOT LIMITED TO, ANY RIGHT OR CLAIM OF CONTRIBUTION)
ARISING FROM OR RELATED TO THE PROPERTY OR TO ANY HAZARDOUS MATERIALS ON THE
PROPERTY. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT ANY INFORMATION
PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE PROPERTY WAS OBTAINED FROM A
VARIETY OF SOURCES AND THAT SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR
VERIFICATION OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY
OR COMPLETENESS OF SUCH INFORMATION. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER
BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING
TO THE PROPERTY, OR THE OPERATION THEREOF, FURNISHED BY ANY REAL ESTATE BROKER,
AGENT, EMPLOYEE, SERVANT OR OTHER PERSON. PURCHASER FURTHER ACKNOWLEDGES AND
AGREES THAT TO
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THE MAXIMUM EXTENT PERMITTED BY LAW, THE SALE OF THE PROPERTY AS PROVIDED FOR
HEREIN IS MADE ON AN "AS IS" CONDITION AND BASIS WITH ALL FAULTS. IT IS
UNDERSTOOD AND AGREED THAT THE PURCHASE PRICE HAS BEEN ADJUSTED BY PRIOR
NEGOTIATION TO REFLECT THAT ALL OF THE PROPERTY IS SOLD BY SELLER AND PURCHASED
BY PURCHASER SUBJECT TO THE FOREGOING. THE PROVISIONS OF THIS SECTION 5 SHALL
SURVIVE THE CLOSING.
5.2 Hazardous Materials. "Hazardous Materials" shall mean any substance
which is or contains (i) "hazardous substance" as now or hereafter defined in
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. ss.9601 et seq.) ("CERCLA") or any regulations
promulgated under or pursuant to CERCLA; (ii) any "hazardous waste" as now or
hereafter defined in the Resource Conservation and Recovery Act (42 U.S.C.
ss.6901 et seq.) ("RCRA") or regulations promulgated under or pursuant to RCRA;
(iii) any substance regulated by the Toxic Substances Control Act (15 U.S.C.
ss.2601 et seq.); (iv) gasoline, diesel fuel, or other petroleum hydrocarbons;
(v) asbestos and asbestos containing materials, in any form, whether friable or
nonfriable; (vi) polychlorinated biphenyls; (vii) radon gas; and (viii) any
additional substances which are now or hereafter classified or considered to
hazardous or toxic under Environmental Requirements (as hereinafter defined) or
the common law, or any other applicable laws relating to the Property. Hazardous
Materials shall include, without limitation, any substance, the presence of
which on the Property, (A) requires reporting, investigation or remediation
under Environmental Requirements; (B) causes or threatens to cause a nuisance on
the Property or adjacent property or poses or threatens to pose a hazard to the
health or safety of persons on the Property or adjacent property; or (C) which,
if it emanated or migrated from the Property, could constitute a trespass.
5.3 Environmental Requirements. Environmental Requirements shall mean
all laws, ordinances, statutes, codes, rules, regulations, agreements,
judgments, orders, and decrees, now or hereafter enacted, promulgated, or
amended, of the United States, the states, the cities, or any other political
subdivisions in which the Property is located, and any other political
subdivision, agency on instrumentality exercising jurisdiction over the owner of
the Property, the Property, or the use of the Property, relating to pollution,
the protection or regulation of human health, natural resources, or the
environment, or the emission, discharge, release or threatened release of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or waste or Hazardous Materials into the environment (including,
without limitation, ambient air, surface water, ground water or land or soil).
5.4 Radon Notice. RADON IS A NATURALLY OCCURRING RADIOACTIVE GAS THAT,
WHEN IT HAS ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES, MAY PRESENT
HEALTH RISKS TO PERSONS WHO ARE EXPOSED TO IT OVER TIME. LEVELS OF RADON THAT
EXCEED FEDERAL AND STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN FLORIDA.
ADDITIONAL INFORMATION REGARDING RADON AND RADON TESTING MAY BE OBTAINED FROM
YOUR COUNTY PUBLIC HEALTH UNIT.
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5.5 Environmental Risks. Purchaser acknowledges that there are, or may
be, certain environmental issues and/or risks with respect to the Property.
5.6 Indemnity. Purchaser hereby expressly acknowledges that from and
after the Closing, Purchaser shall be responsible and liable for the proper
maintenance and handling of any and all Hazardous Materials, if any, located in
or on the Property or in the Improvements in accordance with all Environmental
Requirements, including the regulations at 40 C.F.R. Section 61 as authorized
under the Clean Air Act and all regulations promulgated or to be promulgated
under all other applicable local, state or federal laws, rules or regulations,
as same may be amended from time to time. Furthermore, from and after Closing,
Purchaser shall indemnify and hold Seller harmless from and against any and all
claims, costs, damages or other liability, including attorney's fees, incurred
by Seller as a result of any Hazardous Materials being located now or previously
on the Property or in the Improvements or as a result of Purchaser's failure to
comply with the requirements of this Section in connection with Purchaser's
proper maintenance and handling of any and all Hazardous Materials, if any,
located in or on the Property or in the Improvements. This Indemnification shall
survive the Closing of this Agreement.
5.7 Release. Purchaser, on behalf of itself and its heirs, successors
and assigns hereby waives, releases, acquits and forever discharges Seller, its
officers, directors, shareholders, employees, agents, attorneys,
representatives, and any other persons acting on behalf of Seller and the
successors and assigns of any of the preceding, of and from any and all claims,
actions, causes of action, demands, rights, damages, costs, expenses or
compensation whatsoever, direct or indirect, known or unknown, foreseen or
unforeseen, which Purchaser or any of its heirs, successors or assigns now has
or which may arise in the future on account of or in any way related to or in
connection with any past, present, or future physical characteristic or
condition of the Property or the Improvements, including, without limitation,
any Hazardous Materials in, at, on, under or related to the Property or the
Improvements, or any violation or potential violation of any Environmental
Requirement applicable thereto. Notwithstanding anything to the contrary set
forth herein, this release shall survive the Closing or termination of this
Agreement.
6. CLOSING
6.1 Closing. The closing (the "Closing")shall be held at a mutually
acceptable location to Seller and Purchaser at 10:00 a.m. on or before that date
designated by Seller which is not less than thirty (30) days after the date
hereof but not more than ninety (90) days after the date hereof (the "Closing
Date"), unless the parties mutually agree upon another time or date.
6.2 Possession. Possession of the Property shall be delivered to
Purchaser at the Closing, subject to the Permitted Exceptions.
6.3 Proration; Taxes. At Closing, pro-rations of income and expense and
the apportionment of taxes shall be as follows:
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(a) All rents, income, utilities and all other operating
expenses with respect to the Property, if any, for the month in which the
Closing occurs, and real estate and personal property taxes and other
assessments with respect to the Property for the year in which the Closing
occurs, shall be prorated as of the date of Closing.
(b) Taxes shall be prorated based upon the maximum allowable
discount and all applicable exemptions. If the Closing shall occur before the
tax rate or the assessed valuation of the Property is fixed for the then current
year, the apportionment of taxes shall be upon the basis of the tax rate for the
preceding year applied to the latest assessed valuation. Subsequent to the
Closing, when the tax rate and the assessed valuation of the Property are fixed
for the year in which the Closing occurs, the parties agree that there shall be
no adjustment of such taxes.
(c) The agreements of Seller and Purchaser set forth in this
Section 6.3 shall survive the Closing.
6.4 Closing Costs. Except as otherwise expressly provided herein,
Seller shall pay, on the Closing Date, all of the cost of the preparation of the
deed, any documentary stamps on the deed and surtax, if any, and certified and
pending municipal special assessment liens for which the work has been
substantially completed, and Purchaser shall pay, on the Closing Date, the cost
of the Title Commitment, "including, without limitation, the cost of a title
search or abstract of the Property, and the premium for the Owner's Policy, all
recording costs, intangible tax on any mortgage, documentary stamps on any note,
pending special assessment liens for which the work has not been substantially
completed, the cost of any inspections, and any other customary charges and
costs of closing. In addition, Purchaser shall reimburse Seller for the cost of
the Survey and Environmental Audit and updates and recertifications thereof
Except as otherwise provided herein, each party shall pay its own attorneys'
fees.
6.5 Seller's Obligations at the Closing. At the Closing, Seller shall
deliver to Purchaser each of the following documents but in no event earlier
than the delivery to Seller of all of the proceeds of sale of the Property by
wire transfer or immediately available U.S. funds:
(a) Deed. Special Warranty Deed (the "Deed") executed by
Seller conveying the Land and the Improvements located thereon to Purchaser
subject to no exceptions other than the Permitted Exceptions, in the form
attached to this Agreement as Exhibit C.
(b) Evidence of Authority. Copy of such documents and
resolutions as may be acceptable to the Title Company, so as to evidence the
authority of the person signing the Deed and other documents to be executed by
Seller at the Closing and the power and authority of Seller to convey the
Property to Purchaser in accordance with this Agreement.
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(c) Foreign Person. An affidavit of Seller certifying that
Seller is not a "foreign person", as defined in the Federal Foreign Investment
in Real Property Tax Act of 1980 and the 1984 Tax Reform Act, as amended.
(d) Owner's Affidavit. An executed affidavit or other document
acceptable to the Title Company in issuing the Owner's Policy without exception
for possible lien claims of mechanics, laborers and materialmen or for parties
in possession, as applicable.
(e) Bill of Sale and Assignment. Bill of Sale and Assignment
(the "Bill of Sale") executed by Seller assigning to Purchaser the Tangible
Personal Property, in the form attached to this Agreement as Exhibit D.
(f) A closing statement setting forth the allocation of
closing costs, purchase proceeds, etc.
6.6 Purchaser's Obligations at the Closing. At the Closing, Purchaser
shall deliver to Seller the following:
(a) Purchase Price. The Purchase Price by wire transfer of
immediately available U.S. funds;
(b) Evidence of Authority. Such consents and authorizations as
Seller may reasonably deem necessary to evidence authorization of Purchaser for
the purchase of the Property, the execution and delivery of any documents
required in connection with Closing and the taking of all action to be taken by
the Purchaser in connection with Closing; and
(c) Other Documentation. Such other documents as may be
reasonable and necessary in the opinion of the Seller or its counsel to
consummate and close the purchase and sale contemplated herein pursuant to the
terms and provisions of this Agreement.
7. RISK OF LOSS
7.1 Condemnation. If, after the date of this Agreement and prior to the
Closing, action is initiate to take any Property by eminent domain proceedings
or by deed in lieu thereof, Purchaser may either (a) terminate this Agreement,
or (b) consummate the Closing, in which latter event the award of the condemning
authority shall be assigned to Purchaser at the Closing. If, prior to the date
of this Agreement, an action has been initiated to take any of the Property by
eminent domain proceedings or by deed in lieu thereof, any award made by the
condemning authority shall be paid to Seller and the portion of the Property
taken shall be deleted from the Property without a reduction in the Purchase
Price.
7.2 Casualty. Seller assumes all risks and liability for damage to or
injury occurring to the Property by fire, storm, accident, or any other casualty
or cause until the Closing has been
8
<PAGE> 9
consummated. If the Property, or any part thereof, suffers any damage in excess
of $50,000.00 prior to the Closing from fire or other casualty, which Seller, at
its sole option, does not repair, Purchaser may either (a) terminate this
Agreement, or (b) consummate the Closing, in which latter event the proceeds of
any insurance not exceeding the Purchase Price and covering such damage shall be
assigned to Purchaser at the Closing. If the Property. or any part thereof,
suffers any damage less than or equal to $50,000.00 prior to the Closing,
Purchaser agrees that it will consummate the Closing and accept the assignment
of the proceeds of any insurance covering such damage at the Closing.
8. DEFAULT
8.1 Breach by Seller. If Seller breaches this Agreement, Purchaser may,
as Purchaser's sole and exclusive remedy hereunder, either (a) terminate this
Agreement and thereupon shall be entitled to the immediate return of the Earnest
Money, or (b) enforce specific performance of this Agreement. In no event shall
Seller be liable to Purchaser for any actual, punitive, speculative,
consequential or other damages of any kind.
8.2 Breach by Purchaser. If Purchaser breaches this Agreement, Seller
may, as Seller's sole remedy and relief hereunder, either (a) terminate this
Agreement and thereupon be entitled to receive the Earnest Money as liquidated
damages (and not as a penalty), or (b) enforce specific performance of this
Agreement. Seller and Purchaser have made the above provision for liquidated
damages because it would be difficult to calculate, on the date hereof, the
amount of actual damages for such breach, and that these sums represent
reasonable compensation to Seller for such breach.
8.3 Return/Delivery of Earnest Money. In the event the Earnest Money is
resumed to the Purchaser, as provided in Section 8.1 above, or delivered to the
Seller, as provided in Section 8.2 above, upon the return or delivery of the
same, the parties hereto shall have no further rights, obligations or
liabilities with respect to each other hereunder, except for the obligations
specified in Section 4.2, Section 4.3 and Section 10.2 hereof.
9. FUTURE OPERATIONS
9.1 Future Operations. From the date of this Agreement until the
Closing or earlier termination of this Agreement, Seller will (a) keep and
maintain the Property in substantially the same condition as of the date of this
Agreement, reasonable wear and tear excepted, and (b) promptly advise Purchaser
of any litigation, arbitration or administrative hearing concerning the Property
arising or threatened of which Seller has written notice.
9.2 Trade Fixtures and Equipment. Purchaser acknowledges that Seller is
currently using the Property as a banking facility. Prior to the Closing or, in
the event Seller leases back the Property from Purchaser, prior to vacating the
Property, Seller shall be entitled, at Seller's option, to remove from the
Property all trade fixtures, equipment, furniture, appliances, supplies,
records, documents, cash, coin, and other items of moveable personal property
relating to the operation of
9
<PAGE> 10
Seller's business that may be situated upon the Property (including, without
limitation, all safes, vaults, vault doors, signage, pylons, alarms and security
equipment, auxiliary generators, cubicles and removable partitions, computers
and computer-related equipment, telecommunication equipment, halon systems,
draperies, and decorations) and such items removed by Seller shall be excluded
from the Improvements and Tangible Personal Property to be conveyed hereunder
and shall remain the property of Seller. Seller shall have no obligation repair
any damage to the Property caused by the removal of such items, and Purchaser
shall accept the Property in its then-existing condition at the Closing;
provided, however, Seller shall use its best efforts to minimize any such damage
to the Property caused by the removal of such items.
9.3 Restrictive Covenant. Purchaser shall not use or permit the
Property to be used by any person or entity for "retail banking purposes" (the
"Use Restriction") for a period of sixty (60) days after the lease is terminated
(the "Restricted Period"). The term "retail banking purposes" shall include,
without limitation, receiving deposits or making loans to the general public,
whether done by a state bank, national bank, savings and loan association,
credit union or other entity, whether by walk-up or drive-in teller facility or
otherwise. In addition, during the Restricted Period: (i) there shall be no
signage or advertising of any type placed or permitted upon any portion of the
Property that relates to a financial institution, including Purchaser (the
"Signage Restriction"), and (ii) there shall be no public announcements,
advertising, solicitations, business development, notices or other publications
relating in any manner to the present or future operation of a financial
institution, including Purchaser, upon the Property (the "Advertising
Restriction"). In the event of a violation of any of the aforesaid Restrictions,
Seller shall be entitled to pursue all remedies available at law or in equity,
including, without limitation, injunctive relief. In addition, Seller shall be
entitled to recover from Purchaser liquidated damages in the amount of $2,000.00
per day for any violation of the Use Restriction or Signage Restriction and
$25,000.00 for each and every violation of the Advertising Restriction. The
parties recognize and acknowledge that the foregoing liquidated damages are
reasonable and do not constitute a penalty and are being imposed due tot he
difficulty of calculating the actual damages that would result from a violation
of these Restrictions. In the event of any ligation relating to the enforcement
of the provisions contained in this Section, the prevailing party shall be
entitled to recover all costs and expenses, including reasonable attorney's
fees. The provisions contained in this Section 9.3 shall survive the Closing.
9.4 Leaseback. Seller shall have the option of leasing the entire
Property back from Purchaser for the continued operation of Seller's branch
banking facility. If Seller, in its sole discretion, elects to lease the entire
Property back from Purchaser, Seller shall within fifteen (15) days after the
Effective Date of this Agreement deliver to Purchaser Seller's standard form
lease agreement to be executed at Closing which shall contain terms and
conditions acceptable to Seller and shall terminate no later than November 30,
1998, provided that Seller may terminate the lease upon twenty-four (24) hours
prior notice to Purchaser, at a base rental rate equal to an eight percent (8%)
per annum cost of money on the sales price. In the event Seller and Purchaser
cannot agree on a lease acceptable to both parties, on or before twenty-five
(25) days after the Effective Date of this Agreement, Seller shall have the
option of terminating this Agreement, whereupon the Earnest
10
<PAGE> 11
Money shall be refunded to Purchaser and the parties shall have no further
obligations under this Agreement except with respect to the obligations
specifically set forth herein.
10. MISCELLANEOUS
10.1 Notices. All notices, demands and requests which may be given or
which are required to be given by either party to the other under this
Agreement, and any exercise of a right of termination provided by this
Agreement, shall be in writing and shall be deemed effective when either: (i)
personally delivered to the intended recipient; (ii) three (3) business days
after having been sent, by certified or registered mail, return receipt
requested, addressed to the intended recipient at the address specified below;
(iii) delivered in person to the address set forth below for the party to whom
the notice was given; (iv) at noon of the business day next following after
having been deposited into the custody of a nationally recognized overnight
delivery service such as Federal Airborne Express, addressed to such party at
the address specified below; or (v) immediately if sent during regular business
hours or at 8:30 am. local time on the next business day next following an
after-hours, weekend or holiday notice sent by facsimile, telegram or telex,
provided that receipt for such facsimile, telegram or telex is verified by the
sender and followed by a notice sent in accordance with one of the other
provisions set forth above. Any notice sent as required by this section and
refused by recipient shall be deemed delivered as of the date of such refusal.
For purposes of this Section 10.1, the addresses of the parties for all notices
are as follows (unless changed by similar notice in writing given by the
particular person whose address is to be changed):
IF TO SELLER: NationsBank, N.A.
400 North Ashley Drive (FL1-010-08-01)
Tampa, Florida 33602
Attention: Monica Ammann, SVP
Telephone: (813) 224-5176
Fax: (813) 224-3620
WITH A COPY TO: NationsBank, N.A.
400 North Ashley Drive (FLI-010-15-02)
Tampa, Florida 33602
Attention: Claire Bailey Carraway, Esquire
Telephone: (813) 224-5995
Fax: (913) 224-5075
IF TO PURCHASER: Stanley J. Lieberfarb, Trustee U/T/A of 8/12/98
4001 North Tamiami Trail, suite 330
Naples, Florida 34103
Telephone: (941) 649-4900
Fax: (941) 649-0823
11
<PAGE> 12
WITH A COURTESY COPY TO:
---------------------------
---------------------------
---------------------------
---------------------------
Telephone:
-----------------
Fax:
-----------------------
IF TO ESCROW AGENT: Roetzel & Andress, a Legal Professional Association
2080 McGregor Boulevard, Third Floor
Fort Myers, Florida 33901
Attention: Steven W. Hubbard, Esquire
Telephone: (941) 337-3850
Fax: (941) 337-0790
10.2 Restate Estate Commissions. Seller agrees to pay Lincoln Property
Company Commercial Service Enterprises, Inc., ("Broker") upon the closing of the
transaction contemplated hereby, and not otherwise, a cash commission in
accordance with a separate agreement between Seller and Broker. Purchaser agrees
to pay any commission due Purchaser's broker, if applicable. Purchaser
acknowledges that Seller has no obligations, either express or implied, to
Purchaser's broker and that this Agreement shall not create any privity of
contract between Seller and Purchaser's broker.
As used herein, "Acquisition Fees" shall mean all fees paid to
any person or entity in connection with the selection and purchase of the
Property including real estate commissions, selection fees, nonrecurring
management and startup fees, development fees or any other fee of similar
nature. Seller and Purchaser each hereby agree to indemnify and hold harmless
the other from and against any and all claims for Acquisition Fees or similar
charges with respect to this transaction, arising by, through or under the
indemnifying party, and each further agrees to indemnify and hold harmless the
other from any loss or damage resulting from an inaccuracy in the
representations contained in this Section 10.2. This indemnification agreement
of the parties shall survive the Closing.
10.3 Entire Agreement. This Agreement embodies the entire agreement
between the parties relative to the subject matter hereof, and other are no oral
or written agreements between the parties, nor any representations made by
either party relative to the subject mater hereof, which are not expressly set
forth herein.
10.4 Amendment. This Agreement may be amended only by a written
instrument executed by the party or parties to be bound thereby.
10.5 Headings. The captions and headings used in this Agreement are for
convenience only and do not in any way limit, amplify, or otherwise modify the
provisions of this Agreement.
12
<PAGE> 13
10.6 Time of Essence. Time is of the essence of this Agreement;
however, if the final date of any period which is set out in any provision of
this Agreement falls on a Saturday, Sunday or legal holiday under the laws of
the United States or the State of Florida, then, in such event, the time of such
period shall be extended to the next day which is not a Saturday, Sunday or
legal holiday.
10.7 Governing Law. This Agreement shall be governed by the laws of the
State of Florida and the laws of the United States pertaining to transactions in
such State. All of the parties to this Agreement have participated freely in the
negotiation and preparation hereof; accordingly, this Agreement shall not be
more strictly construed against any one of the parties hereto.
10.8 Successors and Assigns; Assignment. This Agreement shall bind and
inure to the benefit of Seller and Purchaser and their respective heirs,
executors, administrators, personal and legal representatives, successors and
assigns. Purchaser shall not assign Purchaser's rights under this Agreement
without the prior written consent of Seller.
10.9 Invalid Provision. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision" had never
comprised a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
such illegal invalid, or unenforceable provision or by its severance from this
Agreement.
10.10 Attorneys' Fees. In the event it becomes necessary for either
party hereto to file suit to enforce this Agreement or any provision contained
herein, the party prevailing in such suit shall be entitled to recover, in
addition to all other remedies or damages, as provided herein, reasonable
attorneys' fees, paralegal fees and cost incurred in such suit at trial,
appellate, bankruptcy and/or administrative proceedings.
10.11 Multiple Counterparts and Facsimile Execution. This Agreement may
be executed in a number of identical counterparts which, taken together, shall
constitute collectively one (1) agreement; but in making proof of this
Agreement, it shall not be necessary to produce or account for more than one
such counterpart executed by the party to be charged. A facsimile copy of this
Agreement and any signatures thereon shall be considered for all purposes as
originals.
10.12 Date of this Agreement. As used in this Agreement, the terms
"date of this Agreement" or "date hereof" shall mean and refer to the date on
which Seller executes this Agreement.
10.13 Exhibits. The following exhibits are attached to this Agreement
and are incorporated into this Agreement and made a part hereof.
(a) Exhibit A, the Land;
(b) Exhibit B, the Escrow Agreement;
13
<PAGE> 14
(c) Exhibit C, the Deed; and
(d) Exhibit D, the Bill of Sale.
10.14 Authority. Each party hereto represents and warrants to the other
that the execution of this Agreement and any other documents required or
necessary to be executed pursuant to the provisions hereof are valid, binding
obligations and are enforceable in accordance with their terms.
10.15 Recordation; Publicity. Neither this Agreement nor any memorandum
or other summary of this Agreement shall be placed of public record under any
circumstances except with the prior written consent of the Seller and the
Purchaser. In addition, from and after the effective date of this Agreement,
whether this Agreement is closed or terminated, neither Purchaser nor Seller
shall make or permit to be made any announcements or press releases concerning
the existence of this Agreement, the terms of the purchase of the Property or
any other information concerning this Agreement or the transaction contemplated
herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by persons duly empowered to bind the parties to perform
their respective obligations
SELLER:
NATIONSBANK, NA,
a national banking association
By:
-----------------------------------------
Print Name: Monica L. Ammann
-------------------------------
Title: Senior Vice President
-------------------------------------
Date:
---------------------------------------
PURCHASER:
By:
-----------------------------------------
Print Name: Stanley J. Lieberfarb, Trustee
-------------------------------
U/T/A dated August 12, 1998
--------------------------------
Date:
---------------------------------------
14
<PAGE> 15
ACKNOWLEDGMENT AND AGREEMENT BY THE AGENT
The undersigned joins in execution of this Agreement for the purpose of
representing and warranting to Purchaser and Seller that the undersigned (i) is
a duly licensed real estate broker under the real estate licensing act(s) of the
State of Florida and any applicable regulations, (ii) is duly authorized to earn
and receive a commission in connection with the transaction evidenced by this
Agreement, and (iii) acknowledges and agrees to the terms and provisions of
Section 10.2 hereof, including, without limitation, the entitlement to
commission only accruing upon a final closing of the transaction. The
undersigned shall indemnify and hold Purchaser and Seller harmless from any
loss, liability, damage, cost or expense (including attorneys' fees) resulting
by reason of a breach of the representations and warranties made herein.
LINCOLN PROPERTY COMPANY
COMMERCIAL SERVICE ENTERPRISES, INC.
By:
----------------------------
Print Name: Chuck Dunn
-------------------
Title: Senior Vice President
------------------------
Date:
------------------------
15
<PAGE> 16
EXHIBIT A
(Land)
That land located at 3401 N. Tamiami Trail, Collier County, Florida.
(Legal Description to be verified by title commitment and survey.)
16
<PAGE> 17
EXHIBIT B
ESCROW AGREEMENT
THIS ESCROW AGREEMENT made and entered into as of the ___ day of
_________, 1998, by and among NATIONSBANK, N.A., A NATIONAL BANKING ASSOCIATION
("Seller"); STANLEY J. LIEBERFARB, TRUSTEE, U/T/A AUGUST 12, 1998 ("Purchaser");
and Roetzel & Andress, a Legal Professional Association ("Escrow Agent").
STATEMENT OF PURPOSE
Seller and Purchaser have entered into a Purchase and Sale Agreement
dated ___________, 19___, for the sale and purchase of a certain tract of land
located in Collier County, Florida, as more particularly described in the
Purchase and Sale Agreement (the "Property"). Purchaser and Seller desire to
have the Escrow Agent hold the Earnest Money as required under the Purchase and
Sale Agreement in escrow pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Appointment. Purchaser and Seller hereby appoint Roetzel & Andress,
a Legal Professional Association, as Escrow Agent hereunder.
2. Earnest Money Deposit. Purchaser has delivered and deposited with
Escrow Agent the amount of $125,000.00 representing the Earnest Money as
required by the Purchase and Sale Agreement. The Escrow Agent agrees to
immediately deposit said funds in an account at a local banking institution in
Lee County, the accounts of which are insured by the FDIC, and to hold and
disburse said funds, and any interest earned thereon (together the "Earnest
Money") as hereinafter provided.
3. Instructions. Upon written notification from Purchaser and Seller
that the sale contemplated is to be consummated, Escrow Agent shall deliver the
Earnest Money at Closing by wire transfer to Seller to be applied to the
purchase price for the benefit of Purchaser, unless otherwise instructed by the
parties hereto. Upon written notification from both Purchaser and Seller that
the contemplated sale shall not take place, Escrow Agent shall deliver the
Earnest Money to Purchaser or to Seller, as directed, or as otherwise instructed
by the parties hereto.
4. Duties of Escrow Agent/Exculpation. Purchaser and Seller agree that
in performing any of its duties under this Agreement, Escrow Agent shall not be
liable for any loss, costs or damage which it may incur as a result of serving
as Escrow Agent hereunder, except for any loss, costs or damage arising out of
its willful default or negligence. Accordingly, Escrow Agent shall not incur any
liability with respect to (a) any action taken or admitted to be taken in good
faith upon
17
<PAGE> 18
advice of its counsel given with respect to any questions relating to its duties
and responsibilities, or (b) to any action taken or admitted to be taken in
reliance upon any document, including any written notice of instruction provided
for in this Agreement, not only as to its due execution and validity and
effectiveness of its provisions, but also to the truth and accuracy of any
information contained therein, which Escrow Agent shall in good faith believe to
be genuine, to have been signed or presented by a proper person or persons and
to conform with the provisions of this Agreement.
5. Indemnification. Purchaser and Seller hereby agree to indemnify and
hold harmless Escrow Agent against any and all loses, claims, damages,
liabilities and expenses, including without limitation, reasonable attorneys'
fees and disbursements, which may be imposed upon or incurred by Escrow Agent in
connection with its serving as Escrow Agent hereunder, unless such losses,
claims, damages, liabilities and expenses are the result of Escrow Agent's
willful default or negligence in performing its obligations hereunder.
6. Disputes. In an event of dispute between any of the parties hereto,
sufficient in the discretion of Escrow Agent to justify its doing so, Escrow
Agent shall be entitled to tender unto the registry or custody of any court of
competent jurisdiction all money or property held by it under the terms of this
Agreement, together with such legal pleadings as it deems appropriate and
thereupon be discharged.
IN WITNESS HEREOF, the undersigned have caused this instrument to be
duly executed and sealed as of the day and year first above written.
SELLER:
NATIONSBANK, NA,
a national banking association
By:
--------------------------
Print Name: Monica L. Ammann
-------------------
Title: Senior Vice President
------------------------
Date:
--------------------------
18
<PAGE> 19
PURCHASER:
By:
------------------------------------------------
Print Name: Stanley J. Lieberfarb, Trustee
----------------------------------------
U/T/A dated August 12, 1998
----------------------------------------
Date:
----------------------------------------------
ESCROW AGENT:
Roetzel & Andress, a Legal Professional Association
By:
------------------------------------------------
Print Name: Steven W. Hubbard
----------------------------------------
Title: Partner
--------------------------------------------
Date:
----------------------------------------------
19
<PAGE> 1
EXHIBIT 23.1
CONSENT OF HILL, BARTH & KING, INC., INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form SB-2 and related Prospectus of Citizens
Bancshares of Southwest Florida, Inc. for the registration of 1,200,000 shares
of its common stock and to the incorporation therein of our report dated
February 22, 1999 relating to the financial statements of Citizens Bancshares of
Southwest Florida, Inc. as of February 22, 1999 and for the period from June 15,
1998 (date of inception) to February 22, 1999.
/s/ HILL, BARTH & KING, INC.
Certified Public Accountants
Naples, Florida
March 23, 1999
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE AUDITED FINANCIAL
STATEMENTS DATED FEBRUARY 22, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUN-15-1998
<PERIOD-END> FEB-22-1999
<CASH> 206,330
<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> 1,675,414
<DEPOSITS> 0
<SHORT-TERM> 1,642,886
<LIABILITIES-OTHER> 0
<LONG-TERM> 0
0
0
<COMMON> 180
<OTHER-SE> 32,348
<TOTAL-LIABILITIES-AND-EQUITY> 1,675,414
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 2,220
<INTEREST-TOTAL> 2,220
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 4,475
<INTEREST-INCOME-NET> (2,255)
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 145,217
<INCOME-PRETAX> (147,472)
<INCOME-PRE-EXTRAORDINARY> (147,472)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (147,472)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<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>
