<PAGE> 1
As filed with the SEC on August 24, 1999
Registration No. 333-81551
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
AMENDMENT NO. 1
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
----------------------------
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Florida 6021 65-0921046
------- ---- ----------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
1300 Homestead Road N.
Lehigh Acres, Florida 33936
(941) 368-1190
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive
office and place of business)
----------------------------
LLOYD J. WEBER
Chief Executive Officer
1300 Homestead Road N.
Lehigh Acres, Florida 33936
(941) 368-1190
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------------
Copies of all communications, including copies of
all communications sent to agent for
service, should be sent to:
<TABLE>
<S> <C>
Neil E. Grayson, Esq. William T. McCartan
C. Russell Pickering, Esq. Bradley & Riley PC
J. Brennan Ryan, Esq. 2007 First Avenue, S.E.
Nelson Mullins Riley & Scarborough, L.L.P. Cedar Rapids, Iowa 52402
999 Peachtree Street, N.E., Suite 1400 (319) 363-0101
Atlanta, Georgia 30309 (319) 363-9824 (fax)
(404) 817-6000 and (404) 817-6225 (fax)
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act of 1933 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 of 1933, check the following box and list the
Securities Act of 1933 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 of 1933, check the following box and list the
Securities Act of 1933 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. [ ]
--------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE PRICE REGISTRATION FEE
--------------------------- ------------ ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value.... 1,000,000 $10.00 $10,000,000 $2,780*
</TABLE>
- ----------------
* previously paid
The registrant amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to such Section 8(a),
may determine.
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<PAGE> 2
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
SEC is effective. This prospectus is not an offer to buy these securities in any
state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, AUGUST 24, 1999
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
a proposed holding company for
LEHIGH ACRES FIRST NATIONAL BANK
[INSERT COMPANY LOGO HERE]
1,000,000 Shares of Common Stock
$10.00 per share
-------------------------------
We are offering shares of common stock of Lehigh Acres First National
Bancshares, Inc. to fund the start-up of a proposed new community bank named
Lehigh Acres First National Bank. We will be the sole owner of Lehigh Acres
First National Bank, which will be headquartered in Lee County, Florida. We are
currently obtaining regulatory approvals for the bank and expect to open it in
the first quarter of 2000. This is our first offering of stock to the public and
there is no public market for our shares.
The shares will be sold by our sales agent, Berthel Fisher and Company
who has agreed to use its best efforts to sell a minimum of 600,000 shares and a
maximum of 1,000,000 shares, but must sell at least 600,000 shares if it sells
any. The minimum purchase requirement for investors is 100 shares. Organizers
and officers will receive warrants to purchase one share of common stock at
$10.00 a share for every share they purchase in the offering.
We intend to close the offering on December 31, 1999, but we may extend
the offering until March 30, 2000 at the latest. We will place all money we
receive in the offering with an independent escrow agent who will hold the money
until we receive preliminary approval from our bank regulatory agencies for the
new bank. If we do not succeed before the end of the offering period, we will
return all funds received to the subscribers promptly, with interest.
This table summarizes the offering and the amounts we expect to
receive.
<TABLE>
<CAPTION>
Minimum Total Maximum Total
Per Share 600,000 Shares 1,000,000 Shares
--------- -------------- ----------------
<S> <C> <C> <C>
Public Offering Price .. $10.00 $6,000,000 $10,000,000
Sales Agency Commission $ .80 $ 326,400 $ 646,400
Proceeds to Lehigh Acres
Bancshares ............. $ 9.20 $5,673,600 $ 9,353,600
</TABLE>
We will not pay a sales commission for shares purchased by our officers
and directors, we will pay $.50 per share for shares sold to residents of Lehigh
Acres and investors recommended by our organizers, and we will pay $.80 per
share for all other shares sold to the public. The total sales agency
commissions in the table reflect a blended rate on the assumption that our
organizers and directors will purchase 117,000 shares, residents of Lehigh Acres
will purchase 200,000 shares, and that we will pay the maximum sales agency
commission of $.80 per share on the rest of the shares sold.
THIS IS A NEW BUSINESS. AS WITH ALL NEW BUSINESSES, AN INVESTMENT WILL
INVOLVE RISKS. IT IS NOT A DEPOSIT OR AN ACCOUNT AND IS NOT INSURED BY THE FDIC
OR ANY OTHER GOVERNMENT AGENCY. YOU SHOULD NOT INVEST IN THIS OFFERING UNLESS
YOU CAN AFFORD TO LOSE YOUR ENTIRE INVESTMENT. SOME OF THE RISKS OF THIS
INVESTMENT ARE DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 5.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[INSERT BERTHEL FISHER LOGO]
___________ ____, 1999
<PAGE> 3
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
LEHIGH ACRES FIRST NATIONAL BANK
PROPOSED MARKET AREA
[INSERT MAP OF FLORIDA AND LEE COUNTY SHOWING MARKET AREA]
<PAGE> 4
SUMMARY
We encourage you to read the entire prospectus carefully before
investing. Because this section is a summary, it may not contain all of the
information about the offering that is important to you.
We are raising capital in this offering to open Lehigh Acres First
National Bank. The bank will be a new locally owned and operated community bank
which will serve Lee County, Florida. The bank will initially market its
services to customers in the following communities; Lehigh Acres, Alva,
Buckingham, and Gateway, Florida. Our initial office will be in Lehigh Acres,
Florida. We have received preliminary approvals from the Office of the
Comptroller of the Currency, the FDIC, and the Federal Reserve Board to open for
business. We expect to receive final regulatory approvals by the fourth quarter
of 1999. Our principal executive offices are located at:
1300 Homestead Road N.
Lehigh Acres, Florida 33936
Telephone: (941) 368-1190
Fax: (941) 368-1191
REASONS FOR STARTING LEHIGH ACRES FIRST NATIONAL BANK
We are organizing the bank to provide customer-oriented commercial and
consumer banking services to local businesses and individuals in the Lehigh
Acres area of Lee County. We will focus on offering our customers personalized
service and local decision-making, and we will emphasize our local ownership and
management and our strong ties to the Lee County community. Our customers will
consist primarily of individuals and small- to medium-sized businesses.
BOARD OF DIRECTORS AND MANAGEMENT
Lehigh Acres Bancshares was founded by the following fifteen business
leaders and who will also serve as our initial board of directors:
- Robert C. Bagans - Lawrence J. Murphy, D.V.M.
- Calvin H. Beals - Micki J. Regas
- Benjamin R. Bell - Patricia A. Regas
- Craig A. Dearden - E. Byron Richardson
- Paul F. Dinger - Kenneth K. Thompson
- Teresa Goodlad - Lloyd J. Weber
- James D. Hull - Kenneth C. Wolfe
- Vikas K. Jain, M.D.
We have attracted an experienced management team with many years of banking
experience. Our management team currently consists of the following individuals:
- Lloyd J. Weber will be our president and CEO. He is a seasoned
banker with almost thirty years of experience in operations,
strategic planning, marketing, and lending. From 1973 through
1998, Mr. Weber has served in various executive capacities,
including, chairman of the board, CEO, president, and senior loan
officer of several banks throughout the State of Florida. Mr.
Weber has resided in Florida for 27 years.
- Carol E. Benson will be the senior vice president and cashier of
Lehigh Acres Bank. She has over 23 years of experience in bank
operations in Lehigh Acres. During her banking career she has held
numerous banking positions including, cashier, vice president, and
compliance officer. From 1976
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<PAGE> 5
until 1996 she served in various capacities at Tri-County
Community Bank of Lehigh Acres which was acquired by Florida
Community Bank where she served until June 1999.
TOTAL FUNDS TO BE RAISED IN THE OFFERING
The banking regulators have required us to have at least $5,000,000 in
capital to open the bank. Therefore, we plan to sell a minimum of 600,000 shares
and a maximum of 1,000,000 shares in the offering, all at $10.00 per share. We
anticipate our organizers and directors will purchase at least 117,000 shares in
the offering, for an investment of at least $1,170,000. We hope to raise the
rest of these funds primarily from individuals and businesses in Lee County who
share our desire to support a new local community bank in the area.
THE OFFERING
We will use the first $5,000,000 we raise in this offering to
capitalize Lehigh Acres Bank. We will use the remaining proceeds to pay expenses
and provide working capital. Lehigh Acres Bank will use some of the funds it
receives from our investment to pay expenses, for leasehold improvements, to
build and furnish its offices, and to provide working capital to operate the
bank. See "Use of Proceeds" on page 12.
FUNDS RECEIVED WILL BE PLACED IN ESCROW
Because we cannot open the bank without final regulatory approvals, we
will place all the proceeds raised in this offering with the Independent
Bankers' Bank of Florida acting as an independent escrow agent. The escrow agent
will hold these funds until we raise at least $6,000,000 and obtain preliminary
regulatory approvals to open the bank. In March 1999, we received the
preliminary approval of the Office of the Comptroller of the Currency to open
the bank, in April 1999, the FDIC preliminarily approved our application for
deposit insurance, and in August 1999, the Federal Reserve approved our
application to own Lehigh Acres Bank. We currently intend to close the offering
on December 31, 1999, but may extend the date of the offering up to March 30,
2000. If we fail to meet these conditions, we will refund your subscription in
full, with interest.
SHARES WILL BE SOLD BY A SALES AGENT
We have engaged Berthel Fisher and Company as our sales agent to sell
shares in the offering. The sales agent has agreed to use its best efforts to
sell the shares offered, but must sell at least 600,000 shares in order to sell
any. We have agreed to pay the sales agent no commission on shares sold in the
offering to our organizers and a 5% commission on shares sold to investors who
are (i) residents of the City of Lehigh Acres or (ii) whose names are provided
to the sales agent by our organizers, except that the 5% commission will not
apply to shares sold by selected dealers of the sales agent. We will pay the
sales agent an 8% commission on all other shares sold to the public, including
any shares sold by selected dealers of the sales agent. This will result in fees
and commissions of approximately $326,400 on the minimum of 600,000 shares and
$646,400 on the maximum of 1,000,000 shares. We will also pay the sales agent
$20,000 to develop a marketing plan. We will reimburse the sales agent for its
marketing expenses not to exceed $20,000.
WE DO NOT PLAN TO PAY DIVIDENDS
Because we are a new business, we will not pay dividends in the
foreseeable future. We intend to use all available earnings to fund the
continued operation and growth of the business and the bank.
LOCATION OF OFFICE
Our main office will be located at 1300 Homestead Road N., in the
Homestead Road Shopping Center in the central business district of Lehigh Acres,
Florida. We will lease this property at an initial monthly rate of $6,486. We
plan to open this office by the first quarter of 2000. See "Offices and
Facilities" on page 16.
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<PAGE> 6
RISK FACTORS
The following is a summary of some of the risks which we will encounter
in starting and operating the new bank. There may be other risks that we are not
aware of and have not listed. Please read the entire prospectus for a more
thorough discussion of the risks of an investment in our common stock.
WE ARE A NEW BUSINESS AND CANNOT BE SURE WHETHER WE WILL BE SUCCESSFUL.
Neither Lehigh Acres Bancshares nor Lehigh Acres Bank has any operating
history. The operations of new businesses are always risky. Because Lehigh Acres
Bank has not yet opened, we do not have historical financial data and similar
information which would be available for a financial institution that has been
operating for several years.
WE EXPECT TO INCUR LOSSES FOR AT LEAST TWO YEARS AND THERE IS A RISK WE MAY
NEVER BECOME PROFITABLE.
In order for us to become profitable, we will need to attract a large
number of customers to deposit and borrow money. This will take time. We expect
to incur large initial expenses and may not be profitable for several years.
Although we expect to become profitable in our second year, there is a risk that
we may never become profitable and that you will lose part or all of your
investment.
WE CANNOT OPEN THE BANK FOR BUSINESS UNTIL WE RECEIVE REGULATORY APPROVALS,
WHICH ARE AT THE DISCRETION OF OUR REGULATORY AGENCIES.
We cannot begin operations until we receive all required regulatory
approvals. We will not receive these approvals until we satisfy certain
requirements for new banks imposed by state and federal regulatory agencies. We
believe that one requirement will be that we have at least $5 million to
capitalize the bank. We have already received preliminary approval from the
Office of the Comptroller of the Currency, the FDIC, and the Federal Reserve.
Any delay in starting operations will increase our pre-operational expenses,
such as salaries and other administrative expenses, without the ability to
generate any revenues. We expect to obtain all necessary approvals by the fourth
quarter of 1999, but it may take longer.
WE WILL DEPEND HEAVILY ON MR. LLOYD WEBER AND OUR BUSINESS WOULD SUFFER IF
SOMETHING WERE TO HAPPEN TO HIM OR IF HE WERE TO LEAVE.
Lloyd J. Weber will be our president and chief executive officer. Mr.
Weber will provide valuable services to us, and he would be difficult to
replace. If he were to leave, our business would suffer. We will carry key man
life insurance on Mr. Weber, payable to the bank, in the amount of $500,000.
THE OFFERING PRICE OF $10.00 WAS DETERMINED ARBITRARILY AND MAY NOT REFLECT THE
VALUE OF THE SHARES.
Because we do not have any history of operations, we determined the
offering price arbitrarily. The offering price is essentially the book value of
the shares prior to deduction for expenses of the offering and the organization
of the bank. The offering price may not be indicative of the present or future
value of the common stock. As a result, the market price of the stock after the
offering may be more susceptible to fluctuations than it otherwise might be. The
market price will be affected by our operating results, which could fluctuate
greatly. These fluctuations could result from expenses of operating and
expanding Lehigh Acres First National Bank, trends in the banking industry,
economic conditions in our market area, and other factors which are beyond our
control.
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<PAGE> 7
WE WILL NOT HAVE A LARGE NUMBER OF SHAREHOLDERS OR A LARGE NUMBER OF SHARES
AVAILABLE AFTER THE OFFERING, WHICH MAY LIMIT YOUR ABILITY TO SELL OR TRADE THE
SHARES AFTER THE OFFERING.
Prior to this offering, there has been no public trading market for our
shares. After the offering, we will encourage broker-dealers to match buy and
sell orders, or "make a market," for our common stock on the Over-the-Counter
Bulletin Board. However, we do not currently have any broker-dealers that are
willing to make a market in our common stock, and there is a risk that none will
ever do so. Even if a market is made for our common stock, the trading markets
for securities quoted on the OTC Bulletin Board typically lack the depth,
liquidity, and orderliness necessary to maintain a liquid market. A public
market having depth and liquidity depends on having enough buyers and sellers at
any given time. Because this a relatively small offering, we do not expect to
have enough shareholders or outstanding shares to support an active trading
market, and we do not expect a liquid market for our common stock to develop for
several years, if at all. Accordingly, investors should consider the potential
illiquid and long-term nature of an investment in our common stock.
WE WILL FACE STRONG COMPETITION FOR CUSTOMERS FROM LARGER AND MORE ESTABLISHED
BANKS WHICH COULD PREVENT US FROM OBTAINING CUSTOMERS AND MAY CAUSE US TO HAVE
TO PAY HIGHER INTEREST RATES TO ATTRACT CUSTOMERS.
We will encounter strong competition from existing banks and other
types of financial institutions operating in the Lee County area and elsewhere.
Some of these competitors have been in business for a long time and have already
established their customer base and name recognition. Most are larger than we
will be and have greater financial and personal resources than we will have.
Some are affiliated with large super-regional and regional banks like Bank of
America (formerly Nationsbank), First Union, and SouthTrust, and offer services,
such as extensive and established branch networks and trust services that we
either do not expect to provide or will not provide for some time. Due to this
competition, we may have to pay higher rates of interest to attract deposits. In
addition, competitors that are not depository institutions are generally not
subject to the extensive regulations that will apply to our bank. See "Proposed
Business - Competition" and "Supervision and Regulation" starting on page 23.
WE MAY NOT BE ABLE TO COMPETE WITH OUR LARGER COMPETITORS FOR LARGER CUSTOMERS
BECAUSE OUR LENDING LIMITS WILL BE LOWER THAN THEIRS.
We will be limited in the amount we can loan a single borrower by the
amount of Lehigh Acres Bank's capital. The legal lending limit is 15% of the
bank's capital and surplus. We expect that our initial legal lending limit will
be approximately $690,000 immediately following the offering, but we intend to
impose an internal limit on the bank of 80% of this amount, or approximately
$550,000. Until the bank is profitable, we will lose money, which will decrease
our capital and therefore our lending limit. Our lending limit will be
significantly less than the limit for most of our competitors and may affect our
ability to seek relationships with larger businesses in our market area. We
intend to accommodate larger loans by selling participations in those loans to
other financial institutions.
WE HAVE IMPLEMENTED ANTI-TAKEOVER DEVICES WHICH COULD PREVENT ANOTHER COMPANY
FROM PURCHASING US, EVEN THOUGH SUCH A PURCHASE MAY INCREASE SHARE VALUE.
In many cases, shareholders receive a premium for their shares when a
company is purchased by another. However, state and federal law and our articles
of incorporation and bylaws make it difficult for anyone to purchase Lehigh
Acres Bancshares without approval of our board of directors. For a discussion of
some of these provisions, please see "Description of Capital Stock -
Anti-takeover Effects" on page 37.
WE ARE AUTHORIZED TO ISSUE PREFERRED STOCK WHICH, IF ISSUED, MAY ADVERSELY
AFFECT YOUR VOTING RIGHTS AND REDUCE THE MARKET PRICE OF THE COMMON STOCK.
We are authorized by our articles of incorporation to issue shares of
preferred stock without the consent of the shareholders. Preferred stock, when
issued, may rank senior to common stock with respect to voting rights, the
payment of dividends, and amounts received by shareholders upon liquidation,
dissolution, or winding
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up. The existence of rights which are senior to common stock may reduce the
price of our shares. We do not have any plans to issue any shares of preferred
stock at this time.
THE EXERCISE OF WARRANTS AND STOCK OPTIONS WILL CAUSE STOCK DILUTION AND MAY
ADVERSELY AFFECT THE VALUE OF OUR COMMON STOCK.
The organizers and officers may exercise warrants and options to
purchase common stock, which would result in the dilution of your proportionate
interests in Lehigh Acres Bancshares. Upon completion of the offering, we will
issue to the organizers warrants to purchase one share of common stock at $10.00
per share for every share they purchase in the offering. If the organizers
purchase 117,000 shares in the offering, we will issue warrants to purchase an
additional 117,000 shares of common stock to them. In addition, after the
offering, we expect to adopt a stock option plan which will permit us to grant
options to our officers, directors, and employees. We anticipate that we will
initially authorize the issuance of a number of shares under the stock option
plan equal to 15% of the shares outstanding after the offering. We do not intend
to issue stock options at less than the fair market value of the common stock on
the date of grant.
WE MAY NOT ALLOCATE ALL OF THE NET PROCEEDS IN THE MOST PROFITABLE MANNER.
After capitalizing Lehigh Acres Bank with $5,000,000, we will have
broad discretion in allocating the remaining proceeds. If we complete the
maximum offering, these remaining proceeds will be approximately $4,243,000, or
42% of the proceeds of the offering. Initially we plan to invest these proceeds
in United States government securities or deposit them with the bank, and in the
long term we intend use them for general corporate purposes. We cannot predict
the extent to which we will allocate these funds to income-generating assets,
capital assets, or liquidity. Although we intend to utilize these funds to serve
Lehigh Acres Bancshares' best interest, we cannot assure you that our allocation
will ultimately reflect the most profitable application of these proceeds.
IT IS POSSIBLE THAT OUR COMPUTER SYSTEMS OR THOSE OF OUR PROCESSING VENDORS OR
LOAN CUSTOMERS COULD FAIL TO OPERATE ON JANUARY 1, 2000.
Like many financial institutions, we will rely upon computers for
conducting our business and for information systems processing. There is concern
among industry experts that on January 1, 2000, computers will be unable to read
or interpret the new year and there may be widespread computer malfunctions. We
will generally rely on software and hardware developed by independent third
parties to provide our information systems. We will request warranties about
Year 2000 compliance from the primary third party hardware and software system
providers we use. We believe that our other internal systems and software,
including our network connections, will be programmed to comply with Year 2000
requirements, although there is a risk they may not comply. Based on information
currently available, we believe that we will not incur significant expenses in
connection with the Year 2000 issue.
The Year 2000 issue may also negatively affect the business of our
customers. We intend to include Year 2000 readiness in our lending criteria to
minimize this risk. However, we cannot be certain that this will eliminate the
issue, and any financial difficulties our customers experience as a result of
Year 2000 issues could impair their ability to repay loans to the bank.
We may not open the bank until after January 1, 2000, at which time we
believe that most of the uncertainty surrounding the Year 2000 issue should be
resolved. In this event, our risks associated with computer malfunctions should
be greatly reduced, but we will still seek to ensure that our computer systems
and our major vendors' and clients' computer systems are in compliance and
functioning properly. For more information on Year 2000 issues, please refer to
page 16.
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FORWARD LOOKING STATEMENTS
This prospectus contains certain "forward-looking statements"
concerning Lehigh Acres Bancshares and Lehigh Acres Bank and their operations,
performance, financial conditions, and likelihood of success. These statements
are based on many assumptions and estimates. Our actual results will depend on
many factors about which we are unsure, including those discussed above. Many of
these risks and factors are beyond our control. The words "may," "would,"
"could," "will," "expect," "anticipate," "believe," "intend," "plan," and
"estimate," as well as similar expressions, are meant to identify such
forward-looking statements. Potential risks and uncertainties include, but are
not limited to:
- significant increases in competitive pressure in the banking and
financial services industries;
- changes in the interest rate environment which could reduce
anticipated or actual margins;
- changes in political conditions or the legislative or regulatory
environment;
- general economic conditions, either nationally or regionally and
especially in southwest Florida, becoming less favorable than
expected resulting in, among other things, a deterioration in
credit quality;
- changes occurring in business conditions and inflation;
- changes in technology;
- changes in monetary and tax policies;
- changes in the securities markets; and
- other risks and uncertainties detailed from time to time in the
filings of Lehigh Acres Bancshares with the Securities and
Exchange Commission.
The most significant of these risks, uncertainties, and other factors are
discussed under the heading "Risk Factors," beginning on page 5 of this
prospectus, and prospective investors are urged to carefully consider such
factors.
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THE OFFERING
GENERAL
We are offering a minimum of 600,000 shares and a maximum of 1,000,000
shares of our common stock at a price of $10.00 per share to raise between
$6,000,000 and $10,000,000. We intend to impose a minimum purchase requirement
for any investor of 100 shares and the maximum purchase of 5% of the offering,
although we reserve the right to accept subscriptions for more or less.
The organizers and directors intend to purchase 117,000 shares in the
offering, for a total investment of $1,170,000. As a result, they will own
approximately 19.5% of the common stock outstanding upon completion of the
offering if we sell the minimum number of 600,000 shares, and 11.7% of the
common stock outstanding upon completion of the offering if we sell the maximum
number of 1,000,000 shares. Additionally, each of the organizers will receive a
warrant to purchase one additional share of common stock at $10.00 per share for
each share purchased in the offering, exercisable for ten years after the
completion of the offering. If each organizer exercises his warrant in full, the
organizers' ownership of Lehigh Acres Bancshares will increase to 32.6% based on
the minimum offering and 20.9% based on the maximum offering. Although they have
not promised to do so, the organizers may purchase additional shares in the
offering, including up to 100% of the minimum offering. All shares purchased by
the organizers will be for investment and not intended for resale. Because
purchases by the organizers may be substantial, you should not assume that the
sale of a specified minimum offering amount indicates the merits of this
offering.
We must receive your subscription for shares before midnight, Eastern
Standard Time, on December 31, 1999, unless all of the shares are sold earlier
or the offering is terminated or extended. We reserve the right to terminate the
offering at any time or to extend the expiration date up to March 30, 2000.
Extension of the expiration date might cause an increase in our expenses. We do
not have to give you any prior written notice of an extension. If we extend the
offering, subscriptions we have already accepted will still be binding. We do,
however, intend to communicate quarterly with all subscribers and inform you of
any extensions of the offering.
Accepted subscriptions will be binding and may not be revoked except
with our consent. We reserve the right to cancel or reject any or all of any
subscription before or after acceptance until the proceeds of this offering are
released from escrow. We may also allocate shares among subscribers if the
offering is oversubscribed; however, we believe that we will not have to adjust
subscribers for the minimum number of shares. In deciding which subscriptions to
accept, we may take into account any factors, including:
- the order in which subscriptions are received,
- a subscriber's potential to do business with or to direct
customers to the bank, and
- our desire to have a broad distribution of stock ownership.
If we reject any subscription, or accept a subscription but subsequently elect
to cancel all or part of such subscription, we will refund the amount remitted
for shares for which a subscription is rejected or canceled. We will issue
certificates for shares which have been subscribed and paid for promptly after
we receive the funds out of escrow.
CONDITIONS TO THE OFFERING AND RELEASE OF FUNDS
We will place all subscription proceeds with an independent escrow
agent. The escrow agent will hold these funds, and no shares will be issued,
until:
- We have accepted subscriptions and payment in full for a minimum
of 600,000 shares at $10.00 per share;
- We have obtained preliminary approval from the Federal Reserve to
acquire the stock of the bank;
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- We have obtained preliminary approval from the Office of the
Comptroller of the Currency to grant us a national bank charter;
and
- We have received preliminary approval of the bank's application
for deposit insurance from the FDIC.
If we terminate the offering without accepting subscriptions or if the offering
period expires before these conditions are satisfied, then:
- We will cancel all subscription agreements and subscribers in the
offering will not become shareholders;
- The funds held in the escrow account will not be subject to the
claims of any of our creditors or available to defray the expenses
of this offering; and
- We will return the full amount of all subscription funds promptly
to subscribers, with interest.
The escrow agent has not investigated the desirability, advisability,
or merits of a purchase of the shares. The escrow agent will invest escrowed
funds in interest-bearing savings accounts, short-term United States Treasury
securities, FDIC-insured bank deposits, or such other investments as we agree on
with the escrow agent. We do not intend to invest the subscription proceeds held
in escrow in instruments that would mature after the expiration date of the
offering.
If the conditions for releasing subscription funds from escrow are met
and the funds are released but we do not receive final regulatory approval to
operate the bank, or if the bank does not open for any other reason, our board
of directors intends to propose that the shareholders approve a plan to
liquidate Lehigh Acres Bancshares. If this plan is adopted, we would be
dissolved and our net assets, consisting primarily of the funds received in this
offering less the costs and expenses we have incurred, would be distributed to
our shareholders.
PLAN OF DISTRIBUTION
We have entered into an agreement with Berthel Fisher and Company to
sell up to 1,000,000 shares of our common stock. We have agreed to pay the sales
agent no commission on shares sold in the offering to our organizers and a 5%
commission on shares sold to investors who are (i) residents of the City of
Lehigh Acres or (ii) whose names are provided to the sales agent by our
organizers, except that the 5% commission will not apply to shares sold by
selected dealers of the sales agent. We will pay the sales agent an 8%
commission on all other shares sold to the public, including any shares sold by
selected dealers of the sales agent. We will also pay the sales agent $20,000 to
develop a marketing plan. We will reimburse the sales agent for its marketing
expenses not to exceed $20,000.
The sales agency agreement provides for reciprocal indemnification
between Lehigh Acres Bancshares and the sales agent against certain liabilities
in connection with this offering, including liabilities under the Securities Act
of 1933. The SEC has advised us that it believes such indemnification is against
public policy as expressed by the Securities Act of 1933 and is, therefore,
unenforceable.
Prior to this offering there has been no public market for our shares.
We established the initial offering price of the shares based upon our
assessment of the capital needs of Lehigh Acres Bancshares and the commercial
potential of the services to be offered by Lehigh Acres Bank. We have discussed
the establishment and maintenance of a market for the shares after the offering
with the sales agent. Based upon the discussions, we expect that a secondary
market may eventually develop for the shares, although we cannot be sure. In
general, if a secondary market develops, the shares other than those held by
affiliates will be freely transferable in the secondary market. See "Description
of the Capital Stock of Lehigh Acres Bancshares - Shares Eligible for Future
Sale" on page 39. Once a secondary market is established, the market makers may
or may not continue to maintain the secondary market, based on factors such as
the degree to which the secondary market is active.
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<PAGE> 12
HOW TO SUBSCRIBE
If you desire to purchase shares of the common stock of Lehigh Acres
Bancshares, you should:
1. Complete, date, and execute the subscription agreement which
you received with this prospectus;
2. Make a check, bank draft, or money order payable to
"Independent Bankers' Bank of Florida, Escrow Account for
Lehigh Acres First National Bancshares, Inc.," in the amount
of $10.00 times the number of shares you wish to purchase; and
3. Deliver the completed subscription agreement and check to the
sales agent or Lehigh Acres First National Bancshares, Inc. at
the following addresses:
<TABLE>
<S> <C>
Lloyd J. Weber Timothy C. Moody
Lehigh Acres First National Bancshares, Inc. Berthel Fisher and Company
P.O. Box 1479 Corporate Office
Lehigh Acres, Florida 33970-1479 100 Second Street, N.E.
Cedar Rapids, Iowa 52407-4250
</TABLE>
If you have any questions about the offering or how to subscribe,
please call Mr. Weber at (941) 368-1190 (or any of the other organizers) or Mr.
Moody at 1-800-356-5234. If you subscribe, you should retain a copy of the
completed subscription agreement for your records. You must pay the subscription
price at the time you deliver the subscription agreement.
11
<PAGE> 13
USE OF PROCEEDS
Below, we describe how we intend to use the funds received in this
offering based on our plans and estimates of our start-up expenses. Our actual
expenses may be different. Although we believe that the minimum proceeds of
$6,000,000 from the offering will satisfy our cash requirements for our first
twelve months of operation, we cannot be sure. Because we are a new enterprise,
we cannot predict the bank's ability to generate revenue to cover its expenses,
and therefore we cannot predict how we will actually use the proceeds. To date
our expenses have been funded by an initial $180,000 investment from some of
our organizers to whom we issued 18,000 shares of our common stock at $10.00
per share, a $30,000 loan by two individuals, and by a line of credit with The
Independent Bankers' Bank of Florida guaranteed by the organizers. If we
complete the offering, we will use some of the proceeds to pay down the line of
credit and the loan, and we will redeem the 18,000 shares issued to some of our
organizers for their initial investment at $10.00 per share.
The following table shows the expected proceeds from the offering. The
total sales agency commissions payable in the event of a minimum offering and a
maximum offering assume that 117,000 shares will be purchased by our organizers
and directors for no commission, 200,000 shares will be purchased by residents
of Lehigh Acres for a commission of $.50 per share, and the remaining shares
will be sold to the public for which we will pay the maximum sales agency
commission of $.80 per share. All shares, including those to our organizers,
will be at the offering price of $10.00 per share. Based on our assumptions, the
gross proceeds, expenses, and net proceeds from the minimum and maximum offering
would be as follows:
<TABLE>
<CAPTION>
Minimum Total Maximum Total
Per Share 600,000 Shares 1,000,000 Shares
--------- -------------- ----------------
<S> <C> <C> <C>
Public Offering Price .. $10.00 $6,000,000 $10,000,000
Sales Agency Commission $ (.80) $ (326,400) $ (646,400)
------ ---------- -----------
Proceeds to Lehigh Acres
Bancshares ............. $ 9.20 $5,673,600 $ 9,353,400
====== ========== ===========
</TABLE>
12
<PAGE> 14
USE OF PROCEEDS BY LEHIGH ACRES FIRST NATIONAL BANCSHARES
The following table shows our anticipated use of the proceeds by Lehigh
Acres Bancshares of the offering based on the sale of the minimum number and
maximum number of shares. The gross proceeds shown in the table include
$1,170,000 we expect to receive from our organizers and directors. As shown, a
minimum of $5,000,000 will be invested in Lehigh Acres Bank. After we make this
capital investment and we pay all of the costs of organizing the bank, we will
retain 100% of the excess in Lehigh Acres Bancshares. We will initially invest
these proceeds in United States government securities or deposit them with
Lehigh Acres Bank. In the long-term, we will use these funds for the operational
expenses of Lehigh Acres Bancshares and Lehigh Acres Bank and for other general
corporate purposes, including the provision of additional capital to the bank,
if necessary. We may also use these proceeds to expand, for example by opening
additional branches or acquiring other financial institutions. We do not
currently have any definitive plans for expansion. We have established a line of
credit in the amount of $250,000 at the prime rate minus 1% with the Independent
Bankers' Bank of Florida to pay for organizational expenses. We plan to pay down
this line of credit with proceeds from the offering.
<TABLE>
<CAPTION>
Minimum Maximum
Offering Offering
600,000 shares 1,000,000 shares
-------------- ----------------
<S> <C> <C>
Gross proceeds from offering.................................. $ 6,000,000 $10,000,000
Sales Agency Commission....................................... $ (326,400) $ (646,400)
Offering and organizing expenses of Lehigh Acres Bancshares... $ (109,780) $ (109,780)
Investment in capital stock of the bank....................... $(5,000,000) $(5,000,000)
------------ ------------
Remaining proceeds............................................ $ 563,820 $ 4,243,820
=========== ===========
</TABLE>
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<PAGE> 15
USE OF PROCEEDS BY LEHIGH ACRES FIRST NATIONAL BANK
The following table shows the anticipated use of the proceeds by Lehigh
Acres Bank. All proceeds received by the bank will be in the form of an
investment in the bank's capital stock by Lehigh Acres Bancshares as described
above. We have entered into a long-term lease for our offices with an option to
extend. The table below reflects our rent obligation for this facility for our
initial 12 months of operation of $6,486 per month from January 2000 through May
2000 and $7,252 per month from June 2000 through December 2000. We expect our
main office to be completed by January 2000. Furniture, fixtures, and equipment
will be capitalized and amortized over the life of the lease or over the
estimated useful life of the asset. The remaining proceeds will be used to fund
loans or invested in investment grade bonds and government securities, but we
have not determined specifically how we will allocate or invest these funds.
These numbers are estimates only. We cannot assure you that we will open on time
or ever. If the opening of the bank is delayed, our expenses will be
substantially higher.
<TABLE>
<CAPTION>
Minimum Maximum
Offering Offering
600,000 shares 1,000,000 shares
-------------- ----------------
<S> <C> <C>
Investment by Lehigh Acres Bancshares in the bank's
capital stock .................................. $5,000,000 $5,000,000
Organizational and pre-opening expenses of the bank $ (400,000) $ (400,000)
Furniture, fixtures and equipment ................. $ (250,000) $ (250,000)
Lease of permanent facility ....................... $ (83,180) $ (83,180)
Construction of Leasehold Improvements ............ $ (150,000) $ (150,000)
Other operational losses in first year ............ $ (170,000) $ (170,000)
---------- ----------
Remaining proceeds ................................ $3,946,820 $3,946,820
========== ==========
</TABLE>
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<PAGE> 16
CAPITALIZATION
The following table shows Lehigh Acres Bancshares' capitalization as of
June 30, 1999 and the pro forma consolidated capitalization of Lehigh Acres
Bancshares and the bank as adjusted to give effect to the sale of the minimum
and maximum number of shares. All numbers on the "As Adjusted" columns reflect
the proposed initial investment by the organizers and directors of $1,170,000.
The additional paid in capital section shows capital to be received in the
offering for the minimum and maximum offerings, less the sales agent commissions
and expenses of the offering which are charged against this account. The "As
Adjusted" columns also reflect the estimated cost of organizing Lehigh Acres
Bancshares and organizing and preparing to open Lehigh Acres Bank through the
expected opening date, which should be in the first quarter of 2000. See "Use of
Proceeds" above.
Please note that you will probably experience additional dilution due
to operating losses expected during the initial years of the our operations.
<TABLE>
<CAPTION>
As Adjusted As Adjusted
For for
June 30, 1999 Minimum Offering Maximum Offering
------------- ---------------- ----------------
<S> <C> <C> <C>
Shareholders Equity:
Common Stock, par value $.01 per share; 10,000,000
shares authorized; 18,000 shares issued and
outstanding; 600,000 shares issued and outstanding
as adjusted (minimum offering); 1,000,000 shares
issued and outstanding (maximum offering) ........ $ 180 $ 6,000 $ 10,000
Preferred Stock, par value $.01 per share; 10,000,000
shares authorized; no shares issued and outstanding ... 0 0 0
Additional paid-in capital ............................ $ 179,820 $5,667,600 $9,343,600
Deficit accumulated during the pre-opening stage ...... $(194,476) $ (509,780) $ (509,780)
--------- ---------- ----------
Total shareholders' equity (deficit) .................. $ (14,476) $5,163,820 $8,843,820
========= ========== ==========
Book Value Per Share .................................. $ (.80) $ 8.61 $ 8.84
========= ========== ==========
</TABLE>
DIVIDEND POLICY
We expect to initially retain all earnings to operate and expand the
business. It is unlikely that we will pay any cash dividends in the near future.
Our ability to pay any cash dividends will depend primarily on Lehigh Acres
Bank's ability to pay dividends to Lehigh Acres Bancshares, which depends on the
profitability of the bank. In order to pay dividends, the bank must comply with
the requirements of all applicable laws and regulations. See "Supervision and
Regulation - The Bank - Dividends" on page 27 and "Supervision and Regulation -
The Bank - Capital Regulations" on page 28. In addition to the availability of
funds from the bank, our dividend policy is subject to the discretion of our
board of directors and will depend upon a number of factors, including future
earnings, financial condition, cash needs, and general business conditions.
15
<PAGE> 17
PLAN OF OPERATION
GENERAL
Lehigh Acres Bancshares was formed to organize and own all of the
capital stock of Lehigh Acres Bank. The organizers filed an application with the
Office of the Comptroller of the Currency on June 26, 1998 to charter the bank
as a national bank, and it was preliminarily approved on March 30, 1999. We
obtained the preliminary approval of the FDIC to receive federal deposit
insurance on April 2, 1999 and approval from the Federal Reserve to become a
bank holding company on August 13, 1999. Whether the charter is issued and
deposit insurance is obtained will depend upon compliance with legal
requirements imposed by the Office of the Comptroller of the Currency, FDIC, and
Federal Reserve, which includes capitalization of the bank with at least
$5,000,000. We expect to receive all regulatory approvals by the fourth quarter
of 1999.
EXPENSES
As of June 30, 1999, Lehigh Acres Bancshares had total assets of
$27,522, consisting of cash $2,308, deferred registration costs of $23,319 and
other assets $1,895. Lehigh Acres Bancshares incurred a net loss of $194,476 for
the period from its inception on April 14, 1998 through June 30, 1999.
On completion of the offering and opening of the bank, we expect we
will have incurred the following expenses:
- $ 646,400 in commissions to the sale agent in the event of a
maximum offering, which will be deducted from the proceeds of the
offering.
- $ 109,780 in expenses of organizing Lehigh Acres Bancshares, which
will be charged against the income of Lehigh Acres Bancshares.
- $ 400,000 in expenses to organize and prepare to open Lehigh Acres
Bank, consisting principally of salaries, overhead and other
operating costs, will be charged against the income of Lehigh
Acres Bank.
- $ 150,000 for the construction of leasehold improvements.
- $ 250,000 for furniture, fixtures, and equipment.
OFFICES AND FACILITIES
The bank's permanent office will be located in a facility at the
intersection of Homestead Road and Plaza Drive in the Homestead Road Shopping
Center in the heart of Lehigh Acres' business district. We have leased a 4,700
square foot permanent facility with three drive-through service lanes at this
location at an initial rental rate of $6,486 per month. The term of the lease is
16 years, with an option to renew the lease for another 10 years. We also intend
to construct leasehold improvements to this facility prior opening the bank at a
projected cost of $150,000. We will purchase furniture, fixtures, and equipment
for the bank at a projected cost of $250,000. We believe that this facility will
adequately serve the bank's needs for its first several years of operation.
YEAR 2000 ISSUES
Like many financial institutions, we will rely upon computers for the
daily conduct of our business and for information systems processing. There is
concern among industry experts that on January 1, 2000, computers will be unable
to "read" the new year and there may be widespread computer malfunctions. We
will generally be relying on software and hardware developed by independent
third parties for our information systems.
We have entered into an agreement with M & I Data Services to provide
our core data processing software and services and our ATM services. We plan to
request and review testing and results from each of our vendors demonstrating
Year 2000 readiness and compliance. We have prepared a comprehensive Year 2000
Plan. Our chief executive officer will implement the plan with oversight from
our board of directors. The plan involves investigation of each vendor,
validation of each vendor's testing procedures and results, testing on our own
systems if reasonable, and receiving Year 2000 warranties from each of our
selected vendors. Based on our
16
<PAGE> 18
preliminary review of each vendor, we do not believe that any of them have any
significant Year 2000 problems. We will seek to ensure that our agreements with
our primary vendors include warranties regarding Year 2000 compliance, although
the remedies available under such agreements include standard disclaimers of
liability and specifically exclude special, incidental, indirect, and
consequential damages.
Our customers may also have Year 2000 issues. We may incur losses if
such issues affect our loan customers' ability to repay their loans or if they
suffer material harm to their businesses as a result. We intend to require
certification from each commercial borrower that their systems are Year 2000
compliant and that they do not expect to be adversely affected by the year
change. Although these certifications will be helpful, it would be very
difficult for us to accurately assess the Year 2000 readiness of any borrower.
We may therefore suffer loan losses from customers who have significant Year
2000 problems.
We anticipate opening the bank after January 1, 2000, at which time we
believe that most of the uncertainty surrounding the Year 2000 issue should be
resolved. In this event, our risks associated with computer malfunctions should
be greatly reduced, but we will still seek to ensure that our computer systems
and our major vendors' and clients' computer systems are in compliance and
functioning properly.
17
<PAGE> 19
PROPOSED BUSINESS
GENERAL
We incorporated Lehigh Acres Bancshares as a Florida corporation on May
19, 1999 primarily to function as a holding company to own and control all of
the capital stock of Lehigh Acres Bank. We initially will engage in no business
other than owning and managing the bank.
We have chosen this holding company structure because we believe it
will provide flexibility that would not otherwise be available. Subject to
Federal Reserve Board debt guidelines, the holding company structure can assist
the bank in maintaining its required capital ratios by borrowing money and
contributing the proceeds to the bank as primary capital. Additionally, a
holding company may engage in certain non-banking activities that the Federal
Reserve Board has deemed to be closely related to banking. Although we do not
presently intend to engage in other activities, we will be able to do so with a
proper notice or filing to the Federal Reserve if we believe that there is a
need for these services in our market area and that such activities could be
profitable.
We are organizing the bank as a national bank under the laws of the
United States and, subject to regulatory approval, will engage in a commercial
and consumer-banking business with deposits insured by the FDIC. The bank may
not commence business until the Office of the Comptroller of the Currency issues
a charter for the bank and the FDIC grants deposit insurance to the bank.
STATUS OF ORGANIZATION
On June 26, 1998 our directors filed, as organizers, an application
with the Office of the Comptroller of the Currency for permission to operate a
national bank and an application with the Federal Deposit Insurance Corporation
for deposit insurance. On March 30, 1999, the Office of the Comptroller of the
Currency issued an order preliminarily approving the charter of the bank with
conditions, including the receipt of federal deposit insurance and satisfaction
of minimum capital requirements. On April 2, 1999, the Federal Deposit Insurance
Corporation approved the bank's application for federal deposit insurance
subject to conditions including minimum capital requirements. The Federal
Reserve Board approved our application to become a bank holding company through
ownership of the bank on August 13, 1999. We expect to be in a position to
satisfy all conditions of our regulatory approvals upon the completion of this
offering.
MANAGEMENT
We have retained Lloyd Weber to lead the management teams for both
Lehigh Acres Bancshares and Lehigh Acres Bank as their president and chief
executive officer. He has over 30 years of experience in the banking industry.
Until Mr. Weber resigned to begin preparations to open Lehigh Acres Bank, he
served as the senior vice president and senior loan officer (Lee County) of
Florida Community Bank.
SERVICE AREA
We expect initially to draw a large percentage of our business from the
Lee County area, primarily Lehigh Acres. Lee County has been one of the fastest
growing regions in Florida over the last several years. The county's population
has grown from 335,113 in 1990 to 389,100 in 1997. By 2005, the population is
expected to reach 463,195, an increase of over 19% since 1997. The economy in
this area has been strong as well. The primary employment industries in the area
are real estate, finance, insurance, and service. The unemployment rate dropped
to 3.0% in 1998 and gross retail sales in the county increased 10% from 1997 to
1998 to $6.2 billion. During the same period, the annual rate of construction of
single family homes increased 10% and that of multi-family units increased
almost 50%. While the economy in this area has been strong in recent years, an
economic downturn in the area would hurt our business.
18
<PAGE> 20
MARKETING FOCUS
Most of the banks in the Lee County area are now local branches of
large regional banks. Although size gives the larger banks certain advantages in
competing for business from large corporations, including higher lending limits
and the ability to offer services in other areas of Florida and of Lee County,
we believe that there is a void in the community banking market in the Lehigh
Acres and greater Lee County areas and believe that the bank can successfully
fill this void. We will not compete with large institutions for the primary
banking relationships of large corporations, but we will compete for niches in
this business and for the consumer business of their employees. We will also
focus on small- to medium-sized businesses and their employees.
We plan to advertise to emphasize our local ownership, community focus,
and ability to provide more personalized service than our competition. We will
also have the ability to offer large bank services. Most of the organizers are
long-time residents and business people in the target market area and have
determined the credit needs of the area through personal experience and
communications with their business colleagues. We believe that the proposed
community focus of the bank will succeed in this market and that the area will
react favorably to the bank's emphasis on service to small businesses,
individuals, and professional concerns.
The bank will be active in providing residential mortgages, acquisition
and development financing for subdivisions, and construction, and permanent
financing for commercial real estate, particularly owner-occupied property.
Consumers will enjoy extended bank operating hours, drive-up windows,
drive-up ATMs, and a convenient centrally-located main office location where
road infrastructure is in place to make access easier. We will emphasize local
decision-making with experienced bankers, attention to lower employee turnover,
and professional and responsive service. We believe customers will be responsive
to a banking environment where they are encouraged with an approach of "what the
bank can do for you" versus an approach of "what the bank can't do for you."
This highlights the community bank approach we will take in the market place.
DEPOSITS
We intend to offer a full range of deposit services that are typically
available in most banks and savings and loan associations, including checking
accounts, commercial accounts, savings accounts, and other time deposits of
various types, ranging from daily money market accounts to longer-term
certificates of deposit. The transaction accounts and time certificates will be
tailored to our principal market area at rates competitive to those offered in
the Lee County area. In addition, we intend to offer certain retirement account
services, such as Individual Retirement Accounts (IRAs). We intend to solicit
these accounts from individuals, businesses, associations, organizations, and
governmental authorities.
LENDING ACTIVITIES
General. We intend to emphasize a range of lending services, including
real estate, commercial, and consumer loans to individuals and small- to
medium-sized businesses and professional concerns that are located in or conduct
a substantial portion of their business in the our market area. We will
initially emphasize retail banking, home mortgages, real estate, and consumer
lending needs.
Real Estate Loans. We expect that loans secured by first or second
mortgages on real estate will make up a significant portion of the bank's loan
portfolio. These loans will generally fall into one of three categories:
commercial real estate loans, construction and development loans, or residential
real estate loans. Each of these categories is discussed in more detail below,
including their specific risks. Home equity loans are not included because they
are classified as consumer loans, which are discussed below under a separate
heading. Interest rates for all categories may be fixed or adjustable, and will
more likely be fixed for shorter-term loans. The bank will generally charge an
origination fee for each loan.
The principal economic risk associated with real estate loans is cash
flow capability and creditworthiness of the borrowers. Other risks associated
with real estate loans vary with many economic factors, including
19
<PAGE> 21
employment levels, strength of the local and national economies, and
fluctuations in the value of real estate, the primary form of collateral for
these types of loans. Deterioration of any of these factors after a loan has
been made could negatively affect a borrower's cash flow, creditworthiness, and
ability to repay the loan. On first and second mortgage loans we would typically
not advance more than 90% of the lesser of the cost or appraised value of the
property. In the event we advance more than 80% of the lesser of the cost or
appraised value of a property, we will require mortgage insurance. We will
require a valid mortgage lien on all real property loans along with a title lien
policy which insures the validity and priority of the lien. We will also require
borrowers to obtain hazard insurance policies and flood insurance if applicable.
We will compete for these loans with competitors who are well
established in the Lee County area and have greater resources and lending
limits. As a result, we may have to charge lower interest rates to attract
borrowers.
We will have the ability to originate real estate loans for sale into
the secondary market. We may be able to limit our interest rate and credit risks
on these loans by locking the interest rate for each loan with the secondary
investor and receiving the investor's underwriting approval prior to originating
the loan.
Commercial Real Estate Loans. Commercial real estate loans will
generally have terms of five years or less, although payments may be structured
on a longer amortization basis. Risks associated with commercial real estate
loans include the general risk of the failure of each commercial borrower, which
will be different for each type of business and commercial entity. We will
evaluate each business on an individual basis and attempt to determine its
business risks and credit profile. We may or may not be successful. We will
attempt to reduce credit risk in the commercial real estate portfolio by
emphasizing loans on owner-occupied office and retail buildings where the
loan-to-value ratio, established by independent appraisals, does not exceed 80%.
We will also generally require that the debtor has sufficient cash flow to
handle the debt service. We will typically review all of the personal financial
statements of the principal owners and require their personal guarantees. One
purpose of these reviews is to reveal secondary sources of payment and liquidity
to support a loan request.
Construction and Development Real Estate Loans. We will offer
adjustable and fixed rate residential and commercial construction loans to
builders and developers and to consumers who wish to build their own home. The
term of construction and development loans will generally be limited to one
year, although payments may be structured on a longer amortization basis. These
loans are generally interim loans and are refinanced as general residential and
commercial real estate loans upon completion of the project or paid off on the
sale of the property. Construction and development loans generally carry a
higher degree of risk than long term financing of existing properties. Repayment
depends on the ultimate completion of the project and usually on the sale of the
property. Risks include:
- cost overruns;
- mismanaged construction;
- inferior or improper construction techniques;
- economic changes or downturns during construction;
- a downturn in the real estate market;
- rising interest rates which may prevent sale the of the property;
and
- failure to sell completed projects in a timely manner.
We will attempt to reduce risk by obtaining personal guarantees where possible,
and by keeping the loan-to-value ratio of the completed project below specified
percentages. We may also reduce risk by selling participations in larger loans
to other institutions when possible.
Residential Real Estate Loans. Residential real estate loans will
generally have longer terms up to 30 years. We will offer fixed and adjustable
rate mortgages. We expect to face very limited credit risk on these loans
because most of them will be underwritten and sold in the secondary market
without any recourse against the bank.
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<PAGE> 22
Commercial Loans. The bank will make loans for commercial purposes in
various types of businesses. Equipment loans will typically be made for a term
of five years or less at fixed or variable rates, with the loan fully amortized
over the term and secured by the financed equipment and with a loan-to-value
ratio of 80% or less. Working capital loans will typically have terms not
exceeding one year and will usually be secured by accounts receivable,
inventory, or personal guarantees of the principals of the business. For loans
secured by accounts receivable or inventory, principal will typically be repaid
as the assets securing the loan are converted into cash, and in other cases
principal will typically be due at maturity. Asset based lending, leasing, and
factoring will be offered through third party vendors who can handle the paper
work and servicing and generally assume most of the credit risk. Trade letters
of credit, standby letters of credit, and foreign exchange will be handled
through a correspondent bank as agent for the bank.
The principal economic risk associated with each category of
anticipated loans, including commercial loans, is the cash flow capability and
creditworthiness of the borrowers. The risks associated with commercial loans
vary with many economic factors, including the economy in the Lee County area.
Deterioration of the economy could impact our borrower's businesses and
therefore their cash flow and ability to repay their loans. The well established
banks in the Lee County area will make proportionately more loans to medium-to
large-sized businesses than we will. Many of the bank's anticipated commercial
loans will likely be made to small- to medium-sized businesses which may be less
able to withstand competitive, economic, and financial conditions than larger
borrowers.
Consumer Loans. The bank will make a variety of loans to individuals
for personal and household purposes, including secured and unsecured installment
loans. Installment loans typically will carry balances of less than $50,000 and
be amortized over periods up to 60 months. Consumer loans may be offered on a
single maturity basis where a specific source of repayment is available.
Revolving loan products will typically require monthly payments of interest and
a portion of the principal.
The principal economic risks associated with consumer loans are the
creditworthiness and cash flow of the bank's borrowers. The principal
competition for consumer loans will be the established banks in the Lee County
area. Consumer loans are generally considered to have greater risk than first or
second mortgages on real estate.
We will also offer home equity loans. Our underwriting criteria for
and the risks associated with home equity loans and lines of credit will
generally be the same as those for first mortgage loans. Home equity lines of
credit will typically have terms of 15 years or less, will typically carry
balances less than $125,000, and may extend up to 80% of the available equity of
each property.
Loan Approval and Review. The bank's loan approval policies will
provide for various levels of officer lending authority. When the amount of
aggregate loans to a single borrower exceeds that individual officer's lending
authority, the loan request will be considered and approved by an officer with a
higher lending limit or the bank's loan committee. The bank will not make any
loans to any director or executive officer of the bank unless the loan is
approved by the board of directors of the bank and is made on terms not more
favorable to such person than would be available to a person not affiliated with
the bank. The bank currently intends to adhere to Federal National Mortgage
Association and Federal Home Loan Mortgage Corporation guidelines in its
mortgage loan review process, but may choose to alter this policy in the future.
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<PAGE> 23
Loan and Asset Distribution. We estimate that our initial percentage
distribution of our loans and deposits will be as follows:
<TABLE>
<CAPTION>
Loans Deposits
----- --------
<S> <C> <C> <C>
Real Estate 45% Regular Checking 7%
Commercial Loans 35% Interest Checking 9%
Equity Line and Consumer Loans 20% Business Checking 7%
Passbooks 12%
Money Market 13%
CD's under $100,000 38%
CD's over $100,000 10%
IRA & KEOGH 3%
Other 1%
</TABLE>
These are estimates only. Our actual deposit and loan distribution will depend
on our customers and vary initially and over time. We will maintain an allowance
for loan losses, which we will establish through a provision for loan losses
charged against income. We will charge loans against this allowance when we
believe that the collectibility of the principle is unlikely. The allowance will
be an estimated amount that we believe will be adequate to absorb losses
inherent in the loan portfolio based on evaluations of its collectibility. We
anticipate that initially our loan loss reserve will equal approximately 1% of
the average outstanding balance of our loans. Over time, we will base the
allowance for loan losses on our evaluation of factors such as changes in the
nature and volume of the loan portfolio, overall portfolio quality, specific
problem loans and commitments, and current anticipated economic conditions that
may affect the borrower's ability to pay. Despite these allocation measures, we
will continue to be susceptible to risks caused by concentrations in types of
loans. For example, a high percentage of home mortgage loans would be
susceptible to a risk of a drop in the value of real estate.
Lending Limits. The bank's lending activities will be subject to a
variety of lending limits imposed by federal law. In general the bank will be
subject to a legal limit on loans to a single borrower equal to 15% of the
bank's capital and unimpaired surplus. Different limits may apply in certain
circumstances based on the type of loan or the nature of the borrower, including
the borrower's relationship to the bank. These limits will increase or decrease
as the bank's capital increases or decreases. We expect the bank's initial legal
limit will be around $690,000 based on the minimum offering. The bank will
initially have a self-imposed loan limit of 80% of the legal limit, or
approximately $550,000. Unless the bank is able to sell participations in its
loans to other financial institutions, the bank will not be able to meet all of
the lending needs of loan customers requiring aggregate extensions of credit
above these limits.
OTHER BANKING SERVICES
Other anticipated bank services include cash management services for
commercial businesses such as a sweep services and lines of credit. We will
offer drive-up window service and ATMs, debit cards, safe deposit boxes,
travelers checks, direct deposit of payroll and social security checks, and
automatic drafts for various accounts. We plan for the bank to become associated
with the Honor and Cirrus ATM networks that may be used by the bank's customers
throughout Lee County and other regions. We believe that by being associated
with a shared network of ATMs, we will be better able to serve our customers and
will be able to attract customers who are accustomed to the convenience of using
ATMs, although we do not believe that maintaining this association will be
critical to our success. We intend to begin offering these services shortly
after opening the bank. We also plan to offer debit card services through a
correspondent bank as an agent for the bank. We do not expect the bank to
exercise trust powers during its initial years of operation.
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<PAGE> 24
COMPETITION
The banking business is highly competitive. The bank will compete as a
financial intermediary with other commercial banks, savings and loan
associations, credit unions, finance companies, and money market mutual funds
operating in the Lee County area and elsewhere. In 1998, there were more than
148 banking offices representing 26 financial institutions operating in Lee
County holding almost $5.3 billion in deposits. In the City of Lehigh Acres,
there were 6 financial institutions holding over $264 million in deposits in
1998. Most of these competitors have substantially greater resources and lending
limits than the bank will and offer certain services, such as extensive and
established branch networks and trust services, that we either do not expect to
provide or will not provide initially. Our competitors in the Lehigh Acres area
include First Union Bank, Bank of America (formerly NationsBank), SouthTrust
Bank, SunTrust Bank, Florida Community Bank, and Colonial Bank. As a result of
these competitive factors, the bank may have to pay higher rates of interest to
attract deposits. Based on a conservative growth rate of 3%, the deposits in the
Lee County area will grow to approximately $6.5 billion by the year 2005. During
this same period, deposits in the City of Lehigh Acres are projected to grow to
over $325 million. Our plan over the next five years is to reach a 12.3% market
share in Lehigh Acres with deposits in excess of $40 million.
Of course, there can be no assurances that we will accomplish these objectives.
EMPLOYEES
We anticipate that, upon commencement of operations, the bank will have
approximately 13 full time employees and no part time employees operating out of
the facility in Lehigh Acres. Lehigh Acres Bancshares, as the holding company
for the bank, will not have any employees other than its officers.
LEGAL PROCEEDINGS
Neither Lehigh Acres Bancshares, Lehigh Acres Bank, nor any of their
properties are subject to any material legal proceedings.
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<PAGE> 25
SUPERVISION AND REGULATION
Both Lehigh Acres Bancshares and Lehigh Acres Bank are subject to state
and federal banking laws and regulations which impose specific requirements or
restrictions on and provide for general regulatory oversight with respect to
virtually all aspects of operations. These laws and regulations are generally
intended to protect depositors, not shareholders. The following summary is
qualified by reference to the statutory and regulatory provisions discussed.
Changes in applicable laws or regulations may have a material effect on our
business and prospects. Beginning with the enactment of the Financial
Institution Report Recovery and Enforcement Act in 1989 and following with the
FDIC Improvement Act in 1991, numerous additional regulatory requirements have
been placed on the banking industry in the past several years, and additional
changes have been proposed. Our operations may be affected by legislative
changes and the policies of various regulatory authorities. We cannot predict
the effect that fiscal or monetary policies, economic control, or new federal or
state legislation may have in the future on our business and earnings.
LEHIGH ACRES BANCSHARES
Because it will own the outstanding capital stock of the bank, Lehigh
Acres Bancshares will be a bank holding company within the meaning of the
federal Bank Holding Company Act of 1956. As a Florida corporation, Lehigh Acres
Bancshares is also subject to Chapter 607, Florida Business Corporation Act and
the regulations effected by the Florida Department of State. Our activities will
also be governed by the Glass-Steagall Act of 1933.
The Bank Holding Company Act. Under the Bank Holding Company Act,
Lehigh Acres Bancshares will be subject to periodic examination by the Federal
Reserve and required to file periodic reports of its operations and such
additional information as the Federal Reserve may require. Our activities at the
bank and holding company levels will be limited to:
- banking and managing or controlling banks;
- furnishing services to or performing services for its
subsidiaries; and
- engaging in other activities that the Federal Reserve determines
to be so closely related to banking and managing or controlling
banks as to be a proper incident to those activities.
Investments, Control, and Activities. With certain limited exceptions,
the Bank Holding Company Act requires every bank holding company to obtain the
prior approval of the Federal Reserve before:
- acquiring substantially all the assets of any bank;
- acquiring direct or indirect ownership or control of any voting
shares of any bank if after such acquisition it would own or
control more than 5% of the voting shares of such bank (unless it
already owns or controls the majority of such shares); or
- merging or consolidating with another bank holding company.
In addition, and subject to certain exceptions, the Bank Holding
Company Act and the Change in Bank Control Act, together with regulations under
these Acts, require Federal Reserve approval prior to any person or company
acquiring "control" of a bank holding company. Control is conclusively presumed
to exist if an individual or company acquires 25% or more of any class of voting
securities of the bank holding company. Control is rebuttably presumed to exist
if a person acquires 10% or more but less than 25% of any class of voting
securities and either Lehigh Acres Bancshares has registered securities under
Section 12 of the Securities Exchange Act of 1934 or no other person owns a
greater percentage of that class of voting securities immediately after the
transaction. We will most likely be required to register under the Securities
Exchange Act of 1934 once we have more than 500 shareholders of record. The
regulations provide a procedure for challenge of the rebuttable control
presumption.
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<PAGE> 26
Under the Bank Holding Company Act, a bank holding company is generally
prohibited from engaging in, or acquiring direct or indirect control of more
than 5% of the voting shares of any company engaged in nonbanking activities
unless the Federal Reserve Board, by order or regulation, has found those
activities to be so closely related to banking or managing or controlling banks
as to be a proper incident under the Act. Some of the activities that the
Federal Reserve Board has determined by regulation to be proper incidents to the
business of a bank holding company include the following:
- making or servicing loans and certain types of leases;
- engaging in certain insurance and discount brokerage activities;
- performing certain data processing services;
- acting in certain circumstances as a fiduciary or investment or
financial adviser;
- owning savings associations; and
- making investments in certain corporations or projects designed
primarily to promote community welfare.
The Federal Reserve Board imposes certain capital requirements on
Lehigh Acres Bancshares under the Bank Holding Company Act, including a minimum
leverage ratio and a minimum ratio of "qualifying" capital to risk-weighted
assets. These requirements are described below under "- Capital Regulations."
Subject to its capital requirements and certain other restrictions, Lehigh Acres
Bancshares is able to borrow money to make a capital contribution to the bank,
and such loans may be repaid from dividends paid from the bank to Lehigh Acres
Bancshares. Our ability to pay dividends will be subject to regulatory
restrictions as described below in "The Bank - Dividends." Lehigh Acres
Bancshares is also able to raise capital for contribution to the bank by issuing
securities without having to receive regulatory approval, subject to compliance
with federal and state securities laws.
Source of Strength; Cross-Guarantee. In accordance with Federal Reserve
Board policy, Lehigh Acres Bancshares will be expected to act as a source of
financial strength to the bank and to commit resources to support the bank in
circumstances in which Lehigh Acres Bancshares might not otherwise do so. Under
the Bank Holding Company Act, the Federal Reserve Board may require a bank
holding company to terminate any activity or relinquish control of a nonbank
subsidiary, other than a nonbank subsidiary of a bank, upon the Federal Reserve
Board's determination that such activity or control constitutes a serious risk
to the financial soundness or stability of any subsidiary depository institution
of the bank holding company. Further, federal bank regulatory authorities have
additional discretion to require a bank holding company to divest itself of any
bank or nonbank subsidiary if the agency determines that divestiture may aid the
depository institution's financial condition.
Glass-Steagall Act. We will also be restricted by the provisions of the
Glass-Steagall Act, which prohibits Lehigh Acres Bancshares from owning
subsidiaries that are engaged principally in the issue, flotation, underwriting,
public sale, or distribution of securities. The interpretation, scope, and
application of the provisions of the Glass-Steagall Act currently are being
considered and reviewed by regulators and legislators, and the interpretation
and application of those provisions have been challenged in the federal courts.
THE BANK
The bank will operate as a national banking association incorporated
under the laws of the United States and subject to examination by the Office of
the Comptroller of the Currency. Deposits in the bank will be insured by the
FDIC up to a maximum amount, which is generally $100,000 per depositor subject
to aggregation rules.
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<PAGE> 27
The Office of the Comptroller of the Currency and the FDIC will
regulate or monitor virtually all areas of the bank's operations, including:
- security devices and procedures,
- adequacy of capitalization and loss reserves,
- loans,
- investments,
- borrowings,
- deposits,
- mergers,
- issuances of securities,
- payment of dividends,
- interest rates payable on deposits,
- interest rates or fees chargeable on loans,
- establishment of branches,
- corporate reorganizations,
- maintenance of books and records, and
- adequacy of staff training to carry on safe lending and deposit
gathering practices.
The Office of the Comptroller of the Currency will require the bank to maintain
certain capital ratios and imposes limitations on the bank's aggregate
investment in real estate, bank premises, and furniture and fixtures and to
prepare quarterly reports on the bank's financial condition and to conduct an
annual audit of its financial affairs in compliance with its minimum standards
and procedures.
Under the FDIC Improvement Act, all insured institutions must undergo
regular on site examinations by their appropriate banking agency. The cost of
examinations of insured depository institutions and any affiliates may be
assessed by the appropriate agency against each institution or affiliate as it
deems necessary or appropriate. Insured institutions are required to submit
annual reports to the FDIC, their federal regulatory agency, and state
supervisor when applicable. The FDIC Improvement Act directs the FDIC to develop
a method for insured depository institutions to provide supplemental disclosure
of the estimated fair market value of assets and liabilities, to the extent
feasible and practicable, in any balance sheet, financial statement, report of
condition or any other report of any insured depository institution. The FDIC
Improvement Act also requires the federal banking regulatory agencies to
prescribe, by regulation, standards for all insured depository institutions and
depository institution holding companies relating, among other things, to the
following:
- internal controls,
- information systems and audit systems,
- loan documentation,
- credit underwriting,
- interest rate risk exposure, and
- asset quality.
National banks and their holding companies which have been chartered or
registered or have undergone a change in control within the past two years or
which have been deemed by the Office of the Comptroller of the Currency or the
Federal Reserve Board to be troubled institutions must give the Office of the
Comptroller of the Currency or the Federal Reserve Board thirty days prior
notice of the appointment of any senior executive officer or director. Within
the thirty day period, the Office of the Comptroller of the Currency or the
Federal Reserve Board, as the case may be, may approve or disapprove any such
appointment.
Deposit Insurance. The FDIC establishes rates for the payment of
premiums by federally insured banks and thrifts for deposit insurance. A
separate Bank Insurance Fund and Savings Association Insurance Fund are
maintained for commercial banks and savings associations with insurance premiums
from the industry used to
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<PAGE> 28
offset losses from insurance payouts when banks and thrifts fail. In 1993, the
FDIC adopted a rule which establishes a risk-based deposit insurance premium
system for all insured depository institutions. Under this system, until
mid-1995 depository institutions paid to Bank Insurance Fund or Savings
Association Insurance Fund from $0.23 to $0.31 per $100 of insured deposits
depending on its capital levels and risk profile, as determined by its primary
federal regulator on a semiannual basis. Once the Bank Insurance Fund reached
its legally mandated reserve ratio in mid-1995, the FDIC lowered premiums for
well-capitalized banks, eventually to $00 per $100, with a minimum semiannual
assessment of $1,000. However, in 1996 Congress enacted the Deposit Insurance
Funds Act of 1996, which eliminated even this minimum assessment. It also
separated the Financial Corporation (FICO) assessment to service the interest on
its bond obligations. The amount assessed on individual institutions, including
the bank, by FICO is in addition to the amount paid for deposit insurance
according to the risk-related assessment rate schedule. Increases in deposit
insurance premiums or changes in risk classification will increase the bank's
cost of funds, and there can be no assurance that such cost can be passed on to
the bank's customers.
Transactions With Affiliates and Insiders. The bank will be subject to
the provisions of Section 23A of the Federal Reserve Act, which place limits on
the amount of loans or extensions of credit to, or investments in, or certain
other transactions with, affiliates and on the amount of advances to third
parties collateralized by the securities or obligations of affiliates. The
aggregate of all covered transactions is limited in amount, as to any one
affiliate, to 10% of the bank's capital and surplus and, as to all affiliates
combined, to 20% of the bank's capital and surplus. Furthermore, within the
foregoing limitations as to amount, each covered transaction must meet specified
collateral requirements. Compliance is also required with certain provisions
designed to avoid the taking of low quality assets.
The bank will also be subject to the provisions of Section 23B of the
Federal Reserve Act which, among other things, prohibits an institution from
engaging in certain transactions with certain affiliates unless the transactions
are on terms substantially the same, or at least as favorable to such
institution or its subsidiaries, as those prevailing at the time for comparable
transactions with nonaffiliated companies. The bank will be subject to certain
restrictions on extensions of credit to executive officers, directors, certain
principal shareholders, and their related interests. Such extensions of credit
(i) must be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
third parties and (ii) must not involve more than the normal risk of repayment
or present other unfavorable features.
Dividends. A national bank may not pay dividends from its capital. All
dividends must be paid out of undivided profits then on hand, after deducting
expenses, including reserves for losses and bad debts. In addition, a national
bank is prohibited from declaring a dividend on its shares of common stock until
its surplus equals its stated capital, unless there has been transferred to
surplus no less than one-tenth of the bank's net profits of the preceding two
consecutive half-year periods (in the case of an annual dividend). The approval
of the Office of the Comptroller of the Currency is required if the total of all
dividends declared by a national bank in any calendar year exceeds the total of
its net profits for that year combined with its retained net profits for the
preceding two years, less any required transfers to surplus.
Branching. National banks are required by the National Bank Act to
adhere to branch office banking laws applicable to state banks in the states in
which they are located. Under current Florida law, the bank may open branch
offices throughout Florida with the prior approval of the Office of the
Comptroller of the Currency. In addition, with prior regulatory approval, the
bank will be able to acquire existing banking operations in Florida.
Furthermore, federal legislation has recently been passed which permits
interstate branching. The new law permits out-of-state acquisitions by bank
holding companies, interstate branching by banks if allowed by state law, and
interstate merging by banks.
Community Reinvestment Act. The Community Reinvestment Act requires
that, in connection with examinations of financial institutions within their
respective jurisdictions, the Federal Reserve, the FDIC, or the Office of the
Comptroller of the Currency, shall evaluate the record of each financial
institution in meeting the credit needs of its local community, including low
and moderate income neighborhoods. These factors are also considered in
evaluating mergers, acquisitions, and applications to open a branch or facility.
Failure to adequately meet these criteria could impose additional requirements
and limitations on the bank.
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<PAGE> 29
Other Regulations. Interest and certain other charges collected or
contracted for by the bank are subject to state usury laws and certain federal
laws concerning interest rates. The bank's loan operations are also subject to
certain federal laws applicable to credit transactions, such as:
- the federal Truth-In-Lending Act, governing disclosures of credit
terms to consumer borrowers;
- the Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and
public officials to determine whether a financial institution is
fulfilling its obligation to help meet the housing needs of the
community it serves;
- the Equal Credit Opportunity Act, prohibiting discrimination on
the basis of race, creed or other prohibited factors in extending
credit;
- the Fair Credit Reporting Act of 1978, governing the use and
provision of information to credit reporting agencies;
- the Fair Debt Collection Act, governing the manner in which
consumer debts may be collected by collection agencies; and
- the rules and regulations of the various federal agencies charged
with the responsibility of implementing such federal laws.
The deposit operations of the bank also are subject to:
- the Right to Financial Privacy Act, which imposes a duty to
maintain confidentiality of consumer financial records and
prescribes procedures for complying with administrative subpoenas
of financial records; and
- the Electronic Funds Transfer Act and Regulation E issued by the
Federal Reserve Board to implement that act, which governs
automatic deposits to and withdrawals from deposit accounts and
customers' rights and liabilities arising from the use of
automated teller machines and other electronic banking services.
Capital Regulations. The federal bank regulatory authorities have
adopted risk-based capital guidelines for banks and bank holding companies that
are designed to make regulatory capital requirements more sensitive to
differences in risk profiles among banks and bank holding companies and account
for off-balance sheet items. The guidelines are minimums, and the federal
regulators have noted that banks and bank holding companies contemplating
significant expansion programs should not allow expansion to diminish their
capital ratios and should maintain ratios in excess of the minimums. We have not
received any notice indicating that either Lehigh Acres Bancshares or Lehigh
Acres Bank is subject to higher capital requirements. The current guidelines
require all bank holding companies and federally-regulated banks to maintain a
minimum risk-based total capital ratio equal to 8%, of which at least 4% must be
Tier 1 capital. Tier 1 capital includes common shareholders' equity, qualifying
perpetual preferred stock, and minority interests in equity accounts of
consolidated subsidiaries, but excludes goodwill and most other intangibles and
excludes the allowance for loan and lease losses. Tier 2 capital includes the
excess of any preferred stock not included in Tier 1 capital, mandatory
convertible securities, hybrid capital instruments, subordinated debt and
intermediate term-preferred stock, and general reserves for loan and lease
losses up to 1% of risk-weighted assets.
Under these guidelines, banks' and bank holding companies' assets are
given risk-weights of 0%, 20%, 50%, or 100%. In addition, certain off-balance
sheet items are given credit conversion factors to convert them to asset
equivalent amounts to which an appropriate risk-weight applies. These
computations result in the total risk-weighted assets. Most loans are assigned
to the 100% risk category, except for first mortgage loans fully secured by
residential property and, under certain circumstances, residential construction
loans, both of which carry a 50% rating. Most investment securities are assigned
to the 20% category, except for municipal or state revenue bonds, which have a
50% rating, and direct obligations of or obligations guaranteed by the United
States Treasury or United States Government agencies, which have a 0% rating.
The federal bank regulatory authorities have also implemented a
leverage ratio, which is equal to Tier 1 capital as a percentage of average
total assets less intangibles, to be used as a supplement to the risk-based
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<PAGE> 30
guidelines. The principal objective of the leverage ratio is to place a
constraint on the maximum degree to which a bank holding company may leverage
its equity capital base. The minimum required leverage ratio for top-rated
institutions is 3%, but most institutions are required to maintain an additional
cushion of at least 100 to 200 basis points.
The FDIC Improvement Act established a new capital-based regulatory
scheme designed to promote early intervention for troubled banks which requires
the FDIC to choose the least expensive resolution of bank failures. The new
capital-based regulatory framework contains five categories of compliance with
regulatory capital requirements, including "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized." To quality as a "well capitalized" institution, a
bank must have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of
no less than 6%, and a total risk-based capital ratio of no less than 10%, and
the bank must not be under any order or directive from the appropriate
regulatory agency to meet and maintain a specific capital level. Initially, we
will qualify as "well capitalized."
Under the FDIC Improvement Act regulations, the applicable agency can
treat an institution as if it were in the next lower category if the agency
determines (after notice and an opportunity for hearing) that the institution is
in an unsafe or unsound condition or is engaging in an unsafe or unsound
practice. The degree of regulatory scrutiny of a financial institution
increases, and the permissible activities of the institution decreases, as it
moves downward through the capital categories. Institutions that fall into one
of the three undercapitalized categories may be required to do some or all of
the following:
- submit a capital restoration plan,
- raise additional capital,
- restrict their growth, deposit interest rates, and other
activities,
- improve their management,
- eliminate management fees, or
- divest themselves of all or a part of their operations.
Bank holding companies controlling financial institutions can be called upon to
boost the institutions' capital and to partially guarantee the institutions'
performance under their capital restoration plans.
These capital guidelines can affect us in several ways. If we grow the
bank's loan portfolio at a rapid pace, its capital may be depleted too quickly,
and a capital infusion from the holding company may be necessary which could
impact our ability to pay dividends. Our capital levels will initially be more
than adequate; however, rapid growth, poor loan portfolio performance or poor
earnings performance or a combination of these factors could change our capital
position in a relatively short period of time.
The FDIC Improvement Act requires the federal banking regulators to
revise the risk-based capital standards to provide for explicit consideration of
interest-rate risk, concentration of credit risk, and the risks of untraditional
activities. We are uncertain what effect these regulations would have.
Failure to meet these capital requirements would mean that a bank would
be required to develop and file a plan with its primary federal banking
regulator describing the means and a schedule for achieving the minimum capital
requirements. In addition, such a bank would generally not receive regulatory
approval of any application that requires the consideration of capital adequacy,
such as a branch or merger application, unless the bank could demonstrate a
reasonable plan to meet the capital requirement within a reasonable period of
time.
Enforcement Powers. The Financial Institution Reform Recovery and
Enforcement Act expanded and increased civil and criminal penalties available
for use by the federal regulatory agencies against depository institutions and
certain "institution-affiliated parties." Institution-affiliated parties
primarily include management, employees, and agents of a financial institution,
as well as independent contractors and consultants such as attorneys and
accountants and others who participate in the conduct of the financial
institution's affairs. These practices can include the failure of an institution
to timely file required reports or the filing of false or misleading information
or the submission of inaccurate reports. Civil penalties may be as high as
$1,000,000 a day for such
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<PAGE> 31
violations. Criminal penalties for some financial institution crimes have been
increased to twenty years. In addition, regulators are provided with greater
flexibility to commence enforcement actions against institutions and
institution-affiliated parties. Possible enforcement actions include the
termination of deposit insurance. Furthermore, banking agencies' power to issue
cease-and-desist orders were expanded. Such orders may, among other things,
require affirmative action to correct any harm resulting from a violation or
practice, including restitution, reimbursement, indemnification or guarantees
against loss. A financial institution may also be ordered to restrict its
growth, dispose of certain assets, rescind agreements or contracts, or take
other actions as determined by the ordering agency to be appropriate.
Recent Legislative Developments. From time to time, various bills are
introduced in the United States Congress with respect to the regulation of
financial institutions. Some of these proposals, if adopted, could significantly
change the regulation of banks and the financial services industry. We cannot
predict whether any of these proposals will be adopted or, if adopted, what
effect these would have.
Effect of Governmental Monetary Policies. Our earnings are affected by
domestic economic conditions and the monetary and fiscal policies of the United
States government and its agencies. The Federal Reserve Bank's monetary policies
have had, and are likely to continue to have, an important impact on the
operating results of commercial banks through its power to implement national
monetary policy in order, among other things, to curb inflation or combat a
recession. The monetary policies of the Federal Reserve Board have major effects
upon the levels of bank loans, investments and deposits through its open market
operations in United States government securities and through its regulation of
the discount rate on borrowings of member banks and the reserve requirements
against member bank deposits. It is not possible to predict the nature or impact
of future changes in monetary and fiscal policies.
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MANAGEMENT
GENERAL
The following table sets forth the number and percentage of outstanding
shares of common stock beneficially owned as of the date of this prospectus by
the organizers. This table also reflects the anticipated purchases by the
organizers in the offering. We issued 18,000 shares to some of our organizers in
return for their $180,000 initial investment. All purchases by the organizers
prior to the offering were made at a price of $10.00 per share, the same price
at which shares are being offered to the public. Upon completion of the
offering, we will redeem these shares with the proceeds of the offering for
$10.00 per share. Information relating to the beneficial ownership of common
stock is based upon "beneficial ownership" concepts described in rules of the
SEC under Section 13(d) of the Securities Exchange Act of 1934. Under these
rules a person is deemed to be a "beneficial owner" of a security if that person
has or shares "voting power," which includes the power to vote or direct the
voting of each security, or "investment power," which includes the power to
dispose or to direct the disposition of such security. A person is also deemed
to be a beneficial owner of any security of which that person has the right to
acquire beneficial ownership within 60 days, including, without limitation,
shares of common stock subject to currently exercisable options. Under the
rules, more than one person may be deemed to be a beneficial owner of the same
securities, and a person may be deemed to be a beneficial owner of securities as
to which he has no beneficial interest. For instance, beneficial ownership
includes spouses, minor children, and other relatives residing in the same
household, and trusts, partnerships, corporations or deferred compensation plans
which are affiliated with the principal. This table does not reflect warrants
that will be granted to our organizers to purchase one share of common stock at
$10.00 per share for each share purchased by the organizers in the offering.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES ANTICIPATED TO BE OWNED FOLLOWING
PRIOR TO THE OFFERING THE OFFERING
------------------------- ----------------------------------------
PERCENTAGE PERCENTAGE
OF MINIMUM OF MAXIMUM
NAME OF BENEFICIAL OWNER NUMBER PERCENTAGE NUMBER OFFERING OFFERING
- ------------------------ ------ ---------- ------ -------- --------
<S> <C> <C> <C> <C> <C>
ROBERT C. BAGANS 1,500 8.33% 6,500 1.08% 0.65%
CALVIN BEALS 1,500 8.33% 8,600 1.43% 0.86%
BENJAMIN BELL 1,500 8.33% 6,500 1.08% 0.65%
CRAIG A. DEARDEN 1,500 8.33% 5,000 0.83% 0.50%
PAUL DINGER 1,500 8.33% 8,000 1.33% 0.80%
TERESA GOODLAD 1,500 8.33% 7,700 1.28% 0.77%
JAMES D. HULL (CHAIRPERSON) 1,500 8.33% 15,000 2.50% 1.50%
VIKAS K. JAIN 1,500 8.33% 10,000 1.67% 1.00%
LAWRENCE J. MURPHY 1,500 8.33% 8,600 1.43% 0.86%
MICKI J. REGAS 1,500 8.33% 7,500 1.25% 0.75%
PATRICIA A. REGAS 1,500 8.33% 7,500 1.25% 0.75%
E. BYRON RICHARDSON 2,500 0.42% 0.25%
KENNETH K. THOMPSON 3,000 0.50% 0.30%
LLOYD J. WEBER (CEO) 10,300 1.72% 1.03%
KENNETH C. WOLFE 1,500 8.33% 10,300 1.72% 1.03%
ALL EXECUTIVE OFFICERS AND DIRECTORS AS 18,000 100.00% 117,000 19.50% 11.70%
A GROUP (15 PERSONS)
</TABLE>
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EXECUTIVE OFFICERS AND DIRECTORS OF LEHIGH ACRES BANCSHARES
The following sets forth certain information about executive officers
and directors. Lehigh Acres Bancshares' articles of incorporation provide for a
classified board of directors, so that, as nearly as possible, one-third of the
directors are elected each year to serve three-year terms. The terms of office
of the classes of directors expire as follows: Class I at the 2000 annual
meeting of shareholders, Class II at the 2001 annual meeting of shareholders,
and Class III at the 2002 annual meeting of shareholders. Executive officers
serve at the discretion of the board of directors.
<TABLE>
<CAPTION>
POSITION WITH
NAME AGE LEHIGH ACRES BANCSHARES
---- --- -----------------------
<S> <C> <C>
Robert C. Bagans 34 Director
Calvin H. Beals 64 Director
Benjamin R. Bell 53 Director, Vice Chairperson of the Board
Craig A. Dearden 34 Director
Paul F. Dinger 57 Director
Teresa Goodlad 51 Director
James D. Hull 60 Director, Chairperson of the Board
Vikas K. Jain, M.D. 32 Director
Lawrence J. Murphy, D.V.M. 46 Director
Micki J. Regas 38 Director
Patricia A. Regas 65 Director
E. Byron Richardson 48 Director
Kenneth K. Thompson 45 Director
Kenneth C. Wolfe 48 Director
Lloyd J. Weber 57 Director, Chief Executive Officer
</TABLE>
Robert C. Bagans, Class I Director, is the owner of Realty World - C.
Bagans First, Bagans Construction, Inc., and Benchmark Mortgage Corp., all
operating in Lehigh Acres, Florida. He is a graduate of the Georgia Institute of
Technology with a BS in Electrical Engineering. He is a long time resident of
Lehigh Acres, moving to the community in 1970. Mr. Bagans serves as a board
member for the Lehigh Acres Chamber of Commerce, and is President of the Realty
World - Brokers' Council, a member of the National Association of Mortgage
Brokers, and a member of the International Who's Who of Entrepreneurs.
Calvin Beals, Class II Director, is an Executive Search Consultant for
the banking industry. He has been a resident of Lee County for 12 years. Mr.
Beals is a past bank president and was a bank board member for over 21 years. He
also has been (1966 and 1968) involved as the CEO or COO of two de novo banks in
Wisconsin and has total bank employment experience of 30 years. Mr. Beals was a
founding board member and school director of the Wisconsin General Banking
School and a founding board member and president of the District 1 Technical
Foundation. Mr. Beals also served on the Financial Advisory Committee for the
University of Wisconsin-Stout Foundation. He has experience as a director of the
Menomonie, Wisconsin Industrial Development Corporation and several community
and eleemosynary activities. He is currently active on several committees of
Gateway Trinity Lutheran Church.
Benjamin Bell, Class II Director, will be the vice chairperson of the
bank and the holding company. He is a Senior Account Agent with Allstate
Insurance. He started in the insurance business in 1975 with Metropolitan
Insurance as a management trainee. He has been with Allstate since 1982 and
opened his office in Lehigh Acres in 1985. He attended Rider College and Mercer
County Community College from 1964 to 1970. He has served on numerous community
and non-profit boards, is past president of Lehigh Acres Chamber of Commerce,
President of Lehigh Acres Rotary Club, on the board of Directors of Community
Health Assoc., Past President of Southwest Florida Safety Counsel, and a past
Regional Vice President of Florida Association of Life Underwriters.
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<PAGE> 34
Craig A. Dearden, Class I Director, is Vice President/CFO of AIM
Engineering and Surveying, Inc. He received two BS degrees in accounting and
finance from Florida State University. Mr. Dearden started his career in banking
with Citicorp Savings and subsequently moved on to public accounting and
governmental auditing. At present, he is responsible for the fiscal operations,
human resources, and contract negotiations with AIM. Mr. Dearden is an active
member of the Florida Institute of Consulting Engineers Transportation
Committee.
Paul Dinger, Class I Director, is currently a citrus grower. He was
formerly with Chemical Dynamics, Inc. for eight years. Prior to that he was with
Chevron Chemical Co. for 22 years. Mr. Dinger has been a resident in the area
since 1971. He is a graduate of Florida State University with a BS in Business
Management. Mr. Dinger also has an active real estate brokers' license and is a
certified general contractor. He is a member of the Eagles Aerie #3938 in Lehigh
Acres and the Elks Lodge #1288 in Fort Myers.
Teresa Goodlad, Class I Director, CLU, is President of Goodlad
Insurance Agency, Inc., an exclusive agency for State Farm Insurance Companies.
Formerly an educator, she began her State Farm Agency in Lehigh Acres in 1987.
Ms. Goodlad received her BA degree, cum laude, from the University of West
Florida, and received her Chartered Life Underwriter designation from the
American College. Her professional memberships include the National Association
of Life Underwriters and the Society of Financial Service Planners. She is a
member of the State Farm Speakers Bureau and a designated media spokesperson for
State Farm Insurance Company in Lee County. Ms. Goodlad is a past President,
Vice-president, and current director of the Lehigh Acres Chamber of Commerce and
a member of the Town and Gown Society of Florida Gulf Coast University.
James D. Hull, Class III Director, will be the Chairperson of the Board
of the bank and the holding company. He is the owner and president of AIM
Engineering & Surveying, Inc. He is a licensed engineer, surveyor, general
contractor, real estate broker, and appraiser. Mr. Hull was born and raised in
agriculture, still having cattle, but has worked 40 years in the development
field, and for the past 18 years has served as the CEO for AIM, a 150 employee
engineering firm. He is the past chairman of the CE&I sub-committee for the
Florida Institute of Consulting Engineers, and he is a member of FICE, Florida
Engineering Society, Florida Society of Surveyors and Mappers, Appraisal
Institute, National Association of Master Appraisers, the Board of Realtors, the
American Congress on Surveying and Mapping.
Vikas K. Jain, MD, Class II Director, is President, Chief Executive
Officer, and founder of Cornea and Cataract Center, P.A., an ophthalmology
practice specializing in total eye care. He has been in private practice in Lee
County for three years. He attended Johns Hopkins University as an
undergraduate. Thereafter, Dr. Jain took his medical training at the University
of Florida College of Medicine, where he graduated first in his class with
honors and honors for research. Next, he took his internship, residency, and
fellowship in ophthalmology at Harvard Medical School in Boston. Dr. Jain is a
Diplomat of the National Board of Medical Examiners and is board-certified by
the American Board of Ophthalmology. He is an active member of the American
College of Surgeons, American Academy of Ophthalmology, Alpha Omega Honor
Medical Society, and the American Society of Cataract and Refractive Surgery.
Dr. Jain is a staff surgeon at all hospitals and surgery centers in Lee County.
Dr. Jain has published widely in scientific journals and contributed to numerous
ophthalmic textbooks. He has also appeared on Connie Chung's "Eye to Eye" in a
segment focusing on limbal transplantation, a unique surgical procedure to
restore sight to patients with severely injured eyes. In addition, Dr. Jain has
taught and lectured on the local, national and international level in his area
of specialty. Dr. Jain resides in Lee County with his wife, also a physician,
and his three children.
Lawrence J. Murphy, Class III Director, DVM, is a lifetime resident in
Lee County (Fort Myers area since 1955) and received his BS at Florida State
University and his doctorate from The University of Florida in 1982. Dr. Murphy
is the President of The Animal Medical Center of Lehigh Acres, P.A., a full
service small animal veterinary hospital that he and his wife, Beth Murphy, DVM
built and opened in 1986. Nationally, Dr. Murphy belongs to the American
Veterinary Medical Association and the American Animal Hospital Association.
Locally, Dr. Murphy is actively involved with the Lehigh Acres Rotary Club (Past
President 1993), the Humane Society of Lee county (current Board member, Past
President 1991), and The Southwest Florida Community Foundation (currently on
the Grants Advisory Committee).
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Micki J. Regas, Class III Director, has been President and CEO of
Fleetwood Title, a Real Estate Title Insurance company since 1983. He is also
President of Fleetwood Travel. Mr. Regas has a Title Insurance license as well
as a General Contractor's license. He graduated as a junior in high school at
the top of his class and went directly to Ohio State University in Columbus,
Ohio. Mr. Regas relocated to Lehigh Acres and started Fleetwood Title. He has
become well known in the local community as a member of FAITA (Florida
Association of Independent Title Agents), ASTA (American Society of Travel
Agents), and AOPA (Airplane Owner and Pilot Association).
Patricia A. Regas, Class II Director, has been Vice President of
Fleetwood Title since 1983. She has a Real Estate Broker's license and a Title
Insurance license. Ms. Regas has over 40 years of experience in the real estate
industry, and she has taught real estate licensing courses for the State of Ohio
for 5 years. Prior to moving to the Lehigh Acres area in 1981, Ms. Regas was the
President of James Regas, Inc., a real estate holding company, for 25 years, and
she was vice president of All-Ohio Realty, a real estate agency from 1956 until
1981. Ms. Regas has played an active role in several other family businesses
including a hotel and a restaurant.
E. Byron Richardson, Class I Director, has been in the bank consulting
industry since 1983. He is one of the founding owners of Bank Resources, Inc.
(and its predecessors) where he has assisted with the formation of approximately
50 banks and bank holding companies. Mr. Richardson has consulted with financial
institutions and de novo banks in the United States, Russia, South America, and
the Pacific Rim. Mr. Richardson began his banking career in 1970 with Columbus
Bank & Trust Company, Columbus, Georgia (n/k/a Total Systems). In 1996, Mr.
Richardson was a guest speaker at the Viet Nam Payment Systems and Technology
Conference hosted by the Central Bank of Viet Nam and IBM. In 1997, Mr.
Richardson was a member of the faculty of the BAI Graduate School of Banking at
the University of Wisconsin. From 1989 to 1995, he was an organizer, bank
director, chairman of the investment/asset liability committee, and holding
company director of a de novo bank in North Carolina. His education includes
Columbus State University, Columbus, Georgia and Florida State University,
Tallahassee, Florida. (Mr. Richardson is not an organizer.)
Kenneth K. Thompson, Class II Director, is an attorney with a practice
based in Lehigh Acres, Florida. He received a Bachelor of Arts degree in History
from the University of Georgia in 1975 where he graduated with honors. He
graduated from the School of Law at the University of Georgia in 1979, where he
was a recent development editor of the Georgia Journal of Internal and
Comparative Law. Mr. Thompson was admitted to the State Bar of Georgia in 1979
and the State Bar of Florida in 1982. His primary practice areas are family law,
criminal law, probate (estates), and real property. He has been a title agent
with Attorney's Title Insurance Fund, Inc. since 1997. He has been in a sole
practice since 1994 and his representative clients include the Collier County
Housing Authority and the Immokalee Water and Sewer District. Mr. Thompson is an
active member of the Lehigh Acres Rotary and is a board member and
past-president of the Lehigh Acres Chamber of Commerce. He also serves of the
board of the Family Health Services of Southwest Florida.
Lloyd J. Weber, Class III Director, will be the President and CEO of
the bank and the holding company. He is a seasoned banker with over thirty years
experience in lending, operations, strategic planning, and marketing. Mr. Weber
opened the Pan American Bank-Inverray as Vice-President and Cashier and later
served as its President, CEO, and director. He has held various positions with
SunBank-Okeechobee (and its predecessor) including Chairman of the Board,
President, CEO and Senior Loan Officer. Mr. Weber also held the positions of
Senior Vice President and Regional Manager of Sun Bank's Cape Coral offices in
Southwest Florida. Mr. Weber was a partner with Loan Review Systems of Florida
which specialized in bank asset quality. Most recently he served as Senior Vice
President and Senior Loan Officer of Lee County for Florida Community Bank in
Lehigh Acres. Mr. Weber was named 1997 Ambassador of the Year by the Lehigh
Acres Chamber of Commerce for his community service. He is currently the Vice
President of the Lehigh Acres Chamber of Commerce and is scheduled to be
President in 2001.
Kenneth C. Wolfe, Class III Director, is the president and owner of
Charles Wolfe & Sons of Florida, Inc., parent company of Data Storage Services,
Data Recycling, and Data Mailroom Services. He is also President and owner of
KPM Properties, Inc., a homebuilder in Lehigh Acres, Florida. Mr. Wolfe is
active in the community where he serves as the Secretary on the Board of the
Harry Chapin Food Bank and Director of the Recovery Ministry at McGregor Baptist
Church. He has served in various capacities at the Salvation Army and
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<PAGE> 36
he has coached CSA youth soccer and worked with youth sailing at the Edison
Sailing Center. Mr. Wolfe attended Sullivan County College in upstate New York
where he received a degree in business administration.
EMPLOYMENT AGREEMENTS
We have entered into an employment agreement with Lloyd J. Weber for a
five year term pursuant to which Mr. Weber will serve as the President and Chief
Executive Officer of the bank. The term of this agreement will commence on the
date the Bank opens for business. Mr. Weber will receive an annual salary of
$96,000, plus his yearly medical insurance premium. He is eligible for an annual
cash performance bonus equal to 5% of the bank's net income, not to exceed 15%
of Mr. Weber's annual salary, in the event specified bank performance goals are
attained. Mr. Weber is also eligible to participate in any management incentive
program of the bank or any long-term equity incentive program and will be
eligible for grants of stock options and other awards under these programs. Upon
the closing of the offering (or as soon thereafter as an appropriate stock
option plan is adopted by the Lehigh Acres Bancshares), Mr. Weber will be
granted an option to purchase 25,000 shares of Common Stock at $10.00 per share.
The options will vest equally over a three-year period and will have a term of
ten years. Additionally, Mr. Weber will participate in the Bank's retirement,
welfare and other benefit programs and is entitled to a life insurance policy
and an accident liability policy and reimbursement for automobile expenses, club
dues, and travel and business expenses. Mr. Weber's employment agreement also
provides that following termination of his employment with the Bank and for a
period of twelve months thereafter, Mr. Weber, may not (i) engage in the
business of banking within a fifty-mile radius of the bank's offices, (ii)
solicit major customers of the bank for the purpose of providing financial
services, or (iii) disclose the names or addresses of the bank's customers to
any other person or entity.
DIRECTOR COMPENSATION
We do not intend to pay directors' fees until the bank is profitable.
However, we reserve the right to pay directors' fees.
STOCK OPTION PLAN
After the offering, we expect to adopt a stock option plan which will
permit Lehigh Acres Bancshares to grant options to its officers, directors, and
employees. We anticipate that we will initially authorize the issuance of a
number of shares under the stock option plan equal to 15% of the shares
outstanding after the offering. We will not issue stock options at less than the
fair market value of the common stock on the date of grant.
STOCK WARRANTS
In recognition of the financial risk and organizational risk they have
undertaken in organizing the bank, for each share of common stock an organizer
purchases in the offering, the organizer will also receive, for no additional
consideration, a warrant to purchase one share of Common Stock for $10.00 per
share. The warrants, which will be represented by separate warrant agreements,
will become exercisable on the later of the date that the bank opens for
business and one year from the date of this prospectus and will be exercisable
in whole or in part during the ten year period following that date. The warrants
and shares issued pursuant to the exercise of such warrants will be
transferable, subject to compliance with applicable securities laws. If the
Office of the Comptroller of the Currency issues a capital directive or other
order requiring the bank to obtain additional capital, the warrants will be
forfeited if not immediately exercised.
EXCULPATION AND INDEMNIFICATION
The Florida Business Corporation Act authorizes a company to indemnify
its directors and officers in certain instances against certain liabilities
which they may incur by virtue of their relationship with the company. As
permitted by the Florida Business Corporation Act, Lehigh Acres Bancshares's
articles of incorporation contain a provision which, subject to certain limited
exceptions, limits the liability of a director for any breach of duty as a
director. There is no limitation of liability for:
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<PAGE> 37
- 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;
- a transaction from which the director derived an improper personal
benefit;
- liability imposed under Section 607.0834 (or any successor
provision or redesignation thereof) of the Florida Business
Corporation Act (the "Act"); or
- willful misconduct or a conscious disregard for the best interest
of the company in a proceeding by the company, or a company
shareholder.
In addition, if such act is amended to authorize further elimination or
limitation of the liability of director, then the liability of each director
shall be eliminated or limited to the fullest extent permitted by such
provisions, as so amended, without further action by the shareholders, unless
the law requires such action. The provision does not limit the right of the
company or its shareholders to seek injunctive or other equitable relief not
involving payments in the nature of monetary damages.
Lehigh Acres Bancshares' bylaws provide that it shall indemnify each of
its directors and officers to the fullest extent provided by law, and that
indemnity will include advances for expenses and costs incurred during the
course of a covered action.
Our board of directors also has the authority to extend to officers,
employees, and agents the same indemnification rights held by directors, subject
to all of the accompanying conditions and obligations. The board of directors
intends to extend indemnification rights to all of its executive officers.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
We expect to have banking and other transactions in the ordinary course
of business with the organizers, directors, and officers and their affiliates,
including members of their families or corporations, partnerships, or other
organizations in which such organizers, officers, or directors have a
controlling interest, on substantially the same terms, including price, or
interest rates and collateral, as those prevailing at the time for comparable
transactions with unrelated parties. Such transactions are not expected to
involve more than the normal risk of collectibility nor present other
unfavorable features. Loans to individual directors and officers must also
comply with the bank's lending policies and statutory lending limits, and
directors with a personal interest in any loan application will be excluded from
the consideration of such loan application. We intend for all of our
transactions with organizers or other affiliates to be on terms no less
favorable than could be obtained from an unaffiliated third party and to be
approved by a majority of our disinterested directors.
CONSULTING AND PROFESSIONAL RELATIONSHIPS
We have entered into agreements with three of our organizers for the
provision of professional services. Lloyd Weber is providing consulting and
organizational services to us prior to the opening of the bank. We have entered
into consulting agreements with Mr. Weber in order to retain his services. We
paid him $80,000 in 1998 and $32,000 to date in 1999, plus health insurance
benefits. No compensation was paid to Mr. Weber prior to 1998. We have entered
into an employment agreement with Mr. Weber that will commence when the bank
opens for business, please see "Employment Agreements" on page 35. Byron
Richardson is also providing bank consulting services to us. We have paid him
$35,000 to date and upon the successful completion of the offering, we will
grant Mr. Richardson options to purchase 3,000 shares of our common stock for
$10.00 per share. These options must be exercised within 10 years of the date of
their grant. In the event we do not complete the offering, and we do not issue
the options, we will pay Mr. Richardson $4,200. Kenneth Thompson, Esquire, an
attorney
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<PAGE> 38
licensed to practice in Florida, is providing legal services to us in connection
with the organization of the bank. In consideration of his efforts, we have
agreed to pay Mr. Thompson $10,000 when the bank opens for business. This
obligation is contingent upon the successful completion of the offering. If we
do not complete the offering, we will not pay Mr. Thompson. We believe that
these transactions are on terms substantially the same as or better than those
prevailing at the time for comparable transactions with unrelated parties.
MANAGEMENT RELATIONSHIPS
Micki J. Regas is the son of Patricia A. Regas.
DESCRIPTION OF CAPITAL STOCK OF
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
GENERAL
The authorized capital stock of Lehigh Acres Bancshares consists of
10,000,000 shares of common stock, par value $0.01 per share, and 10,000,000
shares of preferred stock, par value $0.01 per share. The following summary
describes the material terms of Lehigh Acres Bancshares' capital stock.
COMMON STOCK
Holders of shares of the common stock are entitled to receive such
dividends as may from time to time be declared by the board of directors out of
funds legally available for that purpose. We do not plan to declare any
dividends in the immediate future. See "Dividend Policy." Holders of common
stock are entitled to one vote per share on all matters on which they are
entitled to vote and do not have any cumulative voting rights. Shareholders have
no preemptive, conversion, redemption or sinking fund rights. In the event of a
liquidation, dissolution or winding-up of the company, holders of common stock
are entitled to share equally and ratably in the assets of the company, if any,
remaining after the payment of all debts and liabilities of the company and the
liquidation preference of any outstanding preferred stock. The outstanding
shares of common stock are, and the shares of common stock offered by the
company under this document when issued will be, fully paid and nonassessable.
The rights, preferences and privileges of holders of common stock are subject to
any classes or series of preferred stock that the company may issue in the
future.
PREFERRED STOCK
Our board of directors has the authority under our articles of
incorporation, without the approval of or any action by the shareholders, to
issue up to 10,000,000 shares of preferred stock. Our board of directors also
has the authority to designate the series and any preferences, powers,
limitations, and relative rights of each issuance of preferred stock, and these
rights may be more favorable than those granted to holders of our common stock.
Issuances of preferred stock, while providing us with flexibility in connection
with general corporate purposes, could have an adverse effect on the rights of
holders of our common stock (for example, the issuance of any preferred stock
with voting or conversion rights may adversely affect the voting power of the
holders of common stock). The designation of any preferred stock with greater
rights, privileges, and preferences than those applicable to the common stock
could adversely affect the voting power, market price, and other rights and
privileges of the common stock and could hinder or delay actions which the
holders of common stock might desire, such as the removal of directors,
attempted tender offers, proxy contests or takeovers, or other attempts to
change control of the company. We do not have any current plans to issue any
shares of preferred stock, and will not issue preferred stock to organizers on
terms more favorable than those on which it issues preferred stock to
shareholders other than organizers.
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ANTI-TAKEOVER EFFECTS
The provisions of the articles, the bylaws, and Florida law summarized
in the following paragraphs may have anti-takeover effects and may delay, defer,
or prevent a tender offer or takeover attempt that a shareholder might consider
to be in such shareholder's best interest, including those attempts that might
result in a premium over the market price for the shares held by shareholders,
and may make removal of management more difficult.
Authorized but Unissued Stock. The authorized but unissued shares of
common stock and preferred stock will be available for future issuance without
shareholder approval. These additional shares may be used for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions, and employee benefit plans. The existence of
authorized but unissued and unreserved shares of common stock and preferred
stock may enable the board of directors to issue shares to persons friendly to
current management, which could render more difficult or discourage any attempt
to obtain control of Lehigh Acres Bancshares by means of a proxy contest, tender
offer, merger or otherwise, and thus protect the continuity of the company's
management.
Number of Directors. The bylaws provide that the number of directors
shall be fixed from time to time by resolution by at least a majority of the
directors then in office, but may not consist of fewer than 5 nor more than 25
members.
Classified Board of Directors. The articles and bylaws divide the board
of directors into three classes of directors serving staggered three-year terms.
As a result, approximately one-third of the board of directors will be elected
at each annual meeting of shareholders. The classification of directors,
together with the provisions in the articles and bylaws described below that
limit the ability of shareholders to remove directors and that permit the
remaining directors to fill any vacancies on the board of directors, will have
the effect of making it more difficult for shareholders to change the
composition of the board of directors. As a result, at least two annual meetings
of shareholders may be required for the shareholders to change a majority of the
directors, whether or not a change in the board of directors would be beneficial
and whether or not a majority of shareholders believe that such a change would
be desirable.
Removal of Directors and Filling Vacancies. The bylaws provide that all
vacancies on the board of directors, including those resulting from an increase
in the number of directors, may be filled by a majority of the remaining
directors, even if they do not constitute a quorum. When one or more directors
resign from the board of directors effective at a future date, a majority of
directors then in office, including the directors who are to resign, may vote on
filling the vacancy.
Advance Notice Requirements for Shareholder Proposals and Director
Nominations. The bylaws establish advance notice procedures with regard to
shareholder proposals and the nomination, other than by or at the direction of
the board of directors or a committee thereof, of candidates for election as
directors. These procedures provide that the notice of shareholder proposals and
shareholder nominations for the election of directors at any meeting of
shareholders must be in writing and be received by each director not later than
twenty-four hours prior to the meeting when delivered personally or by telecopy
or at least two days prior to the meeting when delivered by mail. We may reject
a shareholder proposal or nomination that is not made in accordance with such
procedures.
Nomination Requirements. Pursuant to the bylaws, we have established
certain nomination requirements for an individual to be elected as a director,
including that the nominating party provide (i) notice that such party intends
to nominate the proposed director; (ii) the name of and certain biographical
information on the nominee; and (iii) a statement that the nominee has consented
to the nomination. The chairman of any shareholders' meeting may, for good cause
shown, waive the operation of these provisions. These provisions could reduce
the likelihood that a third party would nominate and elect individuals to serve
on the board of directors.
Control Share Act and Affiliated Transaction/Fair Price Act. Lehigh
Acres Bancshares is subject a provision under Florida law which may deter or
frustrate unsolicited attempts to acquire certain Florida corporations. These
statutes, commonly referred to as the "Control Share Act" and the "Fair Price
Act" apply to
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most public corporations organized in Florida, unless the corporation has
specifically elected to opt out of such provisions. Lehigh Acres has elected to
opt out of the "Control Share Act." The Fair Price Act generally requires that
certain transactions between a public corporation and an affiliate must be
approved by the disinterested directors or by two-thirds of the disinterested
shareholders, not including those shares beneficially owned by an "interested
shareholder." The Control Share Act generally provides that shares of a public
corporation acquired in excess of certain specific thresholds will not possess
any voting rights unless such voting rights are approved by a majority vote of
the corporation's disinterested shareholders. Lehigh Acres Bancshares decision
not to opt out of the Fair Price Act could result in it being less attractive to
a potential acquirer and/or result in shareholders receiving less for their
shares that otherwise might be available in the event of an unsolicited takeover
attempt.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have a minimum of 600,000 and
a maximum of 1,000,000 shares of common stock outstanding. The shares sold in
this offering will be freely tradable, without restriction or registration under
the Securities Act of 1933, except for shares purchased by "affiliates" of
Lehigh Acres Bancshares, which will be subject to resale restrictions under the
Securities Act of 1933. An affiliate of the issuer is defined in Rule 144 under
the Securities Act of 1933 as a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with the issuer. Rule 405 under the Securities Act of 1933 defines the term
"control" to mean the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of the person whether through
the ownership of voting securities, by contract or otherwise. Directors will
likely be deemed to be affiliates. These securities held by affiliates may be
sold without registration in accordance with the provisions of Rule 144 or
another exemption from registration.
In general, under Rule 144, an affiliate of the company or a person
holding restricted shares may sell, within any three-month period, a number of
shares no greater than 1% of the then outstanding shares of the common stock or
the average weekly trading volume of the common stock during the four calendar
weeks preceding the sale, whichever is greater. Rule 144 also requires that the
securities must be sold in "brokers' transactions," as defined in the Securities
Act of 1933, and the person selling the securities may not solicit orders or
make any payment in connection with the offer or sale of securities to any
person other than the broker who executes the order to sell the securities. This
requirement may make the sale of the common stock by affiliates of Lehigh Acres
Bancshares pursuant to Rule 144 difficult if no trading market develops in the
common stock. Rule 144 also requires persons holding restricted securities to
hold the shares for at least one year prior to sale.
LEGAL MATTERS
The validity of the common stock offered by this document will be
passed upon by Nelson, Mullins, Riley & Scarborough, L.L.P., Atlanta, Georgia.
EXPERTS
Lehigh Acres Bancshares' financial statements dated June 21, 1999 and
for the period from April 14, 1998 (inception), until December 31, 1998 have
been audited by Francis & Co., CPA, as stated in their report appearing
elsewhere herein, and have been so included in reliance on the report of Francis
and Company given upon their authority as an expert in accounting and auditing.
39
<PAGE> 41
ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form SB-2
(together with all amendments, exhibits, schedules and supplements, the
"Registration Statement"), under the Securities Act of 1933 and the rules and
regulations under the Act, for the registration of the common stock offered.
This prospectus, which forms a part of the Registration Statement, does not
contain all of the information included in the Registration Statement. For
further information with respect to Lehigh Acres Bancshares, Lehigh Acres Bank,
and the common stock, you should refer to the Registration Statement and the
exhibits attached.
You can examine and obtain copies of the Registration Statement at the
Public Reference Section of the SEC, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The SEC also maintains a Web site at http://www.sec.gov
that contains all of the reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC using
the EDGAR filing system, including Lehigh Acres Bancshares.
We have filed or will file various applications with the Office of the
Comptroller of the Currency and the FDIC. You should only rely only on
information in this prospectus and in our related Registration Statement in
making an investment decision. If other available information is inconsistent
with information in this prospectus, including information in public files or
provided by the Office of the Comptroller of the Currency and the FDIC, such
other information is superseded by the information in this prospectus.
Projections appearing in the applications to such agencies were based on
assumptions that the organizers believed were reasonable at the time, but which
may have changed or otherwise be wrong. Lehigh Acres Bancshares and Lehigh Acres
Bank specifically disclaim all projections for purposes of this prospectus and
caution prospective investors against placing reliance on them for purposes of
making an investment decision. Statements contained in this prospectus regarding
the contents of any contract or other document referred to are not necessarily
complete. If such contract or document is an exhibit to the Registration
Statement, you may obtain and read such document or contract for more
information.
As a result of this offering, Lehigh Acres Bancshares will become a
reporting company subject to the full informational requirements of the
Securities Exchange Act of 1934. We will fulfill our obligations with respect to
these requirements by filing periodic reports and other information with the
SEC, and we will furnish our shareholders with annual reports containing audited
financial statements and with quarterly reports for the first three quarters of
each fiscal year containing unaudited summary financial information. Our fiscal
year ends on December 31.
40
<PAGE> 42
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
Independent Auditors' Report...............................................................................F-2
Balance Sheet as of December 31, 1998......................................................................F-3
Statement of Operations from Inception,
April 14, 1998 to December 31, 1998......................................................................F-4
Statement of Changes in Stockholders' Equity from
Inception, April 14, 1998, to December 31, 1998..........................................................F-4
Statement of Cash Flows from Inception,
April 14, 1998, to December 31, 1998.....................................................................F-5
Notes to Financial Statements..............................................................................F-6
</TABLE>
41
<PAGE> 43
FRANCIS
& CO., CPAs
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Lehigh Acres First National Bancshares, Inc. (in organization)
Lehigh Acres, Florida
We have audited the accompanying balance sheet of Lehigh Acres First
National Bancshares, Inc., (in organization) Lehigh Acres, Florida, (the
"Company") a development stage enterprise, as of December 31, 1998 and the
related statements of operations, changes in stockholders' equity and cash flows
for the period from April 14, 1998 (date of inception) to December 31, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Lehigh Acres First
National Bancshares, Inc. (in organization) as of December 31, 1998, and the
results of its operations and its cash flows for the period from April 14, 1998
(date of inception) to December 31, 1998, in conformity with generally accepted
accounting principles.
/s/ Francis & Co., CPAs
------------------------------------
Francis & Co., CPAs
Atlanta, Georgia
June 21, 1999
4400 Roswell Road Bldg. 142, Suite 301 Marietta, GA 30062
Tel: 770/650-1180 Fax: 770/650-8299
42
<PAGE> 44
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
- ------ June 30 December 31,
1999 1998
--------- ---------
(Unaudited)
<S> <C> <C>
Cash $ 2,308 $ 51,476
Deferred registration costs 23,319 --
Other assets 1,895 2,911
--------- ---------
Total Assets $ 27,522 $ 54,387
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Advances from organizers $ 30,000 $ 209,000
Accrued expenses 11,998 --
--------- ---------
Total Liabilities $ 41,998 $ 209,000
--------- ---------
Commitments and contingencies (Note 3)
Stockholders' Equity (Note 1):
Common stock, $.01 par value,
10,000,000 shares authorized,
18,000 shares and 100 shares issued
and outstanding at June 30, 1999 and
December 31, 1998, respectively $ 180 $ 1
Paid-in-capital 179,820 999
(Deficit) accumulated during
the development stage (194,476) (155,613)
--------- ---------
Total Stockholders' Equity (14,476) (154,613)
--------- ---------
Total Liabilities and
Stockholders' Equity $ 27,522 $ 54,387
========= =========
</TABLE>
Refer to notes to the financial statements.
43
<PAGE> 45
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the From
three-months Inception
ended June 30, April 14,
1999 1998 1998 through
-------- -------- December 31,
(Unaudited) 1998
--------------------------- ------------
<S> <C> <C> <C>
Revenues:
Interest income $ 191 $ 511 $ 2,291
-------- -------- ---------
Total revenues 191 511 2,291
-------- -------- ---------
Expenses:
Organizing consultant $ 19,500 $ 32,000 $ 80,000
Organizational expenses 799 37,239 68,868
Insurance expense 1,269 1,615 4,040
Advertising and promotional 202 100 945
Travel and entertainment 1,385 2,436 2,990
Miscellaneous other expenses 2,596 351 1,061
-------- -------- ---------
Total expenses $ 25,751 $ 73,741 157,904
-------- -------- ---------
Net (loss) $(25,560) $(73,230) $ (155,613)
======== ======== =========
Basic (loss) per share (Note 2) $ (15.27) $(732.30) $(1,556.13)
======== ======== =========
</TABLE>
Refer to notes to the financial statements.
44
<PAGE> 46
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the From
six-months Inception,
ended June 30, April 14,
1999 1998 1998 through
-------- -------- December 31,
(Unaudited) 1998
--------------------------- ------------
<S> <C> <C> <C>
Revenues:
Interest income $ 598 $ 511 $ 2,291
-------- -------- ---------
Total revenues 598 511 2,291
-------- -------- ---------
Expenses:
Organizing consultant $ 31,500 $ 32,000 $ 80,000
Organizational expenses 1,029 37,239 68,868
Insurance expense 2,517 1,615 4,040
Advertising and promotional 202 100 945
Travel and entertainment 1,385 2,436 2,990
Miscellaneous other expenses 2,828 351 1,061
-------- -------- ---------
Total expenses $ 39,461 $ 73,741 157,904
-------- -------- ---------
Net (loss) $(38,863) $(73,230) $ (155,613)
======== ======== =========
Basic (loss) per share (Note 2) $ (43.57) $(732.30) $(1,556.13)
======== ======== =========
</TABLE>
Refer to notes to the financial statements.
45
<PAGE> 47
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the From
six-months Inception,
ended June 30, April 14,
1999 1998 1998 through
-------- -------- December 31,
(Unaudited) 1998
---------------------------- ------------
<S> <C> <C> <C>
Cash flows from pre-operating
activities of
the development stage:
Net (loss) $ (38,863) $ (73,230) $(155,613)
Adjustments to reconcile net
(loss) to net cash used by
pre-operating activities
of the development stage:
Decrease (increase)
in other assets 1,016 (158) (2,911)
(Decease) in payables (167,002) -- --
--------- --------- ---------
Net cash used by pre-operating
activities of the development stage $(204,849) $ (73,388) $(158,524)
--------- --------- ---------
Cash flows from investing activities:
(Increase) in deferred
registration costs $ (23,319) -- --
--------- --------- ---------
Net cash used in
investing activities $ (23,319) -- --
--------- --------- ---------
Cash flows from financing activities:
Issuance of common stock $ 179,000 $ 1,000 $ 1,000
Increase in borrowings -- 110,000 209,000
--------- --------- ---------
Net cash provided from
financing activities $ 179,000 $ 111,000 $ 210,000
--------- --------- ---------
Net increase (decrease) in cash $ (49,168) $ 37,612 $ 51,476
Cash at beginning of period 51,476 -- --
--------- --------- ---------
Cash at end of period $ 2,308 $ 37,612 $ 51,476
========= ========= =========
Supplemental disclosures of cash flow information:
Cash paid for:
Interest $ -- $ -- $ --
========= ========= =========
Income taxes $ -- $ -- $ --
========= ========= =========
</TABLE>
Refer to notes to the financial statements.
46
<PAGE> 48
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FROM INCEPTION (APRIL 14, 1998) TO DECEMBER 31, 1998 (AUDITED)
AND FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
(Deficit)
Common Accumulated
Stock Additional During Total
$.01 Paid-in- the Development Stockholders'
Par Value Capital Stage Equity
--------- ------- ----- ------
<S> <C> <C> <C> <C>
Issuance of
100 shares
of Common stock $ 1 $ 999 $ -- $ 1,000
Net (loss) -- -- (155,613) (155,613)
---- -------- --------- ---------
Balance,
December 31, 1998 1 999 (155,613) (154,613)
---- -------- --------- ---------
Issuance of
17,900 shares
of Common Stock 179 178,821 -- 179,000
---------
Net (loss) -- -- (38,863) (38,863)
---- -------- --------- ---------
Balance,
June 30, 1999 $180 $179,820 $(194,476) $ (14,476)
==== ======== ========= =========
</TABLE>
Refer to notes to the financial statements.
47
<PAGE> 49
NOTE 1 - SUMMARY OF ORGANIZATION
Lehigh Acres First National Bancshares, Inc. (in organization)
(hereinafter, the "Company") was incorporated in the State of Florida on May 19,
1999 for the purpose of becoming a bank holding company with respect to a
proposed de novo bank, Lehigh Acres First National Bank (the "Bank") to be
located in Lehigh Acres, Florida. Prior to the formation of the Company, a group
of organizers, on April 14, 1998, formed a separate company, Lehigh One, Inc.,
to be used as a tool to facilitate in the process of organizing and forming both
the Company and the Bank. All assets, liabilities, rights, revenues and expenses
acquired, incurred or undertaken by Lehigh One, Inc. from inception (April 14,
1998) have been transferred, by mutual agreement of the Boards of Directors of
both Lehigh One, Inc. and the Company, to the Company. Accordingly, all
financial transactions undertaken by Lehigh One, Inc. during 1998 and 1999 are
reflected in the Company's financial statements as of June 30, 1999 and December
31, 1998.
On March 30, 1999, the Company received preliminary approval from the
Office of the Comptroller of the Currency (the "OCC") to charter a bank, and on
April 2, 1999, the Company received preliminary approval from the Federal
Deposit Insurance Corporation (the "FDIC") to insure deposits up to $100,000 per
depositor. The Federal Reserve Board (the "FRB") approved our application to
form of a bank holding company on August 13, 1999. When all regulatory
applications are approved and the minimum stock sale is successfully completed,
the Company will acquire 100 percent of the voting stock of the Bank by
injecting a minimum of $5.0 million into the Bank's capital accounts.
The Company is authorized to issue up to 10.0 million shares of its
$.01 par value per share common stock ("Common Stock") . Each share is entitled
to one vote and shareholders have no preemptive, cumulative voting or conversion
rights. The organizers as a group capitalized the Company by acquiring 18,000
shares of the Company's Common Stock for an aggregate amount of $180,000. The
organizers intend to purchase an additional 99,000 shares of the Company's
Common Stock in the Offering. As of June 30, 1999 and December 31, 1998, there
were 18,000 shares and 100 shares of the Company's Common Stock issued and
outstanding, respectively.
The Company is also authorized to issue of up to 10.0 million shares of
its $.01 par value per share preferred stock. The Company's Board of Directors
may, without further action by the shareholders, direct the issuance of
preferred stock for any proper corporate purpose with preferences, voting
powers, conversion rights, qualifications, special or relative rights and
privileges which could adversely affect the voting power or other rights of
shareholders of Common Stock. As of June 30, 1999 and December 31, 1998, there
were no shares of the Company's preferred stock issued or outstanding.
The Company's Articles of Incorporation and Bylaws contain certain
provisions that might be deemed to have potential defensive "anti takeover"
effects. These certain provisions include: (i) provisions relating to meetings
of shareholders which limit who may call meetings and what matters will be voted
upon; (ii) the ability of the Board of Directors to issue additional shares of
authorized Common Stock and preferred stock without shareholder approval, thus
retaining the ability to dilute any potential acquirer attempting to gain
control by purchasing Company stock; (iii) a staggered Board of Directors,
limiting the ability to change the members of the Board; and (iv) a provision
that individuals affiliated with the Company's competitors may not qualify to
serve on its Board.
The Company intends to file a Registration Statement on Form SB-2 with
the Securities and Exchange Commission offering for sale a minimum of 600,000
and maximum of 1,000,000 shares of its $.01 par value Common Stock (the
"Offering"). The sales price for each share of Common Stock is $10.00. All
subscription proceeds will be held by an Escrow Agent pending acceptance of
subscriptions, completion of the Offering, and the receipt of preliminary
approvals from the OCC, FDIC and the FRB. If the sale of the minimum (600,000)
shares of Common Stock is not accomplished by the expiration date, as extended,
all subscriptions will be canceled and all proceeds returned, with interest, to
the subscribers. If the sale of the minimum (600,000) shares
<PAGE> 50
of Common Stock is accomplished and all final regulatory approvals are obtained,
the Company will capitalize the Bank with at least $5.0 million immediately
prior to commencement of banking operations.
The organizers of the Company will receive one warrant, at no
additional cost, for each share of Common Stock purchased by that organizer in
the Offering. Each warrant entitles its holder to purchase one share of the
Company's Common Stock for $10.00 for a period of ten years from the later of
(i) the date the Bank opens for business or (ii) one year after the date of its
Offering prospectus. The warrants will vest immediately on the above date, as
applicable, and may be exercised either in whole or in part. All warrants are
subject to approval by the banking regulatory agencies.
The Company is a development stage enterprise as defined by the
Financial Accounting Standards Board Statement No. 7, "Accounting and Reporting
by Development Stage Enterprises," as it devotes substantially all its efforts
to establishing a new business, its planned principal operations have not
commenced and there has been no significant revenue from the planned principal
operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting. The accounting and reporting policies of the
Company conform to generally accepted accounting principles and to general
practices in the banking industry. The Company uses the accrual basis of
accounting by recognizing revenues when they are earned and expenses in the
period incurred, without regard to the time of receipt or payment of cash. The
Company has adopted a fiscal year that ends on December 31, effective for the
period ended December 31, 1998.
Organizational Expenses. Organizational costs are costs that have been
incurred in the expectation that they will generate future revenues or otherwise
benefit periods after the Company reaches the operating stage. Organizational
costs generally include incorporation, legal and accounting fees incurred in
connection with establishing the Company. In accordance with recent accounting
pronouncements, all organizational expenses have been expensed when incurred.
Deferred Registration Costs. Deferred registration costs are deferred
and incremental costs incurred by the Company in connection with the
underwriting and issuance of its own Common Stock. Deferred registration costs
do not include any allocation of salaries, overhead or similar costs. The
Company estimates that it will incur and pay commissions associated with the
sale of stock in the Offering of approximately $326,400 on the minimum 600,000
shares and $646,400 on the maximum 1,000,000 shares. In addition to the
underwriting commissions described above, the Company expects its other deferred
registration costs to approximate $110,000. In a successful offering, deferred
registration costs are deducted from the Company's paid-in-capital account.
Registration costs associated with an unsuccessful offering are charged to
operations in the period during which the offering is deemed unsuccessful.
Income Taxes. The Company will be subject to taxation whenever taxable
income is generated. As of June 30, 1999 and December 31, 1998, no income taxes
had been accrued since no taxable income had been generated.
Basic (Loss) Per Share. For the period from Inception (April 14, 1998)
through December 31, 1998, basic loss per share amounted to $ (1,556.13) . The
loss per share was calculated using 100 shares as the average number of shares
outstanding during the period.
Basic loss per share of $(15.27) and $(43.57) is based on the average
number of shares outstanding of 1,674 and 892 for the three-month and six-month
periods ended June 30, 1999, respectively. Note that the above result may not be
indicative of future performance since planned principal operations have not
commenced.
Statement of Cash Flows. The statement of cash flows was prepared using
the indirect method. Under this method, net loss was reconciled to net cash
flows from pre-operating activities by adjusting for the effects of current
assets and short term liabilities.
<PAGE> 51
NOTE 3 - COMMITMENTS AND CONTINGENCIES
On June 10, 1999, the Company obtained a one-year, $250,000 line of
credit ("LOC") at a floating rate of interest of prime less one percent. The LOC
was obtained in order to fund pre-operating activities. As of June 30, 1999, no
funds had been drawn against the LOC.
In connection with the Company's formation and the organization of its
subsidiary Bank, the Company has entered into three separate agreements with a
bank consulting firm, a law firm and an accounting firm to assist it in: (i)
preparing and filing all organizational and incorporation papers; (ii) preparing
and filing applications with the bank regulatory authorities concerning the
formation of a bank holding company and the organization of a Federally
chartered bank; (iii) preparing a Registration Statement on Form SB-2, including
the financial audit and filing same with the Securities and Exchange Commission;
and (iv) drafting of employment agreements, stock option plans and other matters
relating to compensation. The aggregate cost of the above services is estimated
to approximate $145,000 and may vary depending upon the degree of complexity and
time spent on the above projects.
The bank consulting firm mentioned above is 100% owned by a certain
organizer of the Company. The agreement with the bank consulting firm estimates
the cost of its services to approximate $35,000 plus out of pocket expenses. In
addition, this organizer will receive options to purchase 3,000 shares of the
Company's Common Stock. Each option will entitle the organizer to purchase one
share of the Company's Common Stock for $10.00 per share. The options will be
exercisable for a period of ten years from the date the Bank opens for business.
In the event that (i) the minimum offering (600,000 shares) is not met, or (ii)
the options are not awarded for any reason within six months after the Bank
opens for business, the Company will compensate this organizer the amount of
$4,200. From inception (April 14, 1998) through June 30, 1999 and December 31,
1998, the bank consulting firm had been paid $36,361 and $35,332, respectively.
On April 16, 1998, the Company entered into a consulting agreement
("Consulting Agreement I") with one of its organizers who will serve as the
Company's and the Bank's President and CEO (the "CEO"). Consulting Agreement I
requires the CEO to provide consulting services in connection with the
organization of the Company and the proposed Bank. Consulting Agreement I was
for a term of nine months and provided other customary benefits such as health,
life and disability insurance, with cost not exceeding $600 per month. For
calendar year 1998, the CEO was paid $80,000 pursuant to Consulting Agreement I.
On January 16, 1999, the Company entered into a consulting agreement
("Consulting Agreement II") with its CEO. Consulting Agreement II, which
replaced Consulting Agreement I, became effective January 16, 1999 and is for a
term of up to fifteen months. During the six months ended June 30, 1999, the CEO
was compensated $31,500 pursuant to Consulting Agreement II.
On October 9, 1998, the Company entered into an employment agreement
(the "Employment Agreement") with the CEO. The Employment Agreement will
commence when the proposed Bank opens for business. The Employment Agreement is
for a term of five years. Under the terms of the Employment Agreement, the CEO,
for his services and efforts, will be paid an annual base salary of $96,000 plus
performance bonuses of up to 15% of the base salary. The Employment Agreement
provides for other customary benefits, such as health, life and disability
insurance. Also, upon the Bank's opening for business and the Board's adoption
of a stock option plan, the CEO will be granted options to purchase 25,000
shares of the Company's Common Stock at a price of $10.00 per share. The options
will vest equally over a three year period and will have a term of ten years.
The Company entered into two lease agreements with two unrelated
parties. Both agreements cover the same facility from which the proposed Bank
will operate. The first agreement obligates the Company to pay $6,486 for each
of the initial eleven months beginning July 1, 1999 and $7,252 per month
thereafter until May 31, 2005. The second agreement obligates the Company to pay
$7,977 per month for five years beginning June 1, 2005 and $8,775 per month for
five years beginning June 1, 2010. The second agreement also contains two
additional five year options to renew. The first option, if exercised, obligates
the Company to pay $9,652 per
<PAGE> 52
month beginning June 1, 2015. The second option, if exercised, obligates the
Company to pay $10,618 per month beginning June 1, 2020. In addition to the
monthly lease payments, the Company is obligated to pay sales tax, repairs and
maintenance, insurance and property tax.
Please refer to Note 1 concerning warrants to be issued to organizers.
NOTE 4 - RELATED PARTY TRANSACTIONS
A group of fourteen individuals advanced $209,000 to the Company in
order to fund the Company's pre-operating expenses. These funds were advanced
interest-free. No imputed interest was charged to operations in the Company's
financial statements as of and for the periods ended June 30, 1999 and December
31, 1998. Of the above advance of $209,000, on June 22, 1999, $179,000 was
converted into 17,900 shares of the Company's Common Stock.
Under an agreement dated June 26, 1998, an organizer was engaged to
review certain contracts, leases and documents relevant to the organization of
the Company. This organizer, upon a successful completion of the sale of at
least the minimum Offering (600,000 shares), will receive the sum of $10,000 in
consideration for services rendered. As of June 30, 1999 and December 31, 1998,
no accrual was recorded and no payments had been paid with respect to this
agreement.
Please refer to Note 1 regarding all assets, liabilities, rights,
revenues and expenses acquired, incurred or undertaken by Lehigh One, Inc., all
of which have been assumed and transferred to the Company.
Please refer to Note 1 for a discussion concerning the organizers,
warrants.
Please refer to Note 3 for a discussion concerning an agreement with a
bank consulting firm owned 100% by a certain organizer of the Company.
Please refer to Note 3 for discussions concerning the CEO's Employment
Agreement, Consulting Agreement I and Consulting Agreement II.
NOTE 5 - UNAUDITED INTERIM FINANCIAL STATEMENTS
The financial statements and related notes and schedules as of June 30,
1999 and 1998, and for the three and six-month periods then ended are unaudited.
However, in the opinion of the Company's management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation of
those financial statements have been included. Operating results for the
six-month period ended June 30, 1999 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1999.
<PAGE> 53
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
STOCK ORDER FORM/SUBSCRIPTION AGREEMENT
TO: Lehigh Acres First National Bancshares, Inc.
P.O. Box 1479
Lehigh Acres, Florida 33970-1479
Ladies and Gentlemen:
You have informed me that Lehigh Acres First National Bancshares, Inc.,
a Florida corporation (the "Company"), is offering up to 1,000,000 shares of its
common stock, at a price of $10.00 per share payable as provided herein and as
described in and offered pursuant to the prospectus furnished with this
Subscription Agreement to the undersigned (the "prospectus").
1. SUBSCRIPTION. Subject to the terms and conditions included, the
undersigned tenders this subscription, together with payment in United States
currency by check, bank draft, or money order payable to "The Independent
Bankers' Bank of Florida as escrow agent for Lehigh Acres First National
Bancshares, Inc." the amount indicated below (the "Funds"), representing the
payment of $10.00 per share for the number of shares of common stock indicated
below. The total subscription price must be paid at the time the Subscription
Agreement is executed.
2. ACCEPTANCE OF SUBSCRIPTION. It is understood and agreed that Lehigh
Acres First National Bancshares, Inc. shall have the right to accept or reject
this subscription in whole or in part, for any reason whatsoever. Lehigh Acres
First National Bancshares, Inc. 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.
3. ACKNOWLEDGMENTS. The undersigned acknowledges that he or she has
received a copy of the prospectus. This Subscription Agreement creates a legally
binding obligation and the undersigned agrees to be bound by the terms of this
Agreement.
4. REVOCATION. The undersigned agrees that once this Subscription
Agreement is tendered to Lehigh Acres First National Bancshares, Inc., it may
not be withdrawn and that this Agreement shall survive the death or disability
of the undersigned.
BY EXECUTING THIS 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.
THE SHARES OF COMMON STOCK OFFERED HERE ARE NOT SAVINGS ACCOUNTS OR SAVINGS
DEPOSITS ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-1
<PAGE> 54
Please indicate in the space provided below the exact name or names and
address in which the stock certificate representing shares subscribed for
hereunder should be registered.
<TABLE>
<S> <C>
- -------------------------------------------- ------------------------------------------------------------
Number of Shares Subscribed Name or Names of Subscribers (Please Print)
for (at least 100 shares and no more than
5% of the minimum offering)
$
------------------------------------------- ------------------------------------------------------------
Total Subscription Price at Please indicate form of ownership desired (individual,
$10.00 per share (funds must be enclosed) joint tenants with right of survivorship, tenants in
common, trust corporation, partnership, custodian, etc.)
Date: (L.S.)
--------------------------------------- -----------------------------------------------------
Signature of Subscriber(s)
- -------------------------------------------- (L.S.)
Social Security Number or Federal -----------------------------------------------------
Taxpayer Identification Number Signature of Subscriber(s)
Street (Residence) Address:
</TABLE>
- --------------------------------------------
- --------------------------------------------
- --------------------------------------------
City, State and Zip Code
When signing as attorney, trustee, administrator, or guardian, please
give your full title as such. If a corporation, please sign in full corporate
name by president or other authorized officer. In the case of joint tenants or
tenants in common, each owner must sign.
TO BE COMPLETED BY LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.:
Accepted as of __________________, _______, as to ___________ shares.
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
--------------------------------------------
By:
Title:
A-2
<PAGE> 55
FEDERAL INCOME TAX BACKUP WITHHOLDING
In order to prevent the application of federal income tax backup
withholding, each subscriber must provide the escrow agent with a correct
Taxpayer Identification Number ("TIN"). An individual's social security number
is his or her TIN. The TIN should be provided in the space provided in the
Substitute Form W-9 below.
Under federal income tax law, any person who is required to furnish his
or her correct TIN to another person, and who fails to comply with such
requirements, may be subject to a $50 penalty imposed by the IRS.
Backup withholding is not an additional tax. Rather, the tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If backup withholding results in an overpayment of taxes, a refund may
be obtained from the IRS. Certain taxpayers, including all corporations, are not
subject to these backup withholding and reporting requirements.
If the shareholder has not been issued a TIN and has applied for a TIN
or intends to apply for a TIN in the near future, "Applied For" should be
written in the space provided for the TIN on the Substitute Form W-9.
SUBSTITUTE FORM W-9
Under penalties of perjury, I certify that: (i) The number shown on
this form is my correct Taxpayer Identification Number (or I am waiting for a
Taxpayer Identification Number to be issued to me), and (ii) I am not subject to
backup withholding because: (a) I am exempt from backup withholding; or (b) I
have not been notified by the Internal Revenue Service ("IRS") that I am subject
to backup withholding as a result of a failure to report all interest or
dividends; or (c) the IRS has notified me that I am no longer subject to backup
withholding.
You must cross out item (ii) above if you have been notified by the IRS
that you are subject to backup withholding because of underreporting interest or
dividends on your tax return. However, if after being notified by the IRS that
you were subject to backup withholding you received another notification from
the IRS that you are not longer subject to backup withholding, do not cross out
item (ii).
Each subscriber should complete this section.
- ---------------------------------- -----------------------------------
Signature of Subscriber Signature of Subscriber
- ---------------------------------- -----------------------------------
Printed Name Printed Name
- ---------------------------------- -----------------------------------
Social Security or Employer Social Security or Employer
Identification No. Identification No.
A-3
<PAGE> 56
================================================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Summary...........................................3
Risk Factors......................................5
The Offering......................................9
Use of Proceeds..................................12
Capitalization...................................15
Dividend Policy .................................15
Plan of Operation................................16
Proposed Business................................18
Supervision and Regulation.......................24
Management.......................................31
Certain Relationships and Related Transactions...36
Description of Capital Stock.....................37
Legal Matters....................................39
Experts..........................................39
Additional Information...........................40
Index to Financial Statements...................F-1
Subscription Agreement..........................A-1
</TABLE>
--------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT. WE
HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION THAT IS DIFFERENT. THIS
PROSPECTUS IS NOT AN [ OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS COMPLETE AND ACCURATE AS OF THE
DATE ON THE COVER, BUT THE INFORMATION MAY CHANGE IN THE FUTURE.
UNTIL ____________________, ALL DEALERS THAT EFFECT TRANSACTIONS IN
THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED
TO DELIVER A PROSPECTUS.
================================================================================
1,000,000 SHARES
COMMON STOCK
LEHIGH ACRES FIRST
NATIONAL BANCSHARES,
INC.
A PROPOSED HOLDING COMPANY FOR
LEHIGH ACRES FIRST NATIONAL BANK
PROSPECTUS
[INSERT SALES AGENT LOGO]
August ___, 1999
================================================================================
<PAGE> 57
PART II
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Item 24. Indemnification of Directors and Officers
Lehigh Acres First National Bancshares, Inc.'s articles of
incorporation contain a provision which, subject to certain limited exceptions,
limits the liability of a director to Lehigh Acres First National Bancshares,
Inc. or its shareholders for any breach of duty as a director. There is no
limitation of liability 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; a transaction from which
the director derived an improper personal benefit; liability imposed under
Section 607.0834 (or any successor provision or redesignation thereof) of the
Florida Business Corporation Act (the "Corporation Act"); or 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. In addition, if at
any time the Corporation Act shall have been amended to authorize further
elimination or limitation of the liability of director, then the liability of
each director of Lehigh Acres First National Bancshares, Inc. shall be
eliminated or limited to the fullest extent permitted by such provisions, as so
amended, without further action by the shareholders, unless the provisions of
the Corporation Act require such action. The provision does not limit the right
of Lehigh Acres First National Bancshares, Inc. or its shareholders to seek
injunctive or other equitable relief not involving payments in the nature of
monetary damages.
Lehigh Acres First National Bancshares, Inc.'s bylaws contain certain
provisions which provide indemnification to directors that is broader than the
protection expressly mandated in Sections 607.0850 of the Corporation Act. To
the extent that a director or officer has been successful, on the merits or
otherwise, in the defense of any action or proceeding brought by reason of the
fact that such person was a director or officer, Sections 607.0850 of the
Corporation Act would require Lehigh Acres First National Bancshares, Inc. to
indemnify such persons against expenses (including attorney's fees) actually and
reasonably incurred in connection therewith. The Corporation Act expressly
allows Lehigh Acres First National Bancshares, Inc. to provide for greater
indemnification rights to its officers and directors, subject to shareholder
approval.
Insofar as indemnification for liabilities arising under the
Corporation Act may be permitted to directors, officers, and controlling persons
to the articles of incorporation or bylaws, or otherwise, we have been advised
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Corporation Act and is, therefore, unenforceable.
The board of directors also has the authority to extend to officers,
employees and agents the same indemnification rights held by directors, subject
to all of the accompanying conditions and obligations. The board of directors
has extended or intends to extend indemnification rights to all of its executive
officers.
We have the power to purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent against any
liability asserted against him or incurred by him in any such capacity, whether
or not we would have the power to indemnify him against such liability under the
bylaws.
<PAGE> 58
Item 25. Other Expenses of Issuance and Distribution.
Estimated expenses (other than underwriting commissions) of the sale of
the shares of common stock are as follows:
Registration Fee $ 2,780
Printing and Engraving $ 20,000
Legal Fees and Expenses $ 40,000
Accounting Fees $ 2,000
Blue Sky Fees and Expenses $ 10,000
Marketing Expense $ 20,000
Miscellaneous Disbursements $ 15,000
--------
TOTAL $109,780
Item 26. Recent Sales of Unregistered Securities.
On June 22, 1999, Lehigh Acres First National Bancshares, Inc. had
issued a total of 18,000 shares of its common stock to some of its organizers.
The price per share was $10.00 for a total purchase price $180,000. No
additional common stock has been issued by Lehigh Acres First National
Bancshares, Inc. There were no underwriting discounts or commissions paid with
respect to these transactions. All sales were exempt under Section 4(2) of the
Securities Act of 1933. The twelve recipients of securities in these
transactions represented their intention to acquire the securities for
investment purposes only and not with a view to or for the sale in connection
with any distribution of those securities, and we affixed appropriate legends to
the share certificates issued in those transactions. All recipients of these
securities had adequate access, through their relationship with us or otherwise,
to information about us.
Item 27. Exhibits.
3.1.* Articles of Incorporation
3.2.* Bylaws
3.3.* Assignment and Assumption Agreement dated June 21, 1999 between Lehigh
Acres First National Bancshares, Inc. and Lehigh One Incorporated.
4.1.* See Exhibits 3.1 and 3.2 for provisions in Lehigh Acres First National
Bancshares, Inc.'s Articles of Incorporation and Bylaws defining the
rights of holders of the common stock
4.2.* Form of certificate of common stock
5.1.* Opinion Regarding Legality
10.1.* Employment Agreement dated October 9, 1998 between Lehigh Acres First
National Bancshares, Inc. and Lloyd J. Weber.
10.2.* Consulting Agreement dated January 16, 1999 between Lehigh One
Incorporated and Lloyd J. Weber.
10.3.* Consulting Agreement dated April 15, 1998 between Lehigh One
Incorporated and Lloyd J. Weber.
10.4.* Real Property Lease dated June 15, 1999 between Lehigh Acres First
National Bank , as tenant, and John E. Morgan and Leona P. Morgan,
husband and wife, as to an undivided one-half interest, and Elizabeth
E. Culbreth, a single person, as to an undivided one-quarter interest,
and Hazel M. Frantz, a single person, as to an undivided one quarter
interest, all as landlord.
<PAGE> 59
10.5.* Assignment and Assumption Agreement effectively dated July 1, 1999
between Lehigh Acres First National Bank, as assignee, and SouthTrust
Bank, N.A., f/k/a First Federal Savings & Loan Association of DeSoto
County, as assignor.
10.6.* Lease effectively dated June 1, 1980 between First Federal Savings &
Loan Association of Desoto County, as tenant, and Lehigh Corporation,
as landlord.
10.7. Amended Form of Sales Agency Agreement between Lehigh Acres First
National Bancshares, Inc. and Berthel Fisher and Company.
10.8.* Escrow Agreement dated June 15, 1999 between Lehigh Acres First
National Bancshares, Inc. and Independent Bankers' Bank of Florida.
10.9.* Form of Data Processing Services Agreement, between Lehigh Acres First
National Bancshares, Inc. and Marshall & Ilsley Corporation.
10.10.* Consulting Agreement dated March 18, 1998 between the Organizers and
Directors of the Company and Bank Resources, Inc.
10.11.* Legal Services Agreement dated June 26, 1998 between Lehigh Acres
First National Bancshares and Kenneth K. Thompson.
10.12.* Form of Stock Warrant Agreement
10.13.* Form of Subscription Agreement dated June 22, 1999 between Lehigh
Acres First National Bancshares, Inc. and twelve of the original
organizers.
10.14 Line of Credit between Lehigh Acres First National Bancshares and the
Independent Bankers' Bank of Florida dated June 10, 1999.
23.1. Consent of Independent Public Accountants
23.2.* Consent of Nelson Mullins Riley & Scarborough, L.L.P. (appears in its
opinion filed as Exhibit 5.1)
24.1.* Power of Attorney filed as part of the signature page to the
Registration Statement
27.1. Financial Data Schedule (for electronic filing purposes)
* Previously filed with initial Registration Statement
<PAGE> 60
Item 28. Undertakings.
The undersigned Company will:
(a)(1) 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 of 1933;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act of 1933,
treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that 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 Lehigh Acres First National Bancshares, Inc. pursuant to
the provisions described in Item 24 above, or otherwise, Lehigh Acres First
National Bancshares, Inc. has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
If a claim for indemnification against such liabilities (other than the
payment by Lehigh Acres First National Bancshares, Inc. of expenses incurred or
paid by a director, officer or controlling person of Lehigh Acres First National
Bancshares, Inc. 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, Lehigh Acres First National Bancshares, Inc.
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
<PAGE> 61
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Lehigh
Acres, State of Florida, on August 24, 1999.
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
By: /s/ Lloyd J. Weber
-----------------------------------------
Lloyd J. Weber
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
*
- ------------------------------------ Director
Robert C. Bagans
*
- ------------------------------------ Director
Calvin H. Beals
*
- ------------------------------------ Director
Benjamin R. Bell
*
- ------------------------------------ Director
Craig A. Dearden
*
- ------------------------------------ Director
Paul F. Dinger
*
- ------------------------------------ Director
Teresa Goodlad
*
- ------------------------------------
James D. Hull Director
</TABLE>
<PAGE> 62
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
*
- ------------------------------------ Director
Vikas K. Jain, M.D.
*
- ------------------------------------ Director
Lawrence J. Murphy, D.V.M.
*
- ------------------------------------ Director
Micki J. Regas
*
- ------------------------------------ Director
Patricia A. Regas
*
- ------------------------------------ Director
E. Byron Richardson
*
- ------------------------------------ Director
Kenneth K. Thompson
/s/ Lloyd J. Weber
- ------------------------------------ Director, Chief Executive August 24, 1999
Lloyd J. Weber Officer and President
(principal executive officer)
(principal accounting officer)
*
- ------------------------------------ Director
Kenneth C. Wolfe
/s/ Lloyd J. Weber
- ------------------------------------
* As Attorney-in-Fact
</TABLE>
<PAGE> 63
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
3.1.* Articles of Incorporation
3.2.* Bylaws
3.3.* Assignment and Assumption Agreement dated June 21, 1999 between Lehigh
Acres First National Bancshares, Inc. and Lehigh One Incorporated.
4.1.* See Exhibits 3.1 and 3.2 for provisions in Lehigh Acres First National
Bancshares, Inc.'s Articles of Incorporation and Bylaws defining the
rights of holders of the common stock
4.2.* Form of certificate of common stock
5.1.* Opinion Regarding Legality
10.1.* Employment Agreement dated October 9, 1998 between Lehigh Acres First
National Bancshares, Inc. and Lloyd J. Weber.
10.2.* Consulting Agreement dated January 16, 1999 between Lehigh One
Incorporated and Lloyd J. Weber.
10.3.* Consulting Agreement dated April 15, 1998 between Lehigh One
Incorporated and Lloyd J. Weber.
10.4.* Real Property Lease dated June 15, 1999 between Lehigh Acres First
National Bank , as tenant, and John E. Morgan and Leona P. Morgan,
husband and wife, as to an undivided one-half interest, and Elizabeth
E. Culbreth, a single person, as to an undivided one-quarter interest,
and Hazel M. Frantz, a single person, as to an undivided one quarter
interest, all as landlord.
10.5.* Assignment and Assumption Agreement effectively dated July 1, 1999
between Lehigh Acres First National Bank, as assignee, and SouthTrust
Bank, N.A., f/k/a First Federal Savings & Loan Association of DeSoto
County, as assignor.
10.6.* Lease effectively dated June 1, 1980 between First Federal Savings &
Loan Association of Desoto County, as tenant, and Lehigh Corporation,
as landlord.
10.7. Amended Form of Sales Agency Agreement between Lehigh Acres First
National Bancshares, Inc. and Berthel Fisher and Company.
10.8.* Escrow Agreement dated June 15, 1999 between Lehigh Acres First
National Bancshares, Inc. and Independent Bankers' Bank of Florida.
10.9.* Form of Data Processing Services Agreement, between Lehigh Acres First
National Bancshares, Inc. and Marshall & Ilsley Corporation.
10.10.* Consulting Agreement dated March 18, 1998 between the Organizers and
Directors of the Company and Bank Resources, Inc.
10.11.* Legal Services Agreement dated June 26, 1998 between Lehigh Acres
First National Bancshares and Kenneth K. Thompson.
</TABLE>
<PAGE> 64
<TABLE>
<S> <C>
10.12.* Form of Stock Warrant Agreement
10.13.* Form of Subscription Agreement dated June 22, 1999 between Lehigh
Acres First National Bancshares, Inc. and twelve of the original
organizers.
10.14 Line of Credit between Lehigh Acres First National Bancshares and the
Independent Bankers' Bank of Florida dated June 10, 1999.
23.1. Consent of Independent Public Accountants
23.2.* Consent of Nelson Mullins Riley & Scarborough, L.L.P. (appears in its
opinion filed as Exhibit 5.1)
24.1.* Power of Attorney filed as part of the signature page to the
Registration Statement
27.1 Financial Data Schedule (for electronic filing purposes)
</TABLE>
* Previously filed with initial Registration Statement
<PAGE> 1
Exhibit 10.7
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
SALES AGENCY AGREEMENT
June 23, 1999
BERTHEL FISHER FINANCIAL SERVICES, INC.
100 Second Street, N.E.
Cedar Rapids, Iowa 52407-4250
Ladies and Gentlemen:
This letter sets forth and confirms the terms and conditions of the
engagement (the "Agreement") of Berthel Fisher Financial Services, Inc.
("Berthel Fisher") by Lehigh Acres First National Bancshares, Inc. (the
"Company") as exclusive selling agent of the Company with respect to the
Company's proposed public offering (the "Offering") of its common stock. The
Offering will be made pursuant to a registration statement on Form SB-2 (the
"Registration Statement"), filed with the Securities and Exchange Commission
(the "Commission") and by means of a prospectus (the "Prospectus"), which will
be provided to Berthel Fisher.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to, and agrees with, Berthel Fisher
as follows:
(a) The Registration Statement and the Prospectus do not and will
not contain any untrue statements of material fact or omit to
state any material facts required to be stated therein or
necessary to make the statements therein are, in the light of
the circumstances under which they were made, not misleading.
(b) The Company is a corporation validly existing and in good
standing under the laws of the state of its incorporation; has
full corporate and other power and authority under such laws
to own its properties and conduct its business as described in
the Prospectus; and is duly qualified to do business as a
foreign corporation in each other jurisdiction in which it
owns or leases properties or conducts it business so as to
require qualification and is in good standing in each
-1-
<PAGE> 2
such jurisdiction, except where failure to be so qualified
would not have a material adverse effect on the condition,
financial or otherwise, results of operations, affairs or
business prospects of the Company.
(c) The shares of common stock to be issued and sold by the
Company hereunder (the "Shares"), when issued and delivered
against payment therefor as provided herein, will be duly and
validly authorized and issued and fully paid and will conform
to the description thereof contained in the Prospectus.
(d) Except as disclosed in the Prospectus or information
incorporated therein by reference, there are no (i)
outstanding securities or obligations of the Company
convertible into or exchangeable for any capital stock of the
Company, (ii) warrants, rights or options to subscribe for or
purchase from the Company any such capital stock or any such
convertible or exchangeable securities or obligations (iii)
obligations of the Company to issue any such convertible or
exchangeable securities or obligations, or any such warrants,
rights or options.
(e) The Company has the full legal right, power and authority to
enter into and perform this Agreement and sell and deliver the
Shares as provided herein, and this Agreement has been duly
authorized by its Board of Directors and duly executed and
delivered on behalf of the Company.
(f) Other than filings with, and any necessary registrations,
qualifications or exemptions from the Commission and
applicable state securities and "blue sky" authorities, no
consent, approval, authorization or order, registration or
qualification of or with any court or governmental agency or
body is required for the issuance and sale of the Shares or
for the consummation of the other transactions contemplated by
this Agreement.
(g) Except as provided in Section 2, there are no contracts,
agreements or understanding between the Company and any person
which would give rise to a valid claim against the Company for
a brokerage commission, finder's fee or other like payment in
connection with the offering of the Shares, other than
compensation due and payable to Berthel Fisher.
(h) No action, suit or proceeding at law or in equity is pending
or, to the Company's knowledge, threatened to which the
Company is a party, and no proceedings are pending or, to the
Company's knowledge, threatened against or affecting the
Company before or by any governmental official, commission,
-2-
<PAGE> 3
board or other administrative agency, (other than in
connection with required regulatory approvals) wherein an
unfavorable decision, ruling or finding could have a material
adverse effect on the consummation of this Agreement or the
condition, financial or otherwise, results of operations,
affairs or business prospects of the Company.
(i) The Company has such permits, licenses, franchises, and
governmental and regulatory authorizations ("permits") as are
necessary to own its properties and conduct its business in
the manner described in the Prospectus, subject to such
qualifications as may be set forth in the Prospectus, and
except where the failure to have such permits would not have a
material adverse effect on the consummation of this Agreement
or the condition, financial or otherwise, results of
operations, affairs, or business prospects of the Company.
(j) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940.
(k) The Company agrees as follows:
(i) The Company will notify Berthel Fisher immediately,
and confirm such notice in writing, of the receipt of
any comments from any state securities commission or
regulatory authority that relate to the Prospectus or
any amendment thereto or requests by any state
securities commission or regulatory authority for
amendments to the Prospectus or amendments or
supplements to the Prospectus or for additional
information;
(ii) The Company will use the net proceeds from the sale
of the Shares received by it in the manner specified
in the Prospectus under the caption "Use of
Proceeds."
(iii) The Company will supply Berthel Fisher with such
number of Prospectuses as Berthel Fisher shall
reasonably request.
(iv) For three years from the date of this Agreement, the
Company will furnish to Berthel Fisher copies of all
reports and communications (financial or otherwise)
furnished by the Company to its stockholders, copies
of all reports or financial statements filed with the
regulatory
-3-
<PAGE> 4
agencies as soon as such are available, and such
other publicly available documents, reports and
information concerning the business and financial
condition of the Company as Berthel Fisher may
reasonably request.
(l) The Registration Statement, the Prospectus and all other
documents previously filed or filed after the date hereof with
the Commission conform and will conform with all of the
requirements of the Securities Act of 1933 (the "Act") in all
material respects.
(m) The Company has obtained a CUSIP number for its common stock
and the Company has used its reasonable best efforts to
qualify the Shares for offering in every state reasonably
designated by Berthel Fisher. The materials previously filed
or filed after the date hereof with any state do not and will
not contain any untrue statements of material fact nor are
there or will there be any omissions of material facts
required to be stated therein or that are necessary to make
the statements therein not misleading.
(n) With respect to the offer to sell, sale, offer to purchase or
purchase of any of its securities, the Company has not made
any intentional or reckless violations of the anti-fraud
provisions of the federal securities laws, rules or
regulations promulgated thereunder or the laws, rules or
regulations of any jurisdiction wherein such securities
transactions or solicitations occurred.
(o) During the period of the offering of the Shares and for one
year from the date the Commission declares the Registration
Statement to be effective ("Effective Date"), the Company will
not sell any securities (except any shares issued upon the
exercise of (i) warrants issued pursuant to the warrant
agreements with our organizers to purchase one share of common
stock at $10.00 per share for each share purchased in the
offering, (ii) options issued pursuant to the stock option
plan which the Company anticipates adopting for up to 15% of
its shares outstanding after the offering, or (iii) options or
warrants outstanding on the Effective Date) without Berthel
Fisher's prior written consent, which will not be unreasonably
withheld.
(p) Other than as disclosed in the Prospectus, the Company has no
subsidiaries nor contemplates acquiring subsidiaries or
engaging in mergers with or the acquisition of any companies.
-4-
<PAGE> 5
(q) The financial statements, together with related schedules and
notes, included in the Registration Statement and Prospectus
present fairly the financial condition of the Company and are
reported upon by independent public accountants according to
generally accepted accounting principles and as required by
the rules and regulations of the Commission.
(r) Except as disclosed in the Registration Statement and the
Prospectus, the Company does not have any contingent
liabilities, obligations, or claims nor has it received
threats of claims or regulatory action. Further, except as
disclosed in the Registration Statement and the Prospectus,
subsequent to the date information is given in the
Registration Statement and definitive Prospectus, and prior to
the close of the offering: (a) there shall not be any material
adverse change in the management or condition, financial or
otherwise, of the Company or in its business taken as a whole;
(b) there shall not have been any material transaction entered
into by the Company other than transactions in the ordinary
course of business; (c) the Company shall not have incurred
any material obligations, contingent or otherwise, which are
not disclosed in the Registration Statement and the
Prospectus; (d) there shall not have been nor will there be
any change in the capital or long term debt (except current
payments) of the Company; and (e) the Company has not and will
not have paid or declared any dividends or other distributions
on its common shares.
(s) The Company's securities, however characterized, are not
subject to preemptive rights.
(t) The Company is eligible to use Form SB-2 for the offering of
the Shares.
(u) The Company and its affiliates are not currently offering any
securities nor has the Company or its affiliates offered or
sold any securities except as described in the Registration
Statement.
(v) The Company will not file any amendment or supplement to the
Registration Statement, Prospectus, or exhibits if Berthel
Fisher and its counsel have not been previously furnished a
copy, or if Berthel Fisher or its counsel have objected in
writing to the filing of the amendment or supplement.
(w) The Company has filed all tax returns required to be filed and
is not in default in the payment of any taxes which have
become due pursuant to any law or any assessment.
-5-
<PAGE> 6
(x) The Company has marketable title to all properties including
intellectual properties described in the Registration
Statement or Prospectus as owned by it. The properties are
free and clear of all liens, charges, encumbrances, or
restrictions, however characterized, except as described in
the Registration Statement or Prospectus. All of the
contracts, leases, subleases, patents, copyrights, licenses
and agreements, however characterized, under which the Company
holds its properties as described in the Registration
Statement or Prospectus are in full force and effect. The
Company is not in default under any of the material terms or
provisions of any contracts, leases, subleases, patents,
copyrights, licenses or agreements under which the Company
holds its properties. There are no known claims against the
Company concerning the Company's rights under the leases,
subleases, patents, copyrights, licenses and agreements and
concerning its right to continued possession of its
properties.
(y) All original documents and other information relating to the
Company's affairs have and will continue to be made available
upon request to Berthel Fisher and to its counsel at Berthel
Fisher's office or at the office of Berthel Fisher's counsel
and copies of any such documents will be furnished upon
request to Berthel Fisher and to its counsel. Included within
the documents made available have been at least the Articles
of Incorporation and any Amendments, Minutes of all of the
meetings of the Incorporators, Directors and Shareholders, all
financial statements and copies of all contracts, leases,
patents, copyrights, licenses or agreements to which the
Company is a party or in which the Company has an interest.
(z) The Company has appointed ___________________ as the Company's
transfer agent. The Company will continue to retain a transfer
agent reasonably satisfactory to Berthel Fisher for so long as
the Company is subject to the reporting requirements under
Section 12(g) or Section 15(d) of the Securities Exchange Act
of 1934. The Company will make arrangements to have available
at the office of the transfer agent sufficient quantities of
the Company's common stock certificates as may be needed for
the quick and efficient transfer of the Shares.
(aa) The Company is not in material default under any of the
contracts, leases, licenses or agreements to which it is a
party. The proposed offering of the Shares will not cause the
Company to become in material default under any of its
contracts, leases, subleases, patents, copyrights, licenses or
agreements nor will it create a conflict between the Company
and any of the contracting parties to the contracts, leases
and other agreements. Further, the Company is not in material
default in the performance of the any obligation, agreement or
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<PAGE> 7
condition contained in any debenture, note or other evidence
of indebtedness or any indenture or loan agreement of the
Company. The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated and
compliance with the terms of this Agreement will not conflict
with or result in a breach of any of the material terms,
conditions or provisions of, or constitute a material default
under, the Articles of Incorporation or Bylaws of the Company,
as amended, or any note, indenture, mortgage, deed of trust,
or other agreement or instrument to which the Company is a
party or by which it or any of its property is bound, or any
existing law, order, rule, regulation, writ, injunction, or
decree of any government, governmental instrumentality, agency
or body, arbitration tribunal or court, domestic or foreign,
having jurisdiction over the Company or its property. The
consent, approval, authorization, or order of any court or
governmental instrumentality, agency or body is not required
for the consummation of the transactions herein contemplated
except such as may be required under the Act, under the Blue
Sky or securities laws of any state or jurisdiction, or the
rules of the NASD, or except as has already been obtained, or
must be obtained, from the Company's, and its proposed
national bank subsidiary's, banking regulators
(bb) There are no contracts or other documents which are required
to be filed as exhibits to the Registration Statement by the
Act or its rules and regulations which have not been so filed.
Each contract to which the Company is a party has been duly
and validly executed, and is in full force and effect in all
material respects in accordance with its respective terms, and
no contracts have been assigned by the Company, except as
disclosed in the Registration Statement and Prospectus. The
Company knows of no present situation, condition or fact which
would prevent compliance with the terms of such contracts.
Except for amendments or modifications of contracts in the
ordinary course of business and except as disclosed in the
Registration Statement and Prospectus, the Company has no
intention of exercising any right which would cancel any of
its obligations under any contract, and has no knowledge that
any other party to any contract, in which the Company has an
interest, has any intention not to render full performance
under such contract.
(cc) Except as contemplated in accordance with Section 2, the
Company has not made any representation, whether oral or in
writing, to anyone, whether an existing shareholder or not,
that any of the Shares will be reserved for or directed to
them during the proposed public offering.
(dd) None of the executive officers or directors of the Company has
ever (i) been convicted of a criminal felony or misdemeanor,
other than a traffic violation; (ii) been sanctioned or
disciplined by any professional body or association;(iii) been
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<PAGE> 8
sanctioned or disciplined by any regulatory body or authority;
or (iv) filed a petition under federal bankruptcy laws.
2. EMPLOYMENT OF BERTHEL FISHER. In reliance upon the
representations and warranties and subject to the terms and conditions of this
Agreement:
(a) The Company employs Berthel Fisher as its exclusive agent to
sell for the Company's account, as many of the Shares as the
Company shall allot, but in no case less than 600,000 shares
or more than 1,000,000 shares, on a cash basis only, at a
price of $10.00 per Share. Berthel Fisher agrees to use its
best efforts, as agent for the Company, to sell the Shares
subject to the terms and conditions set forth in this
Agreement. It is understood between the parties that there is
no firm commitment by Berthel Fisher to purchase any or all of
the Shares.
(b) The obligation of Berthel Fisher to offer the Shares is
subject to receipt by it of advice from the Commission that
the Registration Statement is effective, is subject to the
Shares being qualified for offering under applicable laws in
the states as may be reasonably designated by Berthel Fisher,
is subject to the absence of any prohibitory action by any
governmental body, agency or official, and is subject to the
terms and conditions contained in this Agreement and in the
Registration Statement covering the offering to which this
Agreement relates.
(c) The Company and Berthel Fisher agree that unless 600,000 of
the Shares to be offered are sold within _______ (____) days
after the Effective Date (which period may be extended for any
additional period not to exceed _________ (____) days by
mutual agreement between the Company and Berthel Fisher), the
agency between the Company and Berthel Fisher will terminate.
If the agency between the Company and Berthel Fisher
terminates, the full proceeds which have been paid for the
Shares shall be returned to the purchasers. Prior to the sale
of all of the Shares to be offered, all proceeds received from
the sale of the Shares will be deposited in an escrow account
entitled _________________________* with
_____________________*(the "Escrow Agent").
(d) The Company, Berthel Fisher and _________________*, the Escrow
Agent, will, prior to the beginning of the offering of the
Shares, enter into a fund escrow agreement in form
satisfactory to the parties. The parties mutually agree to
faithfully perform their obligations under the fund escrow
agreement. Berthel Fisher will promptly deliver the funds into
the escrow account in accordance with Rule 15(c)2-4 of the
Securities Exchange Act of 1934 and the rules and regulations
of the National Association of Securities Dealers.
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<PAGE> 9
(e) Berthel Fisher shall have the right to associate with other
underwriters and dealers as it may determine and shall have
the right to grant to such persons such concessions out of the
commission to be received by Berthel Fisher as Berthel Fisher
may determine, under and pursuant to a Soliciting Dealer
Agreement in the form filed as an exhibit to the Registration
Statement.
(f) In exchange for the services of Berthel Fisher pursuant to
this Agreement, the Company agrees to pay Berthel Fisher a
commission on all Shares sold in the Offering based on the
following: (i) no commission on shares sold in the Offering to
our organizers; (ii) $.50 per share on shares sold to
investors who are (a) residents of the City of Lehigh Acres or
(b) whose names are provided to the Berthel Fisher by our
organizers; provided, however, that the $.50 per share
commission will not apply to shares sold by selected dealers
of Berthel Fisher, but instead commissions shall be payable on
such sales pursuant to Section 2(f)(iii); and (iii) $.80 per
share commission on all other shares sold to the public,
including any shares sold by selected dealers of the Berthel
Fisher. The selling commission shall be payable at such time
as the subscription Shares sold by Berthel Fisher as selling
agent are accepted by and payment in full is received therefor
by the Company and the funds are released from escrow.
3. EXPENSES OF BERTHEL FISHER.
(a) The Company shall pay Bertel Fisher a monthly expense
allowance of $5,000 starting on the effective date of the
offering and every 30 days thereafter. The monthly expense
allowance shall be limited to four months or $20,000 and shall
be deducted from the commission at closing, minus actual
out-of-pocket expenses.
(b) Berthel Fisher agrees that out of its nonaccountable expense
allowance Berthel Fisher will pay all costs incurred or to be
incurred by Berthel Fisher or by its personnel in connection
with the offering of the Shares, except those to be paid by
the Company as described in Section 4 hereof.
4. EXPENSES OF THE COMPANY. The Company agrees that it will pay the
following fees and expenses:
(a) All fees and expenses of its legal counsel who will be engaged
to prepare certain information, documents and papers for
filing with the Commission and with state or local securities
authorities.
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<PAGE> 10
(b) All fees and expenses of its accountants incurred in
connection with the offering of the Shares and the preparation
of all documents and filings made as part of the offering;
(c) All costs in issuing and delivering the Shares;
(d) All costs of printing and delivering to Berthel Fisher and
dealers as many copies of the Registration Statement and
amendments, preliminary Prospectuses and definitive
Prospectuses as reasonably requested by Berthel Fisher;
(e) All of the Company's mailing, telephone, travel, clerical and
other office costs incurred or to be incurred in connection
with the offering of the Shares;
(f) All fees and costs which may be imposed by the Commission, the
various state or local securities authorities and the NASD for
review of the offering of the Shares;
(g) All other expenses incurred by the Company in performance of
its obligations under this Agreement.
5. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BERTHEL FISHER. All
obligations of Berthel Fisher under this Agreement are subject to the following
conditions precedent:
(a) Counsel for Berthel Fisher shall have completed a review of
the form and content of the Registration Statement and
Prospectus, of the organization and present legal status of
the Company, and of the legality and validity of the
authorization and issuance of the issued and outstanding stock
of the Company and of the Shares.
(b) The Company shall have performed all of its obligations under
this Agreement. All of the statements, representations and
warranties contained in this Agreement shall be complete and
true.
(c) From the date of this Agreement until the completion of the
offering, no material adverse changes shall have occurred in
the business, properties and assets of the Company other than
changes occurring in the ordinary course of business.
(d) From the date of this Agreement until the completion of the
offering, no claims or litigation shall have been instituted
or threatened against the Company for substantial amounts or
which would materially adversely affect the Company, its
business or its property and no reasonable basis exists for
such claims or threats.
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<PAGE> 11
Further, no proceeding shall have been instituted or
threatened against the Company before any regulatory body
wherein an unfavorable ruling would have a material adverse
effect on the Company.
(e) From the date of this Agreement until the completion of the
offering of the Shares, no material adverse change shall have
occurred in the operation, financial condition, management or
credit of the Company or in any conditions affecting the
prospects of its business.
(f) From the date of this Agreement until the completion of the
offering, the Company shall not have sustained any loss on
account of fire, flood, accident or calamity of such character
as materially adversely affects its business or property,
regardless of whether or not the loss has been insured.
(g) Berthel Fisher shall have received from the independent public
accountants for the company two letters addressed to Berthel
Fisher, one dated the Effective Date and one dated the date of
the release of the funds from the Escrow Account to the
Company, to the effect that:
(i) With respect to the Company they are independent
public accountants within the meaning of the Act and
the published rules and regulations.
(ii) In their opinion, the financial statements and
supporting schedules and notes examined by them of
the Company at all dates and for all periods referred
to in their opinion included in the definitive
Prospectus comply as to form in all material respects
with the applicable accounting requirements of the
Act and the published rules and regulations.
(i) Upon the basis of a reading of the related available
interim financial statements and the financial data
and accounting records of the Company, inquiries of
officers of the Company responsible for financial and
accounting matters, a reading of the minute books of
the Company and other specified procedures and
inquiries satisfactory to Berthel Fisher, if any,
nothing has come to their attention which causes them
to believe that during the period from the last
audited balance sheet included in the Registration
Statement to a specified date not more than five (5)
days prior to the date of such letter (a) there has
been any change in the capital shares or other
securities of the Company or any payment or
declaration of any dividend or other distribution in
respect thereof or exchange therefor from that shown
in its audited balance sheets or in the debt of the
Company from that shown or contemplated under
"Capitalization" in the Registration Statement or
definitive Prospectus
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<PAGE> 12
(other than as set forth in or contemplated by the
Registration Statement or definitive Prospectus); (b)
there have been any material decreases in net current
assets or net assets as compared with amounts shown
in the last audited balance sheet included in the
definitive Prospectus (other than in the ordinary
course of business), except in all instances the
changes disclosed in or contemplated by the
Registration Statement and definitive Prospectus; and
(c) on the basis of their examinations referred to in
their opinion, report, and consent included in the
Registration Statement and definitive Prospectus and
the indicated procedures and discussions referred to
above, nothing has come to their attention which, in
their judgment, would cause them to believe or
indicate that the financial statements and schedules
set forth in the Registration Statement and
definitive Prospectus do not present fairly the
financial position and results of operations of the
Company, for the periods indicated, in conformity
with generally accepted accounting principles applied
on a consistent basis, and are not in all material
respects a fair presentation of the information
purported to be shown.
(h) On the date of the release of the funds in the Escrow Account
to the Company, Berthel Fisher shall have received from the
president of the Company and the treasurer of the Company
certificates dated as of such date, in form satisfactory to
Berthel Fisher to the effect that:
(i) The representations and warranties of the Company
contained in Section 1 of this Agreement are complete
and true.
(ii) All of the conditions precedent in Sections 5(b)-5(f)
of this Agreement have been performed and the
representations of these conditions precedent are
true.
(iii) No stop order or other proceedings have been
instituted or threatened by the Commission or any
state authority which would adversely affect the
offering of the Shares.
(iv) This Agreement has been duly authorized and executed
and constitutes a valid agreement of the Company.
(v) The respective signers have each carefully examined
the Registration Statement and definitive Prospectus
and any amendments and supplements, and to the best
of their knowledge the Registration Statement and
definitive Prospectus and any amendments and
supplements contain all statements required to be
stated therein. All
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<PAGE> 13
statements contained therein are true and correct,
neither the Registration Statement, definitive
Prospectus or any amendment, supplement or sticker
thereto includes any untrue statement of a material
fact or omits to state any material fact required to
be stated therein or necessary to make the statements
therein not misleading. Since the Effective Date of
the Registration Statement, there has occurred no
event required to be stated therein or necessary to
make the statements therein not misleading, and since
the Effective Date of the Registration Statement,
there has occurred no event required to be set forth
in an amended or supplemented Prospectus which has
not been so set forth.
(i) On the date the funds in the Escrow Account are released to
the Company, Berthel Fisher shall have received a written
opinion from the Company's counsel stating that:
(i) The Company has filed a Registration Statement on
Form SB-2 relating to the Shares with the Commission
pursuant to the Act, the Registration Statement has
become effective under the Act and the Registration
Statement, Prospectus and all other documents filed
with the Commission comply as to form with all
requirements of the Act in all material respects
(except for the financial statements and other
financial data included therein, as to which counsel
need express no opinion).
(ii) Counsel is unaware of any contracts or other
documents required to be described in the
Registration Statement or in the Prospectus or to be
filed as exhibits to the Registration Statement which
have not been described or filed as required.
(iii) Counsel is unaware of any contracts or documents that
have not been disclosed in the Prospectus that are
material to the representations in the Prospectus and
that would require disclosure in order to make
statements made not misleading.
(iv) To the knowledge of counsel, the Company is not in
default of any material contracts to which it is a
party and the proposed offering of Shares will not
cause the Company to become in default of any of its
material contracts, nor will it create a conflict
between the Company and any of the contracting
parties to the material contracts.
(v) This Agreement has been duly authorized and executed
by the Company and constitutes a valid agreement of
the Company except that no opinion need be expressed
as to the validity of the indemnification provisions
insofar as they are or may be held to be violative of
public policy (under either state or federal law),
the availability of specific performance or other
equitable remedies, the effects of bankruptcy,
insolvency,
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<PAGE> 14
moratorium and all other similar laws and decisions
affecting the rights of creditors generally and as to
whether or not this Agreement may be an illusory
contract.
(v) To the knowledge of counsel, no claim or litigation
has been instituted or threatened against the
Company.
(vi) To the knowledge of counsel, no stop order or other
proceedings have been instituted or threatened by the
Commission or any state or local authority which
would adversely affect the offering of the Shares.
(viii) To the knowledge of counsel, the Company possesses
adequate licenses, certificates, authorizations or
permits issued by the appropriate federal, state and
local regulatory authorities necessary to conduct its
business as described in the Registration Statement
and to retain possession of its properties. Counsel
is unaware of any notice of any proceeding relating
to the revocation or modification of any of these
certificates or permits having been received by the
Company.
(ix) To the knowledge of counsel, neither the Company nor
its affiliates is currently offering any securities
for sale except as described in the Registration
Statement.
(vii) No preemptive rights exist with respect to the
Company's securities.
(viii) Counsel is unaware of any subsidiaries of the Company
other than as described in the Registration
Statement.
(ixii) Counsel has participated in the preparation of the
Registration Statement and Prospectus and no facts
have come to the attention of such counsel to lead
counsel to believe that either the Registration
Statement or the Prospectus or any amendment or
supplement thereto (except for the financial
statements and other financial data included therein,
as to which such counsel need express no opinion)
contain any untrue statement of a material fact or
omit to state a material fact required to be stated
therein or necessary to make the statements therein
not misleading.
(xiii) The Company has an authorized capitalization as
described in the Registration Statement, and there
are no outstanding options, warrants or other rights
to purchase shares of the Company's common stock
known to counsel other than as described in the
Registration Statement.
(xiv) The Company has been incorporated and is a validly
existing corporation under the laws of the state of
Florida and has full corporate power and authority
under such laws to own its properties and to conduct
its
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<PAGE> 15
business as described in the Registration Statement.
To the best of counsel's knowledge, the Company is
qualified to conduct business as a foreign
corporation in each jurisdiction where the nature of
its business activities requires such qualification
except where failure to so qualify would not have a
material adverse effect upon the business or
financial condition of the Company.
(xv) The Company's shares of common stock that are issued
and outstanding are fully paid and nonassessable and
the Shares when issued and paid for in accordance
with their terms will be fully paid and
non-assessable. The Shares conform to the description
thereof contained in the Registration Statement. The
Company has authorized the issuance of the Shares and
has full power and authority to issue and sell the
Shares on the terms and conditions herein set forth.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless Berthel
Fisher and each person, if any, who controls Berthel Fisher
within the meaning of Section 15 of the Securities Act of 1933
(the "1933 Act"), against any and all losses, claims, damages,
liabilities and expenses (including reasonable cost of
investigation and counsel's fees) arising out of or based upon
any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus, or in any amendment or
supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading or arising out of any breach
of this Agreement except insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based
upon any untrue statement or omission or alleged untrue
statement or omission made by any means by Berthel Fisher or
its agents, directors or employees in connection with the
offer and sale of the Shares. The foregoing indemnity shall
not, with respect to untrue statements or omissions in the
Prospectus inure to the benefit of Berthel Fisher or any
affiliate or person who controls Berthel Fisher, from whom the
person asserting any such loss, liability, claim, damage or
expense purchased any of the Shares that are the subject
hereof, if such person was not sent or given a copy of the
Prospectus (as amended or supplemented).
(b) If any action or claim shall be brought or asserted against
Berthel Fisher or any person controlling Berthel Fisher in
respect of which indemnity may be sought from the Company,
Berthel Fisher or such controlling person shall promptly
notify the Company in writing, enclosing copies of all papers
served on or delivered to such party, and the Company shall
assume the defense thereof, including the employment of a
single law firm to act as counsel for all parties identified
hereunder, and the payment of all expenses. The failure to
notify an indemnifying party shall not relieve the
indemnifying party from any liability
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<PAGE> 16
hereunder to the extent it is not materially prejudiced as a
result of such failure. Berthel Fisher or any such controlling
person shall have the right to employ separate counsel in any
such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the sole expense
of Berthel Fisher or such controlling person unless (i) the
employment thereof has been specifically authorized in advance
by the Company in writing, (ii) the Company failed to assume
the defense and employ counsel as described above, or (iii)
the named parties to any such action (including any impleaded
parties) include both Berthel Fisher or such controlling
person and the Company, and Berthel Fisher or such controlling
person shall have been advised by such counsel that there may
be one or more legal defenses available to it that are
different from or in addition to those available to the
Company (in which case, if Berthel Fisher or such controlling
person notifies the Company in writing that it elects to
employ separate counsel at the expense of the Company, the
Company shall not have the right to assume the defense of such
action on behalf of Berthel Fisher or such controlling
person). No indemnified party shall settle, compromise or
consent to the entry of any judgment with respect to any
litigation, any investigation or proceeding by any
governmental agency or body, commenced or threatened, or claim
whatsoever in respect of which indemnification or contribution
can be sought under this Section 6(whether or not the
indemnified parties are actual or potential parties), unless
the indemnified party gives prior written notification to the
indemnifying party and such settlement, compromise or consent
does not include any statement or admission of fault,
culpability or failure to act on behalf of, or with respect
to, any indemnified party.
(c) Berthel Fisher agrees individually, and not jointly with any
other selling agent for the Shares, to indemnify and hold
harmless the Company and its respective directors and each
person, if any who controls the Company within the meaning of
Section 15 of the 1933 Act or Section 20 of the Securities
Exchange Act of 1934 against, any and all loss, liability,
claim, damage and expenses described in the indemnity
contained in subsection (a) of this Section 6 but only with
respect to untrue statements or omissions, or alleged untrue
statements or omissions made in the Prospectus (as amended or
supplemental) based upon information furnished to the Company
by Berthel Fisher, in writing.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under subsections (a), (b)
or (c) hereof in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the
Company on the one hand and Berthel Fisher on the other from
the Offering or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits
referred to in
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<PAGE> 17
clause (i) above but also the relative fault of the Company on
the one hand and of Berthel Fisher on the other in connection
with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits
received by the Company on the one hand and Berthel Fisher on
the other shall be deemed to be in the same proportion as the
total net proceeds received by the Company from the Shares
sold by Berthel Fisher in the Offering (before deducting
expenses), and the total selling commission received by
Berthel Fisher. The relative fault of the Company on the one
hand and of Berthel Fisher on the other shall be determined by
references to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the
Company, or by Berthel Fisher and the parties relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company on the one hand and Berthel Fisher on the other
agree that it would not be just and equitable if contribution
be made pursuant to this Section 6 were determined by pro rata
allocation or by any other method of allocation that does not
take account of the equitable considerations referred to in
the immediately preceding paragraph. The amount paid or
payable by, an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in the
immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in
connection with defending any such action or claim.
Notwithstanding the provisions of this Section 6, Berthel
Fisher shall not be required to contribute any amount in
excess of the amount by which the total price at which the
Shares sold by it exceeds the amount of any damages that
Berthel Fisher has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1993 Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
7. TERMINATION.
(a) This Agreement may be terminated by Berthel Fisher by notice
to the Company in the event that the Company shall have failed
or been unable to comply with any of the terms, conditions or
provisions of this Agreement on the part of the Company to be
performed, complied with or fulfilled within the respective
times herein provided for, unless compliance therewith or
performance or satisfaction thereof shall have been expressly
waived by Berthel Fisher in writing.
(b) This Agreement may be terminated by Berthel Fisher by notice
to the Company if Berthel Fisher believes in its sole judgment
that any adverse changes have occurred in the management of
the Company, that material adverse changes
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<PAGE> 18
have occurred in the financial condition or obligations of the
Company or if the Company shall have sustained a loss by
strike, fire, flood, accident or other calamity of such a
character as, in the sole judgment of Berthel Fisher, may
interfere materially with the conduct of the Company's
business and operations regardless of whether or not such loss
shall have been insured.
(c) This Agreement may be terminated by Berthel Fisher by notice
to the Company at any time if, in the sole judgment of Berthel
Fisher, completion of the sale of the Shares is rendered
impracticable or inadvisable because (i) additional material
governmental restrictions not in force and effect on the date
hereof shall have been imposed upon the trading in securities
generally, or trading in securities generally on the
over-the-counter bulletin board shall have been suspended, or
a general moratorium shall have been established by federal or
state authorities, or (ii) a war or other national calamity
shall have occurred, or (iii) substantial and material changes
in the condition of the market (either generally or with
reference to the sale of the Shares to be offered hereby)
beyond normal fluctuations are such that it would be
undesirable, impracticable or inadvisable in the sole judgment
of Berthel Fisher to proceed with this Agreement or with the
public offering or (iv) of any matter materially adversely
affecting the Company.
(d) In the event any action or proceeding shall be instituted or
threatened against Berthel Fisher, either in any court of
competent jurisdiction, before the Commission or any state
securities commission concerning its activities as a broker or
dealer that would prevent Berthel Fisher from acting as such,
at any time prior to the effective date hereunder, or in any
court pursuant to any federal, state, local or municipal
statute, a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee
of Berthel Fisher's assets or if Berthel Fisher makes an
assignment for the benefit of creditors, the Company shall
have the right on three days' written notice to Berthel Fisher
to terminate this Agreement without any liability to Berthel
Fisher of any kind except for the payment of expenses as
specifically provided herein.
(e) Any termination of this Agreement pursuant to this Section 7
shall be without liability of any character (including, but
not limited to, loss of anticipated profits or consequential
damages) on the part of any party thereto, except that in such
event (i) Berthel Fisher shall provide the Company with a
statement of its accountable expenses, which shall include but
are not limited to, Berthel Fisher's counsel fees,
consultants' fees, entertainment expenses, travel expenses,
postage expenses, office costs, advertising costs, clerical
costs, due diligence meeting expenses, duplication expenses,
long-distance telephone expenses, and general and
administrative expenses incurred in connection with the
proposed offering and (ii) if such accountable expenses are
more than the amount of the nonaccountable expense payments
the Company has made to
-18-
<PAGE> 19
Berthel Fisher, Berthel Fisher shall bear such excess or if
such accountable expenses are less than the amount of the
nonaccountable expense payments Berthel Fisher has received
from the Company, Berthel Fisher shall return the difference
to the Company.
8. REPRESENTATION, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
The representations, warranties, indemnities, agreements and
other statements of the Company set forth in or made pursuant
to this Agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
Berthel Fisher or the Company or controlling person of the
Company, and shall survive delivery of and payment for the
Shares.
9. GOVERNING LAW; ASSIGNMENTS.
This Agreement shall be governed by the laws of the State of
Florida. Neither party may assign this Agreement without the
prior written consent of the other party.
10. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
and when a counterpart has been executed by each party hereto
all such counterparts taken together shall constitute one and
the same Agreement. Signatures sent by facsimile shall have
the same effect as if manually signed copies had been
delivered, and shall be binding upon the parties.
11. NO PERSONAL LIABILITY.
In no event shall any officer or director of the Company have
any personal liability to Berthel Fisher or to any other
person under this Agreement.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart
hereof, whereupon this shall become a binding agreement
between the Company and Berthel Fisher.
Very truly yours,
Lehigh Acres First National Bank
(In Organization)
By:
-----------------------------------------
Lloyd J. Weber, President
CONFIRMED AND ACCEPTED,
Berthel Fisher & Co.
By:
-----------------------------
Name:
Title:
-19-
<PAGE> 1
Exhibit 10.14
<TABLE>
<S> <C> <C>
Lehigh Acres First National________________________ INDEPENDENT BANKER'S BANK
Bancshares, Inc.___________________________________ OF FLORIDA
5300 Lee Boulevard_________________________________ ORLANDO, FLORIDA Loan Number 1144
Lehigh Acres, FL 33970____________________________ Date June 10, 1999
BORROWER'S NAME AND ADDRESS LENDER'S NAME AND ADDRESS Maturity Date June 10, 2000
"I" includes each borrower above, jointly and "You" means the lender, its successors and Loan Amount $ $250,000.00
severally. assigns. Renewal Of
</TABLE>
Note: I promise to pay to you, or your order, at your address above, the
principal sum of: Two Hundred Fifty Thousand and 00/100 Dollars $250,000.00 plus
interest from date at the initial rate of 6.75 % per year, which rate is subject
to change so as always to be 1% below the following base rate: the Wall Street
Journal prime rate as published daily in the Wall Street Journal
The interest rate in effect on this note may change (as often as) daily
(assuming there is a change in the base rate) ____________ an increase in the
interest rate will cause an increase in the monthly interest payment . [ ] I
also agree to pay a loan charge of a
I will { (a) [ ] on demand.
{ (b) [X] on demand, but if no demand is made, on June 10, 2000.
{ (c) [ ] on pay
this { If (a), (b), or (c) is checked above, I will pay accrued
amount { interest monthly and on the maturity date.
as { (d) [ ]
follows { Basis: Actual/360
LIMITATIONS: The Truth-in-Lending disclosure box below will indicate if there is
any contractual limit on the periodic or total increase in the interest rate for
this note. If neither such limit is disclosed, the only limitation, if any, on
the amount of any interest rate increase will be the usury limit. The usury
limit is the highest allowable rate for this type of loan as determined by
applicable state or federal law and it may be increased or decreased at any time
by changes in state or federal law and regulations.
[X] If checked, if I fail to make a payment within 10 days of when it is due, I
agree to pay a late charge of 5% of the amount delinquent.
**the maximum rate allowed by law
POST-MATURITY INTEREST: Interest will accrue after maturity on the unpaid
balance of the note on the same basis as interest accrues prior to maturity,
unless a specific post-maturity interest rate is agreed to in the next sentence.
[X] If checked, interest will accrue at the rate of ** %per year on the balance
of this note not paid at maturity, including maturity by acceleration.
[ ] If checked, I also agree to pay a minimum interest charge of $ if
I pay this loan off before you have earned that much in interest.
THE PURPOSE OF THIS LOAN IS: to fund organizational line of credit
<TABLE>
<S> <C> <C> <C> <C>
I have the right to
receive at this time an
AMOUNT FINANCED TOTAL OF PAYMENTS itemization of the
ANNUAL PERCENTAGE RATE FINANCE CHARGE The amount of credit The amount I will have Amount Financed
The cost of my credit The dollar amount the provided to me or paid when I have made
as a yearly rate. credit will cost me. on my behalf. all scheduled payments. YES - I want an itemization
6.75% $17,111.20 $250,000.00 $267,111.20 NO - I do not want an itemization
</TABLE>
My Payment Schedule will be:
<TABLE>
Number of Amount of
Payments Payments When Payments Are Due
<S> <C> <C> <C>
12 $ Monthly interest only beginning July 10, 1999 "a" means an estimate
1 $250,000. All outstanding principal plus all outstanding accrued $ Filing Fees
$ interest due June 10, 2000 $ Non-filing Insurance
$
</TABLE>
[X] Demand: [ ] This note has a demand feature.
[X] This note is payable on demand and all disclosures are based on an assumed
maturity of one year.
Variable Rate: The annual percentage rate may increase during the term of this
transaction if the Wall Street Journal prime rate increases
Any increase will take the form of increased monthly interest payments If the
rate increases by N/A% in one N/A , the N/A will increase to N/A
The rate may not increase more often than once a N/A , and may not increase more
than N/A % each N/A .
The rate will not go above N/A%
SECURITY: I am giving a security interest in: Unsecured
[ ] the goods of property being purchased.
[ ] collateral securing other loans with you may also secure this loan.
[ ] my deposit accounts and other rights to the payment of money from you.
LATE CHARGE: [X] I will be charged 5% of the amount of a payment which is late
by more than 10 days after it is due.
PREPAYMENT: If I pay off this note early, I [ ] may [X] will not have to pay a
penalty, and I [ ] may [X] will not be entitled to a refund of part of the
finance charge.
[ ] ASSUMPTION: Someone buying my home [ ] may, subject to conditions, be
allowed to [ ] cannot assume the reminder of the mortgage on the original terms.
I can see my contract documents for any additional information about nonpayment,
default, any required repayment before the scheduled date, and prepayment
refunds and penalties
- --------------------------------------------------------------------------------
INSURANCE: Credit life insurance and credit
disability insurance are not required to obtain
credit, and will not be provided unless I sign and
agree to pay the additional cost. I may assign any
other policy or policies I own or may procure for the
purpose of covering this loan.
ACKNOWLEDGEMENT: I have read and
understood the previous two sentences: x
<TABLE>
<CAPTION>
Type Premium Term Signatures (or initials)
- ----------- --------- ------ ---------------------------------------------------
<S> <C> <C> <C>
Credit I want credit life
Life insurance x_________________________________
Name of Insured
- ----------- --------- ------ ---------------------------------------------------
Credit I want credit disability
Disability insurance x_________________________________
Name of Insured
- ----------- --------- ------ ---------------------------------------------------
Joint I want joint credit life
Credit insurance x_________________________________
Life x
- ----------- --------- ------ ---------------------------------------------------
</TABLE>
PROPERTY INSURANCE: I may obtain property insurance from anyone I want that is
acceptable to you. If I get the insurance from or through you I will pay
$ for of coverage.
ITEMIZATION OF AMOUNT FINANCED
Amount given to me directly $250,000.00 (a)
Amount paid on my account $ (b)
$
Amounts paid to others on my behalf:
To Insurance Companies $ (c)
To Public Officials $ (d)
Documentary Stamp Tax $ POC (e)
$ (f)
$ (g)
Prepaid Finance Charge $ (h)
AMOUNT FINANCED (a through g-h) $250,000.00 (i)
Finance Charge (include prepaid) $ 17,111.20 (j)
-----------
Total of Payments (i + j) $267,111.20 (k)
-----------
Security - To secure the payment of the note total (defined on the reverse
side):
(1) I acknowledge and agree that you have the right to set-off this note against
any obligation you have (now or hereafter) to pay money to me.
(2) You may collect the proceeds (or rebates of unearned premiums) on any
insurance policy insuring me (where you are named as loss payee) and on any
policy insuring the property securing this note. You will apply this toward what
I owe you.
(3) [ ] If checked, this note is not further secured by any contemporaneous
agreement (other than (1) and (2) of this section).
(4) [ ] If checked, this note is secured by a separate date .
(5) [ ] Security Agreement - If checked, I give you a security interest in the
property described below. The rights I am giving you in this property, and the
obligations this agreement procures are defined on the reverse side of this
form. Unsecured
Florida Documentary Stamp Tax in the amount of $875.00 has been paid or will be
paid directly to the Florida Department of Revenue Certificate of Registration
#592258003-58-001.
Assumptions - Unless specifically agreed in writing to the contrary, this
security agreement _____ any loan. If secures cannot be assumed by any person
who buys the collateral described above from me, and I understand and agree that
if I attempt to transfer any interest in this collateral (including, but not
limited to, possession) I will be in default on all secured obligations.
This collateral will be used for purposes
[ ] If checked, this is a purchase money loan. You may include the name of the
seller on the check or draft for this loan.
- --------------------------------------------------------------------------------
Signatures: I agree to the terms of the note and security agreement above
(including those on the other side of this form) and acknowledge receipt of at
least one copy on today's date.
- ----------------------------------------------------------------------
Any person who signs within this enclosure does so to give you a security
interest in the property described above, but assumes no personal obligation to
pay this note.
Name
----------------------------------------------------------------------------
- --------------------------------------------------------------------------------
x Date
---------------------------------------- --------------------------------
- ----------------------------------------------------------------------
VARIABLE INTEREST NOTE, DISCLOSURE, AND SECURITY AGREEMENT.
_____ BANKERS SYSTEMS, INC., ST. CLOUD, MN 56301 FORM NDAS - VI-FL
COSIGNERS - SEE NOTICE ON REVERSE SIDE BEFORE SIGNING
Signature LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
-----------------------------------------------------------------------
Signature /s/ James D. Hull, Chairman of Board
-----------------------------------------------------------------------
Signature
-----------------------------------------------------------------------
<PAGE> 1
EXHIBIT 23.1
FRANCIS & CO., CPAS
CERTIFIED PUBLIC ACCOUNTANTS
4400 Roswell Rd.
Bldg. 142-Suite 301
Marietta, Georgia 30062
(770) 650-1180
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use of Amendment No. 1 to the Registration
Statement on form SB-2 of our report dated August 24, 1999, relating to the
financial statements of Lehigh Acres First National Bancshares, Inc., Lehigh
Acres, Florida, and to the reference to our Firm under the caption "Experts" in
the Prospectus.
/s/ Francis & Co., CPAs
-----------------------------
FRANCIS & CO., CPAs
Atlanta, Georgia
August 24, 1999
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC. BY FRANCIS & CO.,
CPAS DATED JUNE 21, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
REGISTRATION STATEMENT ON FORM SB-2 ORIGINALLY FILED ON JUNE 25, 1999,
REGISTRATION NUMBER 333-81551.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-14-1998
<PERIOD-END> DEC-31-1998
<CASH> 51,476
<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> 54,387
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 209,000
<LONG-TERM> 0
0
0
<COMMON> 1
<OTHER-SE> 999
<TOTAL-LIABILITIES-AND-EQUITY> 54,387
<INTEREST-LOAN> 0
<INTEREST-INVEST> 2,291
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2,291
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 2,291
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 157,904
<INCOME-PRETAX> (155,613)
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (155,613)
<EPS-BASIC> (1,556.13)
<EPS-DILUTED> (1,556.13)
<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>
