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As filed with the SEC on June 25, 1999
Registration No.
----------------
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
============================
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>
<CAPTION>
Florida 6021 65-0921046
<S> <C> <C>
(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:
Neil E. Grayson, Esq.
C. Russell Pickering, Esq.
J. Brennan Ryan, Esq.
Nelson Mullins Riley & Scarborough, L.L.P.
999 Peachtree Street, N.E., Suite 1400
Atlanta, Georgia 30309
(404) 817-6000
(404) 817-6225 (Fax)
APPROXIMATE DATE OF COMMENCEMANT 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 AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE PRICE FEE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value.... 1,000,000 $10.00 $10,000,000 $2,780
=======================================================================================================
</TABLE>
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to such Section 8(a),
may determine.
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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.
THIS IS A PRELIMINARY PROSPECTUS AND IS NOT YET COMPLETE. JUNE ___, 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.
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. The commissions shown are the maximum we expect to pay to the sales
agent.
<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........... $ .54 $ 326,400 $ 646,400
Proceeds to Lehigh Acres
Bancshares ....................... $ 9.46 $ 5,673,600 $ 9,353,600
=============================================================================================
</TABLE>
We will be charged no sales agency commission for shares purchased by
our officers and directors, $.50 per share for shares sold to residents of
Lehigh Acres and investors recommended by our organizers, and $.80 per share for
all other shares sold to the public. The sales agency commission set forth in
the table above reflects a blended rate based on the assumption that, in a
minimum offering, 117,000 shares will be purchased by our officers and
directors, 200,000 shares will be purchased by residents of Lehigh Acres, and
all remaining shares will be sold to the public for which we will pay the
maximum sales agency commission of $.80 per share.
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
----------- ----
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LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
LEHIGH ACRES FIRST NATIONAL BANK
PROPOSED MARKET AREA
[INSERT MAP OF FLORIDA AND LEE COUNTY SHOWING MARKET AREA]
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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 and the Federal Deposit Insurance Corporation 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.
Lloyd J. Weber will lead our management team:
- Lloyd J. Weber, age 57, 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.
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 will purchase at least 117,000 shares in the offering,
for an
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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 11.
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 approval 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, and
in April 1999, the FDIC preliminarily approved our application for deposit
insurance. We will file an application with the Federal Reserve to own Lehigh
Acres Bank. We expect to receive preliminary regulatory approvals from the
Federal Reserve by the end of the fourth quarter of 1999 or sooner. 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 $6,875.16. We
plan to open this office by the first quarter of 2000.
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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 and the FDIC, and we will file an
application with the Federal Reserve prior to opening the bank. 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.
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
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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 21.
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 $750,000 immediately following the offering, but we intend to
impose an internal limit on the bank of 80% of this amount, or approximately
$600,000. 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 35.
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 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.
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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 15.
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
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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.
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 intend to purchase 117,000 shares in the offering, for a
total investment of $1,170,000. As a result, the organizers 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.
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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;
- 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.
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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 37. 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.
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
1300 Homestead Road N. Corporate Office
Lehigh Acres, Florida 33936 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
10
<PAGE> 12
copy of the completed subscription agreement for your records. You must pay the
subscription price at the time you deliver the subscription agreement.
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 on June 22, 1999, 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.
Included in these funds is $1,170,000 we expect to receive from the sale of
shares to our organizers 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............. $ .54 $ 326,400 $ 646,400
Proceeds to Lehigh Acres
Bancshares.......................... $ 9.46 $ 5,673,600 $ 9,353,400
============ ===========
</TABLE>
11
<PAGE> 13
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. 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>
12
<PAGE> 14
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. Furniture, fixtures, and equipment will be capitalized and amortized
over the life of the lease or over the estimated useful life of the asset. 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*............................ $ 41,250 $ 41,250
Construction of Leasehold Improvements.................. $ 150,000 $ 150,000
Remaining proceeds...................................... $ 4,158,750 $ 4,158,750
============= ===============
- ---------------------------------------
* Reflects lease of permanent facility for 6 months at a rate of $6,875 per month.
</TABLE>
13
<PAGE> 15
CAPITALIZATION
The following table shows Lehigh Acres Bancshares' capitalization as of
March 31, 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. This table does not reflect our issuance of 18,000
shares at $10.00 per share to some of our organizers in return for their
$180,000 initial investment. All numbers reflect the proposed initial investment
by the organizers 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" column reflects 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
March 31, 1999 Minimum Offering Maximum Offering
-------------- ---------------- ----------------
<S> <C> <C> <C>
SHAREHOLDERS EQUITY:
Common Stock, par value $.01 per share; 10,000,000
shares authorized; 100 shares issued and
outstanding; 600,000 shares issued and outstanding
as adjusted (minimum offering); 1,000,000 shares
issued and outstanding (maximum offering)......... $ 1.00 $ 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............................. $ 999.00 $ 5,667,600 $ 9,343,600
Deficit accumulated during the pre-opening stage....... $ (168,916) $ (509,780) $ (509,780)
Total shareholders' equity (deficit)................... $ (167,916) $ 5,157,820 $ 8,833,820
=========== =========== ===========
Book Value Per Share................................... $ (1,679) $ 8.60 $ 8.83
=========== =========== ===========
</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 25 and "Supervision and Regulation -
The Bank - Capital Regulations" on page 26. 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.
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. 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 and the FDIC, which includes
capitalization of the bank with at least $5,000,000. We must also obtain the
approval
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<PAGE> 16
of the Federal Reserve to become a bank holding company before acquiring the
capital stock of the bank. We expect to receive all regulatory approvals by the
fourth quarter of 1999.
EXPENSES
As of March 31, 1999, Lehigh Acres Bancshares had total assets of
($41,084), consisting of cash ($38,046), and other assets ($3,038). Lehigh Acres
Bancshares incurred a net loss of ($168,916) for the period from its inception
on April 14, 1998 through March 31, 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 sales agent, 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 $6,875.16 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 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
15
<PAGE> 17
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.
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. We are preparing
an application to file with the Federal Reserve Board for approval to become a
bank holding company through ownership of the bank. 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
16
<PAGE> 18
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 and 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.
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
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<PAGE> 19
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 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 lessor of the cost or appraised value of the property. In the
event we advance more than 80% of the lessor 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.
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<PAGE> 20
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.
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> 21
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 $750,000 based on the minimum offering. The bank will
initially have a self-imposed loan limit of 80% of the legal limit, or
approximately $600,000. 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> 22
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> 23
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 promulgated thereunder 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, 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, managing, or
controlling banks as to be a proper incident thereto.
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
thereunder, 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> 24
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 thereto. 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> 25
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> 26
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> 27
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> 28
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 at a
rapid pace, a premature "squeeze" on capital could occur making a capital
infusion necessary. The requirements 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> 29
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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<PAGE> 30
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 on
June 22, 1999 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 set forth 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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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. He is a proposed
director).
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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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 thereunder. 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. In addition, 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:
- 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;
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- 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 33. 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 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,
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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.
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 hereby 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.
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
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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 thereby 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 thereto 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 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.
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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 hereby 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.
37
<PAGE> 39
ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form SB-2
(together with all amendments, exhibits, schedules and supplements thereto, the
"Registration Statement"), under the Securities Act of 1933 and the rules and
regulations thereunder, for the registration of the common stock offered hereby.
This prospectus, which forms a part of the Registration Statement, does not
contain all of the information set forth 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 thereto.
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 may become a reporting
company subject to the full informational requirements of the Securities
Exchange Act of 1934. In this event, we will fulfill our obligations with
respect to such 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.
38
<PAGE> 40
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>
F-1
<PAGE> 41
[FRANCIS & CO., CPAs LOGO]
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.
Atlanta, Georgia
June 21, 1999
F-2
<PAGE> 42
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC. (IN ORGANIZATION)
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS March 31, December 31,
1999 1998
---------- -------------
(Unaudited)
<S> <C> <C>
Cash $ 38,046 $ 51,476
Other assets 3,038 2,911
--------- ---------
Total Assets $ 41,084 $ 54,387
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Advances from organizers $ 209,000 $ 209,000
--------- ---------
Total Liabilities $ 209,000 $ 209,000
--------- ---------
Commitments and contingencies (Note 3)
Stockholders' Equity (Note 1):
Common stock, $.01 par value,
10,000,000 shares authorized,
100 shares issued and outstanding $ 1 $ 1
Paid-in-capital 999 999
(Deficit) accumulated during
the development stage (168,916) (155,613)
--------- ---------
Total Stockholders' Equity (167,916) (154,613)
--------- ---------
Total Liabilities and
Stockholders' Equity $ 41,084 $ 54,387
========= =========
</TABLE>
Refer to notes to the financial statements.
F-3
<PAGE> 43
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC. (IN ORGANIZATION)
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three-month From
period April 14, 1998
ended through
March 31, December 31,
1999 1998
----------- --------------
Revenues: (Unaudited)
<S> <C> <C>
Interest income $ 407 $ 2,291
--------- ----------
Total revenues 407 2,291
--------- ----------
Expenses:
Organizing consultant $ 12,000 $ 80,000
Organizational expenses 230 68,868
Insurance expense 1,248 4,040
Advertising & promotional -- 945
Travel & entertainment -- 2,990
Miscellaneous other expenses 232 1,061
--------- ----------
Total expenses $ 13,710 $ 157,904
--------- ----------
Net (loss) $ (13,303) $ (155,613)
========= ==========
Basic (loss) per share (Note 2) $ (133.03) $(1,556.13)
========= ==========
</TABLE>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FROM INCEPTION (APRIL 14, 1998) TO DECEMBER 31, 1999 (AUDITED)
AND FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 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)
---- -------- --------- ---------
Net (loss) -- -- (13,303) (13,303)
---- -------- --------- ---------
Balance,
March 31, 1999 $ 1 $ 999 $(168,916) $(167,916)
==== ======== ========= =========
</TABLE>
Refer to notes to the financial statements.
F-4
<PAGE> 44
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC. (IN ORGANIZATION)
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three-month From
period April 14, 1998
ended through
March 31, December 31,
1999 1998
----------- --------------
(Unaudited)
<S> <C> <C>
Cash flows from pre-operating
activities of the development stage:
Net (loss) $ (13,303) $(155,613)
Adjustments to reconcile net
(loss) to net cash used by
pre-operating activities
of the development stage:
(Increase) in other assets (127) (2,911)
---------- ---------
Net cash used by pre-operating
activities of the development stage $ (13,430) $(158,524)
---------- ---------
Cash flows from investing activities:
Purchase of fixed assets $ -- $ --
---------- ---------
Net cash used in investing activities -- $ --
---------- ---------
Cash flows from financing activities:
Issuance of common stock $ -- $ 1,000
Increase in borrowings -- 209,000
---------- ---------
Net cash provided
from financing activities $ -- $ 210,000
---------- ---------
Net increase (decrease) in cash $ (13,430) $ 51,476
Cash, beginning of period 51,476 -0-
---------- ---------
Cash, end of period $ 38,046 $ 51,476
========== =========
Supplemental disclosures of cash flow information:
Cash paid for:
Interest $ -- $ --
========== =========
Income taxes $ -- $ --
========== =========
</TABLE>
Refer to notes to the financial statements.
F-5
<PAGE> 45
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.(IN ORGANIZATION)
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
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 calendar year 1998
are reflected in the Company's financial statements as of December 31, 1998.
On March 30, 1999, the Company received preliminary approval by the
Office of the Comptroller of the Currency (the "OCC") to charter the Bank and by
the Federal Deposit Insurance Corporation (the "FDIC") to insure deposits up to
$100,000 per depositor. In addition, an application with the Federal Reserve
Board (the "FRB") will be filed for approval of the formation of a bank holding
company. 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 100
shares of the Company's Common Stock for an aggregate amount of $1,000. The
organizers intend to purchase approximately 117,000 shares of Common Stock in
the Offering. As of December 31, 1998, there were 100 shares of the Company's
Common Stock issued and outstanding.
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
F-6
<PAGE> 46
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.(IN ORGANIZATION)
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
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 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 of Common Stock is
accomplished and all preliminary regulatory approvals 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.
F-7
<PAGE> 47
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.(IN ORGANIZATION)
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
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 ending 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.
F-8
<PAGE> 48
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.(IN ORGANIZATION)
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
Income Taxes. The Company will be subject to taxation whenever taxable
income is generated. As of December 31, 1998, no income taxes had been accrued
since no taxable income had been generated.
Basic (Loss) Per Share. Basic loss per share of $(1,556.13) is based on
100 shares outstanding from inception through December 31, 1998. Note that the
above result may not be indicative of future performance primarily due to (i)
the fact that the number of outstanding shares will increase significantly and
(ii) 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.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
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 $110,000 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
F-9
<PAGE> 49
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.(IN ORGANIZATION)
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
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. As of December 31, 1998, the bank consulting
firm had been paid $35,332, which is included under "organizational expenses" on
the statement of operations.
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 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 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.
Please refer to Note 1 concerning warrants to organizers and to Note 5
concerning Consulting Agreement II.
NOTE 4 - RELATED PARTY TRANSACTIONS
A group of fourteen organizers advanced $209,000 to the Company in
order to fund the Company's pre-operating expenses. These funds were advanced
interest-free until such time as the minimum Offering (600,000 shares) is
successfully completed. No
F-10
<PAGE> 50
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.(IN ORGANIZATION)
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
imputed interest was charged to operations in the Company's financial statements
as of and for the period ended December 31, 1998.
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 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 undertaken by Lehigh One, Inc., all of which have been
assumed by 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 (i) the CEO's
Employment Agreement, and; (ii) the organizers' stock purchases.
Please refer to Note 5 for a discussion concerning Consulting Agreement
II with the Company's CEO.
NOTE 5 - SUBSEQUENT EVENTS
Subsequent to December 31, 1998 but prior to the issuance of this
report, the Company, on January 16, 1999 entered into a consulting agreement
("Consulting Agreement II") with its CEO. Consulting Agreement II became
effective January 16, 1999 and is for a term of up to fifteen months. It
replaces Consulting Agreement I described under Note 3. During the initial three
months of Consulting Agreement II, the CEO was compensated $4,000 per month.
F-11
<PAGE> 51
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.(IN ORGANIZATION)
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
On March 30, 1999, when approvals were received from both the OCC and
the FDIC, Consulting Agreement II was automatically extended until the later of
(i) an additional term of six months or (ii) when the proposed Bank opens for
business, but not to exceed March 30, 2000. During this period, the CEO receives
a monthly compensation of $6,500. In addition, the CEO is provided with
customary insurance coverage not exceeding an aggregate cost of $600 per month.
The Employment Agreement described in Note 3 will become effective when the
proposed Bank opens for business.
Please refer to Note 1 for a discussion concerning the Company's
incorporation on May 19, 1999 and the transfer to the Company of all assets,
liabilities, rights, revenues and expenses acquired, incurred or undertaken by
Lehigh One, Inc.
Please refer to Note 1 for a discussion concerning regulatory approvals
by the OCC and FDIC obtained on March 30, 1999.
NOTE 6 - UNAUDITED INTERIM FINANCIAL STATEMENTS
The financial statements as of March 31, 1999 and for the three-month
period 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 three-month period ended March 31, 1999 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999.
Subsequent to March 31, 1999, twelve organizers, on June 22, 1999, each
subscribed to purchase 1,500 shares of the Company's Common Stock for $10.00 per
share, or, in the aggregate, 18,000 shares for $180,000. To effect the purchase,
each of the twelve organizers converted $15,000 in advances to the Company in
exchange for 1,500 shares of the Company's Common Stock, thus converting
$180,000 of the Company's obligations into equity. The above shares will be
redeemed by the Company at $10.00 per share only when the sale of the minimum
Offering (600,000 shares) is successfully completed. The above debt-to-equity
conversion is not reflected on the Company's March 31, 1999 unaudited financial
statements.
F-12
<PAGE> 52
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.(IN ORGANIZATION)
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
Subsequent to March 31, 1999, 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 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.
F-13
<PAGE> 53
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
STOCK ORDER FORM/SUBSCRIPTION AGREEMENT
TO: Lehigh Acres First National Bancshares, Inc.
1300 Homestead Road North
Lehigh Acres, Florida 33936
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 hereof, the
undersigned hereby tenders this subscription, together with payment in United
States currency by check, bank draft, or money order payable to "The Bankers
Bank 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 hereby 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 HEREBY 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 Signature of Subscriber(s)
Taxpayer Identification Number
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 __________________, 199__, 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, which is set forth 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.
<TABLE>
<S> <C>
- ------------------------------------------------------- ----------------------------------------------------
Signature of Subscriber Signature of Subscriber
- ------------------------------------------------------- ----------------------------------------------------
Printed Name Printed Name
- ------------------------------------------------------- ----------------------------------------------------
Social Security or Employer Social Security or Employer
Identification No. Identification No.
</TABLE>
A-3
<PAGE> 56
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary ..........................................3
Risk Factors......................................5
The Offering......................................8
Use of Proceeds .................................11
Capitalization...................................14
Dividend Policy .................................14
Plan of Operation................................14
Proposed Business................................16
Supervision and Regulation.......................22
Management.......................................29
Certain Relationships and Related Transactions...34
Description of Capital Stock.....................35
Legal Matters....................................37
Experts..........................................37
Additional Information ..........................38
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
[INSERT BANK LOGO]
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.
II-1
<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:
<TABLE>
<S> <C>
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
</TABLE>
Item 26. Recent Sales of Unregistered Securities.
On June 22, 1999, Lehigh Acres First National Bancshares, Inc. issued
a total of 18,000 shares of its common stock to some 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.
<TABLE>
<CAPTION>
Item 27. Exhibits.
<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.
</TABLE>
II-2
<PAGE> 59
<TABLE>
<S> <C>
10.7. * Sales Agency Agreement dated ______________ 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.
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>
* To be filed by Amendment
II-3
<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.
II-4
<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 June 21, 1999.
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
By: /s/ Lloyd J. Weber
-------------------------------
Lloyd J. Weber
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned officers
and directors of Lehigh Acres First National Bancshares, Inc. (the "Company"),
a Florida corporation, for himself and not for one another, does hereby
constitute and appoint Lloyd J. Weber, a true and lawful attorney in his name,
place and stead, in any and all capacities, to sign his name to any and all
amendments, including post-effective amendments, to this registration
statement, and to sign a registration statement pursuant to Section 462(b) of
the Securities Act of 1933, and to cause the same (together with all Exhibits
thereto) to be filed with the Securities and Exchange Commission, granting unto
the attorney full power and authority to do and perform any act and thing
necessary and proper to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present, and each of the
undersigned for himself hereby ratifies and confirms all that the attorney
shall lawfully do or cause to be done by virtue hereof.
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>
/s/ Robert C. Bagans
- ----------------------------
Robert C. Bagans Director June 21, 1999
/s/ Calvin H. Beals
- ----------------------------
Calvin H. Beals Director June 21, 1999
/s/ Benjamin R. Bell
- ----------------------------
Benjamin R. Bell Director June 21, 1999
/s/ Craig A. Dearden
- ----------------------------
Craig A. Dearden Director June 21, 1999
</TABLE>
<PAGE> 62
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Paul F. Dinger
- ----------------------------
Paul F. Dinger Director June 21, 1999
/s/ Teresa Goodlad
- ----------------------------
Teresa Goodlad Director June 21, 1999
/s/ James D. Hull
- ----------------------------
James D. Hull Director June 21, 1999
/s/ Vikas K. Jain
- ----------------------------
Vikas K. Jain, M.D. Director June 21, 1999
/s/ Lawrence J. Murphy
- ----------------------------
Lawrence J. Murphy, D.V.M. Director June 21, 1999
/s/ Micki J. Regas
- ----------------------------
Micki J. Regas Director June 21, 1999
/s/ Patricia A. Regas
- ----------------------------
Patricia A. Regas Director June 21, 1999
/s/ E. Byron Richardson
- ----------------------------
E. Byron Richardson Director June 21, 1999
/s/ Kenneth K. Thompson
- ----------------------------
Kenneth K. Thompson Director June 21, 1999
/s/ Lloyd J. Weber
- ----------------------------
Lloyd J. Weber Director, Chief Executive June 21, 1999
Officer and President
(principal executive officer)
(principal accounting officer)
/s/ Kenneth C. Wolfe
- ----------------------------
Kenneth C. Wolfe Director June 21, 1999
</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. * Sales Agency Agreement dated ______________________________ 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.
</TABLE>
<PAGE> 64
<TABLE>
<S> <C>
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>
* To be filed by Amendment
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
ARTICLE ONE
NAME
The name of the corporation is Lehigh Acres First National Bancshares,
Inc. (the "Corporation"). The street address of the initial principal office of
the Corporation is 1300 Homestead Road, Lehigh Acres, Florida 33936.
ARTICLE TWO
ADDRESS AND REGISTERED AGENT
The street address of the initial registered office of the Corporation
shall be 1300 Homestead Road, Lehigh Acres, (Lee County), Florida 33936. The
name of the Corporation's initial registered agent at such address shall be
Lloyd J. Weber.
ARTICLE THREE
CAPITALIZATION
The Corporation shall have the authority, exercisable by its board of
directors (the "Board of Directors"), to issue up to 10,000,000 shares of voting
common stock, par value $.01 per share, and up to 10,000,000 shares of preferred
stock, par value $.01 per share. The board of directors shall have the authority
to specify the preferences, limitations, and relative rights of each class of
preferred stock.
ARTICLE FOUR
PREEMPTIVE RIGHTS
The shareholders shall not have any preemptive rights to acquire
additional stock in the Corporation.
ARTICLE FIVE
NO CUMULATIVE VOTING RIGHTS
The Corporation elects not to have cumulative voting, and no shares
issued by this Corporation may be cumulatively voted for directors of the
Corporation (or for any other decision).
<PAGE> 2
ARTICLE SIX
LIMITATION ON DIRECTOR LIABILITY
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for breach of the duty of
care or any other duty as a director, except that such liability shall not be
eliminated for:
(i) a violation of the criminal law, unless the director
had reasonable cause to believe his conduct was lawful or had no
reasonable cause to believe his conduct was unlawful;
(ii) a transaction from which the director derived an
improper personal benefit;
(iii) liability imposed under Section 607.0834 (or any
successor provision or redesignation thereof) of the Florida Business
Corporation Act (the "Act"); or
(iv) 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.
If at any time the Act shall have been amended to authorize the further
elimination or limitation of the liability of a director, then the liability of
each director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Act, as so amended, without further action by the
shareholders, unless the provisions of the Act, as amended, require further
action by the shareholders.
Any repeal or modification of the foregoing provisions of this Article
Six shall not adversely affect the elimination or limitation of liability or
alleged liability pursuant hereto of any director of the Corporation for or with
respect to any alleged act or omission of the director occurring prior to such a
repeal or modification.
ARTICLE SEVEN
CONTROL SHARE ACQUISITIONS
The provisions of 607.0902 of the Act shall not apply to control share
acquisitions of shares of the Corporation.
ARTICLE EIGHT
CONSIDERATION OF OTHER CONSTITUENCIES
In discharging the duties of their respective positions and in
determining what is in the best interests of the Corporation, the Board of
Directors, committees of the Board of Directors, and individual directors, in
addition to considering the effects of any actions on the Corporation and its
shareholders, may consider the interests of the employees, customers, suppliers,
creditors, and
2
<PAGE> 3
other constituencies of the Corporation and its subsidiaries, the communities
and geographical areas in which the Corporation and its subsidiaries operate or
are located, and all other factors such directors consider pertinent. This
provision solely grants discretionary authority to the directors and shall not
be deemed to provide to any other constituency any right to be considered.
ARTICLE NINE
SPECIAL MEETING OF THE SHAREHOLDERS
The Corporation shall, if and to the extent that it is required by
applicable law, hold a special meeting of shareholders if the holders of at
least 50% of all the votes entitled to be cast on any issue proposed to be
considered at such special meeting sign, date and deliver to the secretary of
the Corporation one or more written demands for the meeting. Such written
demands shall be delivered to the secretary by certified mail, return receipt
requested. Such written demands sent to the secretary of the Corporation shall
set forth as to each matter the shareholder or shareholders propose to be
presented at the special meeting (i) a description of the purpose or purposes
for which the meeting is to be held (including the specific proposal(s) to be
presented); (ii) the name and record address of the shareholder or shareholders
proposing such business; (iii) the class and number of shares of the Corporation
that are owned of record by the shareholder or shareholders as of a date within
ten days of the delivery of the demand; (iv) the class and number of shares of
the Corporation that are held beneficially, but not held of record, by the
shareholder or shareholders as of a date within ten days of the delivery of the
demand; and (v) any interest of the shareholder or shareholders in such
business. Any such special shareholders' meeting shall be held at a location
designated by the Board of Directors. The Board of Directors may set such rules
for any such meeting as it may deem appropriate, including when the meeting will
be held (subject to any requirements of the Act), the agenda for the meeting
(which may include any proposals made by the Board of Directors), restrictions
on who may attend the meeting in addition to shareholders of record, and other
such matters.
ARTICLE TEN
NAME AND ADDRESS OF THE SOLE INCORPORATOR
The sole incorporator is Lloyd J. Weber, whose address is c/o AIM
Engineering & Surveying, Inc., 5300 Lee Boulevard, Lehigh Acres, Florida 33971.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation as of the date indicated below.
/s/ Lloyd J. Weber
------------------------------
Lloyd J. Weber
Sole Incorporator
Date: May 12, 1999
-------------------------
3
<PAGE> 4
Lloyd J. Weber is familiar with and accepts the obligations to act as the
designated registered agent for Lehigh Acres First National Bancshares, Inc. as
provided for in Section 607.0505 of the Florida Statutes.
By: /s/ Lloyd J. Weber Dated: May 12, 1999
---------------------------- -----------------
Lloyd J. Weber
4
<PAGE> 5
[FORM OF BACK OF CERTIFICATE]
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM --as tenants in common UNIF GIFT MIN ACT--______Custodian
TEN ENT --as tenants by the entireties (Cust) (Minor)
JT TEN --as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act___________
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received, _________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
________________________________________________________________________________
__________________________________________________________________________Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint ____________________ Attorney to transfer the said shares on the books
of the within-named Corporation with full power of substitution in the premises.
Dated, _____________________
In presence of
_________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
<PAGE> 2
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1
OFFICES 1
Section 1: Registered Office and Agent...........................................................1
Section 2: Other Offices.........................................................................1
ARTICLE 2
SHAREHOLDERS..........................................................................................1
Section 1: Place of Meetings.....................................................................1
Section 2: Annual Meetings.......................................................................1
Section 3: Special Meetings......................................................................1
Section 4: Notice................................................................................2
Section 5: Quorum................................................................................2
Section 6: Majority Vote; Withdrawal of Quorum...................................................3
Section 7: Method of Voting......................................................................3
Section 8: Record Date...........................................................................3
Section 9: Shareholder Proposals.................................................................3
ARTICLE 3
DIRECTORS.............................................................................................4
Section 1: Management............................................................................4
Section 2: Number, Classification and Terms of Office of Directors...............................4
Section 3: Qualifications of Directors...........................................................5
Section 4: Election of Directors.................................................................5
Section 5: Nomination of Directors...............................................................5
Section 8: Vacancies.............................................................................6
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 9: Removal of Directors..................................................................6
Section 10: Place of Meetings....................................................................7
Section 11: Regular Meetings.....................................................................7
Section 12: Special Meetings.....................................................................7
Section 13: Telephone and Similar Meetings.......................................................7
Section 14: Quorum; Majority Vote................................................................7
Section 15: Compensation.........................................................................7
Section 16: Procedure............................................................................7
Section 17: Action Without Meeting...............................................................8
ARTICLE 4
BOARD COMMITTEES......................................................................................8
Section 1: Designation...........................................................................8
Section 2: Meetings..............................................................................8
Section 3: Quorum; Majority Vote.................................................................8
Section 4: Procedure.............................................................................8
Section 5: Action Without Meeting................................................................8
Section 6: Telephone and Similar Meetings........................................................9
ARTICLE 5
OFFICERS 9
Section 1: Offices...............................................................................9
Section 2: Term..................................................................................9
Section 3: Vacancies.............................................................................9
Section 4: Compensation..........................................................................9
Section 5: Removal...............................................................................9
Section 6: Chairman of the Board................................................................10
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Section 7: Chief Executive Officer..............................................................10
Section 8: President............................................................................10
Section 9: Vice Presidents......................................................................10
Section 10: Secretary...........................................................................10
ARTICLE 6
INDEMNIFICATION......................................................................................11
Section 1: Indemnification of Directors.............................................................11
Section 2. Indemnification Of Others................................................................11
Section 3. Subsidiaries.............................................................................11
Section 4. Determination............................................................................12
Section 5. Advances.................................................................................12
Section 6. Non-Exclusivity..........................................................................13
Section 7. Insurance................................................................................13
Section 8. Information To Shareholders..............................................................13
Section 9. Security................................................................................13
Section 10. Amendment...............................................................................13
Section 11. Agreements..............................................................................14
Section 12. Continuing Benefits.....................................................................14
Section 13. Successors..............................................................................14
Section 14. Severability............................................................................14
Section 15. Additional Indemnification..............................................................14
Section 16. Changes In The Florida Business Corporation Act.........................................14
ARTICLE 7
CERTIFICATES AND SHAREHOLDERS........................................................................15
Section 1: Certificates.........................................................................15
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Section 2: Issuance of Shares...................................................................15
Section 3: Rights of Corporation with Respect to Registered Owners..............................15
Section 4: Transfers of Shares..................................................................15
Section 5: Registration of Transfer.............................................................15
Section 6: Lost, Stolen or Destroyed Certificates...............................................16
Section 7: Restrictions on Shares...............................................................16
Section 9: Voting of Stock Held.................................................................16
ARTICLE 8
GENERAL PROVISIONS...................................................................................17
Section 1: Distributions........................................................................17
Section 2: Books and Records....................................................................17
Section 3: Execution of Documents...............................................................17
Section 4: Fiscal Year..........................................................................17
Section 5: Seal.................................................................................17
Section 6: Resignation..........................................................................17
Section 7: Computation of Days..................................................................17
Section 8: Amendment of Bylaws..................................................................17
Section 9: Construction.........................................................................18
Section 10: Headings............................................................................18
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<PAGE> 6
BYLAWS
OF
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
ARTICLE 1: OFFICES
Section 1: Registered Office and Agent. The registered office of the
Corporation shall be at 1300 Homestead Road N., Lehigh Acres, Florida 33936. The
registered agent shall be Lloyd J. Weber.
Section 2: Other Offices. The Corporation may also have offices at such
other places within and without the State of Florida as the Board of Directors
may from time to time determine or the business of the Corporation may require.
ARTICLE 2: SHAREHOLDERS
Section 1: Place of Meetings. Meetings of shareholders shall be held at
the time and place, within or without the State of Florida, stated in the notice
of the meeting or in a waiver of notice.
Section 2: Annual Meetings. An annual meeting of the shareholders shall
be held each year on such date and at a time to be set by the Board of Directors
in accordance with all applicable notice requirements. At the meeting, the
shareholders shall elect directors and transact such other business as may
properly be brought before the meeting.
Section 3: Special Meetings.
(a) Special meetings of the shareholders, for any purpose or
purposes, unless otherwise required by the Florida Business Corporation Act, as
amended from time to time, the Articles of Incorporation of the Corporation (the
"Articles"), or these Bylaws, may be called by the chief executive officer, the
president, the chairman of the Board of Directors or a majority of the Board of
Directors.
(b) In addition to a special meeting called in accordance with
subsection 3(a) of this Article 2, the Corporation shall, if and to the extent
that it is required by applicable law, hold a special meeting of shareholders if
the holders of at least 50% of all the votes entitled to be cast on any issue
proposed to be considered at such special meeting sign, date
<PAGE> 7
And deliver to the secretary of the Corporation one or more written demands for
the meeting. Such written demands shall be delivered to the secretary by
certified mail, return receipt requested. Such written demands sent to the
secretary of the Corporation shall set forth as to each matter the shareholder
or shareholders propose to be presented at the special meeting (i) a description
of the purpose or purposes for which the meeting is to be held (including the
specific proposal(s) to be presented); (ii) the name and record address of the
shareholder or shareholders proposing such business; (iii) the class and number
of shares of the Corporation that are owned of record by the shareholder or
shareholders as of a date within ten days of the delivery of the demand; (iv)
the class and number of shares of the Corporation that are held beneficially,
but not held of record, by the shareholder or shareholders as of a date within
ten days of the delivery of the demand; and (v) any interest of the shareholder
or shareholders in such business. Any such special shareholders' meeting shall
be held at a location designated by the Board of Directors. The Board of
Directors may set such rules for any such meeting as it may deem appropriate,
including when the meeting will be held (subject to any requirements of the
Florida Business Corporation Act), the agenda for the meeting (which may include
any proposals made by the Board of Directors), restrictions on who may attend
the meeting in addition to shareholders of record, and other such matters.
(c) Business transacted at any special meeting shall be
confined to the specific purpose or purposes stated in the notice of the
meeting.
Section 4: Notice.
(a) Written or printed notice stating the place, day and
hour of the meeting and, in the case of a special meeting, the specific purpose
or purposes for which the meeting is called, shall be delivered by the
Corporation not less than ten nor more than sixty days before the date of the
meeting, either personally or by mail, to each shareholder of record entitled to
vote at such meeting. If mailed, such notice shall be deemed effective when
deposited with postage prepaid in the United States mail, addressed to the
shareholder at the address appearing on the stock transfer books of the
Corporation. Except as may be expressly provided by law, no failure or
irregularity of notice of any regular meeting shall invalidate the same or any
proceeding thereat.
(b) The notice of each special shareholders meeting shall
include a description of the specific purpose or purposes for which the meeting
is called. Except as provided by law, the Articles or these Bylaws, the notice
of an annual shareholders meeting need not include a description of the purpose
or purposes for which the meeting is called.
Section 5: Quorum. The holders of a majority of the shares issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at meetings of the
shareholders for the transaction of business except as otherwise provided by
statute, by the Articles or by these Bylaws. If a quorum is not present or
represented at a meeting of the shareholders, the shareholders entitled to vote,
present in person or represented by proxy, shall have the power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present or represented. At an adjourned meeting at
which a quorum is present or represented, any business may be transacted
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which might have been transacted at the meeting as originally notified. Once a
share is represented for any purpose at a meeting it is deemed present for
quorum purposes.
Section 6: Majority Vote; Withdrawal of Quorum. Except in regards to
the election of directors, when a quorum is present at a meeting, the vote of
the holders of a majority of the shares having voting power, present in person
or represented by proxy, shall decide any question brought before the meeting,
unless the question is one on which, by express provision of the statutes, the
Articles or these Bylaws, a higher vote is required in which case the express
provision shall govern. Directors shall be elected by a plurality vote of the
shareholders. The shareholders present at a duly constituted meeting may
continue to transact business until adjournment, despite the withdrawal of
enough shareholders to leave less than a quorum.
Section 7: Method of Voting. Each outstanding share of common stock
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. Each outstanding share of other classes of stock, if any, shall
have such voting rights as may be prescribed by the Board of Directors. Proxies
delivered by facsimile to the Corporation, if otherwise in order, shall be
valid. Votes shall be taken by voice, by hand or in writing, as directed by the
chairman of the meeting. Voting for directors shall be in accordance with
Article 3, Section 3 of these Bylaws.
Section 8: Record Date and Shareholder Lists. For the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders, including any special meeting, or shareholders entitled to receive
payment of dividends, or in order to make a determination of shareholders for
any other purpose, the Board of Directors may fix in advance a date as the
record date for any such determination of shareholders, such date in any case to
be not less than ten nor more than seventy days prior to the date on which the
particular action, requiring such determination of shareholders, is to be taken.
A new record date must be set for any meeting of the shareholders that is
adjourned for 120 days or more. Except as otherwise provided by law, if no
record date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting of shareholders, or of shareholders entitled to receive
payment of dividends, the date on which notice of the meeting is mailed, or the
date on which the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date. A list of shareholders
eligible to vote a meeting of the shareholders shall be made available for
inspection by any shareholder at the Corporation's principal office during
regular business hours during the 10 days preceding any meeting of the
shareholders.
Section 9: Shareholder Proposals.
(a) To the extent required by applicable law, a
shareholder may bring a proposal before an annual meeting of shareholders as set
forth in this Section 9. To be properly brought before an annual meeting of
shareholders, business must be (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors; (ii)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors; or (iii) otherwise properly brought before the meeting by a
shareholder. In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a shareholder, the shareholder
must have given timely notice thereof in writing to the secretary of
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the Corporation. To be timely, a shareholder's notice must be given, either by
personal delivery or by United States mail, postage prepaid, return receipt
requested, to the secretary of the Corporation not less than 30 nor more than 60
days in advance of the annual meeting (provided, however, that if less than 31
days' notice of the meeting is given to shareholders, such written notice shall
be delivered or mailed, as prescribed, to the Secretary of Corporation not later
than the close of the tenth day following the day on which notice of the meeting
was mailed to shareholders). A shareholder's notice to the secretary of the
Corporation shall set forth for each matter the shareholder proposes to bring
before the annual meeting (i) a description of the business desired to be
brought before the annual meeting (including the specific proposal(s) to be
presented) and the reasons for conducting such business at the annual meeting;
(ii) the name and record address of the shareholder proposing such business;
(iii) the class and number of shares of the Corporation that are owned of
record, and the class and number of shares of the Corporation that are held
beneficially, but not held of record, by the shareholder as of the record date
for the meeting, if such date has been made publicly available, or as of a date
within ten days of the effective date of the notice by the shareholder if the
record date has not been made publicly available; and (iv) any interest of the
shareholder in such business. In the event that a shareholder attempts to bring
business before an annual meeting without complying with the provisions of this
Section 9, the chairman of the meeting may declare to the meeting that the
business was not properly brought before the meeting in accordance with the
foregoing procedures, and such business shall not be transacted. The chairman of
any annual meeting, for good cause shown and with proper regard for the orderly
conduct of business at the meeting, may waive in whole or in part the operation
of this Section 9.
(b) If any shareholder of the Corporation notifies the
Corporation that such shareholder intends to present a proposal for action at a
forthcoming meeting of the Corporation's shareholders and requests that the
Corporation include the proposal in its proxy statement and such shareholder
complies with all the requirements of Rule 14a-8 promulgated under the
Securities Exchange Act of 1934, the Corporation shall consider inclusion of
such proposal in the proxy statement unless it determines that the proposal is
inappropriate for consideration by the shareholders at the meeting.
ARTICLE 3: DIRECTORS
Section 1: Management. The business and affairs of the Corporation
shall be managed by the Board of Directors who may exercise all such powers of
the Corporation and do all such lawful acts and things as are not by law, the
Articles or these Bylaws directed or required to be done or exercised by the
shareholders.
Section 2: Number, Classification and Terms of Office of Directors.
Unless otherwise provided in the Articles of Incorporation, the number of
directors of the Corporation shall be that number as may be fixed from time to
time by resolution of the Board of Directors, but in no event shall the number
be less than five or greater than 25. The initial number of directors shall be
15. The number of members of the Board of Directors can be increased or
decreased within the foregoing range at any time by the Board of Directors. In
addition, unless
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provided otherwise by resolution of the Board of Directors, if, in any case
after proxy materials for an annual meeting of shareholders have been mailed to
shareholders, any person named therein to be nominated at the direction of the
Board of Directors becomes unable or unwilling to serve, the number of
authorized directors shall be automatically reduced by a number equal to the
number of such persons. At any time that the Board has six or more members,
unless provided otherwise by the Articles of Incorporation, the terms of office
of directors will be staggered by dividing the total number of directors into
three classes, with each class accounting for one-third, as near as may be, of
the total. The terms of directors in the first class expire at the first annual
shareholders' meeting after their election, the terms of the second class expire
at the second annual shareholders' meeting after their election, and the terms
of the third class expire at the third annual shareholders' meeting after their
election. At each annual shareholders' meeting held thereafter, directors shall
be chosen for a term of three years to succeed those whose terms expire. If the
number of directors is changed, any increase or decrease shall be so apportioned
among the classes as to make all classes as nearly equal in number as possible,
and when the number of directors is increased and any newly created
directorships are filled by the board, the terms of the additional directors
shall expire at the next election of directors by the shareholders. Each
director, except in the case of his earlier death, written resignation,
retirement, disqualification or removal, shall serve for the duration of his
term, as staggered, and thereafter until his successor shall have been elected
and qualified.
Section 3: Qualifications of Directors. Each member of the Board of
Directors must be a shareholder of the Corporation and a resident of the state
of Florida, unless the Board of Directors determines in any instance to waive
these requirements. No individual who is or becomes a Business Competitor (as
defined below) or who is or becomes affiliated with, employed by or a
representative of any individual, corporation, association, partnership, firm,
business enterprise or other entity or organization which the Board of
Directors, after having such matter formally brought to its attention,
determines to be in competition with the Corporation or any of its subsidiaries
(any such individual, corporation, association, partnership, firm, business
enterprise or other entity or organization being hereinafter referred to as a
"Business Competitor") shall be eligible to serve as a director if the Board of
Directors determines that it would not be in the Corporation's best interests
for such individual to serve as a director of the Corporation. Such affiliation,
employment or representation may include, without limitation, service or status
as an owner, partner, shareholder, trustee, director, officer, consultant,
employee, agent, or counsel, or the existence of any relationship which results
in the affected person having an express or implied obligation to act on behalf
of a Business Competitor; provided, however, that passive ownership of a debt or
equity interest not exceeding 1% of the outstanding debt or equity, as the case
may be, in any Business Competitor shall not constitute such affiliation,
employment or representation. Any financial institution having branches or
affiliates in Lee County, Florida, shall be presumed to be a Business Competitor
unless the Board of Directors determines otherwise.
Section 4: Election of Directors. Directors shall be elected by a
plurality vote.
Section 5: Nomination of Directors.
(a) Nomination of persons to serve as directors of the
Corporation, other than those made by or on behalf of the Board of Directors of
the Corporation, shall be made
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<PAGE> 11
in writing and shall be delivered either by personal delivery or by United
States mail, postage prepaid, return receipt requested, to the secretary of the
Corporation no later than (i) with respect to an election to be held at an
annual meeting of shareholders, ninety days in advance of such meeting; and (ii)
with respect to an election to be held at a special meeting of shareholders for
the election of directors, the close of business on the seventh day following
the date on which notice of such meeting is first given to shareholders. Each
notice shall set forth: (i) the name and address of the shareholder who intends
to make the nomination and of the person or persons to be nominated; (ii) a
representation that the shareholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (iii) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the shareholder; (iv) such other information regarding each nominee proposed by
such shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission, had the
nominee been nominated, or intended to be nominated, by the Board of Directors;
and (v) the consent of each nominee to serve as a director of the Corporation if
so elected. The chairman of the meeting may refuse to acknowledge the nomination
of any person not made in compliance with the foregoing procedure. The chairman
of any such meeting, for good cause shown and with proper regard for the orderly
conduct of business at the meeting, may waive in whole or in part the operation
of this Section 4.
(b) Notwithstanding subsection (a) of this Section 4, if
the Corporation or any banking subsidiary of the Corporation is subject to the
requirements of Section 914 of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, then no person may be nominated by a shareholder for
election as a director at any meeting of shareholders unless the shareholder
furnishes the written notice required by subsection (a) of this Section 4 to the
secretary of the Corporation at least ninety days prior to the date of the
meeting and the nominee has received regulatory approval to serve as a director
prior to the date of the meeting.
Section 6: Vacancies. Except as otherwise provided by law, in the
Articles of Incorporation, or in these Bylaws (a) the office of a director shall
become vacant if he dies, resigns, or is removed from office, and (b) the Board
of Directors may declare vacant the office of a director if (i) he is
interdicted or adjudicated an incompetent, (ii) an action is filed by or against
him, or any entity of which he is employed as his principal business activity,
under the bankruptcy laws of the United States, (iii) in the sole opinion of the
Board of Directors he becomes incapacitated by illness or other infirmity so
that he is unable to perform his duties for a period of six months or longer, or
(iv) he ceases at any time to have the qualifications required by law, the
Articles of Incorporation or these Bylaws. The remaining directors may, by a
majority vote, fill any vacancy on the Board of Directors (including any vacancy
resulting from an increase in the authorized number of directors, or from the
failure of the shareholders to elect the full number of authorized directors)
for an unexpired term; provided that the shareholders shall have the right at
any special meeting called for such purpose prior to action by the Board of
Directors to fill the vacancy.
Section 7: Removal of Directors. Unless provided otherwise by the
Articles of Incorporation, directors may be removed with or without cause by the
affirmative vote of the
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holders of at least a majority of the shares entitled to vote at an election of
directors, such vote being taken at a meeting of the shareholders called for
that purpose at which a quorum is present.
Section 8: Place of Meetings. Meetings of the Board of Directors,
regular or special, may be held either within or without the State of Florida.
Section 9: Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such time and place as shall from time to time be
determined by the Board of Directors.
Section 10: Special Meetings. Special meetings of the Board of
Directors may be called by the chairman, the chief executive officer, or the
president of the Corporation, on not less than twenty-four hours' notice. Notice
of a special meeting may be given by personal notice, telephone, facsimile,
electronic communication, overnight courier or United States mail to each
director. Any such special meeting shall be held at such time and place as shall
be stated in the notice of the meeting. The notice need not describe the purpose
or purposes of the special meeting.
Section 11: Telephone and Similar Meetings. Directors may participate
in and hold a meeting by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in such a meeting shall constitute presence in person
at the meeting, except where a person participates in the meeting for the
express purpose of objecting to the holding of the meeting or the transacting of
any business at the meeting on the ground that the meeting is not lawfully
called or convened, and does not thereafter vote for or assent to action taken
at the meeting.
Section 12: Quorum; Majority Vote. At meetings of the Board of
Directors a majority of the number of directors then in office shall constitute
a quorum for the transaction of business. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, except as otherwise specifically provided by law, the Articles or
these Bylaws. If a quorum is not present at a meeting of the Board of Directors,
the directors present may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum is present.
Section 13: Compensation. Each director shall be entitled to receive
such reasonable compensation as may be determined by resolution of the Board of
Directors. By resolution of the Board of Directors, the directors may be paid a
fixed sum for attendance at each meeting of the Board of Directors. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of committees may, by
resolution of the Board of Directors, be allowed compensation for attending
committee meetings.
Section 14: Procedure. The Board of Directors shall keep regular
minutes of its proceedings. The minutes shall be placed in the minute book of
the Corporation.
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Section 15: Action Without Meeting. Any action required or permitted to
be taken at a meeting of the Board of Directors may be taken without a meeting
if the action is assented to by all the members of the Board. Such consent shall
have the same force and effect as a meeting vote and may be described as such in
any document.
ARTICLE 4: BOARD COMMITTEES
Section 1: Designation. The Board of Directors may, by resolution
adopted by a majority of the full Board, designate one or more committees. Each
committee must have two or more members who serve at the pleasure of the Board
of Directors. To the extent specified by the Board of Directors, in the Articles
or in these Bylaws, each committee may exercise the authority of the Board of
Directors. So long as prohibited by law, however, a committee of the Board may
not (a) authorize distributions; (b) approve or propose to shareholders action
required by the Florida Business Corporation Act to be approved by shareholders;
(c) fill vacancies on the Board of Directors or on any of its committees; (d)
amend the Articles; (e) adopt, amend or repeal these Bylaws; (f) approve a plan
of merger not requiring shareholder approval; (g) authorize or approve
reacquisition of shares, except according to a formula or method prescribed by
the Board of Directors; or (h) authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares, except that the
Board of Directors may authorize a committee (or a senior executive officer of
the Corporation) to do so within limits specifically prescribed by the Board of
Directors. Any director may serve on one or more committees. Any committee
appointed under this Section 1 shall perform such duties and assume such
responsibility as may from time to time be placed upon it by the Board of
Directors.
Section 2: Meetings. Time, place and notice of all committee meetings
shall be as called and specified by the chief executive officer, the committee
chairman or any two members of each committee.
Section 3: Quorum; Majority Vote. At meetings of committees, a majority
of the number of members designated by the Board of Directors shall constitute a
quorum for the transaction of business. The act of a majority of the members
present at any meeting at which a quorum is present shall be the act of such
committee, except as otherwise specifically provided by the Florida Business
Corporation Act, the Articles or these Bylaws. If a quorum is not present at a
meeting of the committee, the members present may adjourn the meeting from time
to time, without notice other than an announcement at the meeting, until a
quorum is present.
Section 4: Procedure. Committees shall keep regular minutes of their
proceedings and report the same to the Board of Directors at its next regular
meeting. The minutes of the proceedings of the committee shall be placed in the
minute book of the Corporation.
Section 5: Action Without Meeting. Any action required or permitted to
be taken at a meeting of any committee may be taken without a meeting if the
action is assented to by all
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the members of the committee. Such consent shall have the same force and effect
as a meeting vote and may be described as such in any document.
Section 6: Telephone and Similar Meetings. Committee members may
participate in and hold a meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in such a meeting shall constitute
presence in person at the meeting, except where a person participates in the
meeting for the express purpose of objecting to the holding of the meeting or
the transacting of any business at the meeting on the ground that the meeting is
not lawfully called or convened, and does not thereafter vote for or assent to
action taken at the meeting.
ARTICLE 5: OFFICERS
Section 1: Offices. The officers of the Corporation shall consist of a
chief executive officer, president, and secretary, each of whom shall be elected
by the Board of Directors. The Board of Directors may also create and establish
the duties of other offices as it deems appropriate. The Board of Directors
shall also elect a chairman of the Board from among its members. The Board of
Directors from time to time may appoint, or may authorize the president to
appoint or authorize specific officers to appoint, the persons who shall hold
such other offices as may be established by the Board of Directors. Any two or
more offices may be held by the same person.
Section 2: Term. Each officer shall serve at the pleasure of the Board
of Directors (or, if appointed pursuant to this Article, at the pleasure of the
Board of Directors, the president, or the officer authorized to have appointed
the officer) until his or her death, resignation, or removal, or until his or
her replacement is elected or appointed in accordance with this Article.
Section 3: Vacancies. Any vacancy occurring in any office of the
Corporation may be filled by the Board of Directors. Any vacancy in an office
which was filled by the president or another officer may also be filled by the
president or by any officer authorized to have filled the office vacant.
Section 4: Compensation. The compensation of all officers of the
Corporation shall be fixed by the Board of Directors or by a committee or
officer appointed by the Board of Directors. Officers may serve without
compensation.
Section 5: Removal. All officers (regardless of how elected or
appointed) may be removed, with or without cause, by the Board of Directors. Any
officer appointed by the president or another officer may also be removed, with
or without cause, by the president or by any officer authorized to have
appointed the officer to be removed. Removal will be without prejudice to the
contract rights, if any, of the person removed, but shall be effective
notwithstanding any damage claim that may result from infringement of such
contract rights.
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Section 6: Chairman of the Board. The office of the chairman of the
board may be filled by the Board at its pleasure by the election of one of its
members to the office. The chairman shall preside at all meetings of the Board
and meetings of the shareholders and shall perform such other duties as may be
assigned to him by the Board of Directors.
Section 7: Chief Executive Officer. The chief executive officer shall
be responsible for the general and active management of the business and affairs
of the Corporation, and shall see that all orders and resolutions of the Board
are carried into effect. He shall perform such other duties and have such other
authority and powers as the Board of Directors may from time to time prescribe.
Section 8: President. The president shall be responsible for the
general and active management of the business and affairs of the Corporation,
and shall see that all orders and resolutions of the Board are carried into
effect. He shall perform such other duties and have such other authority and
powers as the Board of Directors may from time to time prescribe.
Section 9: Vice Presidents. The vice presidents (executive, senior, or
assistant), as such offices are appointed by the Board of Directors, in the
order of their seniority, unless otherwise determined by the Board of Directors,
shall, in the absence or disability of the president, perform the duties and
have the authority and exercise the powers of the president. They shall perform
such other duties and have such other authority and powers as the Board of
Directors may from time to time prescribe or as the president may from time to
time delegate.
Section 10: Secretary.
(a) The secretary shall attend all meetings of the Board
of Directors and all meetings of the shareholders and record all votes, actions
and the minutes of all proceedings in a book to be kept for that purpose and
shall perform like duties for the executive and other committees when required.
(b) The secretary shall give, or cause to be given,
notice of all meetings of the shareholders and special meetings of the Board of
Directors.
(c) The secretary shall keep in safe custody the seal of
the Corporation and, when authorized by the Board of Directors or the executive
committee, affix it to any instrument requiring it. When so affixed, it shall be
attested by the secretary's signature or by the signature of the treasurer or an
assistant secretary.
(d) The secretary shall be under the supervision of the
president and shall perform such other duties and have such other authority and
powers as the Board of Directors may from time to time prescribe or as the
president may from time to time delegate.
10
<PAGE> 16
ARTICLE 6: INDEMNIFICATION
Section 1: Indemnification of Directors. The Corporation shall
indemnify and hold harmless any person (an "Indemnified Person") who was or is a
party, or is threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including any action or suit by or in the right of the
Corporation) because he is or was a director of the Corporation, against
expenses (including, but not limited to, attorneys' fees and disbursements,
court costs and expert witness fees), and against any judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in connection
with the action, suit or proceeding; provided, that in any case, no
indemnification shall be made for any expenses, judgments, fines and amounts
paid in settlement to or on behalf of any director if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute:
(1) 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;
(2) a transaction from which the director derived an improper
personal benefit;
(3) a circumstance under which the liability provisions of Section
607.0834 of the Act (dealing with unlawful distributions) are
applicable; or
(4) 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.
Section 2. Indemnification Of Others. The Board of Directors shall have
the power to cause the Corporation to provide to officers, employees and agents
of the Corporation all or any part of the right to indemnification and other
rights of the type provided under Section 1, 5 or 11 of this Article 6 (subject
to the conditions, limitations and obligations specified therein) upon a
resolution to that effect identifying such officers, employees or agents (by
position or name) and specifying the particular rights provided, which may be
different for each of the persons identified. Each officer, employee or agent of
the Corporation so identified shall be an "Indemnified Person" for the purposes
of the provisions of this Article 6.
Section 3. Subsidiaries. The Board of Directors shall have the power to
cause the Corporation to provide to any director, officer, employee or agent of
the Corporation who also is or was a Director, officer, trustee, general
partner, employee or agent of a Subsidiary (as defined below), all or any part
of the right to indemnification and other rights of the type provided under
Section 1, 5 and 11 of this Article 6 (subject to the conditions, limitations
and obligations specified therein), with regard to amounts actually and
reasonably incurred by such person because he is or was a director, officer,
trustee, general partner, employee or agent of the Subsidiary. The Board of
Directors shall exercise such power, if at all, through a resolution identifying
the person or persons to be indemnified (by position or name) and the Subsidiary
(by name or other classification), and specifying the particular rights
provided, which may be different for each of the persons identified. Each person
so identified shall be an "Indemnified Person" for purposes of the provisions of
this Article 6. As used in this Article 6, "Subsidiary"
11
<PAGE> 17
shall mean (a) another corporation, joint venture, trust, partnership or
unincorporated business association more than 20% of the voting capital stock or
other voting equity interest of which was, at or after the time the
circumstances giving rise to such action, suit or proceeding arose, owned,
directly or indirectly, by the Corporation, or (b) a nonprofit corporation that
received its principal financial support from the Corporation or its
Subsidiaries.
Section 4. Determination. Notwithstanding any judgment, order,
settlement, conviction or plea in any action, suit or proceeding of the kind
referred to in Section 1, an Indemnified Person shall be entitled to
indemnification as provided in such Section unless a determination that such
Indemnified Person is not entitled to such indemnification shall be made:
(1) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action,
suit or proceeding;
(2) if such a quorum is not obtainable or, even if obtainable, by
majority vote of a committee duly designated by the Board of
Directors (in which directors who are parties may participate)
consisting solely of two or more directors not at the time
parties to the proceeding;
(3) by independent legal counsel:
(i) selected by the Board of Directors prescribed in
paragraph (1) or the committee prescribed in
paragraph (2); or
(ii) if a quorum of the directors cannot be obtained for
paragraph (1) and the committee cannot be designated
under paragraph (2), selected by majority vote of the
full Board of Directors (in which directors who are
parties may participate); or
(4) by the shareholders by a majority vote of a quorum consisting
of shareholders who were not parties to such action, suit, or
proceeding or, if no such quorum is obtainable, by a majority
vote of shareholders who were not parties to such proceeding.
Notwithstanding any determination pursuant to the preceding
sentence, if such determination shall have been made at a time
that the members of the Board of Directors, so serving when
the events upon which such Indemnified Person's liability has
been based occurred, no longer constitute a majority of the
members of the Board of Directors, then subject to any
requirements of the Florida Business Corporation Act, such
Indemnified Person shall nonetheless be entitled to
indemnification as set forth in Section 1 of Article 6, unless
the Corporation shall carry the burden of proving, in an
action before any court of competent jurisdiction, that such
Indemnified Person is not entitled to such indemnification.
Section 5. Advances. Expenses (including, but not limited to,
attorneys' fees and disbursements, court costs, and expert witness fees)
incurred by the Indemnified Person in defending any action, suit or proceeding
of the kind described in Section 1 (or in Section 2 or 3, if the Board of
Directors has specified that advancement of expenses be made available to such
Indemnified Person) shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as set forth herein. The
Corporation shall promptly pay the amount of such expenses to the Indemnified
Person, but in no event later than 10 days following the Indemnified Person's
delivery to the Corporation of a written request for an advance pursuant to
12
<PAGE> 18
this Section 5, together with a reasonable accounting of such expenses; provide,
however, that the Indemnified Person shall furnish the Corporation a written
affirmation of his good faith belief that he is entitled to indemnification for
such amounts under this Article 6 and a written undertaking and agreement to
repay to the Corporation any advances made pursuant to this Section 1 if it
shall be determined that the Indemnified Person is not entitled to be
indemnified by the Corporation for such amounts. The Corporation shall make the
advances contemplated by this Section 5 regardless of the Indemnified Person's
financial ability to make repayment. Any advances and undertakings to repay
pursuant to this Section 5 shall be unsecured and interest-free.
Section 6. Non-Exclusivity. Subject to any applicable limitation
imposed by the Florida Business Corporation Act or the Articles of
Incorporation, the indemnification and advancement of expenses provided by or
granted pursuant to this Article 6 shall not be deemed exclusive of any other
rights to which a person seeking indemnification or advancement of expenses may
be entitled under resolution, or agreement specifically or in general terms
approved or ratified by the affirmative vote of holders of a majority of the
shares entitled to be cast thereon.
Section 7. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Section.
Section 8. Information To Shareholders. If any expenses or other
amounts are paid by way of indemnification, otherwise than by court order or
action by the shareholders or by an insurance carrier pursuant to insurance
maintained by the Corporation, the Corporation shall, not later than the time of
delivery to shareholders of written notice of the next annual meeting of
shareholders, unless such meeting is held within three months from the date of
such payment, and, in any event, within fifteen months from the date of such
payment, deliver either personally or by mail to each shareholder of record at
the time entitled to vote for the election of directors, a statement specifying
the persons paid, the amounts paid, and the nature and status at the time of
such payment of the litigation or threatened litigation.
Section 9. Security. The Corporation may designate certain of its
assets as collateral, provide self-insurance or otherwise secure its obligations
under this Article 6, or under any indemnification agreement or plan of
indemnification adopted and entered into in accordance with the provisions of
this Article 6, as the Board of Directors deems appropriate.
Section 10. Amendment. Any amendment to this Article 6 that limits or
otherwise adversely affects the right of indemnification, advancement of
expenses, or other rights of any Indemnified Person hereunder shall, as to such
Indemnified Person, apply only to claims, actions, suits, or proceedings based
on actions, events or omissions (collectively, "Post Amendment Events")
occurring after such amendment and after delivery of notice of such amendment to
the Indemnified Person so affected. Any Indemnified Person shall, as to any
13
<PAGE> 19
claim, action, suit or proceeding based on actions, events or omissions
occurring prior to the date of receipt of such notice, be entitled to the right
of indemnification, advancement of expenses and other rights under this Article
6 to the same extent as if such provisions had continued as part of the Bylaws
of the Corporation without such amendment. This Section 10 cannot be altered,
amended or repealed in a manner effective as to any Indemnified Person (except
as to Post Amendment Events) without the prior written consent of such
Indemnified Person.
Section 11. Agreements. The provisions of this Article 6 shall be
deemed to constitute an agreement between the Corporation and each person
entitled to indemnification hereunder. In addition to the rights provided in
this Article 6, the Corporation shall have the power, upon authorization by the
Board of Directors, to enter into an agreement or agreements providing to any
person who is or was a director, officer, employee or agent of the Corporation
indemnification rights substantially similar to those provided in this Article
6.
Section 12. Continuing Benefits. The indemnification and advancement of
expenses provided by or granted pursuant to this Article 6 shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such person.
Section 13. Successors. For purposes of this Article 6, the term
"Corporation" shall include any corporation, joint venture, trust, partnership
or unincorporated business association that is the successor to all or
substantially all of the business or assets of this Corporation, as a result of
merger, consolidation, sale, liquidation or otherwise, and any such successor
shall be liable to the persons indemnified under this Article 6 on the same
terms and conditions and to the same extent as this Corporation.
Section 14. Severability. Each of the Sections of this Article 6, and
each of the clauses set forth herein, shall be deemed separate and independent,
and should any part of any such Section or clause be declared invalid or
unenforceable by any court of competent jurisdiction, such invalidity or
unenforceability shall in no way render invalid or unenforceable any other part
thereof or any separate Section or clause of this Article 6 that is not declared
invalid or unenforceable.
Section 15. Additional Indemnification. In addition to the specific
indemnification rights set forth herein, the Corporation shall indemnify each of
its directors and such of its officers as have been appointed by the Board of
Directors to the full extent permitted by action of the Board of Directors
without shareholder approval under the Florida Business Corporation Act or other
laws of the State of Florida as in effect from time to time.
Section 16. Changes in the Florida Business Corporation Act. The Board
of Directors of the Corporation may amend any Section of Article 6 without
shareholder approval such that each Section of Article 6 will be in conformity
with the Florida Business Corporation Act at all times.
14
<PAGE> 20
ARTICLE 7: CERTIFICATES AND SHAREHOLDERS
Section 1: Certificates. Certificates in the form determined
by the Board of Directors shall be delivered representing all shares of which
shareholders are entitled. Certificates shall be consecutively numbered and
shall be entered in the books of the Corporation as they are issued. At a
minimum, each share certificate must state on its face: (a) the name of the
Corporation and that it is organized under the laws of Florida; (b) the name of
the person to whom the certificate is issued; and (c) the number and class of
shares and the designation of the series, if any, the certificate represents.
Each share certificate (a) must be signed (either manually or in facsimile) by
at least two officers, including the president, the secretary, or such other
officer or officers as the Board of Directors shall designate; and (b) may bear
the corporate seal or its facsimile. If the person who signed (either manually
or in facsimile) a share certificate no longer holds office when the certificate
is issued, the certificate is nevertheless valid.
Section 2: Issuance of Shares. The Board of Directors may
authorize shares to be issued for consideration consisting of any tangible or
intangible property or benefit to the Corporation, including cash, promissory
notes, services performed, written contracts for services to be performed, or
other securities of the Corporation. Before the Corporation issues shares, the
Board of Directors must determine that the consideration received or to be
received for shares to be issued is adequate. That determination by the Board of
Directors is conclusive insofar as the adequacy of consideration for the
issuance of shares relates to whether the shares are validly issued, fully paid
and nonassessable. When the Corporation receives the consideration for which the
Board of Directors authorized the issuance of shares, the shares issued therefor
are fully paid and nonassessable.
Section 3: Rights of Corporation with Respect to Registered
Owners. Prior to due presentation for transfer of registration of its shares,
the Corporation may treat the registered owner of the shares as the person
exclusively entitled to vote the shares, to receive any dividend or other
distribution with respect to the shares, and for all other purposes; and the
Corporation shall not be bound to recognize any equitable or other claim to or
interest in the shares on the part of any other person, whether or not it has
express or other notice of such a claim or interest, except as otherwise
provided by law.
Section 4: Transfers of Shares. Transfers of shares shall be
made upon the books of the Corporation kept by the Corporation or by the
transfer agent designated to transfer the shares, only upon direction of the
person named in the certificate or by an attorney lawfully constituted in
writing. Before a new certificate is issued, the old certificate shall be
surrendered for cancellation or, in the case of a certificate alleged to have
been lost, stolen or destroyed, the provisions of these Bylaws shall have been
complied with.
Section 5: Registration of Transfer. The Corporation shall
register the transfer of a certificate for shares presented to it for transfer
if: (a) the certificate is properly endorsed by the registered owner or by his
duly authorized attorney; (b) the signature of such person has been guaranteed
by a commercial bank or brokerage firm that is a member of the National
Association of Securities Dealers and reasonable assurance is given that such
endorsements are effective; (c)
15
<PAGE> 21
the Corporation has no notice of an adverse claim or has discharged any duty to
inquire into such a claim; (d) any applicable law relating to the collection of
taxes has been complied with; and (e) the transfer is in compliance with
applicable provisions of any transfer restrictions of which the Corporation
shall have notice. The Board of Directors shall have the discretion to waive any
of these requirements in its discretion.
Section 6: Lost, Stolen or Destroyed Certificates. The
Corporation shall issue a new certificate in place of any certificate for shares
previously issued if the registered owner of the certificate: (a) makes proof in
affidavit form that the certificate has been lost, destroyed or wrongfully
taken; (b) requests the issuance of a new certificate before the Corporation has
notice that the certificate has been acquired by a purchaser for value in good
faith and without notice of an adverse claim; (c) gives a bond in such form, and
with such surety or sureties, with fixed or open penalty, as the Corporation may
direct, to indemnify the Corporation (and its transfer agent and registrar, if
any) against any claim that may be made on account of the alleged loss,
destruction or theft of the certificate; and (d) satisfies any other reasonable
requirements imposed by the Corporation. When a certificate has been lost,
apparently destroyed or wrongfully taken, and the holder of record fails to
notify the Corporation within a reasonable time after he has notice of it, and
the Corporation registers a transfer of the shares represented by the
certificate before receiving such notification, the holder of record is
precluded from making any claim against the Corporation for the transfer or for
a new certificate.
Section 7: Restrictions on Shares. The Board of Directors, on
behalf of the Corporation, or the shareholders may impose restrictions on the
transfer of shares (including any security convertible into, or carrying a right
to subscribe for or acquire shares) to the maximum extent permitted by law. A
restriction does not affect shares issued before the restriction was adopted
unless the holders of the shares are parties to the restriction agreement or
voted in favor of the restriction. A restriction on the transfer of shares is
valid and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this Section 7 and its existence is noted
conspicuously on the front or back of the certificate.
Section 8: Voting of Stock Held. Unless otherwise provided by
resolution of the Board of Directors, the president or any executive vice
president shall from time to time appoint an attorney or attorneys or agent or
agents of this Corporation, in the name and on behalf of this Corporation, to
cast the vote which this Corporation may be entitled to cast as a shareholder or
otherwise in any other corporation, any of whose stock or securities may be held
by this Corporation, at meetings of the holders of the stock or other securities
of such other corporation, or to consent in writing to any action by any of such
other corporation, and shall instruct the person or persons so appointed as to
the manner of casting such votes or giving such consent and may execute or cause
to be executed on behalf of this Corporation and under its corporate seal or
otherwise, such written proxies, consents, waivers or other instruments as may
be necessary or proper; or, in lieu of such appointment, the president or any
executive vice president may attend in person any meetings of the holders of
stock or other securities of any such other corporation and their vote or
exercise any or all power of this Corporation as the holder of such stock or
other securities of such other corporation.
16
<PAGE> 22
ARTICLE 8: GENERAL PROVISIONS
Section 1: Distributions. The Board of Directors may authorize, and the
Corporation may make, distributions (including dividends on its outstanding
shares) in the manner and upon the terms and conditions provided by applicable
law and the Articles.
Section 2: Books and Records. The Corporation shall keep correct and
complete books and records of account and shall keep minutes of the proceedings
of its shareholders and Board of Directors.
Section 3: Execution of Documents. The Board of Directors or these
Bylaws shall designate the officers, employees and agents of the Corporation who
shall have the power to execute and deliver deeds, contracts, mortgages, bonds,
debentures, checks and other documents for and in the name of the Corporation,
and may authorize such officers, employees and agents to delegate such power
(including authority to redelegate) to other officers, employees or agents of
the Corporation. Unless so designated or expressly authorized by these Bylaws,
no officer, employee or agent shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable pecuniarily for any purpose or any amount.
Section 4: Fiscal Year. The fiscal year of the Corporation shall be the
same as the calendar year.
Section 5: Seal. The Corporation may provide a seal which contains the
name of the Corporation and the name of the state of incorporation. The seal may
be used by impressing it or reproducing a facsimile of it or otherwise.
Section 6: Resignation. A director may resign by delivering written
notice to the Board of Directors, the chairman or the Corporation. Such
resignation of a director is effective when the notice is delivered unless the
notice specifies a later effective date. An officer may resign at any time by
delivering notice to the Corporation. Such resignation of an officer is
effective when the notice is delivered unless the notice specifies a later
effective date. If a resignation of an officer is made effective at a later date
and the Corporation accepts the future effective date, the Board of Directors
may fill the pending vacancy before the effective date if the Board of Directors
provides that the successor does not take office until the effective date.
Section 7: Computation of Days. In computing any period of days
prescribed hereunder the day of the act after which the designated period of
days begins to run is not to be included. The last day of the period so computed
is to be included.
Section 8: Amendment of Bylaws.
(a) Except to the extent required otherwise by law, these
Bylaws, or the Articles of Incorporation, these Bylaws may be altered, amended
or repealed or new Bylaws may be adopted at any meeting of the Board of
Directors at which a quorum is present, by the
17
<PAGE> 23
affirmative vote of a majority of the directors then in office, provided notice
of the proposed alteration, amendment or repeal is contained in the notice of
the meeting.
(b) Except to the extent required otherwise by law, these
Bylaws, or the Articles of Incorporation, these Bylaws may also be altered,
amended or repealed or new Bylaws may be adopted at any meeting of the
shareholders at which a quorum is present or represented by proxy, by the
affirmative vote of the holders of a majority of each class of shares entitled
to vote thereon, provided notice of the proposed alteration, amendment or repeal
is contained in the notice of the meeting.
(c) Upon adoption of any new bylaw by the shareholders,
the shareholders may provide expressly that the Board of Directors may not
adopt, amend or repeal that bylaw or any bylaw on that subject.
Section 9: Construction. If any portion of these Bylaws shall be
invalid or inoperative, then, so far as is reasonable and possible: (a) the
remainder of these Bylaws shall be considered valid and operative and (b) effect
shall be given to the intent manifested by the portion held invalid or
inoperative.
Section 10: Headings. The headings are for convenience of reference
only and shall not affect in any way the meaning or interpretation of these
Bylaws.
The undersigned, as Chairman of the Corporation, hereby certifies that the
bylaws contained herein are the true and correct bylaws adopted by the
Corporation's board of directors in compliance with any procedural requirements
of the Corporation's Articles of Incorporation and the laws of the State of
Florida, and the rules and regulations promulgated thereunder.
/s/ Lloyd J. Weber
---------------------------
Lloyd J. Weber
Chairman
Date: May 12, 1999
----------------------
18
<PAGE> 1
EXHIBIT 3.3
This ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of June 21, 1999 is
among Lehigh Acres First National Bancshares, Inc., a Florida corporation
("Lehigh Bancshares") and Lehigh One, Inc., a Florida corporation ("Lehigh
One").
WHEREAS, Lehigh Bancshares was incorporated on May 19, 1999 for the
purpose of becoming a bank holding company in order to initially hold all of
the shares of Lehigh Acres First National Bank (proposed)(the "Bank");
WHEREAS, the organizers of the Bank formed Lehigh One on April 14,
1998 to facilitate in the formation processes of both Lehigh Bancshares and the
Bank;
WHEREAS, the Lehigh Bancshares proposes to acquire and assume all of
the assets, liabilities, rights, revenues, contracts, and expenses acquired,
incurred, or undertaken by Lehigh One from the date of its inception until the
date of this Agreement;
WHEREAS, the sole shareholder and creditors of Lehigh One propose to
assign and transfer all of the assets, liabilities, rights, revenues,
contracts, and expenses acquired, incurred, or undertaken by Lehigh One from
the date of its inception until the date of this Agreement to Lehigh Bancshares
for a sum of $10.00 and other valuable consideration.
NOW THEREFORE, in consideration of $10.00 in hand paid and the mutual
promises and covenants set forth below, and for other good and valuable
consideration the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1: Assignment. Lehigh One hereby transfers, assigns, sells,
conveys, and delivers all of its assets, liabilities, rights, revenues,
contracts, and expenses to Lehigh Bancshares.
SECTION 2: Assumption. Lehigh Bancshares hereby assumes and acquires
all of the assets, liabilities, rights, revenues, contracts, and expenses of
Lehigh One.
SECTION 3: Counterparts. This agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and which when taken
together shall constitute one complete instrument.
(SIGNATURES OF FOLLOWING PAGES)
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto execute this agreement as of
that date and the year first above written.
LEHIGH ONE, INC.
/s/ Lloyd J. Weber
- -----------------------------------
Lloyd J. Weber, Sole Shareholder
CONSENTED TO BY:
<TABLE>
<S> <C>
/s/ Robert C. Bagans /s/ Calvin Beals
- ----------------------------------- ------------------------------
Robert C. Bagans, Creditor Calvin Beals, Creditor
/s/ Benjamin Bell /s/ Craig A. Dearden
- ----------------------------------- ------------------------------
Benjamin Bell, Creditor Craig A. Dearden, Creditor
/s/ Paul Dinger /s/ Teresa Goodlad
- ----------------------------------- ------------------------------
Paul Dinger, Creditor Teresa Goodlad, Creditor
/s/ James D. Hull /s/ Vikas K. Jain
- ----------------------------------- ------------------------------
James D. Hull, Creditor Vikas K. Jain, Creditor
/s/ Lawrence J. Murphy /s/ Micki J. Regas
- ----------------------------------- ------------------------------
Lawrence J. Murphy, Creditor Micki J. Regas, Creditor
/s/ Patricia A. Regas /s/ Kenneth C. Wolfe
- ----------------------------------- ------------------------------
Patricia A. Regas, Creditor Kenneth C. Wolfe, Creditor
/s/ Fred J. Anderson
- -----------------------------------
Fred J. Anderson, Creditor
/s/ James O. Phebus
- -----------------------------------
James O. Phebus, Creditor
</TABLE>
<PAGE> 3
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
<TABLE>
<S> <C>
/s/ Lloyd J. Weber
- ----------------------------------- ------------------------------
Lloyd J. Weber, CEO Robert C. Bagans, Director
/s/ Calvin Beals /s/ Benjamin Bell
- ----------------------------------- ------------------------------
Calvin Beals, Director Benjamin Bell, Director
/s/ Craig A. Dearden /s/ Paul Dinger
- ----------------------------------- ------------------------------
Craig A. Dearden, Director Paul Dinger, Director
/s/ Teresa Goodlad /s/ James D. Hull
- ----------------------------------- ------------------------------
Teresa Goodlad, Director James D. Hull, Director
/s/ Vikas K. Jain /s/ Lawrence J. Murphy
- ----------------------------------- ------------------------------
Vikas K. Jain, Director Lawrence J. Murphy, Director
/s/ Micki J. Regas /s/ Patricia A. Regas
- ----------------------------------- ------------------------------
Micki J. Regas, Director Patricia A. Regas, Director
/s/ E. Byron Richardson /s/ Kenneth K. Thompson
- ----------------------------------- ------------------------------
E. Byron Richardson, Director Kenneth K. Thompson, Director
/s/ Kenneth C. Wolfe
- -----------------------------------
Kenneth C. Wolfe, Director
</TABLE>
<PAGE> 1
EXHIBIT 4.2
[FORM OF FACE OF CERTIFICATE]
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
INCORPORATED UNDER THE LAWS OF FLORIDA.
THE CORPORATION IS TO ISSUE 1,000,000 SHARES OF COMMON STOCK - PAR VALUE $.01
EACH
This certifies that _______________________________is the registered holder of
_______________________________ Shares of Common Stock which are fully paid and
non-assessable and transferable only on the books of the Corporation by the
holder hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to
be signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this ______________ day of _______________ A.D. 19____
- --------------------------- ----------------------------------
SECRETARY PRESIDENT
<PAGE> 1
EXHIBIT 5.1
LAW OFFICES
[Nelson Mullins Riley & Scarborough, L.L.P. LETTERHEAD]
999 PEACHTREE STREET, N.E.
FIRST UNION PLAZA
SUITE 1400
ATLANTA, GEORGIA 30309
TELEPHONE (404) 817-6000
FACSIMILE (404) 817-6050
WWW.NMRS.COM
June 23, 1999
Lehigh Acres First National Bancshares, Inc.
1300 Homestead Road N.
Lehigh Acres, Florida 33936
Re: Registration Statement on Form SB-2
Ladies and Gentlemen:
We have acted as counsel to Lehigh Acres First National Bancshares,
Inc. (the "Company") in connection with the filing of a Registration Statement
on Form SB-2 (the "Registration Statement"), under the Securities Act of 1933,
covering the offering of up to 1,000,000 shares (the "Shares") of the Company's
Common Stock, par value $.01 per share. In connection therewith, we have
examined such corporate records, certificates of public officials, and other
documents and records as we have considered necessary or proper for the purpose
of this opinion.
The opinions set forth herein are limited to the laws of the State of
Florida and applicable federal laws.
Based on the foregoing, and having regard to legal considerations which
we deem relevant, we are of the opinion that the Shares, when issued and
delivered as subscribed in the Registration Statement, will be legally issued,
fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus contained in the Registration Statement.
NELSON MULLINS RILEY & SCARBOROUGH
By: /s/ Neil E. Grayson
-------------------------------------
Neil E. Grayson
<PAGE> 1
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 9th day of October, 1998,
by and between LEHIGH ACRES FIRST NATIONAL BANK/LEHIGH ACRES FIRST BANCSHARES,
INC., a banking corporation proposed to be formed under the laws of the State of
Florida, represented by the undersigned formative Management Committee
(hereinafter referred to as the "Bank"), and LLOYD WEBER (hereinafter referred
to as the "Executive").
WITNESSETH:
WHEREAS, a group of Lee County residents has begun the process toward
incorporating and organizing the Bank to serve the Lehigh Acres Primary Service
Area, in the County of Lee, the State of Florida;
WHEREAS, such incorporators have met and authorized a Management
Committee with the power to negotiate employment contracts for the executive
officers of the Bank;
WHEREAS, such Management Committee has met with the Executive and
reached an agreement with him, the terms of which the parties desire to commit
in writing;
NOW, THEREFORE, in consideration of the mutual covenants, herein
contained, the parties hereto do agree as follows:
A. RELATIONSHIP ESTABLISHED AND DUTIES.
1. The Bank hereby employs the Executive as Chief Execution
Officer of the Bank, to hold the title of President and Chief Executive Officer,
and to perform such services and duties as the Bank's Board of Directors may,
from time to time, designate during the term hereof. Subject to the terms and
conditions hereof, the Executive will perform such duties and exercise such
authority as are customarily performed and exercised by persons holding such
office, subject to the general direction of the Board of Directors, exercised in
good faith in accordance with the standards of reasonable business judgment.
2. The Executive shall serve on the Board of Directors of the
Bank and as a member of its Executive Committee, subject to the terms hereof.
3. The Executive accepts such employment and shall devote his
full time attention and efforts to the diligent performance of his duties
herein specified as an officer and director, and will not accept employment with
any other individual, corporation, partnership, governmental authority or other
entity, or engage in any other venture for profit (other than as a passive
investor) which the Bank may consider to be in conflict with his or its best
interest, or which may interfere in any way with the Executive's performance of
his duties hereunder.
Employment Agreement
Lehigh Acres First National Bank and Lloyd Weber
Page 1
<PAGE> 2
i. As an exception to this covenant the Executive
shall be permitted to serve on the Board of Directors of other banking
institutions, subject to Board approval, so long as those institutions shall not
have a regular business located within Lee County, State of Florida, and as long
as such service does not interfere with said executive services to the Bank.
B. TERMS OF EMPLOYMENT.
Employment shall commence upon opening of Bank for business. The term
shall continue for five (5) consecutive years, unless such term is terminated
earlier by the Bank pursuant to the occupance of any of the following
conditions:
1. The death of the Executive;
2. The complete disability of the Executive. "Complete
disability," as used herein, shall mean the inability of the Executive, due to
illness, accident or any other physical or mental incapacity, to perform the
services provided for hereunder for an aggregate of ninety (90) days within any
period of 120 consecutive days the term hereof;
3. The discharge of the Executive by the Bank for cause.
"Cause" as used herein, shall include but not be limited to the following:
i. Unethical conduct: (a) Disclosing or misusing trade
secrets or confidential or proprietary information belonging to the Bank; (b)
selecting vendors based on non-business reasons, such as personal or former
non-business relationships; (c) promising or giving something of value to anyone
doing or seeking to do business with the Bank in order to influence them in
matters relating to Bank business; or (d) engaging in acts of dishonesty, fraud,
theft or sabotage.
ii. Violence or Other Inappropriate Behavior: (a) Threats
of any kind; (b) threatening, physically aggressive or violent behavior, such as
intimidation of or attempts to instill fear in others; (c) using any object in a
threatening or weapon-like manner; (d) insubordination or refusal to comply with
instructions or failure to perform reasonable duties which are assigned; (e)
conviction by any duly constituted law enforcement agency or authority of a
criminal offence; or (f) conduct which the Bank feels reflects adversely on the
Executive or the Bank.
Termination of the Executive's employment shall constitute a tender by
the Executive of his resignation as an officer and director of the Bank.
Such initial five (5) year terms shall be renewed automatically for two
(2) consecutive one year terms for an aggregate employment period of the
Executive with the Bank of seven (7) years from the date hereof, unless ninety
(90) days written notice is provided by either the Executive or the Bank of the
Executive's or the Bank's intention not to continue such employment relationship
for any one year extension period. If such written notice is not given by the
Executive or the Bank with respect to any one year extension period, then this
Agreement automatically shall be extended for an additional one year term.
Employment Agreement
Lehigh Acres First National Bank and Lloyd Weber
Page 2
<PAGE> 3
C. COMPENSATION.
For all services which the Executive may render to the Bank during the
term hereof, including service on the Board of Directors and Executive Committee
of the Bank, the Bank shall pay to the Executive, subject to such deductions as
may be required by law:
1. Base Salary. An annual salary of $96,000.00, payable in
equal monthly installments; merit increases may be granted in the discretion of
the Board of Directors.
2. Bonus. Each year, as cash performance bonus, the Executive
shall be entitled to five percent (5%) of net income before income taxes of the
Bank (determined by generally accepted accounting principals), up to a maximum
of fifteen percent (15%) of Executive's annual salary. Each bonus will be
awarded and payable within sixty (60) days of the end of the Bank's fiscal year
provided the Bank achieves the following performance criteria: (a) return on
assets (determined by generally accepted accounting principals) in each year;
(b) loan loss reserve ratio meets or exceeds 1.1% of net loans plus any
adjustments for classified loans; (c) ration of non-performing loans to total
loans do not exceed that of its peers as published at year end in the Uniform
Bank Performance Report; and (d) the Bank achieves a composite rating and asset
quality rating of "2" or better.
Year One - 1999 through 12/31/2000 N/A
Year Two - 1/l/2001 through 12/31/2001 .3%
Year Three - 1/l/2002 through 12/31/2002 .5%
Year Four - 1/l/2003 through 12/31/2003 .7%
Year Five - 1/l/2004 through 12/31/2004 1.0%
The Bank may, in its discretion, award Executive a bonus at
the end of calendar year one, should they determine said bonus is appropriate.
3. Life Insurance. As soon as practical, the Bank shall
establish a plan of employee group term life insurance for its employees, and
provided the Executive is a standard insurance risk, the Bank shall provide the
Executive with employee term life insurance with a minimum face amount of three
(3) times the Executive's annual salary.
4. Disability Insurance. As soon as practical, the Bank shall
obtain for the benefit of the Executive an insured salary continuation plan to
provide the Executive benefit payment of up to two-thirds (2/3) of his salary to
age 65, in the event of his disability while employed by the Bank.
5. Other Fringe Benefits. The Executive shall be entitled to
participate in the fringe benefits provided by the Bank to all employees which
shall be determined at a later date by the Board of Directors. Such benefits
under consideration may include up to - health and dental insurance; deferred
compensation plan, and an approved paid holiday schedule.
6. Dues and Subscriptions. The Bank shall pay directly, or
reimburse the Executive for his memberships in civic and social clubs for the
benefit of the Executive and the business opportunities of the Bank, all
memberships subject to approval by the Board of Directors.
Employment Agreement
Lehigh Acres First National Bank and Lloyd Weber
Page 3
<PAGE> 4
7. Business Automobile. The Bank shall provide the Executive
an automobile allowance of $800.00 per month. The allowance is provided to cover
the ownership, gas, maintenance, repair and insurance while on Bank business.
Since the Bank assumes no responsibility beyond making
available an allowance, it is the Executive's responsibility to protect against
damage to his vehicle and legal liability in such a form and amount as the
Executive deems appropriate.
It is highly recommended that the Executive consult with his
own insurance agent for coverage levels. (Note: It is possible that an
individual carrier will deny coverage due to misrepresentation regarding the
business use of an automobile. It is therefore essential that the Executive
properly informs his carrier accordingly, to ensure complete coverage.)
8. Bank Expense. The Bank shall reimburse the Executive for
his out-of-pocket business related expenses, not to exceed $1,000.00 per month,
incurred during these activities on behalf of the Bank.
9. Stock Options Linked to Bank Performance. If the Bank
opens for business and the Executive is initially and continues to be employed
under the provisions of this Agreement, then the Executive will earn option
rights redeemable in shares of common stock as a percentage of the Executive's
base salary.
Provided the Bank achieves a composite rating and asset
quality rating of "2" or better, the Executive may, at the discretion of the
Board, receive each year an option in shares of capital stock of the Bank equal
to 2.5% of his base salary.
In the event of the merger, consolidation or sale of all or
substantially all of the assets of the holding company or the Bank prior to the
expiration of five (5) years from the date of this Agreement, and if the
Executive is still employed by Bank, then all stock options contemplated by this
Paragraph 9 not yet received by Executive shall immediately be considered earned
by the Executive, as though the required anniversary dates and performance
criteria had been attained, provided the merger consolidation or sale meets or
exceeds one and one-half times of the existing book value of the Bank at date of
sale.
10. Vacations. Executive shall have the right to accrued
vacation of fifteen (15) working days each calendar year for the first year.
These vacation days shall be at full pay earned on a prorated basis for twelve
(12) months of employment. During the last four (4) years of this employment
contract, the Executive shall have the right to twenty (20) working days of
vacation at full pay during each calendar year. Each twenty (20) days shall be
accrued at a prorated basis over twelve (12) months of employment.
11. Employment Stock Option. As inducement for Executive to
forego further employment activities, other than those contemplated by this
Agreement and its attached agreement, Bank agrees to make available to Executive
option rights redeemable in common stock in the amount of 25,000 shares of the
Bank upon the issuance of stock.
Employment Agreement
Lehigh Acres First National Bank and Lloyd Weber
Page 4
<PAGE> 5
12. Conditions Regarding Stock Options. All stock options
contemplated pursuant to this Agreement are subject to the following terms;
non-transferable, shall expire within ten (10) years from the date of grant or
upon termination (discharge) of this agreement, subject to any and all forfeit
or exercise clause as may be required by the appropriate regulatory authorities,
shall be issued at the higher of the market value as of the date of grant or the
offering price of $10.00 per share.
All options issued to the Executive shall be vested at the rate of 1/3 (33.33%)
per calendar year end after the year issued and each calendar year end
thereafter until fully vested. In the event this agreement is terminated for
reasons other than discharge, all issued options must be exercised within 90
days of separation or said options shall expire.
At no time shall options be issued or redeemable if said Bank is under any form
of notice by the appropriate regulatory authorities.
D. INCAPACITY.
If the Executive should become incapacitated or unable to perform the
duties of his employment hereunder for an aggregate of ninety (90) continuous
days absence in any twelve (12) month period (hereinafter referred to as the
"Disability Period"), the Executive nevertheless shall be entitled to all
compensation and other payments provided hereunder during the Disability Period;
provided, however, that any amount paid the Executive under any disability
insurance will be subtracted from compensation payable to the Executive by the
Bank for a period of one (1) year. If the Executive is incapacitated for a
period which exceeds the one year period, the Executive shall not be entitled to
receive the compensation and other payments provided for by the Bank, other than
the compensation from the Disability Policy hereunder for any time after the end
of the one year period until commences working again for the Bank.
The Executive shall be considered to be incapacitated when he is unable
to perform the normal duties required of him hereunder.
E. TERMINATION AND SEVERANCE.
The term of this Agreement is five (5) years as above provided.
However, either party hereto may terminate this Agreement prior to the
expiration of such five years on sixty (60) days written notice to the other.
In the event of the termination of the Executive by the Bank for cause
(as defined herein), voluntary resignation or because of his death, the
compensation of the Executive shall cease on the effective date of such
termination. In the event the Executive is terminated for reasons other than the
aforementioned reasons the Executive shall be entitled to a severance
compensation equal to one years base salary payable, at the discretion of the
board, as either a lump sum distribution or in 12 monthly installments. In the
event the Executive is terminated prior to one (1) year of service, the amount
of severance will be reduced by the amount of compensation received during the
first year. Payments will be distributed over the same number of months of
service performed during the first year of service.
Employment Agreement
Lehigh Acres First National Bank and Lloyd Weber
Page 5
<PAGE> 6
F. TRADE SECRETS.
It is recognized between the Bank and the Executive that the Bank will
acquire and develop techniques, plans processes, computer programs and lists of
customers and their particular needs, situations and requirements which may
pertain to many and varied Bank related services and equipment, and related
trade secrets, know-how, research and development, which are secrecy and
confidential in character and are and will continue to be used in its business
(all hereinafter referred to as "Secret Information"). Some of such Secret
Information will be disclosed to and become known by the Executive in the course
of the proper performance of his duties hereunder.
All such Secret Information heretofore or hereafter received by the
Executive shall be kept and maintained by him as confidential and in complete
secrecy. The Executive shall not disclose at any time, either orally, or in
writing or otherwise, in any manner, directly or indirectly, to any person or
firm, except to other directors, officers, and employees of the Bank, any Secret
Information.
Upon termination of his employment hereunder, and regardless of
whether such termination is voluntary or involuntary, the Executive shall
without demand thereof, deliver to the Bank all marketing surveys, operating
manuals, price lists, memoranda, customer lists and information, and all Secret
Information and other written matter emanating from or prepared by the Bank.
G. INSURANCE.
The Bank, at its sole discretion, may apply for insurance in its own
name and for its own benefit covering the Executive for life insurance, in any
amount deemed advisable and the Executive shall have no right, title or interest
therein. The Executive shall submit to any required examination and shall
execute and assign and/or deliver such application and policies necessary to
effectuate such insurance coverage.
H. CONSTRUCTION OF AGREEMENT.
This Agreement was executed by the parties in accordance with and
shall be governed and interpreted in accordance with the laws of the State of
Florida.
I. BENEFITS AND BURDENS.
The Executive recognizes that the Bank has not yet been formed and
that he is being employed to aid the incorporators in its formation.
Accordingly, the individual incorporators, organizers, proposed directors and
officers, committee members and chairmen, and all other participants in the
venture and in the employment of the Executive shall have no liability
whatsoever to the Executive hereunder, or otherwise it being expressly
understood that the Executive is contracting with an entity yet to be formed;
and while such organizers intend to do their best to complete the Bank's
organization, there can be no guarantee or warranty that it can or will be
completed. However, in the event the organization of the Bank is completed, the
Bank hereby ramifies and formally adopts this Agreement and binds the Bank to
its provisions herein contained.
Employment Agreement
Lehigh Acres First National Bank and Lloyd Weber
Page 6
<PAGE> 7
In the event the Bank as proposed is not organized and does not open by
March 1, 1999, this Agreement shall be null and void and of no effect as to the
parties thereto, their promoters, organizers, and proposed directors.
This Agreement shall inure to the benefit of and be binding upon the
Bank when formed, its successors and assigns, and any corporation with which the
Bank may merge or consolidate or to which the Bank may sell substantially all of
its business and assets, and shall inure to the benefit of and be binding on the
Executive. Since the Executive's duties and services hereunder are special,
personal and unique in nature, the Executive may not sell or otherwise assign
his rights, obligations or benefits under this Agreement.
J. DIRECTORS COMPENSATION.
The Executive will be entitled to all benefits awarded to Board of
Directors, with the exception of compensation granted for committee meeting
participation.
K. ENTIRE AGREEMENT.
This Agreement contains the entire agreement between the parties
relating to the subject matter hereof and supersedes any previous discussions,
negotiations or agreements between the parties, whether written or oral, with
respect to the subject matter hereof. This Agreement cannot be modified, altered
or amended except by a writing, signed by both parties.
L. SEVERABILITY.
If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect or impair
the validity or unenforceability of the remaining provisions of this Agreement.
M. NO COMPLETE CLAUSE. The Executive covenants that he will not, for a
period of one (1) year after this Agreement is terminated, by either party, with
or without cause, engage in the business of banking with the radius of 50 miles
of Lehigh Acres, Lee County, Florida.
For a period of one (1) year immediately following termination of
employment, the Executive may not directly or indirectly make known to any
person, firm, or corporation the names or addresses of any of the Bank's
customers or any other information pertaining to the Bank's customers.
Also for a period of one (1) year immediately following termination
of employment, the Executive may not call on, solicit, or attempt to call on,
solicit, or take away any of the Bank's customers called upon by the Executive,
or whom the Executive became acquainted with during the Executive's employment
with the Bank.
N. COMPETITION WITH BANK. The Bank respects the Executive's right to
pursue future career opportunities, and the Bank expects the Executive to
acknowledge the Bank's right to protect its interest, its customers and its
employees. Accordingly, in accepting this offer of employment, the Executive
agrees not to engage in direct competition with the Bank during the term of
employment
Employment Agreement
Lehigh Acres First National Bank and Lloyd Weber
Page 7
<PAGE> 8
without the expressed written consent of the Bank's Board of Directors. "Direct
Competition" is defined herein as designing, selling or rendering services
similar to those offered by the Bank for the Executive's personal economic
benefit or the economic benefit of any competitive bank who provides services
in any geographical area in which the Bank is engaged. This includes services
rendered as an independent contractor or consultant or as the owner or
shareholder in any other bank.
L. ARBITRATION. In accepting this offer of employment, the Executive
agrees that any dispute arising out of this agreement or out of any termination
of employment, with or without cause, said dispute shall be resolved pursuant
to mandatory arbitration at the written request of either party. This agreement
provides such arbitration shall be complied with and be governed by the
provisions of the Federal Arbitration Act.
N. GOVERNING LAW.
This Agreement shall in all respects be interpreted, construed and
governed by and in accordance with the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date and year first above written.
Signed, sealed and delivered
in the presence of:
Witnesses as to Bank:
LEHIGH ACRES FIRST NATIONAL BANK/
LEHIGH ACRES FIRST BANCSHARES, INC.
(Sign) /s/ Shirley A. Sheets By: /s/ James D. Hull
---------------------------- ----------------------------------
(Print) Shirley A. Sheets Name: James D. Hull
---------------------------- ----------------------------------
Title: Chairman
----------------------------------
(Sign) /s/ Rebecca Wilson
----------------------------
(Print) Rebecca Wilson
----------------------------
Witnesses as to Executive:
(Sign) /s/ Craig A. Dearden By: /s/ Lloyd Weber
---------------------------- -------------------------------------
(Print) Craig A. Dearden Lloyd Weber, proposed President/CEO
----------------------------
(Sign) /s/ Shirley A. Sheets
----------------------------
(Print) Shirley A. Sheets
----------------------------
Employment Agreement
Lehigh Acres First National Bank and Lloyd Weber
Page 8
<PAGE> 9
STATE OF FLORIDA }
}
COUNTY OF LEE }
SWORN TO AND SUBSCRIBED before me this 9th day of October,
1998, by James D. Hull as Chairman of LEHIGH ACRES FIRST NATIONAL BANK/LEHIGH
ACRES FIRST BANCSHARES, INC., on behalf of the Bank, who is [X] personally
known to me or who has [ ] produced Florida Driver's License No.
___________________________________, as identification.
/s/ Rebecca A. Wilson
----------------------
NOTARY PUBLIC
[Seal] Rebecca Anne Wilson
My Commission CC746184
Expires June 1, 2002
STATE OF FLORIDA }
}
COUNTY OF LEE }
SWORN TO AND SUBSCRIBED before me this 9th day of October, 1998, by LLOYD
WEBER, the Executive, who is [X] personally known to me or who has [ ] produced
Florida Driver's License No. __________________________, as identification.
/s/ Rebecca A. Wilson
----------------------
NOTARY PUBLIC
[Seal] Rebecca Anne Wilson
My Commission CC746184
Expires June 1, 2002
Employment Agreement
Lehigh Acres First National Bank and Lloyd Weber
Page 9
<PAGE> 1
EXHIBIT 10.2
CONSULTING AGREEMENT
THIS AGREEMENT, entered into this 16th of January, 1999, by and between
LEHIGH ONE INCORPORATED (hereinafter referred to as the "Corporation"), a
Florida corporation in the process of organizing a national bank to be situated
in Lee County, Florida, which will operate under the name Lehigh Acres First
National Bank (hereafter referred to as the "Bank") and LLOYD J. WEBER,
(hereinafter referred to as the "Consultant").
WITNESSETH:
WHEREAS, the Corporation is in the process of organizing the Bank and
is desirous of engaging the Consultant to assist it in certain organizational
matters; and
WHEREAS, the Consultant is desirous of providing consulting services to
the Corporation with regard to the organization of the Bank, and to serve as
President and Chief Executive Officer of the Bank after its charter has been
approved, which the bank is to be owned by a Bank Holding Company (the "Holding
Company"), which will be organized to own all of the stock of the Bank.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
1. ENGAGEMENT. The Corporation agrees to engage the Consultant and the
Consultant agrees to provide consulting services to the Corporation relating to
the regulatory process associated with the Corporation's application for the
Bank's charter and for permission to form the Bank Holding Company, and the
development of organizational and business plans relating to the operation of
the Bank and the Holding Company.
1
<PAGE> 2
2. TERM. The term of this Agreement shall commence on January 16, 1999,
and shall continue for a period of three months. In the event that the Bank
receives the necessary charter approval from the Office of the Comptroller of
the Currency and the Federal Deposit Insurance Corporation within the term of
this Agreement, the Bank will automatically extend this Agreement for an
additional six months or until the Bank has opened for business, but not to
extend past March 30, 2000.
3. SERVICES. The Consultant shall exert his best efforts and devote
substantially all of his time and attention to the organizational matters of the
Bank and the Holding Company.
4. COMPENSATION. As compensation for the Consultant's services, the
Corporation shall pay to the Consultant in advance a fee of Four Thousand
($4,000) Dollars per month until such time the charter application is approved
by all regulatory authorities. Upon receipt of an unconditional approval of the
charter or all conditional terms are met as requested by a regulatory authority,
the Corporation shall increase said compensation to Six Thousand Five Hundred
($6,500) per month the next payment date. The increased rate of compensation
will remain in effect until the Bank has opened for business.
5. EXPENSES.
a.) INSURANCE. The Corporation will provide the Consultant
with mutually agreeable insurance policies covering health, dental, life and
disability. Alternatively, the Corporation may reimburse the Consultant for the
cost of continuing Consultant's existing group health, dental, life and
disability insurance until such time as the Consultant and the Bank enter into
Employment Agreement, as hereinafter. The cost of said insurance payments shall
not exceed $600.00 per month.
b.) OTHER EXPENSES. The Consultant shall also be entitled to
reimbursement for all reasonable expenses incurred by him in the performance of
his duties upon presentation of a voucher, and appropriate receipts, indicating
the amount and the business purposes.
2
<PAGE> 3
6. TERMINATION. In the event of the Consultant's death or in the event
the Consultant is prevented from rendering services by-reason of illness,
incapacity or injury for a period of sixty (60) consecutive days during the term
of this Agreement or in the event the Consultant fails to perform the services
required hereunder, then and in such event the Corporation may terminate this
Agreement upon written notice to the Consultant. If the Agreement is terminated
for other than cause, as cause is defined in the Employment Agreement dated
October 9, 1998, and the Consultant has commenced providing services, then the
Corporation shall continue to compensate the Consultant under Section 4 above
for a period of two weeks from date of notification In the event Consultant
voluntarily terminates his services then the Consultant shall receive no further
compensation.
The Consultant agrees that for a period of nine (9) months after
termination of his employment with the Corporation in any manner with, whether
with or without cause, Consultant will not, within fifty miles of the
Corporation's headquarters located at 5300 Lee Boulevard, Lehigh Acres,
Florida, directly or indirectly engaging in the business of banking, or in any
competitive business shall include engaging in such business as owner, partner
or agent, or as employee or consultant of any person, firm or corporation
engaged in such business, or in being interested directly or indirectly in any
such business conducted by any person, firm or corporation.
3
<PAGE> 4
7. RATIFICATION OF EMPLOYMENT AGREEMENT. In the event the Bank is
granted its charter and the requisite amount of capital has been raised to
permit the Bank to open for business, the shareholders of the Corporation agree
to ratify and approve, on behalf of the Bank, the Employment Agreement dated
October 9, 1998. The shareholders of the Corporation shall also cause the Board
of Directors of the Bank to ratify and approve such Employment Agreement. Upon
approval by the Bank's Board of Directors of the Employment Agreement, the
Consultant agrees to enter into said Employment Agreement and perform the duties
enumerated therein as the President and Chief Executive Officer of the Bank.
Each shareholder of the Corporation represents to the Consultant that he will
vote for the approval of said Employment Agreement at the initial Board of
Directors meeting of the Bank, and that they, as a group, will have sufficient
votes to ratify said Employment Agreement.
8. NOTICES. All notices request, demands and other communication
provided for by this Agreement shall be in writing and shall be deemed to have
been given at the time and then mailed at any general or branch United States
Post Office enclosed in a certified, postage pre-paid envelope, and addressed to
the address of the respective parties states below, or as such party may have
fixed by notice:
To the Corporation:
5300 Lee Boulevard
Lehigh Acres, Florida 33971
To the Consultant:
Fairways I, Apartment 102A
Joel Boulevard
Lehigh Acres, Florida 33972
4
<PAGE> 5
9. SUCCESSORS AND ASSIGNS. This agreement shall inure to the benefit of
and be binding upon the Corporation and its successors. The Consultant may not
assign his right to payment nor his obligations under this Agreement.
10. GOVERNING LAW. This agreement shall in all respects be interpreted,
construed and governed by and in accordance with the laws of the State of
Florida.
11. MISCELLANEOUS. This agreement supersedes all prior understandings and
agreements between the parties, and may not be amended orally, but only in
writing signed by the parties hereto.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
LEHIGH ONE INCORPORATED
By: /s/ James D. Hull
-------------------------------------
JAMES D. HULL, President
Attest: /s/ Benjamin Bell
---------------------------------
BENJAMIN BELL, Vice President
(CORPORATE SEAL)
/s/ Lloyd J. Weber
-----------------------------------------
LLOYD J. WEBER, Consultant
5
<PAGE> 1
EXHIBIT 10.3
CONSULTING AGREEMENT
THIS AGREEMENT, entered into this 16th day of April, 1998, by and between
LEHIGH ONE INCORPORATED (hereinafter referred to as the "Corporation"), a
Florida corporation in the process of organizing a national bank to be situated
in Lee County, Florida, which will operate under a name to be determined ninety
day of this agreement (hereinafter referred to as the "Bank") and LLOYD J.
WEBER, (hereinafter referred to as the "Consultant").
W I T N E S S E T H :
WHEREAS, the Corporation is in the process of organizing the Bank and is
desirous of engaging the Consultant to assist it in certain organizational
matters; and
WHEREAS, the Consultant is desirous of providing consulting services to
the Corporation with regard to the organization of the Bank, and to serve as
President and Chief Executive officer of the Bank after its charter has been
approved, which bank is to be owned by a Bank Holding Company (the "Holding
Company"), which will be organized to own all of the stock of the Bank.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
1. ENGAGEMENT. The Corporation agrees to engage the Consultant and the
Consultant agrees to provide consulting services to the Corporation relating to
the regulatory process associated with the Corporation's application for the
Bank's charter and for permission to form the Bank Holding Company, and the
development of organizational and business plans relating to the operation of
the Bank and the Holding Company.
1
<PAGE> 2
2. TERM. The term of this Agreement shall commence on April __, 1998, and
shall continue until the earlier of nine (9) months from the date of
commencement of this Agreement or the date the Bank is no longer in its
organizational phase and has opened for business.
3. SERVICES. The Consultant shall exert his best efforts and devote
substantially all of his time and attention to the organizational matters of the
Bank and the Holding Company.
4. COMPENSATION. As compensation for the Consultant's services, the
Corporation shall pay the consultant a fee of Eight Thousand ($8,000.00)
Dollars per month. The consulting fees shall be paid as follows:
a.) Eight thousand upon execution of the agreement for services
rendered by the Consultant prior to the formation of the Corporation;
b.) Eight thousand beginning April 15, 1998, and continuing each and
every month thereafter under the term of this agreement, as set forth above.
5. EXPENSES.
A.) INSURANCE. The Corporation will provide the Consultant with
mutually agreeable insurance policies covering health, dental, life and
disability. Alternatively, the Corporation may reimburse the Consultant for the
cost of continuing Consultant's existing group health, dental, life and
disability insurance until such time as the Consultant and the Bank enter into
Employment Agreement, as hereinafter. The cost of said insurance payments shall
not exceed $600.00 per month.
(B.) OTHER EXPENSES. The Consultant shall also be entitled to
reimbursement for all reasonable expenses incurred by him in the performance of
his duties upon presentation of a
2
<PAGE> 3
voucher, and appropriate receipts, indicating the amount and the business
purposes.
6. TERMINATION. In the event of the Consultant's death or in the event
the Consultant is prevented from rendering services by reason of illness,
incapacity or injury for a period of sixty (60) consecutive days during the
term of this Agreement or in the event the Consultant fails to perform the
services required hereunder, then and in such event the Corporation may
terminate this Agreement upon written notice to the Consultant. If the
Agreement is terminated for other than cause, as cause is defined in the
Employment Agreement, (to be mutually agreed upon by the parties on or before
May 15, 1998), and the Consultant has commenced providing services, then the
Corporation shall continue to compensate the Consultant under Section 4 above
for a period of two weeks from the date of notification. In the event
Consultant voluntarily terminates his services then the Consultant shall
receive no further compensation.
The Consultant agrees that for a period of nine (9) months after
termination of his employment with the Corporation in any manner with, whether
with or without cause, Consultant will not, within fifty miles of the
corporation's headquarters located at 5300 Lee Boulevard Lehigh Acres, Florida,
directly or indirectly engaging in the business of banking, or in any business
competitive with employer. Directly or indirectly engaging in business of
banking or in competitive business shall include engaging in such business as
owner, partner or agent, or as employee or consultant of any person, firm or
corporation engaged in such business, or in being interested directly or
indirectly in any such business conducted by any person, firm or corporation.
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<PAGE> 4
7. RATIFICATION OF EMPLOYMENT AGREEMENT. In the event the Bank is
granted its charter and the requisite amount of capital has been raised to
permit the Bank to open for business, the shareholders of the Corporation agree
to ratify and approve, on behalf of the Bank, the Employment Agreement (to be
mutually agreed upon by the parties on or before May 15, 1998). The shareholders
of the Corporation shall also cause the Board of Directors of the Bank to
ratify and approve such Employment Agreement. Upon approval by the Bank's Board
of Directors of the Employment Agreement, the Consultant agrees to enter into
said Employment Agreement and perform the duties enumerated therein as the
President and Chief Executive Officer of the Bank. Each shareholder of the
Corporation represents to the Consultant that he will vote for the approval of
said Employment Agreement at the initial Board of Directors meeting of the
Bank, and that they, as a group, will have sufficient votes to ratify said
Employment Agreement.
8. NOTICES. All notices requests, demands and other communication
provided for by this Agreement shall be in writing and shall be deemed to have
been given at the time when mailed at any general or branch United States Post
Office enclosed in a certified, postage pre-paid envelope, and addressed to the
address of the respective parties stated below, or as such party may have fixed
by notice:
To the Corporation:
5300 Lee Boulevard
Lehigh Acres, Florida 33971
To the Consultant:
Fairways I, Apartment 102A
Joel Boulevard
Lehigh Acres, Florida 33972
4
<PAGE> 5
9. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and
be binding upon the Corporation and its successors. The Consultant may not
assign his right to payment nor his obligations under this Agreement.
10. GOVERNING LAW. This Agreement shall in all respects be interpreted,
construed and governed by and in accordance with the laws of the State of
Florida.
11. MISCELLANEOUS. This Agreement supersedes all prior understandings and
agreements between the parties, and may not be amended orally, but only in
writing signed by the parties hereto.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
LEHIGH ONE INCORPORATED
By: /s/ James D. Hull
------------------------
Its President JAMES D. HULL
Attest: /s/ Benjamin Bell
---------------------
Vice-president BENJAMIN BELL
(CORPORATE SEAL)
/s/ Lloyd J. Weber
-----------------------------
LLOYD J. WEBER
Consultant
5
<PAGE> 1
EXHIBIT 10.4
REAL PROPERTY LEASE
THIS REAL PROPERTY LEASE ("Lease") is made and entered into as of the last date
of execution by the parties hereto, by and between 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, d/b/a GSB
Partnership, of 302 Lee Boulevard, Suite 102, Lehigh Acres, Florida 33936
("Landlord"), and LEHIGH ACRES FIRST NATIONAL BANK, of 1300 Homestead Road
North, Lehigh Acres, Florida 33936 ("Tenant").
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. PREMISES. Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, the real property and all improvements thereupon, including but
not limited to all buildings, fixtures, equipment, furniture and all other
property of every kind and character owned by Landlord and located on, attached
to, or used in connection therewith ("Premises"), situated in Lehigh Acres,
Florida, and commonly referred to as 1300 Homestead Road North, Lehigh Acres,
Florida 33936, and as more particularly described on Exhibit "A" attached hereto
and made a part hereof.
2. TRIPLE NET LEASE. This is a triple net Lease. Tenant, in addition to
the payment of "Rent" (as hereinafter defined) shall also pay and be responsible
for all taxes, insurance, repairs and maintenance relating to the Premises.
3. TERM, EFFECTIVE DATE, RENT COMMENCEMENT DATE.
a. Term. The term of this Lease ("Term") shall consist of the "Primary
Term" and may include one or more "Option Terms."
b. Primary Term. The primary term of this Lease ("Primary Term") shall
be ten (10) years from the "Rent Commencement Date" (as hereinafter defined).
The Primary Term shall commence on the Rent Commencement Date and shall end at
12:01 A.M. on the date which is ten (10) years after the Rent Commencement Date.
C. Option Terms. The Tenant shall have two (2) rights to extend the
Term of this Lease for two (2) separate five (5) year terms ("Option Term(s)").
Each Option Term must be exercised by the Tenant sending written notice of the
exercise of this option to the Landlord, not less than ninety (90) days prior to
the expiration of the preceding Term. These rights and options are wholly
conditioned and contingent upon (i) the Tenant not being in default beyond the
applicable cure periods under this Lease upon the exercise of an option, and
(ii) in addition to the condition above, the second Option Term is conditioned
and contingent upon the exercise of the preceding Option Term.
d. Effective Date. The term "Effective Date" shall mean the latest date
of execution of this Lease by the parties hereto.
Real Property Lease 05/26/99 Page 1 of 15
<PAGE> 2
e. Lease Year. The term "Lease Year" shall mean any period of twelve
(12) calendar months commencing on the Rent Commencement Date or an anniversary
thereof and ending on the last day of the twelfth (12th) month thereafter.
f. Rent Commencement Date. The term "Rent Commencement Date" shall mean
June 1, 2005.
4. RENT
a. Triple Net Expenses. From and after the Rent Commencement Date,
triple net expenses will be payable by Tenant, including but not limited to, all
ad valorem taxes, all tangible property taxes and any other taxes relating to
the premises, assessments, all insurance relating to the premises as required
herein and all repairs and maintenance to the premises.
b. Primary Term Rent. During the Primary Term of this Lease and
commencing on the Rent Commencement Date, Tenant shall pay to Landlord as Rent
("Rent") for the Premises, plus triple net expenses, through and including the
last day of the sixtieth (60th) month after the Rent Commencement Date, the net
sum of SEVEN THOUSAND NINE HUNDRED SEVENTY SEVEN DOLLARS ($7,977.00) per month
plus applicable sales tax. Tenant shall pay to Landlord as Rent for the
Premises, plus triple net expenses, from the first day of the sixty-first (61st)
month through and including the last day of the one-hundred-twentieth (120th)
month after the Rent Commencement Date, the net sum of EIGHT THOUSAND SEVEN
HUNDRED SEVENTY FIVE DOLLARS ($8,775.00) per month, plus applicable sales tax.
If the Rent Commencement Date is a day other than the first day of a month, the
Rent for the first and last month of this period shall be prorated. In addition,
Tenant shall pay all triple net expenses, including but not limited to, all ad
valorem taxes, all tangible property taxes and any other taxes relating to the
premises, assessments, all insurance relating to the premises as required herein
and all repairs and maintenance to the premises.
C. Option Term Rent. During the Option Terms of this Lease, Tenant
shall pay to Landlord, as Rent for the Premises, the sums as set forth below:
(1) During the first Option Term, Tenant shall pay to Landlord, as
Rent, the net sum of NINE THOUSAND SIX HUNDRED FIFTY TWO
DOLLARS ($9,652.00) per month, plus applicable sales tax. In
addition, Tenant shall pay all triple net expenses, including
but not limited to, all ad valorem taxes, all tangible
property taxes and any other taxes relating to the premises,
assessments, all insurance relating to the premises as
required herein and all repairs and maintenance to the
premises.
(2) During the second Option Term, Tenant shall pay to Landlord,
as Rent, the net sum of TEN THOUSAND SIX HUNDRED EIGHTEEN
DOLLARS ($10,618.00) per month, plus applicable
Real Property Lease 05/26/99 Page 2 of 15
<PAGE> 3
sales tax. In addition, Tenant shall pay all triple net
expenses, including but not limited to, all ad valorem taxes,
all tangible property taxes and any other taxes relating to
the premises, assessments, all insurance relating to the
premises as required herein and all repairs and maintenance to
the premises.
d. Payment Date. Rent is payable in advance on or before the first
(1st) day of each and every calendar month, at the address of Landlord set forth
herein, without demand.
e. Sums Expended. In the event Tenant, at any time, does not strictly
comply with all of the terms, covenants and conditions of this lease, Landlord
may, without obligation, but following written notice to Tenant, elect to
perform on behalf of Tenant. In such event, any amounts expended by Landlord
shall be immediately due and payable by Tenant to Landlord as additional Rent
hereunder, and, in the event of nonpayment thereof, Landlord shall be entitled
to exercise all of its remedies for Tenant's failure to pay Rent as set forth
herein.
5. DEPOSIT and PRE-PAID RENT. On or before June 1, 2005, Tenant shall pay
to Landlord the sum of $7,977.00 as a prepayment of the first (1st) month's Rent
due under the Primary Term, as set forth in Section 4(b)(1) above.
On or before October 31, 1999 the Tenant shall pay the sum of
$15,000.00 as a prepayment of rent securing the performance of its obligations
under this lease. Tenant agrees that there shall be no restriction on the use of
these funds by Landlord and there shall be no requirement that the pre-payment
of rent be held in a separate or interest bearing account.
This prepayment of rent shall be held as a credit for the Tenant in
either the settlement of disputes between the Landlord and Tenant or for the
payment toward the final two (2) months rent due under the terms of this Lease.
6. "AS IS" CONDITION OF THE PREMISES. Tenant agrees that it has examined
and knows the condition of the Premises and every part thereof and improvements
thereon, and that no statements or representations as to the condition or repair
of the Premises have been made by or for Landlord prior to or contemporaneously
with the execution of this lease. TENANT ACCEPTS THE PREMISES AND IMPROVEMENTS
THEREON IN AN "AS IS, WHERE IS CONDITION, SUBJECT TO All FAULT."
7. QUIET ENJOYMENT: INSPECTION RIGHTS OF LANDLORD. Landlord agrees that if
Tenant is not in default hereunder, Tenant's quiet and peaceable enjoyment of
the Premises during the Term of this lease shall not be disturbed by Landlord.
Notwithstanding the above-stated language, during the Term of this lease,
Landlord shall have the right to enter the Premises after prior, reasonable
notice to Tenant, for the purpose of inspection, or for any other lawful
purpose.
8. USE. Tenant shall use and occupy the Premises for the operation of a
state or national bank or any other lawful business, which other lawful business
shall be subject
Real Property Lease 05/26/99 Page 3 of 15
<PAGE> 4
to Landlord's consent, which shall not be unreasonably withheld or delayed.
9. LAWS AND STANDARDS. Tenant shall promptly comply with all laws,
ordinances, rules and regulations of all Federal, state, county and municipal
governments now in force or that may be enacted hereafter, with all directions,
rules and regulations of the fire marshal, health officer, building inspector or
other proper officers of the governmental agencies having jurisdiction and with
such standards established from time to time by the National Board of Fire
Underwriters of the National Fire Protective Association, or any similar bodies
which are applicable to Tenant's use and occupancy of the Premises.
10. UTILITIES AND OTHER COSTS. From and after the Rent Commencement Date
Tenant shall pay for all water, fuel, light, power, heat, telephone, sewer and
rubbish services or other utility services supplied to the Premises, as well as
any other similar costs and expenses which are customarily paid by tenants under
triple net leases. Landlord shall not be liable to Tenant if said utilities or
services are interrupted or terminated because of necessary repairs,
installations, improvements or any cause beyond Landlord's control.
11. REPAIR AND MAINTENANCE. Landlord shall have no obligation, express or
implied, for repair and maintenance other than as specifically provided for
hereinabove in paragraph 6. Tenant shall keep and maintain the Premises in a
clean and sanitary order and in good condition and repair. Tenant shall make
such structural and nonstructural repairs and replacements to the Premises as
may from time to time be necessary or required for the proper use thereof.
12. ALTERATIONS, SIGNS.
a. Tenant shall have the right to make structural and non-structural
changes or alterations to the building or improvements on the Premises. Prior to
the commencement of any construction for alterations, Tenant shall furnish to
Landlord, for its approval, which shall not be unreasonably withheld or delayed,
plans and specifications for such alterations. In the event Landlord fails to
approve or disapprove, as the case may be, such plans within fifteen (15) days
from the date of submission to Landlord, then Landlord shall be deemed to have
approved the same.
Notwithstanding the aforesaid, Tenant shall be able to make minor,
non-structural changes or alterations to the building or improvements on the
Premises without Landlord's prior approval, so long as the cost of the changes
or improvements do not exceed $5,000.00.
b. Tenant shall have the right, at Tenant's sole cost, to erect,
install, maintain, and operate on the Premises such equipment, trade and
business fixtures, and signs as Tenant may deem advisable for the operation of
Tenant's business. Such items shall not be deemed to be part of the Premises,
but shall remain the property of Tenant. All such installations shall be
effected in compliance with applicable governmental laws, ordinances and
regulations. At any time during the term of this lease, Tenant shall have
Real Property Lease 05/26/99 Page 4 of 15
<PAGE> 5
the right to remove its equipment, trade or business fixtures, signs and other
personal property from the Premises provided that (i) Tenant is not then in
default, and (ii) Tenant shall repair any damage to the improvements and
building of the Premises resulting from such removal.
13. LIABILITY INSURANCE.
a. From and after the Rent Commencement Date, and continuing throughout
the Term, Tenant shall procure, maintain and keep in force, comprehensive
general liability insurance for claims for bodily injury, death or property
damage, occurring in or about the Premises, with a limit of two million
($2,000,000.00) each occurrence for bodily injury or death to any one person, or
property damage with a general policy aggregate of $2,000,000.00. Landlord shall
be named as an additional insured. Tenant shall provide certificates of such
insurance to Landlord on or prior to the Rent Commencement Date.
b. If Tenant shall not provide evidence of insurance, Landlord may, at
its option, cause such insurance to be issued, and Tenant shall pay the premiums
for such insurance, which shall be deemed additional Rent, promptly upon demand
by Landlord.
14. FIRE/EXTENDED COVERAGE INSURANCE.
a. From and after the Rent Commencement Date, Tenant shall procure at
its expense, a standard form policy or policies of insurance providing coverage
against loss by fire, extended coverage, vandalism and malicious mischief
insurance, including wind damage and hurricane coverage if available, on the
building and other improvements constructed upon the Premises in an amount equal
to one hundred percent (100%) of the full replacement value of the building
(exclusive of foundations) and improvements. Landlord shall be named as an
additional insured. Tenant shall provide certificates of such insurance to
Landlord on or prior to the Rent Commencement Date.
b. If Tenant shall not provide evidence of insurance, Landlord may, at
its option, cause such insurance to be issued, and Tenant shall pay the
premiums for such insurance, which shall be deemed additional Rent, promptly
upon demand by Landlord.
C. If the building or other improvements shall be damaged or destroyed
prior to or during the Term by fire or other casualty, either Landlord or Tenant
shall have the right, but not the obligation, to elect to cancel or terminate
this lease. Said right shall be exercised in writing and delivered to other
party within sixty (60) days after the date of such occurrence as set forth in
this Section. Upon such termination, Landlord shall be entitled to all insurance
proceeds covering the Premises (but not covering Tenant's equipment, trade or
business fixtures or personal property, furnishings or furniture) resulting from
such damage or destruction.
d. If the building or other improvements shall be damaged or destroyed
during the Term by fire or other casualty, and neither Landlord nor Tenant
elects to
Real Property Lease 05/26/99 Page 5 of 15
<PAGE> 6
terminate the lease, as permitted above, then promptly after adjustment of the
insurance claim and the agreement of Landlord to make the proceeds available to
Tenant to restore the improvements, Tenant, using any and all available
insurance proceeds, shall repair and restore the building and improvements to
approximately the same condition as existed immediately prior to the date of
such damage or destruction. During the time of such repair and restoration, if
Tenant is unable to operate its business, there shall be an abatement of all
rental obligations hereunder.
e. The Tenant acknowledges that the insurance provided above insures
only the building and improvements and not its contents and Tenant will procure
renter's or other coverage as it deems necessary.
15. MECHANIC'S LIENS. Tenant agrees and covenants that it will not allow
any mechanic's liens, or other liens for any labor performed or materials
furnished which may cloud or impair title to the Premises, and that if any such
liens shall arise, within twenty (20) days after request from Landlord, Tenant
shall either discharge and cancel the lien of record or post a bond (in
connection with which Tenant may contest any claims of any persons who have
provided or alleged to have provided, work to the Premises) in favor of Tenant.
16. INDEMNITY. Except as set forth in Section 18 below, Landlord shall not
be liable for any damage or liability of any kind, for any injury or death of
persons, or damage to property of Tenant or any other person occurring from and
after the date of execution of this lease, from any cause whatsoever, by reason
of the use or occupancy of the Premises by Tenant or any person thereon or
holding under Tenant, unless such damage is caused by the negligent or willful
act or omission of Landlord, its employees or agents. Tenant shall indemnify and
save Landlord harmless from all liability whatsoever, on account of any such
real or claimed damage or injury and from all liens, claims and demands arising
out of the use or occupancy of the Premises and its facilities, or any repairs,
alterations or improvements which Tenant may make to the Premises, unless such
liability is caused by the negligent or wilful act or omission of Landlord, its
agents or employees.
17. WAIVER OF SUBROGATION. The parties release each other, and their
respective authorized representatives, from any claims for damage to any person
or property of either Landlord or Tenant in or on the Premises that are caused
by or result from risks insured against under any insurance policies carried by
the parties and in force at the time of any such damage. The parties further
agree neither party shall be liable to the other for any damage caused by fire
or any of the risks insured against under any insurance policy required by this
lease, and each party shall cause each insurance policy obtained by it to
provide that the insurance company waives all right of recovery by way of
subrogation against either party in connection with any covered damage.
18. PROPERTY TAXES.
a. Taxes. From and after the Rent Commencement Date, Tenant, in
Real Property Lease 05/26/99 Page 6 of 15
<PAGE> 7
accordance with Section 19(d) below, shall pay all taxes, assessments, levies,
fees, water and sewer charges, sales and use taxes and all other governmental
charges, general and special, ordinary and extraordinary, together with any
interest and penalties thereon, which are, at any time, imposed or levied upon
or assessed against (i) the Premises, (ii) this lease; or (iii) any personal
property owned or leased by Tenant. Notwithstanding the foregoing, Tenant shall
not be required to pay any franchise, rent, corporate, estate, inheritance,
succession, transfer, income, profits or revenue taxes of Landlord, unless any
such tax is imposed or levied upon or assessed against Landlord in substitution
for or in place of any other tax, assessment, charge or levy referred to above.
b. Apportionment. All property taxes and assessments that shall become
due and payable during the first and last years of the Term of this lease, shall
be apportioned pro rata between Landlord and Tenant in accordance with the
respective number of months during which the Tenant occupies the Premises,
commencing with the Rent Commencement Date, and shall be based on the taxing
authority's year. For the first year of the Term of this lease, Tenant shall pay
Landlord its pro rata share of the taxes for the current year, within ten (10)
days of the presentation by Landlord to Tenant of the tax bill for the current
year.
C. Contesting Assessment. Tenant, at its expense, shall have the right
to contest the amount or validity of any tax or assessment imposed against the
Premises, but Landlord shall not be liable for any expenses, including
attorney's fees, in connection therewith. Landlord will cooperate with Tenant in
its contest of any tax or assessment imposed against the Premises.
d. Method of Payment. Tenant shall pay all taxes and assessments due at
least thirty (30) days prior to the date due and within fifteen (15) days of
payment provide written proof of payment to Landlord.
19. BANKRUPTCY OR INSOLVENCY.
a. In the event of the filing or commencement of any proceeding by or
against Tenant under the Bankruptcy Code, the duly appointed Trustee, subject to
Court approval, shall have the right to assume this lease if the Trustee shall
(i) cure any default or provide adequate assurance that the Trustee will
promptly cure such default; (ii) compensate or provide adequate assurance that
the Trustee will promptly compensate the Landlord for any actual loss resulting
from such default; and (iii) provide adequate assurance of future performance of
the covenants, agreements and obligations of Tenant under the terms of this
lease.
b. The failure by the Trustee to assume or reject this lease within
sixty (60) days after the order for relief (Chapter 7), or within sixty (60)
days of confirmation of a plan (Chapter 11), shall, at Landlord's option, be
deemed a rejection.
Real Property Lease 05/26/99 Page 7 of 15
<PAGE> 8
20. DEFAULT.
a. The default on the part of Tenant shall exist under this
lease when:
(1) Tenant fails to pay any monetary sum due hereunder, including
without limitation, Rent or any other charges as and when due,
and such failure continues for ten (10) days after written
notice thereof by Landlord to Tenant;
(2) Tenant fails to observe or perform any other provision,
covenant or condition of this lease to be observed or
performed by Tenant, and such failure continues for thirty
(30) days after written notice thereof by Landlord to Tenant;
provided if such default cannot reasonably be cured within
thirty (30) days, then Tenant shall have additional time to
cure such default as is reasonable and necessary; provided
that Tenant diligently, continuously and in good faith
prosecutes the cure of such default;
(3) A general assignment by Tenant for the benefit of creditors
occurs or the filing by or against Tenant of any proceeding
under any insolvency or bankruptcy law occurs, or the
appointment of a trustee or receiver to take possession of all
or substantially all of Tenant's assets located upon the
Premises or of Tenant's interest in this lease, unless such
seizure is discharged within sixty (60) days thereof for the
purpose of effecting a moratorium upon or composition of its
debts occurs within sixty (60) days.
b. In the event of a default, Landlord may treat same as a
breach of this lease, and, in addition to any or all other rights or remedies of
Landlord, and by the law provided and without being considered an election of
remedies, Landlord shall have the option without further notice or demand: (i)
to declare the Term hereof ended and to reenter the Premises and take possession
thereof and remove all persons therefrom, and Tenant shall have no further claim
thereon or hereunder; or (ii) without declaring this lease terminated, to
reenter the Premises and occupy the whole or any part thereof for and on account
of Tenant and to collect any unpaid rentals and any other charges which have
become payable or which may thereafter become payable; or (iii) even though
Landlord may have reentered the Premises, to thereafter elect to terminate this
lease and all of the rights of Tenant in or to the Premises.
c. Landlord shall not be deemed to have terminated this Lease or
the liability of Tenant to pay any rental or other charges thereafter accruing,
or to have terminated Tenant's liability for damages under any of the provisions
hereof, by any such reentry or by any action in unlawful detainee, or otherwise,
to obtain possession of the Premises, unless Landlord shall have notified Tenant
in writing that Landlord has so elected to terminate this lease. The service by
Landlord of any notice pursuant to the unlawful detainer statutes of the state
where the Premises are situated and the surrender of possession pursuant to such
notice shall not (unless Landlord elects to the contrary at the time of or at
any time subsequent to the serving of such notices and such election is
Real Property Lease 5/26/99 Page 8 of 15
<PAGE> 9
evidenced by a written notice to Tenant) be deemed to be a termination of this
lease. In the event of any entry or taking possession of the Premises as
aforesaid, Landlord shall have the right, but not the obligation, to remove
therefrom all or any part of the personal property belonging to Tenant and
located therein and may place the same in storage at a public warehouse at the
expense and risk of Tenant.
d. Should Landlord elect to terminate this lease, Landlord may recover
from Tenant as damages: (i) the worth at the time of award of judgment of the
unpaid rent which had been earned at the time of termination; plus (ii) the
worth at the time of award of judgment of the amount by which the unpaid rent
for the balance of the term of the lease exceeds the fair rental value of the
Premises; plus (iii) any reasonable costs or expenses incurred by Landlord in,
(a) retaking possession of the Premises, including reasonable attorney's fees
therefor, (b) leasing commissions, and (c) any other reasonable costs necessary
or appropriate to relet the Premises; plus (d) such other reasonable amounts in
addition to or in lieu of the foregoing as may be permitted from time to time by
the laws of the state where the Premises are situated.
e. Efforts by the Landlord to mitigate the damages caused by the
Tenant's breach of the lease do not waive the Landlord's right to recover
damages.
f. Even though Tenant has breached this lease and abandoned the
Premises, this lease shall remain in effect for so long as Landlord does not
terminate the lease, and the Landlord may enforce all its rights and remedies
under this lease, including the right to recover the Rent as it becomes due
under this lease. The following do not constitute a termination of Tenant's
right to possession: (i) acts of maintenance or preservation; (ii) efforts to
relet the Premises; or (iii) the appointment of a receiver on initiation by
Landlord to protect its interest under this lease. Should Landlord relet the
Premises on account of the Tenant, the Landlord shall not be obligated to
terminate this lease, and in addition to such other relief as may be allowed by
law, Landlord may recover from Tenant the past due Rent and unpaid Rent for the
balance of the Term of the lease, less the amount of rent collected under the
reletting of the Premises, plus (iii) any reasonable costs or expenses incurred
by Landlord in, (a) retaking possession of the Premises, including reasonable
attorneys fees therefor, (b) leasing commissions, and (c) any other reasonable
costs necessary or appropriate to relet the Premises. Landlord shall have no
obligation or duty to Tenant to relet the Premises.
g. The rights of Landlord are not exclusive and shall be cumulative to
all other rights or remedies now or hereafter given to Landlord by law or by the
terms; of this Lease. Nothing herein affects the right of Landlord to equitable
relief where such relief is appropriate. The bringing of an action as described
herein does not affect Landlord's right to bring a separate action for relief on
termination, or in equity but no relief shall be requested and no damages shall
be recovered in the subsequent action for any detriment for which a claim for
damages was made and determined on the merits in the previous action.
Real Property Lease 05/26/99 Page 9 of 15
<PAGE> 10
21. CONDEMNATION.
a. If thirty percent (30%) or more of the rentable area of the Premises
including any dedicated parking areas or drive-thru banking lanes shall be
acquired or condemned by power of condemnation or eminent domain, or be sold in
lieu thereof, then Tenant, by written notice given within sixty (60) days after
notice of such taking or acquisition, may terminate this Lease effective on the
date that title vests in the condemning authority. In the event Tenant receives
any portion of the condemnation proceeds, Tenant shall first be entitled to
retain the amount of the proceeds equal to Tenant's compensation for reasonable
attorney's fees and relocation expenses associated with the condemnation event.
To the extent, but not exceeding the remaining condemnation proceeds received by
Tenant, Tenant shall pay to Landlord the amount representing the present value
of the remaining rent due under the Lease. Tenant, however, shall not reimburse
Landlord for the remaining payments under the Lease to the extent that Landlord
receives compensation from the condemning authority for the loss of its expected
income under the lease.
b. If all or any portion of the Premises shall be acquired by authority
of any governmental authority pursuant to the exercise of its power of eminent
domain or by deed in lieu thereof and the Lease is not terminated then,
commencing on the date of such acquisition, the Rent provided shall be reduced
in the same proportion that the fair rental value of the Premises immediately
after such acquisition and any restoration agreed to be performed by the parties
hereto bears to the fair rental value of the Premises immediately prior to such
acquisition. In addition, if Tenant shall restore the remaining portion of the
Premises to as close to its previously existing condition as possible, then
Tenant shall first be entitled to recover its expenses incurred in such
restoration out of any such award and the balance shall be allocated to
Landlord, as aforesaid. If the parties are unable to agree on such fair rental
values within ninety (90) days after the date of such acquisition, the same
shall be determined by appraisal. Until the new Rent shall have been determined,
Tenant shall continue to pay Rent at the rate in effect immediately prior to
such acquisition, and upon such determination, an appropriate adjustment shall
be made.
c. If the parties do not agree upon any fair rental value, then
Landlord shall within ten (10) days provide Tenant with the name of three (3)
appraisers. Tenant shall within ten (10) days select one of the named
appraisers, who shall determine the fair rental value. All appraisers appointed
shall be licensed by the State of Florida, shall be members of the Appraisal
Institute and shall be qualified by experience and ability to determine the
foregoing fair rental value, and the fees and other costs shall be shared
equally by both Landlord and Tenant.
22. ASSIGNMENT.
a. Tenant shall have the right to assign this Lease, or its rights
hereunder, or to sublet all or any part of the Premises to an entity owned or
controlled by Tenant without the prior written consent of the Landlord. In all
other cases, Tenant must obtain Landlord's prior written consent, which consent
shall not be unreasonably withheld or
Real Property Lease 05/26/99 Page 10 of 15
<PAGE> 11
delayed. In the event of an assignment or sublease, Tenant shall remain
primarily liable for any and all obligations under this Lease. No assignment or
sublease shall alter, affect or modify any of the rights of Landlord under this
Lease. In the event of such assignment or sublet, and provided that the new use
is related to banking or any other financial service, Landlord agrees that such
use is permissible under the terms of this Lease.
b. Tenant may mortgage, pledge or otherwise encumber its interest in
this lease or in the Premises to any financial institution advancing
purchase-money financing for Tenant's operations on the Premises; provided,
however, that in the event of a foreclosure of the interest of such financial
institution, the Premises may be used only in the manner permitted by this
lease.
23. NOTICES. Any and all notices or demands by or from Landlord to Tenant,
or Tenant to Landlord shall be in writing. They shall be served either
personally, via messenger or overnight carrier, or by certified mail. If served
personally, service shall be conclusively deemed made at the time of service. If
served by certified mail, service shall be conclusively deemed made twenty-four
(24) hours after deposit thereof in the United States mail, postage prepaid.
Any notice or demand to Landlord may be given unto it at:
John E. Morgan
302 Lee Boulevard, Suite 102
Lehigh Acres, Florida 33936
Any notice or demand to Tenant may be given unto it at:
Lloyd J. Weber
1300 Homestead Road North
Lehigh Acres, Florida 33936
With copy to:
Neil E. Grayson, Esquire
Nelson Mullins Riley & Scarborough L.L.P.
999 Peachtree Street, N.E.
First Union Plaza, Suite 1400
Atlanta, Georgia 30309
Said addresses may be changed from time to time by notice given in accordance
with the provisions of this Section.
24. TERMINATION. On the last day of the Term of this Lease or sooner
termination as provided herein, Tenant shall peaceably and quietly leave the
Premises in good working order, condition and repair, damage by events or acts
beyond the reasonable control of Tenant and permitted alterations excepted. The
Premises shall be returned in a
Real Property Lease 05/26/99 Page 11 of 15
<PAGE> 12
broom clean condition.
25. HOLDING OVER. Tenant shall not continue to conduct its business at the
Premises after the last day of the Term herein created. Any holding over shall
create no more than a month-to-month tenancy, subject to all of the terms and
conditions of this Lease provided herein.
26. HAZARDOUS SUBSTANCES.
a. Tenant shall not cause or permit to occur: (i) any violation of any
federal, state, or local law, ordinance, or regulation now or hereafter enacted,
related to environmental conditions on, under, or about the Premises; or (ii)
the use, generation, release, manufacture, refining, production, processing,
storage, or disposal of any hazardous substances on, under, or about the
Premises, other than used in Tenant's ordinary course of business.
b. Tenant shall comply with all laws regulating the use, generation,
storage, transportation, or disposal of hazardous substances.
c. If Tenant fails to fulfill any duty imposed under this provision,
then Landlord may take whatever actions are necessary to correct the situation,
and Tenant shall reimburse Landlord for all costs associated therewith
(including reasonable attorney's fees).
d. Tenant shall indemnify, defend, and hold harmless the Landlord from
all fines, suits, procedures, claims and actions of every kind, and all costs
associated therewith arising out of or in any way connected with any deposit,
spill, discharge, or other release of hazardous substances that occurs during
the Term of this Lease.
e. Landlord shall indemnify, defend and hold harmless the Tenant from
all fines, suits, procedures, claims and actions of every kind, and all costs
associated therewith arising out of or in any way connected with any deposit,
spill, discharge or other release of hazardous substances that occur before or
after the Term of this Lease.
27. LEASING COMMISSION. Landlord and Tenant each represent and warrant to
the other that there are no claims for broker's commissions or finder's fees in
connection with the execution and delivery of this Lease, and Landlord and
Tenant each agree to indemnify the other against and hold such party harmless
from all liabilities arising from a breach of the representation and warranty
made by such party herein, including, without limitation, reasonable attorney's
fees and related court costs.
28. MISCELLANEOUS PROVISIONS.
a. Nothing contained in this Lease shall be deemed or construed by the
parties hereto, or any third party, to create the relationship of principal and
agent, or of partnership or of joint venture, or of trustee and beneficiary, or
of any other association between the parties hereto, and neither the method of
payment of any monies hereunder,
Real Property Lease 05/26/99 Page 12 of 15
<PAGE> 13
nor any other provisions in this Lease, nor any acts of the parties hereto,
shall be deemed to create any relationship set forth hereinabove.
b. No waiver of default by the party or parties hereunder shall be
implied from any omission by a party or parties to take action on account of
such default if such default persists or is repeated, and no express waiver
shall affect any default other than the default specified in the express waiver,
and that only for the time and to the extent therein stated. One or more waivers
of any covenant, term or condition of this Lease by a party or parties shall not
be deemed to waive or render unnecessary the consent to or approval of said
party or parties of any subsequent or similar acts by a party or parties.
c. This Lease may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but such
counterparts together shall constitute but one Lease.
d. This lease shall be construed according to the laws of the State of
Florida.
e. Time is of the essence of this lease.
f. Should any portion of this lease be declared invalid and
unenforceable, then such portion shall be deemed to be severable from this lease
and shall not affect the remainder thereof.
g. It is expressly understood that this lease contains all terms,
covenants, conditions and agreements between the parties hereto relating to the
subject matter of this lease, and that no prior agreements or understandings,
either oral or written, pertaining to the same, shall be valid or of any force
or effect, and that the terms, covenants, conditions and provisions of this
lease cannot be altered, changed, modified or added to except in writing by all
the parties hereto.
h. Should any party or parties hereto institute any action or
proceeding in Court or by arbitration to enforce any provision or provisions
hereof, or for damages by reason of any default under this lease, or for a
declaration of such party's or parties' rights or obligations hereunder, or for
any other judicial remedies, the prevailing party or parties shall be entitled
to receive from the losing party or parties such amount as the Court may find to
be reasonable and actual attorney's fees and costs incurred for the services
rendered the party or parties prevailing in any such action or proceeding or on
appeal therefrom.
i. This lease shall be binding upon and inure to the benefit of the
personal and legal representatives, successors and assigns of the parties.
j. The time for the completion of any alterations, repairs or
improvements shall be deemed extended by time lost due to delays resulting from
acts of God, strikes, unavailability of materials, civil riots, floods, other
unusually inclement weather (but not including seasonally inclement weather),
national or labor restrictions by governmental
Real Property Lease 05/26/99 Page 13 of 15
<PAGE> 14
authority, and any other cause not within the control of such party.
k. Landlord hereby permits Tenant to retain, during the Term of this
lease, all warranties and guarantees pertaining to improvements and equipment
erected or installed upon the Premises. In the event of termination of this
lease when any warranties or guarantees are still applicable, Tenant hereby
assigns to Landlord, effective as of the date of termination, all such
warranties and guarantees pertaining to the improvements (including, without
limitation, all heating and air conditioning equipment installed upon the
Premises, but not including Tenant's kitchen equipment, furniture, personal
property or inventory).
l. Tenant accepts this lease subject and subordinate to any mortgage,
deed of trust or other lien presently now existing upon the Premises and to any
renewals and extensions thereof. Landlord is hereby irrevocably vested with full
power and authority to subordinate this lease to any mortgage, deed of trust or
other lien hereafter placed upon the Premises, and Tenant agrees upon demand to
execute such further instruments subordinating the lease upon the express
condition that this lease shall be recognized by the mortgagee by the execution
of a non-disturbance agreement and that the rights of Tenant shall remain in
full force and effect during the term of this Lease so long as Tenant shall
continue to perform all of the covenants and conditions of this Lease.
The parties hereto have executed this Lease as of the dates set forth below.
Signatures, Date and Witness for John E. Morgan and Leona P. Morgan
________________________________________________________________________________
Date May 26, 1999 Landlord
-----------------------------
/s/ Amy A. Wellington /s/ John E. Morgan
- ----------------------------------- --------------------------------
Witness John E. Morgan
Amy A. Wellington
- -----------------------------------
Typed or Printed Name of Witness
(Two Required)
/s/ Susan E. Vertefeuille /s/ Leona P. Morgan
- ----------------------------------- --------------------------------
Witness Leona P. Morgan
Susan E. Vertefeuille
- -----------------------------------
Typed or Printed Name of Witness
(Two Required)
Real Property Lease 05/26/99 Page 14 of 15
<PAGE> 15
Signature, Date and Witness for Elizabeth E. Culbreth
- ------------------------------------------------------------------------------
Dated 6/7/99 Landlord
------------
/s/ Laura L. Blocklin /s/ Elizabeth E. Culbreth
- ------------------------------------------------ --------------------------
Witness Elizabeth E. Culbreth
Laura L. Blocklin
- ------------------------------------------------
Typed or Printed Name of Witness (Two Required)
/s/ Michael F. Blocklin
- ------------------------------------------------
Witness
Michael F. Blocklin
- ------------------------------------------------
Typed or Printed Name of Witness (Two Required)
Signature, Date and Witness of Hazel M. Frantz
- ------------------------------------------------------------------------------
Dated 6/7/99 Landlord
------------
/s/ Laura L. Blocklin /s/ Hazel H. Frantz
- ------------------------------------------------ --------------------------
Witness Hazel H. Frantz
Laura L. Blocklin
- ------------------------------------------------
Typed or Printed Name of Witness (Two Required)
/s/ Michael F. Blocklin
- ------------------------------------------------
Witness
Michael F. Blocklin
- ------------------------------------------------
Typed or Printed Name of Witness (Two Required)
Signature, Date and Witness for First National Bank of Lehigh Acres
- ------------------------------------------------------------------------------
Tenant
First National Bank of
Dated 6/15/99 Lehigh Acres
------------
/s/ Shirley A. Sheets /s/ James D. Hull
- ------------------------------------------------ --------------------------
Witness
Shirley A. Sheets James D. Hull
- ------------------------------------------------ ---------------------------
Typed or Printed Name of Witness (Two Required) Typed or Printed Name of
Officer
Its: Chairperson
----------------------
/s/ Rebecca A. Wilson
- ------------------------------------------------
Witness
Rebecca A. Wilson
- ------------------------------------------------
Typed or Printed Name of Witness (Two Required)
Real Property Lease 05/26/99 Page 15 of 15
<PAGE> 1
EXHIBIT 10.5
ASSIGNMENT AND ASSUMPTION OF LEASE
KNOW ALL MEN BY THESE PRESENTS, that SouthTrust Bank, N.A. f/k/a First
Federal Savings & Loan Association of DeSoto County (herein "SouthTrust") for
and in consideration of the sum of Ten Dollars ($10.00) and other valuable
consideration received from Lehigh Acres First National Bank (herein "LAFNB"),
the receipt of which is hereby acknowledged, hereby sells, assigns and transfers
to LAFNB that certain lease attached hereto. The effective date of this
agreement is July 1, 1999. Notwithstanding the terms of the lease, the landlord,
GSB Partnership (herein "GSB"), 302 Lee Boulevard, Suite 102, Lehigh Acres,
Florida 33936, hereby consents to the assignment and assumption of the lease as
described herein but without releasing SouthTrust from any of the obligations of
the lease with the exception that GSB acknowledges that SouthTrust shall not be
obligated in any manner whatsoever under the lease for any extension or renewal
period thereof after the termination date of the lease which is May 31, 2005.
LAFNB agrees that it shall pay and perform and shall be liable for all
obligations, duties, responsibilities and liabilities under the lease which
arise from and after the effective date of this assignment and assumption.
Should LAFNB
<PAGE> 2
fail to perform any obligation, duty, responsibility or liability under the
lease, GSB agrees that prior to declaring a default in the lease it will give
SouthTrust written notice of the acts of default and thirty (30) days in which
to cure the default.
SouthTrust represents that it is the owner and holder of the tenant's
interest under the lease, that it has not assigned, transferred or otherwise
conveyed all or any portion of such interest, and that there are no pending
claims or litigation against it relating to its use and occupancy of the
property.
GSB represents that it is the owner and holder of the landlord's interest
under the lease, that the right to receive rents and other rights of the
landlord under the lease have not been assigned, transferred or otherwise
conveyed nor has any portion of such interest.
LAFNB shall hold SouthTrust harmless from and indemnify SouthTrust from any
and all claims, losses, damages, costs, or expenses, including reasonable
attorney's fees that SouthTrust may incur from and after the effective date of
this assignment
2
<PAGE> 3
and assumption agreement resulting from the failure of LAFNB to perform any of
its obligations under the lease.
SOUTHTRUST BANK, N.A.
By: /s/ Dave Robbins
---------------------
Date Signed: 6/16/99
------------
LEHIGH ACRES FIRST
NATIONAL BANK
By: /s/ James D. Hull
----------------------
Date Signed: 6/16/99
-------------
GSB PARTNERSHIP
By: /s/ Jack E. Morgan
-----------------------
Date Signed: 6/11/99
--------------
3
<PAGE> 1
EXHIBIT 10.6
L E A S E
W I T N E S S E T H :
WHEREAS, LEHIGH CORPORATION desires to lease a certain parcel
of ground and recently constructed buildings thereon located on the north side
of Homestead Road as more fully described on attached Schedule "A", (said parcel
of ground and the building being herein referred to collectively as the
"Property") and
WHEREAS, FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF DE SOTO
COUNTY desires to let the Property and
WHEREAS, this agreement was contemplated by them in an
agreement to let and construct said Property and that agreement having required
the execution of this lease in order to fully perform under its terms,
NOW, THEREFORE, LEHIGH CORPORATION ("LEHIGH") and FIRST
FEDERAL SAVINGS AND LOAN ASSOCIATION OF DE SOTO COUNTY, ("FEDERAL") in
consideration of the covenants, conditions, agreements and stipulations herein
contained, agree as follows:
1) LEHIGH agrees to lease the Property to FEDERAL for an initial
term not to exceed eight (8) months for the sum of $100.00. The said "not to
exceed eight months" will be the time allowed for construction of the building
by FEDERAL in accordance with the terms as contemplated by previous agreement
between the parties. At the end of the said eight month period or the date of
the closing of the sale of the building on said Property to LEHIGH as was
contemplated by the previous agreement between the parties, then the twenty-five
(25) year term of this Lease shall begin and the payments as set forth in
Paragraph 2 hereunder shall be in effect. Said lease term shall end on the same
day that it commences twenty-five (25) years from the occurrence of either the
end of the eight month period as set forth above, or the date of closing on the
sale of the building on said Property to LEHIGH.
2) FEDERAL shall be obligated and shall pay the following rentals
in annual installments, payable in advance, the first being due at and on the
same time and day that the above-described building is sold to LEHIGH and
continuing thereafter to be due on or before said day in the remaining years of
the term. The following payments shall be due for the referenced years for the
five (5) years immediately following the close of the sale of the above-
described structure there shall be due, according to the terms herein, $3,333.33
monthly rental, thence commencing on the first day of the sixth year and for the
second five (5) years under the term of this agreement, there shall be due as
monthly rental, the sum of $3,666.67, thence commencing on the 11th year and
continuing through the third five-year period, there shall be due according to
the terms of the above agreement, $4,083.33, monthly, thence, commencing on the
16th year and for the fourth five-year period, there shall be due the sum of
$4,604.17, monthly, thence, commencing on the 21st year and through the
completion of the above-described lease agreement, there shall be due the sum of
$5,255.42, monthly, provided, however, that if the cost of said building exceeds
$200,000.00 then the rental for each of the five-year terms shall be increased
according to the following formula, the base rental as described above, shall be
increased by two (2%) percent of the difference of the actual cost and
$200,000.00 in each of the five-year term periods. Failure to pay the above-
described rental in a timely fashion or within thirty (30) days of the date upon
which it falls due shall accelerate the entire balance due at the option of
LEHIGH. Any amount of rent which may be paid after due shall accrue interest at
the rate of twelve (12%) percent, and shall be tendered along with any payment
due herein.
<PAGE> 2
3) Rental payments shall be tendered in advance at the office of
LEHIGH CORPORATION, 201 East Joel Boulevard, Lehigh Florida 33936. In addition
to any rental payment due herein FEDERAL shall pay the sales tax on said
payments and rent shall be paid to LEHIGH without notice or demand and without
abatement, deduction or set-off.
4) COSTS AND UTILITIES. All costs, taxes, (including ad valorem
taxes) expenses, utilities and obligations of every kind relating to the leased
property which may arise or become due during the term of this Lease shall be
paid by FEDERAL and LEHIGH shall be indemnified by FEDERAL against such costs,
taxes, expenses, utilities and obligations.
5) PURPOSE OF LEASE. The premises demised under this Lease are to
be used by FEDERAL in the conduct of the business of a Savings and Loan, and all
tasks related thereto. FEDERAL shall not use the premises for any illegal,
immoral or ultrahazardous activity, whether within or outside the scope of the
business of FEDERAL.
6) INSURANCE. FEDERAL shall, at its own expense, at all times
during the term of this Lease, maintain in force a policy or policies of
insurance, written by one or more responsible insurance carriers approved by
LEHIGH, which will insure LEHIGH against liability for injury to or death of
persons or loss or damage to property occurring in or about the demised
premises. The liability under such insurance shall not be less than $300,000.00
for any one person killed or injured, $500,000.00 for any one accident, and
$100,000.00 for property damage. FEDERAL shall be responsible for carrying
insurance on contents and personal property located on the above-described
premises and LEHIGH shall not be liable in any way whatsoever for said insurance
or any damages or losses to said inventory, fixtures or personal property of
FEDERAL.
7) FEDERAL shall keep the portion of the building service
equipment that constitutes machinery used in the operation of elevators, air
cooling apparatus, heating units, and air-conditioning apparatus, if requested
by LEHIGH, which are a part of the demised premises, insured against loss or
damage from accident without coinsurance clauses so long as available.
8) ACCIDENTAL DAMAGE OR INJURY. LEHIGH shall not be liable for
any damage to property or any injury to persons, sustained by FEDERAL or others,
caused by conditions or activities on the demised premises. FEDERAL shall
indemnify LEHIGH against all claims arising therefrom and shall carry liability
insurance insuring LEHIGH and FEDERAL Lessee against any claims, in amounts to
be approved by LEHIGH.
9) FEDERAL shall not cause or allow any undue waste on the
premises and shall comply with all applicable laws and ordinances respecting the
use and occupancy of the premises relating to matters not covered elsewhere in
this Lease.
10) ALTERATIONS, ADDITION OR IMPROVEMENTS. FEDERAL shall be
allowed to make alterations, additions or improvements on or to the premises
which alterations, additions or improvements are consistent with the purpose for
which this Lease is granted and which are first approved in writing by LEHIGH;
and all alterations, additions and improvements that shall be made shall be at
the sole expense of FEDERAL and shall become the property of LEHIGH and shall
remain on and be surrendered with the premises as a part thereof at the
termination of this Lease without disturbance, molestation or injury. Nothing
contained in this provision shall prevent FEDERAL from removing all office
machines, equipment and trade fixtures customarily used in the business of
FEDERAL.
-2-
<PAGE> 3
11) LIENS. FEDERAL shall keep the leased premises free and clear
of all liens arising out of any work performed, materials furnished, or
obligations incurred by FEDERAL.
12) SALES, ASSIGNMENTS AND SUBLEASES. FEDERAL shall not assign
this Lease, or sell or sublet the premises leased herein, or any part thereof or
interest therein, without the prior written consent of LEHIGH. This Lease shall
not be assigned by operation of law, in particular, but not limited to, its
assumption by any trustee in bankruptcy. If consent is once given by LEHIGH to
the assignment of the Lease or sublease of the premises or any interest therein,
LEHIGH shall not be barred from subsequently refusing to consent to any further
assignment or sublease. Any attempt to sell, assign or sublet without the
consent of LEHIGH shall be deemed as a default by FEDERAL, entitling LEHIGH to
either re-enter pursuant to Section 15 or accelerate the entire lease balance,
pursuant to Paragraph 5 above, if LEHIGH so elects.
13) QUIET ENJOYMENT. If FEDERAL performs the terms of this Lease,
LEHIGH will warrant and defend FEDERAL in the enjoyment and peaceful possession
of the premises during the term hereof without any interruption by LEHIGH or any
person rightfully claiming under it, provided, however, LEHIGH assumes no
responsibility for any breach of quiet enjoyment which may have been caused by
or during the period of construction of the described premises.
14) DEFAULT OF SUBLESSEE. If any rents reserved, or any part
thereof, shall be and remain unpaid when these rents shall become due, or if
FEDERAL violates or defaults in any of the provisions of this Lease, then LEHIGH
may cancel this Lease and re-enter the premises. Notwithstanding any re-entry,
the liability of FEDERAL for the rent shall not be extinguished for the balance
of the term hereof, and FEDERAL shall make good to LEHIGH any deficiency arising
from a re-entry and reletting of the premises at a reduced rental. Said
deficiency shall be due and payable on demand as soon as said amount can be
ascertained by LEHIGH. This is in addition to any right LEHIGH may have under
paragraph 2 for interest on past due rent.
15) INSOLVENCY OR BANKRUPTCY. If FEDERAL becomes insolvent,
voluntarily or involuntarily bankrupt, or if a receiver, assignee or other
liquidating officer is appointed for the business of FEDERAL, then LEHIGH may
terminate this Lease at the option of LEHIGH.
16) WAIVER OF BREACH. The waiving of any of the provisions of this
Lease by any party shall be limited to the particular instance involved and
shall not be deemed to waive any other rights of the same or any other terms of
this Lease.
17) REMOVAL OF PERSONAL PROPERTY. FEDERAL shall have the right to
remove all personal property, trade fixtures and office equipment, whether
attached to the premises or not, provided that these items can be removed
without serious damage to the building or premises. All holes or damages to the
building or premises caused by removal of any items shall be restored or
repaired by FEDERAL promptly.
18) HOLDING OVER. Any holding over at the expiration of this
Lease with the consent of LEHIGH shall be on an annual basis which tenancy may
thereafter be terminated as provided by the laws of the State of Florida. During
any holdover tenancy, FEDERAL shall pay the same rate of rental on an annual
prepaid basis, plus an adjustment upward equal to the last annual rental
payment, plus an appropriate adjustment according to the Consumer Price Index
as published by the Department of Health, Education and Welfare for the year
immediately preceding, further, FEDERAL shall be bound by all terms and
conditions of this Agreement.
-3-
<PAGE> 4
19) INTEREST OF SUCCESSORS. The covenants and agreements of this
Lease shall be binding on the successors and assigns of LEHIGH and on the
successors and assigns of FEDERAL but only to the extent herein specified.
20) NOTICES. Except where otherwise required by statute, all
notices given pursuant to the provisions hereof may be sent by certified mail,
postage prepaid, to the last known mailing address of the party for whom the
notice is intended.
21) COSTS OF LITIGATION. If any legal action is instituted to
enforce this Lease, or any part thereof, the prevailing party shall be entitled
to recover reasonable attorney's fees and court costs from the other party.
22) TOTAL CONDEMNATION. If the whole of the leased premises shall
be acquired or condemned by eminent domain for any public or quasi-public use or
purpose, then the term of this lease shall cease and terminate as of the date of
title vesting in such proceeding and all rentals shall be paid up to that date
and FEDERAL shall have no claim against LEHIGH nor the condemning authority for
the value of any unexpired term of this lease.
23) PARTIAL CONDEMNATION. If any part of the leased premises shall
be acquired or condemned as aforesaid, and in the event that such partial taking
or condemnation shall render the leased premises unsuitable for the business of
FEDERAL, then the term of this lease shall cease and terminate as of the date of
title vesting in such proceeding. FEDERAL shall have no claim against LEHIGH nor
the condemning authority for the value of any unexpired term of this lease and
rent shall be adjusted to the date of such termination. In the event of a
partial taking or condemnation which is not extensive enough to render the
premises unsuitable for the business of FEDERAL, then LEHIGH shall promptly
restore the leased premises to a condition comparable to its condition at the
time of such condemnation less the portion lost in the taking, and this lease
shall continue in full force and effect without any reduction or abatement of
rent.
24) OWNER'S DAMAGES. In the event of any condemnation or taking as
aforesaid, whether whole or partial, the Tenant shall not be entitled to any
part of the award paid for such condemnation and LEHIGH is to receive the full
amount of such award, FEDERAL hereby expressly waiving any right or claim to any
part thereof.
25) TENANT'S DAMAGES. Although all damages in the event of any
condemnation are to belong to LEHIGH whether such damages are awarded as
compensation for diminution in value of the leasehold or to the fee of the
leased premises, FEDERAL shall have the right to claim and recover from the
condemning authority, but not from LEHIGH, such compensation as may be
separately awarded or recoverable by FEDERAL in FEDERAL's own right on account
of any and all damage to FEDERAL's business by reason of the condemnation and
for or on account of any cost or loss to which FEDERAL might be put in removing
FEDERAL's furniture, fixtures, leasehold improvements and equipment.
26) CONDEMNATION OF LESS THAN A FEE. In the event of a
condemnation of a leasehold interest in all or a portion of the leased premises
without the condemnation of the fee simple title also, this lease shall not
terminate and such condemnation shall not excuse FEDERAL from full performance
of all its covenants hereunder, but FEDERAL in such event shall be entitled to
present or pursue against the condemning authority its claim for and to receive
all compensation or damages sustained by it by reason of such condemnation, and
LEHIGH's right to recover compensation or damages shall be limited to
compensation for and damages, if any, to its reversionary interest; it being
understood, however,
-4-
<PAGE> 5
that during such time as FEDERAL shall be out of possession of the leased
premises by reason of such condemnation, the lease shall not be subject to
forfeiture for failure to observe and perform those covenants calling for the
payment of money. In the event the condemning authority shall fail to keep the
premises in the state of repair required hereunder, or to perform any other
covenant not calling for the payment of money, FEDERAL shall have ninety (90)
days after the restoration of possession to it within which to carry out its
obligations under such covenant or covenants. During such time as FEDERAL shall
be out of possession of the leased premises by reason of such leasehold
condemnation, FEDERAL shall pay to LEHIGH the annual rent due under the terms of
this agreement. At any time after such condemnor proceedings are commenced,
LEHIGH shall have the right, at its option, to require FEDERAL to assign to
LEHIGH all compensation and damages payable by the condemnation to FEDERAL, to
be held without liability for interest thereon as security for the full
performance of FEDERAL's covenants hereunder, such compensation and damages
received pursuant to said assignment to be applied first to the payment of rents
and all other sums from time to time payable by FEDERAL pursuant to the terms of
this lease as such sums fall due, and the remainder, if any, to be payable to
FEDERAL at the end of the term hereof or on restoration of possession to
FEDERAL, whichever shall first occur, it being understood and agreed that such
assignment shall not relieve FEDERAL of any of its obligations under this lease
with respect to such rents, and other sums except as the same shall be actually
received by LEHIGH.
27) NO PARTNERSHIP. LEHIGH does not, in any way or for any
purpose, become a partner of FEDERAL in the conduct of its business, or
otherwise, or joint venturer or a member of a joint enterprise with FEDERAL.
28) FORCE MAJEURE. In the event that either party hereto shall be
delayed or hindered in or prevented from the performance of any act required
hereunder by reason of strikes, lock-outs, labor troubles, inability to procure
materials, failure of power, restrictive governmental laws or regulations,
riots, insurrection, war or other reason of a like nature not the fault of the
party delayed in performing work or doing acts required under this agreement,
then this lease shall be extended for a period equivalent to the period of such
delay. The provisions of this Section shall not operate to excuse FEDERAL from
prompt payment of rent, additional rent or any other payments required by the
terms of this lease.
29) ENTIRE AGREEMENT. It is agreed by the parties hereto that
LEHIGH will be constructing a Winn-Dixie Shopping Center adjacent to and
surrounding the demised property. LEHIGH shall provide to FEDERAL upon the
completion of construction of said Winn-Dixie Shopping Center adjacent to and
surrounding the demised premises a cross parking agreement and an easement for
the use of all access roads to the shopping center including, but not limited
to, the access road to the building on the west side of the demised premises.
Witnesses:
/s/ Clara J. Bill LEHIGH CORPORATION
- ------------------------------
/s/ Joan J. Adler By /s/ John E. Mary
- ------------------------------ ----------------------------
Vice President
/s/ Patricia G. Hudson
- ------------------------------ FIRST FEDERAL SAVINGS AND LOAN
ASSOCIATION OF DE SOTO COUNTY
/s/ Carolyn Thomas By /s/ Rita J. McElroy
- ------------------------------ ------------------------------
Senior Vice President
-5-
<PAGE> 6
LEGAL DESCRIPTION
FIRST FEDERAL SAVINGS & LOAN ASSOCIATION OF DESOTO COUNTY PARCEL 1, A
TRACT OF LAND IN BLOCK 4, OF THE UNRECORDED PLAT OF SUNSHINE SHOPPING
PLAZA, DATED 11 APRIL 1966.
COMMENCING AT THE SOUTHEAST CORNER OF SECTION 31, TOWNSHIP 44 SOUTH, RANGE 27
EAST, LEE COUNTY, FLORIDA; THENCE NORTH 0 DEGREES- 52'-08" EAST ALONG THE EAST
SECTION LINE A DISTANCE OF 1,618.87 FEET TO THE NORTHERLY RIGHT-OF-WAY LINE OF
HOMESTEAD ROAD; THENCE NORTH 45 DEGREES- 11'-33" WEST ALONG THE NORTHERLY
RIGHT-OF-WAY LINE OF HOMESTEAD ROAD A DISTANCE OF 2,232.01 FEET TO THE POINT OF
BEGINNING OF A TRACT OF LAND HEREIN DESCRIBED: THENCE CONTINUING NORTH 45
DEGREES- 11'-33" WEST ALONG THE NORTHERLY RIGHT-OF-WAY LINE OF HOMESTEAD ROAD A
DISTANCE OF 175.00 FEET; THENCE NORTH 44 DEGREES- 48'-27" EAST A DISTANCE OF
175.00 FEET, THENCE SOUTH 45 DEGREES- 11'-33" EAST A DISTANCE OF 175.00 FEET;
THENCE SOUTH 44 DEGREES- 48'-27" WEST A DISTANCE OF 175.00 FEET TO THE NORTHERLY
RIGHT-OF-WAY LINE OF HOMESTEAD ROAD AND THE POINT OF BEGINNING. SAID TRACT OF
LAND CONTAINING 0.703 ACRES, MORE OR LESS.
JUNE 26, 1979
REVISED
SEPTEMBER 25, 1979
<PAGE> 7
L E A S E A M E N D M E N T
------------------------------
WHEREAS, LEHIGH CORPORATION, a Florida corporation, hereinafter
referred to as LESSOR, and FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF DESOTO
COUNTY, a corporation organized and existing under the laws of the United States
of America, hereinafter referred to as LESSEE, have entered into a Lease on a
parcel of ground and recently constructed buildings thereon, which ground shall
hereinafter be referred to as PROPERTY, and which ground is more particularly
described on Schedule "A" attached hereto and made a part hereof, and
WHEREAS, LESSOR and LESSEE are desirous of making certain changes
and/or additions to said Lease,
NOW, THEREFORE, the following numbered items as they appear in said
Lease shall be altered to include the following information as hereinafter
stated:
3) Rental payments shall be tendered in advance beginning June 1,
1980, which date shall be the effective date of this Lease.
6) LESSEE shall maintain, at LESSEE'S expense, a policy of Hazard
and Fire insurance on the buildings constructed upon the PROPERTY.
NOW, THEREFORE, whereas the actual cost of the construction of the
buildings was $342,000.00, the following numbered item as it appears in said
Lease shall be altered only as same pertains to the monthly payment rates:
2) For the five years immediately following the close of the sale
of the above described structure there shall be due, according to the
terms herein, $4,990.00 monthly rental; thence commencing on the first
day of the sixth year and for the second five years under the term of
this Lease, there shall be due the sum of $5,382.00 monthly rental;
thence commencing on the first day of the eleventh year and for the
third five years under the term of this Lease, there shall be due the
<PAGE> 8
sum of $5,873.00 monthly rental; thence commencing on the first day of the
sixteenth year and for the fourth five years under the term of this Lease, there
shall be due the sum of $6,486.00 monthly rental; thence commencing on the first
day of the twenty-first year and for the completion of this Lease, there shall
be due the sum of $7,252.00 monthly rental.
Witnesses: LEHIGH CORPORATION, a Florida
corporation
/s/ Clara J. Bill By: /s/ John E. Mary (SEAL)
- ----------------------------- ----------------------
V.P.
/s/ Joan F. Adler
- -----------------------------
FIRST FEDERAL SAVINGS AND LOAN
ASSOCIATION OF DESOTO COUNTY, a
corporation under the laws of the
United States of America
/s/ Patricia G. Hudson By: /s/ Rita J. McElroy (SEAL)
- ----------------------------- ----------------------
SR V.P.
/s/ Kay Hill
- -----------------------------
2 of 2
<PAGE> 9
LEGAL DESCRIPTION
FIRST FEDERAL SAVINGS & LOAN ASSOCIATION OF DESOTO COUNTY
PARCEL 1, A TRACT OF LAND IN BLOCK 4, OF THE UNRECORDED
PLAT OF SUNSHINE SHOPPING PLAZA, DATED 11 APRIL 1966.
COMMENCING AT THE SOUTHEAST CORNER OF SECTION 31, TOWNSHIP 44 SOUTH, RANGE 27
EAST, LEE COUNTY, FLORIDA; THENCE NORTH 00 DEGREES-52'-08" EAST ALONG THE EAST
SECTION LINE A DISTANCE OF 1,618.87 FEET TO THE NORTHERLY RIGHT-OF-WAY LINE OF
HOMESTEAD ROAD; THENCE NORTH 45 DEGREES-11'-33" WEST ALONG THE NORTHERLY
RIGHT-OF-WAY LINE OF HOMESTEAD ROAD A DISTANCE OF 2,232.01 FEET TO THE POINT OF
BEGINNING OF A TRACT OF LAND HEREIN DESCRIBED: THENCE CONTINUING NORTH 45
DEGREES-11'-33" WEST ALONG THE NORTHERLY RIGHT-OF-WAY LINE OF HOMESTEAD ROAD A
DISTANCE OF 175.00 FEET; THENCE NORTH 44 DEGREES-48'-27" EAST A DISTANCE OF
175.00 FEET, THENCE SOUTH 45 DEGREES-11'-33" EAST A DISTANCE OF 175.00 FEET;
THENCE SOUTH 44 DEGREES-48'-27" WEST A DISTANCE OF 175.00 FEET TO THE NORTHERLY
RIGHT-OF-WAY LINE OF HOMESTEAD ROAD AND THE POINT OF BEGINNING. SAID TRACT OF
LAND CONTAINING 0.703 ACRES, MORE OR LESS.
JUNE 26, 1979
REVISED
SEPTEMBER 25, 1979
<PAGE> 1
EXHIBIT 10.8
[logo]
Independent Bankers' Bank of Florida
ESCROW AGREEMENT
This Escrow Agreement is entered into and effective this 15th day of
June, 1999, by and between Lehigh Acres First National Bancshares, Inc., a
Florida corporation (the "Company") and the Independent Bankers' Bank of
Florida ("Escrow Agent" or "Agent").
WITNESSETH:
WHEREAS, the Company, proposes to offer for sale up to 1,000,000 shares
of its $0.01 par value common stock (the "Common Stock"), which shares shall be
registered under the Securities Act of 1933, as amended, at a price of $10.00
each, in minimum subscriptions of 100 shares ("Offering"); and
WHEREAS, the Company has requested the Escrow Agent to serve as the
depository for the payment of subscription proceeds ("Payments") received by the
Company from investor(s) who are subscribing to purchase shares of Common Stock
in the Company pursuant to, and in accordance with, the terms and conditions
contained in the Company's Prospectus and Subscription Agreements thereto; and
WHEREAS, the Offering will terminate at 5:00 P.M. Eastern Time,
December 31, 1999, unless extended by the Company for up to an additional 90
days ("Initial Offering Period"), and, if during the Initial Offering Period
the minimum number of shares have been subscribed to, the Offering will continue
until the earlier of : (i) the maximum number of shares are subscribed to, or
(ii) one year after the Effective Date of the Company's Registration Statement.
NOW THEREFORE, in consideration of the premises and understandings contained
herein, the parties agree as follows:
(1) The Company hereby appoints and designates the Escrow Agent for the
Purposes set forth herein. The Escrow Agent acknowledges and accepts said
appointment and designation. The Company understands that the Escrow Agent, by
accepting said appointment and designation, in no way endorses the merits of the
offering of the shares described herein. The Company agrees to notify any person
acting on its behalf that the position of Escrow Agent does not constitute such
an endorsement, and to prohibit said persons from the use of the Agent's name as
an endorser of such offering. The Company further agrees to allow the Escrow
Agent to review any sales literature in which the Agent's name appears and which
is used in connection with such offering.
A-1 of 6
Post Office Box 958423 * Lake Mary, Florida 3295-8423
1-800-275-4222 * 407-541-1620
<PAGE> 2
(2) The Company shall deliver all payments received (the "Subscription
Funds") to the Escrow Agent (Independent Bankers' Bank of Florida, Attn.:
Customer Service Group) in the form in which they are received by noon of the
fifth (5th) business day after their receipt by the Company, and the Company
shall deliver to the Escrow Agent within ten (10) calendar days copies of
written acceptances of the Company for shares in the Company for which the
Subscription Funds represent payment. Upon receipt of such written acceptance by
the Company, the Escrow Agent shall deposit such funds into the escrow account.
The Company shall also deliver to the Escrow Agent completed copies of
Subscription Agreements for each subscriber, along with such subscriber's name,
address, number of shares subscribed and social security or taxpayer
identification number.
(3) Subscription Funds shall be held and disbursed by the Escrow Agent
in accordance with the terms of this Agreement.
(4) In the event any Subscription Funds are dishonored for payment for
any reason, the Escrow Agent agrees to orally notify the Company thereof as soon
as practicable and to confirm same in writing and to return due dishonored
Subscription Funds to the Company in the form in which they were delivered.
(5) Should the Company elect to accept a subscription for less than the
number of shares shown in the purchaser's Subscription Agreement, by indicating
such lesser number of shares on the written acceptance of the Company
transmitted to the Escrow Agent, the Agent shall deposit such payment in the
escrow account and then, upon separate instruction from the Company, remit
within ten (10) days after such deposit to such subscriber at the address shown
in his Subscription Agreement that amount of his Subscription Funds in excess of
the amount which constitutes full payment for the number of subscribed shares
accepted by the Company as shown in the Company's written acceptance, without
interest or diminution. Said address shall be provided by the Company to the
Escrow Agent as requested.
(6) Definitions as used herein:
(a) "Total Receipts" shall mean the sum of all Subscription
Funds delivered to the Escrow Agent pursuant to Paragraph (2) hereof, less (i)
all Subscription Funds returned pursuant to Paragraphs (4) and (5) hereof and
(ii) all Subscription Funds which have not been paid by the financial
institution upon which they are drawn.
(b) "Expiration Date" shall mean 5:00 P.M., Eastern Time,
December 31, 1999; provided, however, in the event that the Escrow Agent is
given oral notification followed in writing, by the Company that it has elected
to extend the offering to a date not later than 90 additional days (March 30,
2000), then the Expiration Date shall mean 5:00 P.M., Eastern Time, on the date
to which the offering has been extended. The Company will notify the Escrow
Agent of the effective date of the Offering Circular as soon as practicable
after such date has been determined.
(c) "Closing Date" shall mean the business day on which the
Company, after determining that all of the Offering conditions have been met,
selects in its sole discretion. The Closing Date shall be confirmed to the
Escrow Agent in writing by the Company.
A-2 of 6
Post Office Box 958423 * Lake Mary, Florida 3295-8423
1-800-275-4222 * 407-541-1620
<PAGE> 3
(d) "Escrow Release Conditions" shall mean that (i) the
Company has not canceled the Offering, and (ii) that the Company has received
preliminary approval from the appropriate regulatory entity to charter the Bank
as well as preliminary approval for deposit insurance from the FDIC.
(7) If, on or before the Expiration Date, (i) the Total Receipts held
by the Escrow Agent equal or exceed $6,000,000 and (ii) the Company has
certified to the Agent that, upon receipt of the net proceeds of the offering
(after the deduction of all fees, commissions, and other expenses of the
offering): (a) the Company will have stockholders' equity of at least
$5,000,000; and (b) the Escrow Release Conditions have been consummated, the
Escrow Agent shall:
(a) No later than 10:00 A.M., Eastern Time, one day
prior to Closing Date (as that term is defined herein), deliver to the Company
all Subscription Agreements provided to the Escrow Agent; and
(b) On the Closing Date, no later than 10:00 o'clock
A.M., Eastern Time, upon receipt of 24-hour written instructions from the
Company, remit all amounts representing Subscription Funds, plus any profits or
earnings, held by the Escrow Agent pursuant hereto to the Company in accordance
with such instructions.
(8) If (i) the Escrow Release Conditions are not met by the Expiration
Date, or (ii) the offering is canceled by the company at any time prior to the
Expiration Date, then the Escrow Agent shall promptly remit to each subscriber
at the address set forth in his Subscription Agreement an amount equal to the
amount of his Subscription Funds thereunder, plus any profits or earnings
thereon. The earnings accruing to any individual subscriber under this paragraph
shall be a prorated share of the gross earnings on all funds under escrow,
weighted by the amount and the duration of the funds tendered for the individual
subscription. Under no circumstances will earnings accrue to any subscription
canceled for any reason other than those provided for in this paragraph.
(9) Pending disposition of the Subscription Funds under this Agreement,
the Escrow Agent will invest collected Subscription Funds, in $1,000 increments
above a maintained balance of $50,000, in United States Treasury securities with
maturities of 120 days or less.
(10) The obligations as Escrow Agent hereunder shall terminate upon the
Agents transferring all funds held hereunder pursuant to the terms of Paragraphs
(7) or (8) herein, as applicable.
(11) The Escrow Agent shall be protected in acting upon any written
notice, request, waiver, consent, certificate, receipt, authorization, or other
paper or document which the Agent believes to be genuine and what it purports to
be.
(12) The Escrow Agent shall not be liable for anything which the Agent
may do or refrain from doing in connection with this Escrow Agreement, except
for the Agent's own gross negligence or willful misconduct.
(13) The Escrow Agent may confer with legal counsel in the event of any
dispute or questions as to the construction of any of the provisions hereof, or
the Agent's duties hereunder,
A-3 of 6
Post Office Box 958423 * Lake Mary, Florida 3295-8423
1-800-275-4222 * 407-541-1620
<PAGE> 4
and shall incur no liability and shall be fully protected in acting in
accordance with the opinions and instructions of such counsel. Any and all
expenses and legal fees in this regard will be paid by the Company.
(14) In the event of any disagreement between the Company and any other
person resulting in adverse claims and demands being made in connection with any
Subscription Funds involved herein or affected hereby, the Agent shall be
entitled to refuse to comply with any such claims or demands as long as such
disagreement may continue, and in so refusing, shall make no delivery or other
disposition of any Subscription Funds then held under this Agreement, and in so
doing shall be entitled to continue to refrain from acting until (a) the right
of adverse claimants shall have been finally settled by binding arbitration or
finally adjudicated in a court in Orange County, Florida assuming and having
jurisdiction of the Subscription Funds involved herein or affected hereby or (b)
all differences shall have been adjusted by agreement and the Agent shall have
been notified in writing of such agreement signed by the parties hereto. In the
event of such disagreement, the Agent may, but need not, tender into the
registry or custody of any court of competent jurisdiction in Orange County,
Florida all money or property in the Agent's hands under the terms of this
Agreement, together with such legal proceedings as the Agent deems appropriate
and thereupon to be discharged from all further duties under this Agreement. The
filing of any such legal proceeding shall not deprive the Agent of compensation
earned prior to such filing. The Escrow Agent shall have no obligation to take
any legal action in connection with this Agreement or towards its enforcement,
or to appear in, prosecute or defend any action or legal proceeding which would
or might involve the Agent in any cost, expense, loss or liability unless
indemnification shall be furnished.
(15) The Escrow Agent may resign for any reason, upon thirty (30) days
written notice to the Company. Upon the expiration of such thirty (30) day
notice period, the Escrow Agent may deliver all Subscription Funds and
Subscription Agreements in possession under this Escrow Agreement to any
successor Escrow Agent appointed by the Company, or if no successor Escrow Agent
has been appointed, to any court of competent jurisdiction. Upon either such
delivery, the Escrow Agent shall be released from any and all liability under
this Escrow Agreement. A termination under this paragraph shall in no way change
the terms of Paragraphs (15) and (17) affecting reimbursement of expenses,
indemnity and fees.
(16) The Escrow Agent will charge the Company for services hereunder a
fee of $1,500.00, plus an additional fee of $5.00 for each check issued, $10.00
for each wire and $.50 for each photo copy necessitated in the performance of
duties, with total fees for services not to exceed $2,500.00. All actual
expenses and costs incurred by the Agent in performing obligations under this
Escrow Agreement will be paid by the Company. All fees and expenses shall be
paid on the Closing Date by the Company. Any subsequent fees and expenses will
be paid by the Company upon receipt of invoice.
(17) All notices and communications hereunder shall be in writing and
shall be deemed to be duly given if sent by registered or certified mail, return
receipt requested, to the respective addresses set forth herein. The Escrow
Agent shall not be charged with knowledge of any fact, including but not limited
to performance or non-performance of any condition, unless the Escrow Agent has
actually received written notice thereof from the Company or its authorized
representative clearly referring to this Escrow Agreement.
A-4 of 6
Post Office Box 958423 * Lake Mary, Florida 3295-8423
1-800-275-4222 * 407-541-1620
<PAGE> 5
(18) The rights created by this Escrow agreement shall inure to the
benefit of, and the obligations created hereby shall be binding upon the
successors and assigns of the Escrow Agent and the parties hereto.
(19) This Escrow Agreement shall be construed and enforced according to
the laws of the State of Florida.
(20) This Escrow Agreement shall terminate and the Escrow Agent shall
be discharged of all responsibility hereunder at such time as the Escrow Agent
shall have completed all duties hereunder.
(21) This Escrow Agreement may be executed in several counterparts,
which taken together shall constitute a single document.
(22) This Escrow Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the transactions described
herein and supersedes all prior agreements or understandings, written or oral,
between the parties with respect thereto.
(23) If any provision of this Escrow Agreement is declared by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way.
(24) The Company shall provide the Escrow Agent with its Employer
Identification Number as assigned by the Internal Revenue Service. Additionally,
the Company shall complete and return to the Escrow Agent any and all tax forms
or reports required to be maintained or obtained by the Escrow Agent.
(25) The authorized signature of the Escrow Agent hereto is consent
that a signed copy hereof may be filed with the various regulatory authorities
of the State of Florida and with any Federal Government agencies or regulatory
authorities.
A-5 of 6
Post Office Box 958423 * Lake Mary, Florida 3295-8423
1-800-275-4222 * 407-541-1620
<PAGE> 6
IN AGREEMENT AND ACCEPTANCE OF THE INDEPENDENT BANKERS' BANK OF FLORIDA ESCROW
AGREEMENT BETWEEN LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.. (COMPANY), FOR
THE PURPOSE OF ORGANIZING A FINANCIAL INSTITUTION TO BE KNOWN AS LEHIGH ACRES
FIRST NATIONAL BANK, AND THE INDEPENDENT BANKERS' BANK OF FLORIDA (ESCROW
AGENT).
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC..
--------------------------------------------------
COMPANY
Address: 1300 Homestead Road North
Lehigh Acres, Florida 33936
Fax:
Phone: (941) 368-1190
By: /s/ James G. Hull
-----------------------------------------------
Authorized Signature
Title: James D. Hull, Chairman
-----------------------------------------------
(Type Name and Title)
Attest:
------------------
Date ADDITIONAL AUTHORIZED SIGNER
By: Name: /s/ Lloyd J. Weber
-------------------- ---------------------------------------------
Additional Authorized Signature
Title: Title: Lloyd J. Weber, CEO
-------------------- ---------------------------------------------
(Type Name and Title)
(SEAL)
INDEPENDENT BANKERS' BANK OF FLORIDA
------------------------------------
Address: 615 Crescent Executive Court
Suite 400
Lake Mary, Florida 327462-2109
Attest: Fax: (407) 541-1663
------------------ ----------------------------------------------
Date
By: By: /s/ James McKillop
------------------ ----------------------------------------------
Authorized Signature
Title: Title: James H. McKillop, III Exec Vice President
------------------ -------------------------------------------
(Type Name and Title)
(CORPORATE SEAL)
A-6 of 6
Post Office Box 958423 * Lake Mary, Florida 3295-8423
1-800-275-4222 * 407-541-1620
<PAGE> 1
EXHIBIT 10.9
OUTSOURCING AGREEMENT
BY AND BETWEEN
Lehigh Acres First National Bank
and
MARSHALL & ILSLEY CORPORATION
acting through its division
M&I DATA SERVICES
DATED AS OF
_________________, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. DEFINITIONS ...................................................................... 5
1.1 Background ..................................................................... 5
1.2 Definitions .................................................................... 5
1.3 References ..................................................................... 10
1.4 Interpretation ................................................................. 11
2. TERM ............................................................................. 11
2.1 Initial Term ................................................................... 11
2.2 Extensions ..................................................................... 11
3. APPOINTMENT ...................................................................... 12
3.1 Performance by M&I Affiliates or Subcontractors ................................ 12
3.2 Third Party Products/services .................................................. 12
3.3 Proper Instructions ............................................................ 12
4. CONVERSION ....................................................................... 12
4.1 Banking Applications ........................................................... 12
4.2 Development of Conversion Plan ................................................. 13
4.3 Conversion Resources ........................................................... 13
4.4 Conversion Milestones .......................................................... 13
5. BANKING APPLICATION SERVICES ..................................................... 13
5.1 ADP Services ................................................................... 13
5.2 New Services ................................................................... 13
5.3 Automated Clearing House Services .............................................. 14
5.4 Data Warehouse Services ........................................................ 14
5.5 Item Processing Services ....................................................... 14
6. RETAIL DELIVERY SYSTEMS AND SERVICES ............................................. 15
6.1 Branch Automation Systems ...................................................... 15
7. BANKCARD PROCESSING SERVICES ..................................................... 15
7.2 EFD Services ................................................................... 15
8. FEES ............................................................................. 15
8.1 Fee Structure .................................................................. 15
8.2 Conversion ..................................................................... 16
8.3 Pricing and Operational Assumptions ............................................ 16
8.4 EFD Services ................................................................... 16
8.5 Training and Education ......................................................... 17
8.6 Excluded Costs ................................................................. 17
8.7 Disputed Amounts ............................................................... 17
8.8 Terms of Payment ............................................................... 18
8.9 Modification of Terms and Pricing .............................................. 18
9. PERFORMANCE WARRANTY/EXCLUSIVE REMEDY/
DISCLAIMER OF ALL OTHER WARRANTIES ............................................... 18
9.1 Performance Warranty ........................................................... 18
9.2 Performance Warranty Exclusions ................................................ 18
9.3 Notice of and Correction of Defects ............................................ 19
9.4 Backup Remedy .................................................................. 19
9.5 DISCLAIMER OF ALL OTHER WARRANTIES ............................................. 19
10. MODIFICATION OR PARTIAL TERMINATION .............................................. 19
10.1 Modifications to Services ...................................................... 20
10.2 Partial Termination by M&I ..................................................... 20
10.3 Partial Termination by Customer ................................................ 20
10.4 Ownership and Proprietary Rights ............................................... 20
10.5 Millennium Modifications ....................................................... 21
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
11. TERMINATION ...................................................................... 21
11.1 Early Termination .............................................................. 21
11.2 For Cause ...................................................................... 21
11.3 For Insolvency ................................................................. 21
11.4 For Force Majeure .............................................................. 22
12. SERVICES FOLLOWING TERMINATION ................................................... 22
12.1 Termination Assistance ......................................................... 22
12.2 Continuation of Services ....................................................... 22
13. LIMITATION OF LIABILITY/MAXIMUM DAMAGES ALLOWED .................................. 23
13.1 Equitable Relief ............................................................... 23
13.2 Exclusion of Incidental and Consequential Damages .............................. 23
13.3 Maximum Damages Allowed ........................................................ 23
13.4 Statute of Limitations ......................................................... 23
13.5 Economic Loss Waiver ........................................................... 24
13.6 Liquidated Damages ............................................................. 24
13.7 Essential Elements ............................................................. 24
14. INSURANCE AND INDEMNITY .......................................................... 24
14.1 Insurance ...................................................................... 24
14.2 Indemnity ...................................................................... 25
14.3 Indemnification Procedures ..................................................... 25
15. DISPUTE RESOLUTION ............................................................... 26
15.1 Representatives of Parties ..................................................... 26
15.2 Continuity of Performance ...................................................... 27
16. REPRESENTATIONS AND WARRANTIES ................................................... 27
16.1 By M&I ......................................................................... 27
16.2 By Customer .................................................................... 27
17. CONFIDENTIALITY AND OWNERSHIP .................................................... 28
17.1 Customer Data .................................................................. 28
17.2 M&I Systems .................................................................... 28
17.3 Confidential Information ....................................................... 28
17.4 Obligations of the Parties ..................................................... 29
17.5 Security ....................................................................... 29
18. MANAGEMENT OF PROJECT ............................................................ 29
18.1 Account Representatives ........................................................ 29
18.2 Reporting and Meetings ......................................................... 30
18.3 Development Projects and Technical Support ..................................... 30
19. REGULATORY COMPLIANCE ............................................................ 30
20. DISASTER RECOVERY ................................................................ 31
20.1 Services Continuity Plan ....................................................... 31
20.2 Relocation ..................................................................... 31
20.3 Resumption of Services ......................................................... 32
20.4 Annual Test .................................................................... 32
21. GENERAL TERMS AND CONDITIONS ..................................................... 32
21.1 Transmission of Data ........................................................... 32
21.2 Equipment and Network .......................................................... 32
21.3 Reliance on Data ............................................................... 32
21.4 Data Backup .................................................................... 33
21.5 Balancing and Controls ......................................................... 33
21.6 Use of Services ................................................................ 33
21.7 Regulatory Assurances .......................................................... 33
21.8 IRS Filing ..................................................................... 35
21.9 Affiliates ..................................................................... 35
21.10 Future Acquisitions ............................................................ 35
22. MISCELLANEOUS PROVISIONS ......................................................... 36
22.1 Governing Law .................................................................. 36
</TABLE>
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<TABLE>
<S> <C> <C>
22.2 Venue and Jurisdiction ......................................................... 36
22.3 Entire Agreement; Amendments ................................................... 36
22.4 Assignment ..................................................................... 37
22.5 Relationship of Parties ........................................................ 37
22.6 Notices ........................................................................ 37
22.7 Headings ....................................................................... 38
22.8 Counterparts ................................................................... 38
22.9 Waiver ......................................................................... 38
22.10 Severability ................................................................... 38
22.11 Attorneys' Fees and Costs ...................................................... 39
22.12 Financial Statements ........................................................... 39
22.13 Publicity ...................................................................... 39
22.14 Solicitation ................................................................... 39
22.15 No Third Party Beneficiaries ................................................... 39
22.16 Force Majeure .................................................................. 39
22.17 Construction ................................................................... 40
22.18 Waiver of Jury Trial ........................................................... 40
</TABLE>
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Schedules
1.2 Customer Affiliates
4.2 Conversion Plan
5.1 ADP Services Schedule
5.3 ACH Services Terms and Conditions
5.4 Data Warehouse Services
5.5 Item Processing Services
7.1 EFD Services
8.1 Fee Schedule
9.1 ADP Performance Standards
11.1 Termination Fee
21.2 Network Schedule
Exhibits
A ACH Authorization Agreement
B Attorney-in-Fact Appointment
C Affidavit
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OUTSOURCING AGREEMENT
This Outsourcing Agreement ("Agreement") is made as of the _______ day
of ___________, 1999, by and between Lehigh Acres First National Bank, a
_____________ corporation ("Customer") and Marshall & Ilsley Corporation, a
Wisconsin corporation, acting through its division, M&I Data Services ("M&I").
In consideration of the payments to be made and services to be
performed hereunder, the parties agree as follows:
1. DEFINITIONS
1.1 Background.
This Agreement is being made and entered into with reference to the
following facts:
A. Customer provides systems development and operations, data
processing, telecommunications and other information technology services for
itself, and on behalf of its customers.
B. M&I is a provider of data processing, systems development
and operations, corporate support and item processing, home banking, internet
banking, retail delivery services, trust data processing, and other services.
M&I desires to perform for Customer the outsourcing services described in this
Agreement.
C. In reliance on its own independent analysis, and after
careful evaluation of M&I's proposal and other alternatives, Customer has
selected M&I to provide the Services (as defined in Section 1.2) to Customer.
This Agreement documents the terms and conditions under which Customer agrees to
purchase and M&I agrees to provide the Services.
1.2 Definitions.
The following terms shall have the meaning ascribed to them in this
Section 1.2:
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A. "Account Representative" shall have the meaning set forth
in Section 18.1.
B. "ADP Services" shall mean the Accounts Data Processing
Services set forth in attached Schedule 5.1.
C. "Affiliate," shall mean, with respect to a party, any
Entity at any time Controlling, Controlled by or under common Control with, such
party.
D. "Branch Automation Agreement" shall mean the Branch
Automation Agreement of even date herewith between M&I and Customer relating to
the license and implementation of M&I's proprietary branch automation software.
E. "CPI", as defined by the United States Department of Labor,
shall mean the Consumer Price Index-All Items Urban, less food and energy (or
any successor index).
F. "Change in Control" shall mean any event or series of
events by which (i) any person or entity or group of persons or entities shall
acquire Control of another person or entity or (ii) in the case of a
corporation, during any period of 12 consecutive months commencing before or
after the date hereof, individuals who at the beginning of such 12-month period
were directors of such corporation shall cease for any reason to constitute a
majority of the board of directors of such corporation.
G. "Commencement Date" shall mean the date, on which
Conversion for Customer and all Affiliates identified on Schedule 1.2 has been
completed.
H. "Confidential Information" shall have the meaning set forth
in Section 17.3 of this Agreement.
I. "Contract Year" shall mean successive periods of twelve
months, the first of which (being slightly longer than twelve (12) months) shall
commence on the Commencement Date and terminate on the last day of the month in
which the first anniversary of the Commencement Date occurs.
J. "Control" shall mean the direct or indirect ownership of
over 50% of the capital stock (or other ownership interest, if not a
corporation) of any Entity or the possession, directly or indirectly, of the
power to
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direct the management and policies of such Entity by ownership of voting
securities, by contract or otherwise. "Controlling" shall mean having Control of
any Entity and "Controlled" shall mean being the subject of Control by another
Entity.
K. "Conversion" shall mean (i) the transfer of Customer's data
processing and other information technology services to the M&I system; (ii)
completion of upgrades, enhancements and software modifications as set forth in
this Agreement; and (iii) completion of all interfaces set forth in this
Agreement and full integration thereof such that Customer is able to receive the
Initial Services in a live operating environment.
L. "Conversion Date" shall mean the date on which Conversion
for Customer or a particular Affiliate has been completed. Schedule 1.2
identifies the Conversion Date for Customer and each Affiliate identified
therein.
M. "Conversion Period" shall mean that portion of the Term
beginning on the Effective Date and ending on the Conversion Date.
N. "Core Services" shall mean services provided by M&I's
Deposit System, Loan System and Customer Information System.
O. "Customer" shall mean Customer and all Affiliates of
Customer for whom M&I agrees to provide Services under this Agreement; Schedule
1.2, attached hereto identifies such Affiliates as of the Effective Date.
P. "Customer Data" shall have the meaning set forth in Section
17.1 of this Agreement.
Q. "Effective Date" shall mean the date first set forth above.
R. "Effective Date of Termination" shall mean the last day on
which M&I provides the Services to Customer (including any Termination
Assistance).
S. "Eligible Provider" shall have the meaning as set forth in
Section 3.1 of this Agreement.
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T. "Entity" means an individual or a corporation, partnership,
sole proprietorship, limited liability company, joint venture or other form of
organization, and includes the parties hereto.
U. "Estimated Remaining Value" shall mean the number of
calendar months remaining between the Effective Date of Termination and the last
day of the contracted-for Term, multiplied by the average of the three (3)
highest monthly Fees (but in any event no less than the Monthly Base Fee)
payable by Customer during the twelve (12) month period prior to the event
giving rise to termination rights under this Agreement. In the event the
Effective Date of Termination occurs prior to expiration of the First Contract
Year, the estimated monthly fees set forth in the Fee Schedule shall be
substituted for the average monthly fees described in the preceding sentence.
V. "Expenses" shall mean any and all reasonable and direct
expenses incurred by M&I for any postage, supplies, materials, travel and
lodging provided to or on behalf of Customer under this Agreement.
W. "Federal Regulator" shall have the meaning set forth in
Section 21.7.
X. "Fee Schedule" shall have the meaning set forth in Section
8.1 of this Agreement.
Y. "Initial Services" shall mean those Services requested by
Customer from M&I under this Agreement prior to the Commencement Date. The
Initial Services requested as of the Effective Date are set forth in the
schedules attached hereto, which shall be modified to include any additional
services requested by CUSTOMER during the Conversion Period.
Z. "Initial Term" shall have the meaning set forth in Section
2.1 of this Agreement.
AA. "Legal Requirements" shall have the meaning set forth in
Section 19(A) of this Agreement.
BB. "LU" shall have the meaning as set forth in Section 8.6 of
this Agreement.
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CC. "M&I Proprietary Materials and Information" shall mean the
M&I Software and all source code, object code, documentation (whether
electronic, printed, written or otherwise), working papers, non-customer data,
programs, diagrams, models, drawings, flow charts and research (whether in
tangible or intangible form or in written or machine readable form), and all
techniques, processes, inventions, knowledge, know-how, trade secrets (whether
in tangible or intangible form or in written or machine readable form),
developed by M&I prior to or during the Term of this Agreement, and such other
information relating to M&I or the M&I Software that M&I identifies to Customer
as proprietary or confidential at the time of disclosure.
DD. "M&I Software" shall mean the software owned by M&I and
used to provide the Services.
EE. "Millennium Ready" shall mean the ability of the M&I
Software to accurately process date/time data (including calculating, compare
and sequence) from, into and between the years 1999 and 2000, including leap
year calculations, to the extent that other information technology, used in
combination therewith, properly exchanges date/time data with the M&I Software.
FF. "Monthly Base Fee" shall mean the minimum monthly fees
payable by Customer to M&I for those Initial Services identified in the ADP
Services Schedule or the Fee Schedule as being included in the Monthly Base Fee.
GG. "New Services" shall mean any services which are not
included in the Initial Services. Upon mutual agreement of the parties, New
Services shall be included in the term "Services.
HH. "Operations Center" shall mean the datacenter used by M&I
to provide the ADP Services under this Agreement.
II. "Performance Standards" shall mean those service levels
set forth in attached Schedule 9.1 for the provision of ADP Services.
JJ. "Performance Warranty" shall have the meaning, including
the exclusions and exclusive remedy, set forth Article 9 of this Agreement.
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KK. "Plan" shall have the meaning set forth in Section 20.1 of
this Agreement.
LL. "Proper Instructions" shall mean those instructions sent
to M&I in accordance with Section 3.3 of this Agreement.
MM. "Services" shall mean the services, functions and
responsibilities described in this Agreement to be performed by M&I during the
Term and shall include New Services which are agreed to by the parties in
writing.
NN. "Taxes" shall mean any manufacturers, sales, use, gross
receipts, excise, personal property or similar tax or duty assessed by any
governmental or quasi-governmental authority upon or as a result of the
execution or performance of any service pursuant to this Agreement or materials
furnished with respect to this Agreement, except any income, franchise,
privilege or like tax on or measured by M&I's net income, capital stock or net
worth.
00. "Term" shall mean the Initial Term and any extension
thereof, unless this Agreement is earlier terminated in accordance with its
provisions.
PP. "Termination Assistance" shall have the meaning set forth
in Section 12.1 of this Agreement.
QQ. "Termination Feel" shall have the meaning set forth on
attached Schedule 11.1.
RR. "Third Party" shall mean any Entity other than the parties
or any Affiliates of the parties.
SS. "User Manuals" shall mean the documentation provided by
M&I to Customer which describes the features and functionalities of each of the
ADP Services as modified and updated by the customer bulletins distributed by
M&I from time to time.
1.3 References. In this Agreement and the schedules and exhibits
attached hereto, which are hereby incorporated and deemed a part of this
Agreement, references and mention of the word "include" and "including" shall
mean "includes,
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without limitation" and "including, without limitation", as applicable.
1.4 Interpretation. In the event of a conflict between this
Agreement and the terms of any exhibits and schedules attached hereto, the terms
of the schedules and exhibits shall prevail and control the interpretation of
the Agreement. The exhibits and schedules together with the Agreement shall be
interpreted as a single document.
2. TERM
2.1 Initial Term. This Agreement shall commence on the Effective
Date and end on the seventh (7th) anniversary of the last day of the month in
which the Commencement Date occurs ("Initial Term").
2.2 Extensions. Unless this Agreement has been earlier terminated,
at least one (1) year prior to the expiration of the Initial Term, M&I shall
submit to Customer a written proposal for renewal of this Agreement. Customer
will respond to such proposal within three (3) months following receipt and
inform M&I in writing whether or not Customer desires to renew this Agreement.
If M&I and Customer are unable to agree upon the terms for renewal of this
Agreement at least six (6) months prior to the expiration of the Initial Term,
then this Agreement shall be automatically renewed for one (1) twelve-month
period at M&I's then-current standard prices. Thereafter, this Agreement shall
expire unless further renewed in writing by the parties.
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3. APPOINTMENT
3.1 Performance by M&I Affiliates or Subcontractors. Customer
understands and agrees that Marshall & Ilsley Corporation is a bank holding
company and that the actual performance of the Services may be made by the
divisions or subsidiaries of Marshall & Ilsley Corporation, Affiliates
Controlled by Marshall & Ilsley Corporation, or subcontractors of any of the
foregoing Entities (collectively, the "Eligible Providers"). For purposes of
this Agreement, performance of the Services by any Eligible Provider shall be
deemed performance by Marshall & Ilsley Corporation itself. M&I shall remain
fully responsible for the performance or non-performance of each Eligible
Provider under this Agreement, to the same extent if M&I itself performed or
failed to perform such services.
3.2 Third Party Products/Services. The parties acknowledge that
certain services and products necessary for the performance of the Services are
being, and in the future may be, provided by Third Parties who will contract
directly with Customer. M&I shall have no liability to Customer for information
and products supplied by, or services performed by, such Third Parties in
conjunction with the Services.
3.3 Proper Instructions. "Proper Instructions" shall mean those
instructions sent to M&I by letter, memorandum, telegram, cable, telex, telecopy
facsimile, computer terminal, e-mail or other "on line" system or similar means
of communication or given orally over the telephone or given in person by one or
more of the person(s) whose name(s) and signature(s) are listed on the most
recent certificate delivered by Customer to, M&I which lists those persons
authorized to give orders, corrections and instructions in the name of and on
behalf of Customer. Proper Instructions shall specify the action requested to be
taken or omitted.
4. CONVERSION
4.1 Implementation of Services. The parties agree to use their
best efforts to perform the Conversion(s) such that the Commencement Date occurs
on or before ________________, _____.
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4.2 Development of Conversion Plan. M&I has, in consultation with
Customer, developed a detailed, customized plan for the Conversion (the
"Conversion Plan"). The Conversion Plan includes (i) a description of the tasks
to be performed for the Conversion; (ii) allocation of responsibility for each
of such tasks; and (iii) the schedule on which each task is to be performed. The
Conversion project leaders for each party shall regularly communicate on the
progress of the Conversion, the feasibility of the Conversion Dates specified in
the Conversion Plan, and such other matters which may affect the smooth
transition of the Services. Customer agrees to maintain an adequate staff of
persons who are knowledgeable about the banking, data processing and information
technology systems currently used by Customer. Each party agrees to provide such
services and to perform such obligations as are specified as its responsibility
in the Conversion Plan and as necessary for it to timely and adequately meet the
scheduled dates set forth therein. Each party shall cooperate fully with all
reasonable requests of the other party made necessary to effect the Conversion
in a timely and efficient manner. The preliminary Conversion Plan is attached
hereto as Schedule 4.2 and may be amended by mutual agreement of the parties.
4.3 Conversion Resources. M&I and Customer will provide a team of
qualified individuals to assist in the Conversion effort. The anticipated team
and description of their responsibilities is set forth in the Conversion Plan.
4.4 Conversion Milestones. As part of the Conversion Plan, the
parties shall develop and agree upon milestones to which the progress of the
Conversion(s) shall be measured.
5. BANKING APPLICATION SERVICES
5.1 ADP Services. M&I agrees to provide Customer with the ADP
Services in accordance with the applicable User Manuals and this Agreement.
5.2 New Services. If Customer wishes to receive any New Service
which is identified on M&I's then-current standard price list, Customer shall
notify M&I and the parties shall implement the same in accordance with a
mutually acceptable schedule. If the New Service is not
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identified on M&I's then-current standard price list, Customer shall submit a
written request to M&I in accordance with Section 18.3 of this Agreement.
Nothing contained herein shall obligate M&I to develop a New Service for
Customer.
5.3 Automated Clearing House Services. The automated clearing
house services ("ACH Services") to be provided by M&I shall be subject to the
terms and conditions set forth on attached Schedule 5.3.
5.4 Data Warehouse Services. The Data Warehouse Services to be
provided by M&I shall be subject to the terms and conditions set forth on
attached Schedule 5.4.
5.5 Item Processing Services.
(i) M&I shall perform for Customer those certain Item
Processing Services described in Schedule 5.5 for
which Customer agrees to pay M&I in accordance with
the fees specified in the Fee Schedule.
(ii) M&I and Customer agree to perform their respective
responsibilities associated with Item Processing
Services in accordance with the procedures
established by M&I as modified from time to time. A
copy of M&I's procedure has been or will be provided
to Customer.
(iii) M&I agrees that solely with respect to the item
Processing Services provided under Schedule 5.5,
such Item Processing Services shall be performed in
a commercially reasonable manner and no other or
higher degree of care. M&I assumes no other
obligation as to performance or quality of the Item
Processing Services provided. M&I shall not be
responsible for any loss or damage to Customer
arising as a result of any action or inaction on the
part of M&I including, but not limited to, indirect,
incidental, or consequential damages, lost profits,
or business operation loss. In the event of errors
resulting from M&I's provision of the Item Processing
Services,
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M&I's sole obligation and Customer's sole remedy,
shall be for M&I to correct such errors, if possible,
and to review its systems and procedures for the
purpose of implementing changes to prevent a future
occurrence of a similar error.
6. RETAIL DELIVERY SYSTEMS AND SERVICES
6.1 Branch Automation Systems. M&I agrees to provide the licenses,
products, interfaces and network management associated with the automation of
Customer's branch offices, in accordance with the Branch Automation Agreement.
7. BANKCARD PROCESSING SERVICES
7.1 EFD Services. The electronic funds delivery services ("EFD
Services") to be provided by M&I shall be subject to the terms and conditions
set forth on attached Schedule 7-1.
8. FEES
8.1 Fee Structure. Schedule 8.1 attached hereto (the "Fee
Schedule") sets forth the costs and charges for the Services and Customer agrees
to pay M&I the fees specified in the Fee Schedule for the Services rendered by
M&I. These costs and charges are included in one or more of the following
categories:
(i) one-time fees associated with the Conversion;
(ii) a minimum monthly fee for certain recurring,
aggregated data processing services based on stated
volumes; actual volumes in excess of stated volumes
shall result in additional charges as further
described in the Fee Schedule;
(iii) an hourly or daily fee for programming, training and
related Services requested by Customer; and
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(iv) fees based on M&I's then current published price list
for New Services not included in the foregoing
categories.
8.2 Conversion. Customer agrees to pay M&I the fees relating to
the Conversion on the terms and conditions set forth on the Fee Schedule. In
addition, Customer agrees to reimburse M&I (i) for all Expenses reasonably
incurred in connection with the Conversion; (ii) for Conversion of accounts or
products not identified in the Conversion Plan as of the Effective Date; and
(iii) for M&I personnel or any independent contractors who perform services
which are identified as the responsibility of the Customer in the Conversion
Plan.
8.3 Pricing and Operational Assumptions. The Fee Schedule sets
forth the operational and pricing assumptions made by M&I following completion
of its preliminary due diligence of Customer's requirements and its evaluation
of information provided by Customer. If the parties determine that one or more
of the pricing or operational assumptions listed in the Fee Schedule is
inaccurate or incomplete in any material respect, the parties will negotiate in
good faith regarding an equitable adjustment to any materially and adversely
impacted provisions of this Agreement.
8.4 EFD Services. In addition to the charges specified on the Fee
Schedule, Customer shall be responsible for all interchange and network provider
fees and all dues, fees and assessments established by and owed to Visa and/or
MasterCard for the processing of Customer's transactions, and for all costs and
fees associated with changes to ATM (as defined in Schedule 7.1) protocol caused
by Customer's use of the EFD Services.
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8.5 Training and Education.
A. M&I shall provide training in accordance with the training
schedule developed pursuant to the Conversion Plan. The sessions shall be held
at a location mutually agreed upon by the parties. Customer shall be responsible
for all Expenses incurred by the participants and M&I's trainers in connection
with such education and training. If Customer requests that training be
conducted at a non-M&I facility, Customer shall be responsible for additional
fees as quoted by M&I. The training fees specified as part of Conversion fees do
not include training for data warehouse, branch automation systems, Bankcard
Services and EFD Services.
B. M&I will provide to Customer, at no charge, one set of each
of the User Manuals. When the User Manuals are updated, M&I will provide the
updates to Customer at no additional charge. Additional sets of the User Manuals
may be purchased by Customer at M&I's then current published price list.
8.6 Excluded Costs. The fees set forth in the Fee Schedule do not
include shipping and courier costs, telecommunication charges, logical unit
("LU") charges, Expenses, Third Party pass-through charges, workshop fees,
training fees, late fees or charges and Taxes.
8.7 Disputed Amounts. If Customer disputes any charge or amount on any
invoice and such dispute cannot be resolved promptly through good faith
discussions between the parties, Customer shall pay the amounts due under this
Agreement less the disputed amount, and the parties shall diligently proceed to
resolve such disputed amount. An amount will be considered disputed in good
faith if (i) Customer delivers a written statement to M&I on or before the due
date of the invoice, describing in detail the basis of the dispute and the
amount being withheld by Customer, (ii) such written statement represents that
the amount in dispute has been determined after due investigation of the facts
and that such disputed amount has been determined in good faith, and (iii) all
other amounts due from Customer that are not in dispute have been paid in
accordance with the terms of this Agreement.
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8.8 Terms of Payment. All "one-time" fees shall be paid to M&I as
set forth in the Fee Schedule. Customer shall pay the Monthly Base Fee in
advance on the first day of the calendar month in which the Services are to be
performed. To effect payment, Customer hereby authorizes M&I to initiate debit
entries from and, if necessary, initiate credit entries and adjustments to
Customer's account at the depository institution designated in the ACH
Authorization Agreement attached hereto as Exhibit A, which shall be executed by
Customer contemporaneously with the execution of this Agreement. All other
amounts due hereunder shall be paid within thirty (30) days of invoice, unless
otherwise provided in the Fee Schedule. Undisputed charges not paid by the due
date shall be subject to annual interest at the rate of 12% or the highest rate
permitted by law, whichever is lower. Customer shall also pay any collection
fees and Damages incurred by M&I in collecting payment of the charges and any
other amounts for which Customer is liable under the terms and conditions of
this Agreement.
8.9 Modification of Terms and Pricing. All charges for Services shall
be subject to the annual adjustments set forth in the Fee Schedule.
9. PERFORMANCE WARRANTY/EXCLUSIVE REMEDY/DISCLAIMER OF ALL
OTHER WARRANTIES
9.1 Performance Warranty. M&I warrants that it will provide the ADP
Services covered by this Agreement in accordance with the Performance
Standards and that it will provide reports to the Customer that are in
substantial conformity with the User Manuals, as amended from time to time. THIS
PERFORMANCE WARRANTY IS SUBJECT TO THE WARRANTY EXCLUSIONS SET FORTH BELOW IN
ARTICLE 9.2 AND THE REMEDY LIMITATIONS SET FORTH BELOW IN ARTICLE 9.3.
9.2 Performance Warranty Exclusions. Except as may be expressly agreed
in writing by M&I, M&I's Performance Warranty does not apply to:
(a) defects, problems, or failures caused by the Customer's
nonperformance of obligations essential to M&I's performance of its
obligations; and/or
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(b) defects, problems, or failures caused by an event of force
majeure.
9.3 Notice of and Correction of Defects. Customer shall notify M&I in
writing of any alleged breach of this Performance Warranty. Upon receipt of such
notice, M&I shall have ninety (90) days to correct the alleged breach. During
this time period, M&I shall make every reasonable effort, at its own expense, to
correct any material defect. Customer shall be responsible for making whatever
appropriate adjustments may be necessary to mitigate adverse effects on Customer
until M&I corrects the defect. if requested by Customer, M&I will, at M&I's
expense, assist Customer in making such corrections through the most
cost-effective means, whether manual, by system reruns or program modifications.
9.4 Backup Remedy. If after ninety (90) days M&I remains in breach of
the Performance Warranty, the Customer may terminate this Agreement without
penalty or payment of any Termination Fee upon giving M&I at least thirty (30)
days' prior written notice, with such notice to run after the expiration of the
ninety (90) day cure period. THE BACKUP REMEDY SET FORTH IN THIS SECTION 9.4 IS
CUSTOMER'S SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH OF THE PERFORMANCE WARRANTY,
TO THE EXCLUSION OF ALL OTHER REMEDIES, IN CONTRACT, TORT, OR OTHERWISE.
9.5 DISCLAIMER OF ALL OTHER WARRANTIES. THIS PERFORMANCE WARRANTY,
AND THE REPRESENTATIONS IN SECTION 16.1, ARE IN LIEU OF, AND M&I DISCLAIMS
ANY AND ALL OTHER WARRANTIES CONDITIONS, OR REPRESENTATIONS (EXPRESS OR
IMPLIED, ORAL OR WRITTEN) WITH RESPECT TO THE SERVICES PROVIDED UNDER THIS
CONTRACT, INCLUDING, WITHOUT LIMITATION ANY AND ALL IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS OR SUITABILITY FOR ANY PURPOSE (WHETHER OR NOT M&I
KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF
ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE
IN THE TRADE, OR BY COURSE OF DEALING. IN ADDITION, M&I DISCLAIMS ANY WARRANTY
OR REPRESENTATION TO ANY PERSON OTHER THAN THE CUSTOMER WITH RESPECT TO THE
SERVICES PROVIDED UNDER THIS CONTRACT.
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10. MODIFICATION OR PARTIAL TERMINATION
10.1 Modifications to Services. M&I may modify, amend, enhance,
update, or provide an appropriate replacement for the software used to provide
the Services, or any element of its systems or processes at any time to: (i)
improve the Services or (ii) facilitate the continued economic provision of the
Services to Customer or M&I, provided that neither the functionality of the
Services nor any applicable Performance Standards are materially adversely
affected.
10.2 Partial Termination by M&I. M&I may, at any time, withdraw any of
the Services (other than the Core Services) upon providing ninety (90) days'
prior written notice to Customer. M&I may also terminate any of the Services
immediately upon any final regulatory, legislative, or judicial determination
that providing such Services is inconsistent with applicable law or regulation.
If M&I terminates any Service, M&I agrees to assist Customer, without additional
charge, in identifying an alternate provider of such terminated Service.
10.3 Partial Termination by Customer.
A. Customer agrees that, during the Term, Customer shall
obtain exclusively from M&I all of its requirements covered by the Initial
Services. If Customer breaches the foregoing covenant, Customer shall pay M&I a
Termination Fee for the discontinued Service, as liquidated damages and not as a
penalty.
B. Unless otherwise agreed to by the parties in writing,
Customer may terminate any New Service upon one hundred eighty (180) days prior
written notice to M&I. Termination of New Services shall not be subject to any
Termination Fee, unless the entire Agreement is terminated in a manner which
would entitle M&I to receive a Termination Fee.
10.4 Ownership and Proprietary Rights. M&I reserves the right to
determine the hardware, software and tools to be used by M&I in fulfilling its
duties under this Agreement. M&I and Customer intend and agree that M&I shall
retain title and all other ownership and proprietary rights in and to the M&I
Proprietary Materials and information. Such ownership and proprietary rights
shall include any and all rights in and to patents, trademarks, copyrights, and
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trade secret rights. M&I and Customer agree that M&I Proprietary Materials and
Information are not "work made for hire" within the meaning of U.S. Copyright
Act 17 U.S.C. Section 101.
10.5 Millennium Modifications. The M&I Software has been modified to
be Millennium Ready. Any additional modification to the M&I Software to make it
Millennium Ready shall be made by M&I at no additional charge to Customer,
provided, however, that any testing requirements imposed on Customer by any
Federal Regulator shall be performed by M&I at Customer's sole cost and expense
at M&I's then-current standard rates. M&I shall provide to Customer, at no
charge, the results of proxy testing conducted as of the Effective Date on
non-custom M&I Software used to provide the Initial Services.
11. TERMINATION
11.1 Early Termination. The terms and conditions set forth in attached
Schedule 11.1 shall govern the early termination of this Agreement (or any
Service which is part of the Initial Services).
11.2 For Cause. If either party fails to perform any of its material
obligations under this Agreement and does not cure such failure within thirty
(30) days after being given notice specifying the nature of the failure, then
the non-defaulting party may, by giving notice to the other party, terminate
this Agreement as of the date specified in such notice of termination, or such
later date agreed to by the parties, without prejudice to the non-defaulting
party's right to collect Damages (if the non-defaulting party is the Customer)
or the Termination Fee (if the non-defaulting party is M&I).
11.3 For, Insolvency. In addition to the termination rights set forth
in Sections 11.1 and 11.2, subject to the provisions of Title 11, United States
Code, if either party becomes or is declared insolvent or bankrupt, is the
subject to any proceedings relating to its liquidation, insolvency or for the
appointment of a receiver or similar officer for it, makes an assignment for the
benefit of all or substantially all of its creditors, or enters into an
agreement for the composition, extension, or readjustment of
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all or substantially all of its obligations, or is subject to regulatory
sanction by any Federal Regulator, then the other party may, by giving written
notice to such party, may terminate this Agreement as of a date specified in
such notice of termination; provided that the foregoing shall not apply with
respect to any involuntary petition in bankruptcy filed against a party unless
such petition is not dismissed within sixty (60) days of such filing.
11.4 For Force Majeure. In the event that M&I fails to provide the
Services in accordance with this Agreement for a period of forty-five (45) days
due to an event of force majeure (as described in Section 22.16 hereof),
Customer may terminate this Agreement upon written notice to M&I delivered
within thirty (30) days thereafter, without payment of any Termination Fee.
12. SERVICES FOLLOWING TERMINATION
12.1 Termination Assistance. Following the expiration or early
termination of this Agreement, M&I shall provide Customer, at Customer's
expense, all necessary assistance to facilitate the orderly transition of
Services to Customer or its designee ("Termination Assistance"). As part of the
Termination Assistance, M&I shall assist Customer to develop a plan for the
transition of all Services then being performed by M&I under this Agreement,
from M&I to Customer or its designee, on a reasonable schedule developed jointly
by M&I and Customer. Prior to providing any Termination Assistance, M&I shall
deliver to Customer a good faith estimate of all such Expenses and charges
including charges for custom programming services. Customer understands and
agrees that all Expenses and charges for Termination Assistance shall be
computed in accordance with M&I's then-current standard published prices for
such products, materials and services. Nothing contained herein shall obligate
Customer to receive Termination Assistance from M&I. No termination of this
Agreement pursuant to Section 11 above or otherwise shall affect the provisions
of this Section 12.1.
12.2 Continuation of Services. Unless M&I terminates this Agreement
pursuant to Section 11.2 above, upon at least ninety (90) days' prior written
request by Customer, M&I shall continue to provide Customer all Services and
the
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Effective Date of Termination shall be extended for a maximum period of twelve
(12) months. If Customer elects to receive the Services for such period, M&I's
then-current standard pricing shall continue to apply to the provision and
receipt of such Services.
13. LIMITATION OF LIABILITY/MAXIMUM DAMAGES ALLOWED
13.1 Equitable Relief. Either party may seek equitable remedies,
including injunctive relief, for a breach of the other party's obligations under
Section 17 of this Agreement, prior to commencing the dispute resolution
procedures set forth in Section 15.1 below.
13.2 Exclusion of Incidental and Consequential Damages. Independent
of, severable from, and to be enforced independently of any other provision of
this Agreement, NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY (NOR TO ANY
PERSON CLAIMING RIGHTS DERIVED FROM THE OTHER PARTY'S RIGHTS) IN CONTRACT, TORT,
OR OTHERWISE, FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE, OR EXEMPLARY
DAMAGES OF ANY KIND--including lost profits, loss of business, or other economic
damage, and further including injury to property, but specifically excluding the
damages set forth in Article 13.3, below--AS A RESULT OF BREACH OF ANY WARRANTY
OR OTHER TERM OF THIS AGREEMENT, INCLUDING ANY FAILURE OF PERFORMANCE,
REGARDLESS OF WHETHER THE PARTY LIABLE OR ALLEGEDLY LIABLE WAS ADVISED, HAD
OTHER REASON TO KNOW, OR IN FACT KNEW OF THE POSSIBILITY THEREOF.
13.3 Maximum Damages Allowed. Notwithstanding any other provision of
this Agreement, and for any reason, including breach of any duty imposed by this
contract, or independent of this contract, and regardless of any claim in
contract, tort, or otherwise, M&I's total, aggregate liability under this
Agreement shall in no circumstance exceed payments made to M&I by Customer under
this Agreement during the three (3) months prior to the act or event giving rise
to such claim.
13.4 Statute of Limitations. No lawsuit or other action may be brought
by either party hereto, or on any claim or controversy based upon or arising in
any way out of this Agreement, after one (1) year from the date on which the
cause of action arose regardless of the nature of the
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claim or form of action, whether in contract, tort, or otherwise; provided,
however, the foregoing limitation shall not apply to the collection of any
amounts due under this Agreement.
13.5 Economic Loss Waiver. In addition to and not in limitation of any
other provision of this Article 13, Customer hereby knowingly, voluntarily, and
intentionally waives any right to recover from M&I any economic losses or
damages in any action brought under tort theories, including, misrepresentation,
negligence and/or strict liability, relating to the quality or performance of
any products or services provided by M&I. For purposes of this waiver, economic
losses and damages include monetary losses or damages to Customer caused by a
defective product or service except personal injury or damage to other property.
Even if remedies provided to Customer under this Agreement shall be deemed to
have failed of their essential purpose, M&I shall have no liability to Customer
under tort theories for economic losses or damages.
13.6 Liquidated Damages. Customer acknowledges that M&I shall suffer a
material adverse impact on its business if this Agreement is terminated prior
to expiration of the Term, and that the resulting damages may not be
susceptible of precise determination. Customer acknowledges that the Termination
Fee is a reasonable approximation of such damages and shall be deemed to be
liquidated damages and not a penalty.
13.7 Essential Elements. Customer and M&I acknowledge and agree that
the limitations contained in this Article 13 are essential to this Agreement,
and that M&I has expressly relied upon the inclusion of each and every provision
of this Article 13 as a condition to executing this Agreement.
14. INSURANCE AND INDEMNITY
14.1 Insurance. M&I shall maintain for its own protection fidelity
bond coverage for the Operations Center personnel; insurance coverage for loss
from fire, disaster or the causes contributing to interruption of normal
services, including replacement of data processing equipment; reconstruction of
data file media and related processing costs; additional expenses incurred to
continue
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operations; and business interruption to reimburse M&I for losses resulting from
suspension of the Operation Center's activities due to physical loss of
equipment.
14.2 Indemnity.
A. By Customer. Customer shall indemnify M&I from, defend M&I
against, and pay any final judgments awarded against M&I, resulting from: (i)
any breach of this Agreement by Customer (ii) Customer's violation of Federal,
state, or other laws or regulations; (iii) work-related injury or death caused
by Customer or its employees or agents; (iv) tangible personal or real property
damage or financial or monetary loss incurred by M&I resulting from Customer's
acts or omissions; and (v) the data, information and/or instructions furnished
by Customer and any inaccuracy or inadequacy therein.
B. By M&I. M&I shall indemnify Customer from, defend Customer
against, and pay any final judgment awarded against Customer, resulting from:
(i) any claim by a Third Party that the Services or the M&I Software infringe
upon any patent, copyright or trademark of a Third Party under the laws of the
United States; (ii) any breach of this Agreement by M&I; (iii) M&I's violation
of Federal, state, or other laws or regulations; (iv) work-related injury or
death caused by M&I, its employees, or agents; and (v) tangible personal or real
property damage resulting from M&I's acts or omissions.
14.3 Indemnification Procedures. If any Third Party makes a claim
covered by this Section against an indemnitee with respect to which such
indemnitee intends to seek indemnification under this Section, such indemnitee
shall give notice of such claim to the indemnifying party, including a brief
description of the amount and basis therefor, if known. Upon giving such notice,
the indemnifying party shall be obligated to defend such indemnitee against such
claim, and shall be entitled to assume control of the defense of the claim with
counsel chosen by the indemnifying party, reasonably satisfactory to the
indemnitee. Indemnitee shall cooperate fully with, and assist, the indemnifying
party in its defense against such claim in all reasonable respects. The
indemnifying party shall keep the indemnitee fully apprised at all times as to
the status of the defense. Notwithstanding the foregoing,
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the indemnitee shall have the right to employ its own separate counsel in any
such action, but the fees and expenses of such counsel shall be at the expense
of such indemnitee. Neither the indemnifying party nor any indemnitee shall be
liable for any settlement of action or claim effected without its consent.
Notwithstanding the foregoing, the indemnitee shall retain, assume, or reassume
sole control over all expenses relating to every aspect of the defense that it
believes is not the subject of the indemnification provided for in this section.
Until both (a) the indemnitee receives notice from indemnifying party that it
will defend, and (b) the indemnifying party assumes such defense, the indemnitee
may, at any time after ten (10) days from the date notice of claim is given to
the indemnifying party by the indemnitee, resist or otherwise defend the claim
or, after consultation with and consent of the indemnifying party, settle or
otherwise compromise or pay the claim. The indemnifying party shall pay all
costs of indemnity arising out of or relating to that defense and any such
settlement, compromise, or payment. The indemnitee shall keep the indemnifying
party fully apprised at all times as to the status of the defense. Following
indemnification as provided in this Section, the indemnifying party shall be
subrogated to all rights of the indemnitee with respect to the matters for which
indemnification has been made.
15. DISPUTE RESOLUTION
15.1 Representatives of Parties. All disputes arising under or in
connection with this Agreement shall initially be referred to the Account
Representatives. If the Account Representatives are unable to resolve the
dispute within five (5) business days after referral of the matter to them, the
managers of the Account Representatives shall attempt to resolve the dispute.
If, after five (5) days they are unable to resolve the dispute, senior
executives of the parties shall attempt to resolve the dispute. If, after five
(5) days they are unable to resolve the dispute, the parties shall submit the
dispute to the chief executive officers of the parties for resolution. Neither
party shall commence legal proceedings with regard to a dispute until completion
of the dispute resolution procedures set forth in this Section 15.1, except to
the extent necessary to preserve its rights or maintain a superior position.
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15.2 Continuity of Performance. During the pendency of the dispute
resolution proceedings described in this Article 15, M&I shall continue to
provide the Services so long as Customer shall continue to pay all undisputed
amounts to M&I in a timely manner.
16. REPRESENTATIONS AND WARRANTIES
16.1 By M&I. M&I represents and warrants that:
A. Rights. M&I has the right to provide the Services hereunder,
using all computer software required for that purpose.
B. Organization and Approvals. M&I is a corporation validly
existing and in active status under the laws of the State of Wisconsin. It has
all the requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement. The execution, delivery and performance of
this Agreement has been duly authorized by M&I and this Agreement is enforceable
in accordance with its terms against M&I. No approval, authorization or consent
of any governmental or regulatory authorities is required to be obtained or made
by M&I in order for M&I to enter into and perform its obligations under this
Agreement.
16.2 By Customer. Customer represents and warrants that:
A. Organization. It is a corporation validly existing and in good
standing under the laws of the state of its incorporation.
B. Authority. It has all the requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement.
The execution, delivery and performance of this Agreement has been duly
authorized by Customer and this Agreement is enforceable in accordance with its
terms against Customer.
C. Approvals. No approval, authorization or consent of any
governmental or regulatory authorities required to be obtained or made by
Customer in order for
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Customer to enter into and perform its obligations under this Agreement.
17. CONFIDENTIALITY AND OWNERSHIP
17.1 Customer Data. Customer shall remain the sole and exclusive owner
of all Customer Data and other Confidential Information (as hereinafter
defined), regardless of whether such data is maintained on magnetic tape,
magnetic disk, or any other storage or processing device. All such Customer Data
and other Confidential Information shall, however, be subject to regulation and
examination by the appropriate auditors and regulatory agencies to the same
extent as if such information were on Customer's premises. "Customer Data" means
any and all data and information of any kind or nature submitted to M&I by
Customer, or received by M&I on behalf of Customer, in connection with the
Services.
17.2 M&I Systems. Customer acknowledges that it has no rights in any
software, systems, documentation, guidelines, procedures and similar related
materials or any modifications thereof provided by M&I, except with respect to
Customer's use of the same during the Term to process its data.
17.3 Confidential Information. "Confidential Information" of a party
shall mean all confidential or proprietary information and documentation of such
party, whether or not marked as such, including without limitation with respect
to Customer, all Customer Data. Confidential Information shall not include: (i)
information which is or becomes publicly available (other than by the person or
entity having the obligation of confidentiality) without breach of this
Agreement; (ii) information independently developed by the receiving party;
(iii) information received from a third party not under a confidentiality
obligation to the disclosing party; or (iv) information already in the
possession of the receiving party without obligation of confidence at the time
first disclosed by the disclosing party. The parties acknowledge and agree that
the substance of the negotiations of this Agreement, and the terms of this
Agreement are Considered Confidential Information subject to the restrictions
contained herein. Neither party shall use, copy, sell, transfer, publish,
disclose, display, or otherwise make any of the other party's Confidential
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Information available to any Third Party without the prior written consent of
the other.
17.4 Obligations of the Parties. M&I and Customer shall hold the
Confidential Information of the other party in confidence and shall not disclose
or use such Confidential Information other than for the purposes contemplated by
this Agreement, and shall instruct their employees, agents, and contractors to
use the same care and discretion with respect to the Confidential Information of
the other party or of any Third Party utilized hereunder that M&I and Customer
each require with respect to their own most confidential information, but in no
event less than a reasonable standard of care, including but not limited to, the
utilization of security devices or procedures designed to prevent unauthorized
access to such materials. Each party shall instruct its employees, agents, and
contractors of its confidentiality obligations hereunder and not to attempt to
circumvent any such security procedures and devices. Each party's obligation
under the preceding sentence may be satisfied by the use of its standard form of
confidentiality agreement, if the same reasonably accomplishes the purposes here
intended. All such Confidential Information shall be distributed only to persons
having a need to know such information to perform their duties in conjunction
with this Agreement.
17.5 Security. M&I shall be responsible for, and shall establish and
maintain safeguards against, any disaster, loss or alteration of the Customer
Data in the possession of M&I. Such safeguards shall be no less rigorous than
that M&I uses to protect its own data of a similar nature.
18. MANAGEMENT OF PROJECT
18.1 Account Representatives. Each party shall cause an individual to
be assigned ("Account Representative") to devote time and effort to management
of the Services under this Agreement following the Conversion. Neither party
shall reassign or replace its Account Representative during the first six (6)
months of his or her assignment without the consent of the other party, except
if such individual voluntarily resigns, is dismissed for cause, or is unable to
work due to his or her death or disability.
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18.2 Reporting and Meetings. Within sixty (60) days after the
Effective Date, the parties shall mutually agree upon (a) an appropriate set of
periodic reports to be issued by M&I to Customer during the Conversion Period
and during the remainder of the Term; and (b) an appropriate set of periodic
meetings to be held between the Account Representatives during the Conversion
Period and the remainder of the Term. Meetings shall be held to review
performance, changes, resource utilization and such other matter as appropriate.
18.3 Development Projects and Technical Support. Upon Customer's
written request, M&I will develop and provide to Customer a good faith estimate
of any additional charges which Customer may incur in connection with the
operation of any new software, major modification or enhancements developed by
M&I or the acquisition of Third Party software. Customer agrees that M&I will
have the opportunity to bid on and be considered for all software development,
maintenance and other technology projects related to the Services that Customer
wishes to implement. Nothing contained herein shall obligate M&I to develop
enhancements requested by Customer.
19. REGULATORY COMPLIANCE
A. Customer shall be solely responsible for monitoring and
interpreting (and for complying with, to the extent such compliance requires no
action by M&I) the federal and state laws, rules and regulations pertaining to
Customer's business (the "Legal Requirements"). Based on Customer's Proper
Instructions, M&I shall select the processing parameter settings, features and
options (collectively, the "Parameters") within M&I's system that will apply to
Customer. Customer shall be responsible for determining that such selections are
consistent with the Legal Requirements and with the terms and conditions of any
agreements between Customer and its clients. In making such determinations,
Customer may rely upon the written descriptions of such Parameters contained in
the User Manuals. M&I shall perform system processing in accordance with the
Parameters.
B. Subject to the foregoing, M&I shall perform an ongoing review
of federal laws, rules and regulations. M&I
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shall maintain the features and functions set forth in the User Manuals for each
of the Services in accordance with all changes in federal laws, rules and
regulations applicable to such features and functions, in a non-custom
environment. For any new federal laws, rules and regulations, M&I will perform a
business review, with input from M&I's customers and user groups. If M&I elects
to support a new federal law, rule or regulation through changes to the M&I
Software, M&I shall develop and implement modifications to the Services to
enable Customer to comply with such new federal laws, rules and regulations. In
all other circumstances relating to regulatory compliance of the Services,
including state laws, rules and regulations, the provisions of Section 5.2 above
(New Services) shall apply.
C. In any event, M&I shall work with Customer in developing and
implementing a suitable procedure or direction to enable Customer to comply with
federal and state laws, rules and regulations applicable to the Services being
provided by M&I to Customer, including in those instances when M&I has elected
to, but it is not commercially practicable to, modify the M&I Software prior to
the regulatory deadline for compliance.
20. DISASTER RECOVERY
20.1 Services Continuity Plan. M&I shall maintain throughout the Term
of the Agreement a Services Continuity Plan (the "Plan") in compliance with
applicable regulatory requirements. "Disaster" shall have the meaning set forth
in the Plan. Review and acceptance of the Plan as may be required by any
applicable regulatory agency shall be the responsibility of Customer. M&I shall
cooperate with Customer in conducting such reviews as such regulatory agency may
from time to time reasonably request. A detailed executive summary of the Plan
has been provided to Customer. Updates to the Plan shall be provided to Customer
without charge.
20.2 Relocation. If appropriate, M&I shall relocate all affected
Services to an alternate disaster recovery site as expeditiously as possible
after declaration of a Disaster, and shall coordinate with Customer all
requisite telecommunications modifications necessary to achieve full
connectivity to the disaster recovery site, in material compliance with all
regulatory requirements.
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20.3 Resumption of Services. The Plan provides that, in the event of a
Disaster, M&I will be able to resume the Services in accordance therewith within
the time periods specified in the Plan. In the event M&I is unable to resume the
Services to Customer within the time periods specified in the Plan, Customer
shall have the right to terminate this Agreement without payment of the
Termination Fee upon written notice to M&I delivered within forty-five (45) days
after declaration of such Disaster.
20.4 Annual Test. M&I shall test its Plan by conducting one (1) test
annually and shall provide Customer with a description of the test results in
accordance with applicable laws and regulations.
21. GENERAL TERMS AND CONDITIONS
21.1 Transmission of Data. The responsibility and expense for
transportation and transmission of, and the risk of loss for, data and media
transmitted between M&I and Customer shall be borne by Customer. Data lost by
M&I following processing, including loss of data transmission, shall either be
restored by M&I from its backup media or shall be reprocessed from Customer's
backup media at no additional charge to Customer.
21.2 Equipment and Network. Customer shall obtain and maintain at its
own expense its own data processing and communications equipment as may be
necessary or appropriate to facilitate the proper use and receipt of the
Services. Customer shall pay all installation, monthly, and other charges
relating to the installation and use of communications lines between Customer's
datacenter and the Operations Center, as set forth in Schedule 21.2 ("Network
Schedule"). M&I maintains and will continue to maintain a network control center
with diagnostic capability to monitor reliability and availability of the
communication lines described in the Network Schedule, but M&I shall not be
responsible for the continued availability or reliability of such communications
lines.
21.3 Reliance on Data. M&I will perform the Services described in this
Agreement on the basis of information furnished by Customer. M&I shall be
entitled to rely upon
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any such data, information, or instructions as provided by Customer. If any
error results from incorrect input supplied by Customer, Customer shall be
responsible for discovering and reporting such error and supplying the data
necessary to correct such error to M&I for processing at the earliest possible
time.
21.4 Data Backup. Customer shall maintain adequate records for at least
ten (10) business days including (i) microfilm images of items being transported
to M&I or (ii) backup on magnetic tape or other electronic media where
transactions are being transmitted to M&I, from which reconstruction of lost or
damaged items or data can be made. Customer assumes all responsibility and
liability for any loss or damage resulting from failure to maintain such
records.
21.5 Balancing and Controls. Customer shall (a) on a daily basis,
review all input and output, controls, reports, and documentation, to ensure the
integrity of data processed by M&I; and (b) on a daily basis, check exception
reports to verify that all file maintenance entries and nondollar transactions
were correctly entered. Customer shall be responsible for initiating timely
remedial action to correct any improperly processed data which these reviews
disclose.
21.6 Use of Services. Customer assumes exclusive responsibility for the
consequences of any Proper Instructions Customer may give M&I, for Customer's
failure to properly access the Services in the manner prescribed by M&I, and for
Customer's failure to supply accurate input information. Customer agrees that,
except as otherwise permitted in this Agreement or in writing by M&I, Customer
will use the Services only for its own internal business purposes to service its
banking customers and clients and will not sell or otherwise provide, directly
or indirectly, any of the Services or any portion thereof to any Third Party.
21.7 Regulatory Assurances. M&I and Customer acknowledge and agree that
the performance of these Services will be subject to regulation and examination
by Customer's regulatory agencies to the same extent as if such Services were
being performed by Customer. Upon request, M&I agrees to provide any appropriate
assurances to such agency and agrees to subject itself to any required
examination or
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regulation. Customer agrees to reimburse M&I for reasonable costs actually
incurred due to any such examination or regulation that is performed primarily
for the purpose of examining Services used by Customer.
A. Notice Requirements. Customer shall be responsible
for complying with all regulatory notice provisions to any applicable
governmental agency, which shall include providing timely and adequate notice to
the Chief Examiner of the Federal Home Loan Bank Board, the Office of Thrift
Supervision, the Office of the Comptroller of the Currency, The Federal Deposit
Insurance Corporation, the Federal Reserve Board, or their successors, as
applicable (collectively, the "Federal Regulators"), as of the Effective Date of
this Agreement, identifying those records to which this Agreement shall apply
and the location at which such Services are to be performed.
B. Examination of Records. The parties agree that the
records maintained and produced under this Agreement shall, at all times, be
available at the Operations Center for examination and audit by governmental
agencies having jurisdiction over the Customer's business, including any Federal
Regulator. The Director of Examinations of any Federal Regulator or his or her
designated representative shall have the right to ask for and to receive
directly from M&I any reports, summaries, or information contained in or derived
from data in the possession of M&I related to the Customer. M&I shall notify
Customer as soon as reasonably possible of any formal request by any authorized
governmental agency to examine Customer's records maintained by M&I, if M&I is
permitted to make such a disclosure to Customer under applicable law or
regulations. Customer agrees that M&I is authorized to provide all such
described records when formally required to do so by a Federal Regulator.
C. Audits. M&I shall cause a Third Party review of the
Operations Center and related internal controls, to be conducted annually by its
independent auditors. M&I shall provide to Customer, upon written request, one
copy of the audit report resulting from such review. Remote datacenters used by
M&I in providing some of the Services shall be reviewed by M&I's internal
auditors in accordance with procedures and on a schedule satisfactory to the
Federal Regulator responsible for supervision of M&I.
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21.8 IRS Filing. Customer represents it has complied with all laws,
regulations, procedures, and requirements in attempting to secure correct tax
identification numbers (TINS) for Customer's payees and customers and agrees to
attest to this compliance by an affidavit provided annually. Customer authorizes
M&I to act as Customer's agent and sign on Customer's behalf the Affidavit
required by the Internal Revenue Service on Form 4804, or any successor form.
Exhibit B (Attorney-in-Fact Appointment) and Exhibit C (Affidavit) shall be
executed by Customer contemporaneously with the execution of this Agreement.
Customer acknowledges that M&I's execution of the Form 4804 Affidavit on
Customer's behalf does not relieve Customer of responsibility to provide
accurate TINs or liability for any penalties which may be assessed for failure
to comply with TIN requirements.
21.9 Affiliates. Customer agrees that it is responsible for assuring
compliance with this Agreement by those Affiliates receiving Services under this
Agreement. Customer agrees to be responsible for the submission of its
Affiliates, data to M&I for processing and for the transmission to Customer's
Affiliates of such data processed by and received from M&I. Customer agrees to
pay any and all fees owed under this Agreement for Services rendered to its
Affiliates.
21.10 Future Acquisition. Customer acknowledges that M&I has
established the Fee Schedule and enters into this Agreement on the basis of
M&I's understanding of the Customer's current need for Services and Customer's
anticipated future need for Services as a result of internally generated
expansion of its customer base. If the Customer expands its operations by
acquiring Control of additional financial institutions or the Customer
experiences a Change in Control (as hereinafter defined), the following
provisions shall apply:
A. Acquisition of Additional Entities. If Customer
acquires Control after the date hereof of one or more bank holding companies,
banks, savings and loan associations or other financial institutions that are
not currently Affiliates, M&I agrees to provide Services for such new Affiliates
and such Affiliates shall automatically be included in the definition of
"Customer"; provided that
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(a) the Conversion of each new Affiliate must be scheduled at a mutually
agreeable time (taking into account, among other things, the availability of M&I
Conversion resources) and must be completed before M&I has any obligation to
provide Services to such new Affiliate; (b) the Customer will be liable for any
and all Expenses in connection with the Conversion of such new Affiliate; and
(c) Customer shall pay Conversion Fees in an amount to be mutually agreed upon
with respect to each new Affiliate.
B. Change in Control of Customer. If a Change in Control
occurs with respect to Customer, M&I agrees to continue to provide Services
under this Agreement; provided that (a) M&I obligation to provide Services shall
be limited to the entities comprising the Customer prior to such Change in
Control and (b) M&I's obligation to provide Services shall be limited in any and
all circumstances to the number of accounts and items processed in the 3-month
period prior to such Change in Control occurring plus 25%.
22. MISCELLANEOUS PROVISIONS
22.1 Governing Law. The validity, construction and interpretation of
this Agreement and the rights and duties of the parties hereto shall be governed
by the internal laws of the State of Wisconsin, excluding its principles of
conflict of laws.
22.2 Venue and Jurisdiction. In the event of litigation to enforce the
terms of this Agreement, the parties consent to venue in an exclusive
jurisdiction of the courts of Milwaukee County, Wisconsin and the Federal
District Court for the Eastern District of Wisconsin. The parties further
consent to the jurisdiction of any federal or state court located within a
district which encompasses assets of a party against which a judgment has been
rendered, either through arbitration or litigation, for the enforcement of such
judgment or award against such party or the assets of such party.
22.3 Entire Agreement; Amendments. This Agreement, together with the
exhibits and schedules hereto, constitutes the entire agreement between M&I and
the Customer with respect to the subject matter hereof. There are no
restrictions, promises, warranties, covenants or
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undertakings other than those expressly set forth herein and therein. This
Agreement supersedes all prior negotiations, agreements, and undertakings
between the parties with respect to such matter. This Agreement, including the
exhibits and schedules hereto, may be amended only by an instrument in writing
executed by the parties or their permitted assignees.
22.4 Assignment. This Agreement may not be assigned by either party, by
operation of law or otherwise, without the prior written consent of the other
party, which consent shall not be unreasonably withheld, provided that (a) M&I's
consent need not be obtained in connection with the assignment of this Agreement
pursuant to a merger in which Customer is a party and as a result of which the
surviving Entity becomes an Affiliate of another bank holding company, bank,
savings and loan association or other financial institution, so long as the
provisions of Section 21.10 are complied with; and (b) M&I may freely assign
this Agreement (i) in connection with a merger, corporate reorganization or sale
of all or substantially all of its assets, stock or securities, or (ii) to any
Entity which is a successor to the assets or the business of the M&I Data
Services division of M&I.
22.5 Relationship of Parties. The performance by M&I of its duties and
obligations under this Agreement shall be that of an independent contractor and
nothing contained in this Agreement shall create or imply an agency's
relationship between Customer and M&I, nor shall this Agreement be deemed to
constitute a joint venture or partnership between Customer and M&I.
22.6 Notices. Except as otherwise specified in the Agreement, all
notices, requests, approvals, consents and other communications required or
permitted under this Agreement shall be in writing and shall be personally
delivered or sent by (i) first class U.S. mail, registered or certified, return
receipt requested, postage pre-paid; or (ii) U.S. express mail, or other,
similar overnight courier service to the address specified below. Notices shall
be deemed given on the day actually received by the party to whom the notice is
addressed.
37
<PAGE> 39
In the case of Customer: First National Bank
of Lehigh Access
1300 Homestead Road
Lehigh Access FL 35936
Attn: Lloyd Weber
President & CEO
For Billing Purposes: --------------------------
--------------------------
--------------------------
--------------------------
In the case of M&I: M&I Data Services
4900 West Brown Deer Road
Brown Deer WI 53223
Attn:
-------------------
Senior Vice President
Sales & Marketing
-------------------
Vice President and
General Counsel
22.7 Headings. Headings in this Agreement are for reference purposes
only and shall not effect the interpretation or meaning of this Agreement.
22.8 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original but all of
which together constitute one and the same agreement.
22.9 Waiver. No delay or omission by either party to exercise any right
or power it has under this Agreement shall impair or be construed as a waiver of
such right or power. A waiver by any party of any breach or covenant shall not
be construed to be a waiver of any succeeding breach or any other covenant. All
waivers must be in writing and signed by the party waiving its rights.
22.10 Severability. If any provision of this Agreement is held by court
or arbitrator of competent jurisdiction to be contrary to law, then the
remaining provisions of this Agreement will remain in full force and effect.
Articles 11, 13 and 17 and Sections 22.1, 22.2 and 22.18 shall survive the
expiration or earlier termination of this Agreement for any reason.
38
<PAGE> 40
22.11 Attorneys' Fees and Costs. If any legal action is commenced in
connection with the enforcement of this Agreement or any instrument or agreement
required under this Agreement, the prevailing party shall be entitled to costs,
attorneys' fees actually incurred, and necessary disbursements incurred in
connection with such action, as determined by the court.
22.12 Financial Statements. M&I agrees to furnish to the Customer
copies of the then-current annual report for the Marshall & Ilsley Corporation,
within 45 days after such document is made publicly available.
22.13 Publicity. Neither party shall use the other parties' name or
trademark or refer to the other party directly or indirectly in any media
release, public announcement or public disclosure relating to this Agreement or
its subject matter, in any promotional or marketing materials, lists or business
presentations, without consent from the other party for each such use or
release. Customer agrees that neither it, its directors, officers, employees or
agents shall disclose this Agreement or any of the terms or provisions of this
Agreement to any other party.
22.14 Solicitation. Neither party shall solicit the employees of the
other party during the Term of this Agreement, for any reason.
22.15 No Third Party Beneficiaries. Each party intends that this
Agreement shall not benefit, or create any right or cause of action in or on
behalf of, any person or entity other than the Customer and M&I.
22.16 Force Majeure. Notwithstanding any provision contained in this
Agreement, neither party shall be liable to the other to the extent fulfillment
or performance if any terms or provisions of this Agreement is delayed or
prevented by revolution or other civil disorders; wars; acts of enemies;
strikes; lack of available resources from persons other than parties to this
Agreement; labor disputes; electrical equipment or availability failure; fires;
floods; acts of God; federal, state or municipal action; statute; ordinance or
regulation; or, without limiting the foregoing, any other causes not within its
control, and which by the exercise of reasonable diligence
39
<PAGE> 41
it is unable to prevent, whether of the class of causes hereinbefore enumerated
or not. This clause shall not apply to the payment of any sums due under this
Agreement by either party to the other.
22.17 Construction. M&I and Customer each acknowledge that the
limitations and exclusions contained in this Agreement have been the subject of
active and complete negotiation between the parties and represent the parties'
voluntary agreement based upon the level of risk to Customer and M&I associated
with their respective obligations under this Agreement and the payments to be
made to M&I and the charges to be incurred by M&I pursuant to this Agreement.
The parties agree that the terms and conditions of this Agreement shall not be
construed in favor of or against any party by reason of the extent to which any
party or its professional advisors participated in the preparation of this
document.
22.18 Waiver of Jury Trial. Each of Customer and M&I hereby knowingly,
voluntarily and intentionally waives any and all rights it may have to a trial
by jury in respect of any litigation based on, or arising out of, under, or in
connection with, this Agreement or any course of conduct, course of dealing,
statements (whether verbal or written), or actions of M&I or Customer,
regardless of the nature of the claim or form of action, written contract or
tort, including negligence.
40
<PAGE> 42
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in their names as of the date first above written.
MARSHALL & ILSLEY CORPORATION ("M&I")
ACTING THROUGH ITS DIVISION,
M&I DATA SERVICES
By:
--------------------------
Name: Owen J. Sullivan
Title: President
Outsourcing Business Group
By:
--------------------------
Name: Thomas R. Mezera
Title: Senior Vice President
Sales & Marketing
LEHIGH ACRES FIRST NATIONAL BANK ("CUSTOMER")
1300 Homestead Road
Lehigh Access FL 33936
By:
--------------------------
Name: Lloyd Weber
Title: President & CEO
41
<PAGE> 43
EXHIBIT A
AUTHORIZATION AGREEMENT
The undersigned ("Customer") hereby authorizes M&I Data Services, a
division of the Marshall & Ilsley Corporation, ("M&I") to initiate debit entries
and to initiate, if necessary, credit entries and adjustments for any excess
debit entries or debit entries made in error, to Customer's account indicated
below and the depository named below, to debit and/or credit the same such
account.
This authority is to remain in full force and effect for the period coinciding
with the term (and any renewals thereof) of the Outsourcing Agreement made the
______________ day of ________________ 1999, and any addenda thereto (the
"Agreement"), pursuant to the terms and conditions specified in the Agreement.
DEPOSITORY NAME:
---------------------------------------
ADDRESS:
---------------------------------------
CITY/STATE/ZIP:
---------------------------------------
TELEPHONE NUMBER:
---------------------------------------
ROUTING TRANSIT NUMBER:
---------------------------------------
ACCOUNT NUMBER:
---------------------------------------
LEHIGH ACRES FIRST NATIONAL BANK
("customer")
BY:
--------------------------------
Name: LLOYD WEBER
Title: PRESIDENT & CEO
42
<PAGE> 44
EXHIBIT B
ATTORNEY-IN-FACT APPOINTMENT
Customer hereby appoints M&I Data Services, a division of the Marshall
& Ilsley Corporation ("M&I") as: (1) customer's attorney-in-fact and empowers
M&I to authorize the Internal Revenue Service (IRS) to release information
return documents supplied to the IRS by M&I to states which participate in the
"Combined Federal/State Program"; and (2) Customer's agent to sign on Customer's
behalf the Affidavit required by the Internal Revenue Service on Form 4804, or
any successor form.
LEHIGH ACRES FIRST NATIONAL BANK
("Customer")
By:
-------------------------
Name: Lloyd Weber
Title: President & CEO
43
<PAGE> 45
EXHIBIT C
AFFIDAVIT
STATE OF )
-------------------------
)ss.
COUNTY OF )
-------------------------
I, Lloyd Weber, being first duly sworn, on oath, depose and say:
1. I am an employee of Lehigh Acres First National Bank. I have
personal knowledge of my employer's practices with regard to procuring and
reporting tax identification numbers (TINS) and authority to execute this
Affidavit on my employer's behalf.
2. Lloyd Weber has complied with all laws, regulations, procedures, and
requirements in attempting to secure correct TINs for its payees. This
compliance has been pursued with due diligence, and any failure to secure
correct TINs is due to reasonable cause.
LEHIGH ACRES FIRST NATIONAL BANK
("Customer")
By:
-------------------------
Name: Lloyd Weber
Title: President & CEO
Subscribed and sworn to before me
this day of , 1999.
------ --------
- --------------------------------------
- -------------------------------------- Notary Public
44
<PAGE> 46
My Commission expires:
-------------------
45
<PAGE> 47
SCHEDULE 1.2
AFFILIATES
46
<PAGE> 48
SCHEDULE 4.2
CONVERSION PLAN
The schedule listed below has been developed based on the information provided
to date. Time frames and activities are subject to change as the project is
further defined. In addition to the schedule below, an issues list accompanies
this Schedule 4.2 to outline specific responsibilities which are part of this
Conversion project plan. The issues list documents the parties' understandings
and commitments as of the Effective Date, and shall be supplemented throughout
the Conversion Period as additional information is made available and further
agreements are made by the parties.
WEEKS PRIOR
TO CONVERSION EVENT
26 WEEKS PROJECT ORGANIZATION AND ADMINISTRATION
Specific individuals to support this Conversion will be
assigned at the Customer and at M&I. Internal project
initiation documents will be completed, and a detailed
project plan will be developed at M&I.
24 WEEKS PROJECT KICKOFF MEETING
A kickoff meeting is held at the bank to introduce M&I
Conversion Project Management to the Customer's project
team. The overall Conversion process will be reviewed.
Specific details will be discussed regarding project
scope, roles and responsibilities, Conversion major
events, and critical success factors.
EQUIPMENT/NETWORK ASSESSMENT
Each office will be visited to record the layout of each
location from a network perspective and to inventory
existing equipment, including terminals, printers, ATM
machines, controllers, and modems. This information will
be evaluated to determine requirements for the future.
HIGH-LEVEL APPLICATION AND OPERATIONS REVIEW
A discussion of each application will be conducted at a
high level to better understand services provided to
existing customers. Current operational processes
supported, such as item capture, statement rendering,
and exception items, will be reviewed as well as
interfaces to the current processor to clarify service
requirements and special needs.
CONVERSION TAPES ORDERED
Conversion tapes will be ordered from the appropriate
service providers.
22 WEEKS EQUIPMENT/NETWORK PLAN DEVELOPMENT
Based on the Equipment/Network Assessment, an Equipment/
Network Plan with a network design and hardware/software
requirements will be developed.
STAFF TRAINING AT M&I
Key individuals from the Bank will attend application
training at M&I to help with Conversion analysis and to
prepare to train others at the Bank.
47
<PAGE> 49
<TABLE>
<S> <C>
20 WEEKS MIFIL REPORTS CREATED
M&I reports will be produced using the Conversion
test tapes to list each field, all values found in
each field, and the number of occurrences of each
value.
18 WEEKS PRODUCT MAPPING
Meetings will be conducted with M&I product support
representatives to review the business processes
supported by the Bank based on the product knowledge
of Bank personnel current application documentation,
and Conversion file record layouts. Each field will
be discussed for clarification and determination of
the corresponding use on the M&I System. All backroom
support will be reviewed, a general training plan
will be developed, and enhancements will be
identified.
16 WEEKS TRAINING BANK AND TRAINING NETWORK ESTABLISHED
A training Bank will be set up on the M&I system to
facilitate training of Bank staff and testing of the
Conversion. The appropriate network and equipment
will be installed at designated training locations.
10 WEEKS TEST REPORT REVIEW
Conversion Test Reports will be reviewed by the
product support representative with key contacts at
the Bank to verify accuracy of the Conversion
process. Issues will be identified and addressed.
OPERATIONAL ANALYSIS
Business processes, as planned,
will be reviewed to confirm that system parameters
and processes are aligned with operational
procedures. Issues win be identified and addressed.
6 WEEKS BANK NETWORK INSTALLED
The network to support all Bank locations will be
installed. As a general rule, one terminal will be
installed at each location in preparation for
Readiness Review. The remainder of the equipment
will be installed during the last few days before
the Conversion.
4 WEEKS READINESS REVIEW
This is a three-day test of our preparedness for the
live Conversion with M&I project staff on-site for
support. Test scripts will be distributed to Bank
personnel at each location for data entry on the
training Bank. Nightly posting will be run with item
capture test files as input, reports will be
produced, and the test Bank will be balanced each
day. Bank personnel will be asked to support all
functions of this test using operational procedures
from data entry to balancing. This will give Bank
staff a chance to practice using the system and gain
confidence before dealing with their customers in a
production environment. It also will serve to
validate network configuration, interface processes,
staff training, and operational procedures. Issues
will be identified and addressed.
</TABLE>
48
<PAGE> 50
<TABLE>
<S> <C>
2 WEEKS FINAL PREPARATION FOR CONVERSION
Technical setup for the Conversion will be reviewed
for accuracy, and follow-up calls will be made to
external firms supporting the Bank to confirm
previously made arrangements (Federal Reserve,
current software vendors, ATM support, etc.). A
detailed Conversion Weekend Plan will be developed
and distributed to all key contacts.
0 WEEKS FILES CONVERTED, "LIVE" ON M&I
Files will be converted to M&I over Conversion
weekend, after posting on the old processor for
Friday night.
CONVERSION SUPPORT ON-SITE
The M&I project manager and product support
representatives will be on-site the week following
Conversion to support Bank personnel.
</TABLE>
49
<PAGE> 51
SCHEDULE 5.1
ADP SERVICES
50
<PAGE> 52
SCHEDULE 5.3
ACH SERVICES
A. Definitions. The following terms, as referenced from the
NACHA Rules, shall have the following meanings for the purposes of the
Agreement:
1. "Applicable Law" means the NACHA Rules, the rules of
local ACH Associations, the rules of any and all ACH Operators, and other
applicable law.
2. "Automated Clearing House Operator" or "ACH Operator"
means the central clearing facility, operated by a Federal Reserve Bank ("FRB")
or a private organization, which receives entries from the ODFI or the Third
Party processor acting as an agent for the ODFI, and distributes entries to the
appropriate RDFI or the Third Party processor acting as an agent for the RDFI,
and performs the settlement functions for the affected financial institutions.
3. "Originating Depository Financial Institution" or
"ODFI" means the institution that receives the payment instructions from the
Originators and forwards the entries to the ACH Operator.
4. "Originator" means a person that has authorized an
ODFI to transmit a credit or debit entry to the deposit account of an RDFI.
5. "Receiving, Depository Financial Institution" or
"RDFI" means the institution that receives ACH entries from the ACH Operator and
posts them to the accounts of its depositors.
B. General. Customer hereby authorizes M&I to initiate and
receive automated clearing house debit and credit entries, adjustments to debit
entries and credit entries to Customer's account to be set up during the
Conversion Period, to credit and/or debit the same to such account, and to
provide various ACH services, as described below, to Customer pursuant to the
terms and conditions specified in this Schedule 5.3. The ACH entries covered
shall hereinafter be referred to as the "ACH Entries." Except as otherwise
provided herein, the terms used in this Schedule 5.3 shall have the same
meanings as ascribed to
51
<PAGE> 53
such terms in the Operating Rules of the National Automated Clearing House
Association, as in effect from time to time (the "NACHA Rules").
C. ACH Services.
1. M&I shall act as Customer's agent for initiating and
transmitting ACH Entries to the appropriate ACH Operator. In addition, M&I shall
act as Customer's agent for receiving ACH Entries from an ACH Operator. For all
ACH Entries initiated by M&I pursuant to this Agreement, Customer, and not M&I,
shall be the ODFI when M&I receives payment instructions directed to Customer's
routing number from an Originator, or the RDFI when M&I receives ACH Entries
directed to Customer's routing number from an ACH Operator.
2. M&I shall transmit ACH Entries in accordance with the
format requirements of the NACHA Rules to an ACH Operator using Customer's
Routing Number. M&I shall receive ACH Entries on behalf of Customer that are
transmitted to M&I by an ACH Operator. M&I shall provide reports to Customer, as
described in the ACH User Manual. If agreed to between Customer and M&I, M&I
shall provide for the posting of ACH Entries to Customer deposit accounts.
3. All warranties of an ODFI or RDFI prescribed under
Applicable Law shall be in effect and applicable to Customer, and not M&I, with
respect to all ACH Entries.
4. M&I may provide additional ACH Services as requested
by Customer and agreed to by M&I in writing.
D. M&I PC ACH Services. Customer may provide its business
depositors with personal computer access to M&I's ACH Services in accordance
with the ACH User Manual (the "PC ACH Service"). Customer shall be responsible
for informing M&I prior to permitting a new depositor to begin using the PC ACH
Service. Customer also shall inform M&I whether any credit limit shall apply to
the ACH Entries of a depositor utilizing the PC ACH Service.
52
<PAGE> 54
E. Customer Depositor Inquiries, Erroneous or Rejected ACH
Entries.
1. Customer shall be responsible for handling all
inquiries of its depositors regarding ACH Entries, including inquiries regarding
credits or debits to a depositor's account resulting from an ACH Entry. M&I
agrees to reasonably assist Customer in responding to such inquiries by
providing information to Customer concerning ACH Entries.
2. As described in the ACH User Manual, M&I shall
provide reports to Customer showing errors and rejections resulting from ACH
Entries transmitted on behalf of Customer during a particular day. It shall be
Customer's responsibility to research and correct such ACH Entries.
F. Credit Limits.
1. Customer may from time to time establish one or more
credit limits applicable to ACH Entries involving a particular depositor or all
depositors of Customer. Such credit limits shall be established by written
notice from Customer and shall be implemented by M&I as soon as reasonably
practicable.
2. In the event that an ACH Entry exceeds a credit limit
communicated to M&I by Customer, M&I shall promptly give oral or written notice
to Customer. Customer may either approve the ACH Entry as an exception to the
credit limit, request that it be held over to the next day, or reject such ACH
Entry provided, however, that any exception to the credit limit must be approved
in writing by Customer.
G. User Manuals.
1. M&I shall provide Customer with a copy of the ACH
User Manual and any updates to such manual. Customer agrees to comply with the
requirements of such manual.
2. It shall be Customer's responsibility, and Customer
is authorized, to forward a copy of the applicable portion of the ACH User
Manual, and any updates
53
<PAGE> 55
thereto, to Customer's depositors that utilize the PC ACH Service.
H. NACRA Rules. Prior to providing ACH origination services,
Customer shall enter into an agreement with the Originator in compliance with
the NACRA Rules, including but not limited to the requirement of the NACHA Rules
that such agreement include a provision whereby the Originator agrees to be
bound by the NACHA Rules. M&I shall have no responsibility for ensuring that the
Originators have entered into such agreements.
I. Limitation On Liability.
1. M&I is acting solely in its capacity as agent for
Customer in connection with the initiation, transmission and receipt of ACH
Entries on behalf of Customer. As agent, M&I shall be under no obligation to
provide funds to any party to settle for any ACH Entry received or initiated by
M&I. Upon notification from Customer of the occurrence of an error or omission
with respect to an ACH Entry, M&I shall promptly furnish corrected ACH
Entry(ies) to an ACH Operator, unless the NACHA Rules prohibit the processing of
the correct ACH Entry(ies). Notwithstanding any provision in the Agreement to
the contrary, M&I's liability to Customer for claims arising out of the ACH
Services performed by M&I pursuant to this Schedule 5.3 shall be limited to the
extent of errors and omissions which are caused by M&I's gross negligence or
willful misconduct and which cannot be remedied through the processing of
appropriate corrected ACH Entry(ies).
2. M&I shall make reasonable efforts to deliver ACH
Entries to Customer or to an ACH Operator, as appropriate, prior to any
applicable deadline for such delivery. M&I does not guarantee timely delivery.
M&I shall have no liability to Customer as a result of any late delivery, except
to the extent such late delivery is (i) caused by the gross negligence or
willful misconduct of M&I and (ii) made more than 24 hours after its scheduled
deadline.
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<PAGE> 56
SCHEDULE 5.
DATA WAREHOUSE SERVICES
The following terms and conditions shall govern the provision of Data Warehouse
Services by M&I to Customer.
1. Definitions.
<TABLE>
<S> <C>
1.1. "Data Warehouse Services" shall mean the Operational Data
Warehouse, the Management Data Warehouse, and the Information
Desktop, or any one of the foregoing.
1.2. "Information Desktop" shall mean the information support
system developed by M&I to access key business information
contained in the Management Data Warehouse and the
Operational Data Warehouse. The tools included in the
Information Desktop as of the Effective Date are (a)
InFormatter; (b) Report Edge; and (c) Data Dictionary. Me
software for the Information Desktop tools will reside on
equipment located at Customer's facility and operated by
Customer's employees.
1.3. "Management Data Warehouse" shall mean the data which is
translated, mapped, summarized and downloaded from the
Operational Data Warehouse, and stored in a relational
database. The Management Data Warehouse is operated on a
Unix-based processing platform.
1.4. "Operational Data Warehouse" shall mean extracts of M&I's
legacy applications in a MVS environment, as well as a
limited number of third party applications for which M&I has
created and maintains interfaces.
</TABLE>
All other capitalized terms not defined herein shall have the meaning
ascribed to them in the Outsourcing Agreement
2. License.
<TABLE>
<S> <C>
2.1. Grant. Subject to the terms and conditions of the Agreement,
M&I grants Customer a perpetual nonexclusive,
nontransferrable license to use the Information Desktop
solely for Customer's own internal processing and computing
needs and for no other purpose. Customer shall be entitled to
use the Information Desktop in a productive mode only at the
locations specified on attached Exhibit A. Copies of
Information Desktop used for archival testing, temporary
backup or temporary transfer to another site (not to exceed
90 days) shall not be considered productive use.
2.2. Scope. Customer's use of Information Desktop shall be limited
to the number of locations and/or workstations specified on
Exhibit A and for any additional licenses granted by M&I at a
future date. Customer acknowledges and agrees that the
Information Desktop is designed for use with the version of
software made available from time to time by M&I through the
M&I Service Bureau, and that interfacing of the Information
Desktop to other software or mainframe applications is
outside the scope of this Agreement
2.3 Restrictions on Use. Customer shall not (a) distribute, sell
assign or transfer (except as permitted under this Agreement)
or sublicense the Information Desktop, or any part thereof,
to any Third Party; (b) adapt, modify, translate, reverse
engineer, decompile, disassemble, or create derivative works
based on the Information Desktop or any part thereof; (c)
copy the Information Desktop, in whole or in part, except for
making a single
</TABLE>
55
<PAGE> 57
archival copy for each Affiliate which copy shall contain the
notices and labels required under this Agreement; (d) use the
Information Desktop in any manner to provide service bureau,
time sharing, shared resource or other computer services to
Third Parties; or (e) export the Information Desktop outside
the United States of America, either directly or indirectly.
3. Training and Consulting Services. Upon request of Customer, M&I
agrees to provide the relationship management consulting services and
user training specified on attached Exhibit B (collectively,
"Consulting Services"). Unless otherwise specified on Exhibit B,
hourly rates for Consulting Services are billable at M&I's
then-current rates. Customer shall reimburse M&I for all reasonable
and actual out-of-pocket expenses incurred by M&I in connection with
the consulting services including supplies, travel, lodging and meals.
Customer pays for their attendees.
4. Performance Standards. M&I agrees to provide the Data Warehouse
Services in accordance with the performance standards set forth on
Exhibit C.
5. Fees. Customer agrees to pay M&I for the Data Warehouse Services in
accordance with attached Exhibit D or, in lieu thereof, the fees
specified on the Fee Schedule (Schedule 8.1) to the Agreement. Payment
shall be made within thirty (30) days after Customer's receipt of
M&I's invoice.
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<PAGE> 58
Exhibit A
<TABLE>
<CAPTION>
<S> <C>
Location 1 Number of Licenses:
Name:
Street Address:
City, State Zip:
Location 2 Number of Licenses:
Name:
Street Address:
City, State Zip:
Location 3 Number of Licenses:
Name:
Street Address:
City, State Zip:
Location 4 Number of Licenses:
Name:
Street Address:
City, State Zip:
Location 5 Number of Licenses:
Name:
Street Address:
City, State Zip:
</TABLE>
57
<PAGE> 59
Exhibit B
<TABLE>
<CAPTION>
TRAINING
CLASS NUMBER OF PRICE PER STUDENT TOTALS
STUDENTS
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Introduction to InFormatter (2 days) $600
Advanced InFormatter (2 days) $600
Introduction to Report Edge (2 days) $600
Advanced Report Edge (2 days) $600
Financial Reporting (1 day) $300
- --------------------------------------------------------------------------------
TOTAL
</TABLE>
NOTE: TRAINING AT A NON-M&I FACILITY INCREASES THE PER DAY RATE BY $5O PER
STUDENT.
CONSULTING
<TABLE>
<CAPTION>
NUMBER OF
SERVICE DAYS/HOURS RATE TOTALS
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Call Report: 2 Days $1,500 per day $3,000
Additional Consulting: $ 150 per hour
- -----------------------------------------------------------------------------
TOTAL
</TABLE>
NOTE: CALL REPORT RULE DEVELOPMENT CONSULTING PROVIDED ON A PER QUOTE BASIS.
58
<PAGE> 60
Exhibit C
INFORMATION DESKTOP/DATABANK
SERVICE LEVEL AGREEMENT
INFORMATION DESKTOP AVAILABILITY:
This availability refers to the time frames that the Information Desktop can be
used to access the DataBank. The Information Desktop will be able to access
the DataBank during the following time frames:
<TABLE>
<S> <C>
MONDAY-FRIDAY 7 A.M. TO 10 P.M.
SATURDAY 7 A.M. TO 6 P.M.
SUNDAY NOT AVAILABLE
</TABLE>
These times are specific to an institution's time zone. The availability of
Information Desktop does not automatically imply availability of prior day data
updates as explained with the next service level.
AVAILABILITY OF PRIOR-DAY MANAGEMENT DATA WAREHOUSE UPDATES:
Availability of prior-day data updates refers to the time frames for when an
institution's latest IBS application data is available in the DataBank. Due to
varying account volumes and month-end DataBank processing being three times
that of a normal day's processing, two service levels will be established as
follows:
<TABLE>
<CAPTION>
INSTITUTION'S* AGGREGATE
DEPOSIT ACCOUNT VOLUME NORMAL PROCESSING DAY** MONTH-END PROCESSING
- ---------------------------------------------- --------------------
DAY**
--------------------
<S> <C>
< 250,000 ACCTS. 9:30 A.M. NOON
>= 250,000 ACCTS. 10:30 A.M. NEXT DAY
</TABLE>
* Institution is defined as the logical grouping of banks forming a
holding company or other higher-level entity.
** Availability times are specific to an institution's time zone.
Note: This excludes Profitability Processing due to re-analysis processing.
Customers using this data will be notified separately concerning Profitability
service levels.
NORMAL PROCESSING DAY
On normal processing days, only the Management Detail is updated. If processing
has been completed prior to Information Desktop availability, data will be
accessible and will reflect the updates from the previous day. If processing is
still occurring upon Information Desktop availability, the updates will not be
available until loading is complete. If processing has not yet started upon
Information Desktop availability, the data in the Management Detail will remain
the same as the prior day until loading begins for the most recent updates.
During the loading process, the Management Detail layer will not be available.
Month-end Snapshot data and Management Summary data are not updated on a normal
processing day and, therefore, will be accessible upon Information Desktop
availability.
MONTH-END PROCESSING DAY
At month-end, all layers of the DataBank are updated. Similar to normal
processing days, if the month-end updates are not started prior to Information
Desktop availability, the prior day's data will be available until loading
begins. Once loading of month-end updates begins, data will not be available
until the load is complete.
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The Status Inquiry function on the Information Desktop will always indicate the
current processing status of the DataBank for your organization. You can use
the Status Inquiry to determine which levels of the DataBank are currently
available.
AVAILABILITY OF MONTHLY ASSET LIABILITY FILES:
This availability refers to when the Asset Liability interface files are
updated with an institution's prior month-end Deposit Loan, General Ledger,
CPI, MCIF, and Investment information. The availability is as follows:
<TABLE>
<CAPTION>
FILE AVAILABILITY
---------------------------
<S> <C>
Deposit Fourth Business Day of Month
Loan Fourth Business Day of Month
GL Fourth Business Day of Month
GL Retro Three Business Days Following Date of Retro
Investments
Projected Fourth Business Day of Month
Final Eighth Business Day of Month
CPI Seventh Business Day of Month
MCIF- Tape Shipped By Tenth Business Day
AVAILABILITY OF OTHER FILES
Salespartner/
Bankers Insight Updated Weekly on Monday
CPI Seventh Business Day of Month
</TABLE>
AVAILABILITY OF CALL REPORTING FILES
This availability refers to when the Call Reporting interface files are updated
with the prior month's information, using the most current mapping rules
established by a customer. The Call Reporting interfaces will be available four
business days following a Month-End Processing day. Also, data will be
available three business days following the GL retros and the second business
day following a customer refresh of their Call Reporting rules.
SERVICES CONTINUITY:
Services continuity consists of three aspects: hardware and/or system software
component failures, platform failure, and site disaster. Currently, no
redundancy has been implemented in the UNIX processing environment. In the event
of a hardware component failure (such as a system board failure or disk array
failure), the failure will be addressed as soon as possible, with a downtime of
no longer than 24 hours. In the event of a platform failure, a new platform
will be implemented as soon as possible, with a downtime of no longer than two
weeks. In the event of a site disaster, Information Desktop/DataBank will not
have a service level initially. In the event of a platform failure where
service is delayed more than one day, the system will be restored to the last
backup prior to the failure before processing is resumed. Processing associated
with the outage days will not be performed. Processing will resume with the
information available at the point in time the system is restored.
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EXHIBIT D
Information Desktop License Fees:
Please see Schedule 8.1 attached hereto for details.
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SCHEDULE 5.5
ITEM PROCESSING SERVICES
Following is a short description of services performed by M&I Data Services
(M&I., Tampa) These descriptions may be revised from time to time via written
memoranda, signed by an officer of M&I, and attached to this exhibit. For this
Agreement, "Customer" refers to Lehigh Acres First National Bank, and "Client"
refers to the user of Lehigh Acres First National Bank products or services. It
is specifically agreed hereto that Customer will pay M&I and that Customer will
be responsible for the collection of its service charges directly from its
Client for the services rendered by M&I.
1. BULKFILE - Pull daily exception items, maintain inventory control,
perform monthly statement sort, daily fine sort GL and savings items if
required by customer, retain truncated items 15 days, repair DDA debit
rejected items.
2. INCLEARINGS - Receive and capture for posting on-us items from FRB
and other clearing agents, notify the customer of totals received.
Microfilm checks during item capture.
3. MAIL SERVICES - Meter all USPS out going mail and make available for
pre-sort vendor pick-up. Receive, sort and ready for next day delivery
all inter-office mail. Track and invoice customer for postage and
pre-sort expense used.
4. MICROFICHE - Produce fiche of item processing reports on a daily
basis, POD and Inclearing capture runs. Fiche reports will include
capture listing, audit listing, out going cash letters and an all
items listing.
5. NON-POST - Re-qualify items for rerun or return pursuant to the
customer direction. Non-post items include but are not limited to;
account not found, post no transaction and account closed.
6. OUTING RETURN ITEMS - Prepare form, routing the returned item to the
bank of first deposit in the most expedient manner. Make large dollar
notification as applicable. Microfilm all local returns with return
item draft.
7. OVERDRAFT PROCESS - Receive return decision from customer, pull items
identified by the customer for return, review item for guarantees, mark
them accordingly, and prepare item for return.
8. POD/CAPTURE/TRANSMISSION - Receive proof work from customer location,
debit first transaction sequence, MICR encode items for high speed
sorter processing, prepare proof corrections according to customer
guidelines, capture & balance, produce cash letters for transit items,
reformat data in M&I record layouts, transmit to host processor.
9. RESEARCH AND ADJUSTMENT - Perform photocopy research and adjustments
on cash letters to meet end client and customer requirements. Turn
around time frames will be defined in the Schedule of Services.
Follow-up, clear and reconcile outstanding items in research and
adjustment asset and liability suspense accounts. Customer will
interoffice research request form to M&I.
10. RETURNED DEPOSITED ITEMS - Receive and process according to customer
policy incoming return items. Maintain list of special handling
clients provided by customer. Microfilm returned checks with Returned
Item Notice and mail as directed by customer.
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<PAGE> 64
11. STATEMENT RENDERING - Fold, insert debit items and/or marketing fliers
and meter statements within pre-defined time frames identified in the
Schedule of Services document. Identify special handling accounts,
(e.g. serial sort and special instruction statements), distribute
accordingly, insert missing/extra item notice when applicable.
12. STOP PAYMENTS - Receive Stop Suspect report, pull suspects, determine
match, if match mark accordingly and return. Place large dollar
notification calls as appropriate.
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<PAGE> 65
SCHEDULE 7.1
EFD SERVICES
A. Definitions. The following terms shall have the following
meanings for the purposes of the Agreement:
1. "Account" shall mean any account maintained by
Customer's depositors and includes a checking, savings, NOW, money market or
other asset account or credit card account or any one of the various loan
accounts or lease accounts.
2. "ATM" shall mean the cash disbursement automated
teller machines and/or script dispenser or other similar device which conforms
to M&I's standards.
3. "Card" shall mean a plastic card issued by or on
behalf of Customer to Customer's Cardholders for use in effecting Transactions
at Terminals.
4. "Cardholder" shall mean. any person who has, or is
authorized to use, an Account with Customer and to whom a Card and/or PIN is
issued for use in originating Transactions.
5. "Credit Card" means any Card that primarily accesses
an account which is an asset of the Customer or a Third Party for whom Customer
is an agent and who issues the Card.
6. "Debit Card" shall mean any Card that primarily
accesses an Account which is a liability of the Customer.
7. "EFD Services" shall mean the electronic funds
delivery Services set forth in this Schedule.
8. "Item" means any electronic message which
communicates and effects a Transaction between Customer and its depositors
through a Terminal and which includes the date, type and amount of such
Transaction, identification of the depositor, the Customer, the Terminal, the
location of the Terminal, the PIN and authorization codes.
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<PAGE> 66
9. "MasterCard" shall mean MasterCard International,
Inc.
10. "Network" shall mean a shared electronic funds
transfer system operating under a common name whereby financial institutions
are available to route, process and settle certain financial Transactions.
11. "PIN" shall mean a Cardholder's personal
identification number which is used by the Cardholder at the Terminals as one
means of identification of such Cardholder.
12. "POS" means point of sale.
13. "Terminal" means an ATM, a POS device, or any other
device which directly or indirectly is supported by M&I and meets the
specifications of M&I.
14. "Transaction" shall mean any function supported by
M&I and attempted by Cardholders or others at a Terminal and includes: (a) cash
withdrawals from an Account; (b) deposit to an Account; (c) balance inquiries
regarding an Account; (d) transfer from one Account to another Account; (e)
payment enclosed for Credit Cards and loans; and (f) POS authorizations and
settlement.
15. "Visa" shall mean VISA U.S.A., Inc.
B. Customer shall execute applications for membership in Visa
and/or MasterCard. M&I agrees to assist Customer in obtaining sponsorship by an
appropriate financial institution, if necessary. Customer shall provide M&I with
copies of its fully executed Visa and/or Mastercard membership agreements
promptly after receipt by Customer.
C. Customer shall comply with the articles, bylaws, operating
regulations, rules, procedures and policies of Visa and/or MasterCard and shall
be solely responsible, as between Customer and M&I, for any claims,
liabilities, lawsuits and expenses arising out of or caused by Customer's
failure to comply with the same. Customer agrees to maintain an account with a
financial institution approved by M&I and Customer hereby authorizes M&I to
charge any amounts due to M&I, for EFD Services, against any credits due to
Customer to Customer's account whether or not such charges create overdrafts.
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<PAGE> 67
D. Customer understands and agrees that M&I may terminate EFD
services immediately in the event M&I's access to any Network is terminated by
the Network provider.
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<PAGE> 68
SCHEDULE 8.1
FEE SCHEDULE
67
<PAGE> 69
SCHEDULE 9.1
PERFORMANCE STANDARDS
UPDATED 4/20/99
A. Batch Processing. M&I will initiate batch processing and have
operations reports(1) available for transmission to Customer or available for
print at an M&I center, within (REPLACE WITH HOURS BASED ON ACCOUNT VOLUMES
BELOW- MINIMUM IS FIVE (5) HOURS) on all processing days in a calendar month
[fifteen (15) hours at year-end] provided M&I receives all input data from
Customer by (STANDARD IS 1:00 A.M C.T. FOR LOWER ACCOUNT VOLUMES). This batch
window is based on (CURRENT ACCOUNT VOLUMES) plus account growth not to exceed
20%. Batch windows shall be adjusted by M&I in consultation with Customer
should account volumes exceed this level. Performance Standard: M&I shall not
miss deliverable identified above more than twice in any calendar month.
B. On-line Availability. M&I will ensure that its on-line computing
facilities are available for the processing of Customer's on-line
transactions at a minimum of ninety-seven point five percent (97.5%) of the
time, as prescribed by Customer, measured over a calendar month at the point of
departure from M&I's communications controller. The time prescribed by Customer
for each processing day for which on-line computing facilities shall be made
available for each product or service is set forth below. Processing day shall
mean any weekday which is not declared a holiday by the Federal Reserve Bank of
Chicago. "Availability" for purposes of this paragraph shall be expressed as a
percentage for each calendar month and shall be the number 100 less the ratio
of (i) time period of unscheduled outages over (ii) total time prescribed less
the time period of scheduled outages.
(1) OPERATIONS REPORTS ARE DEFINED AS STANDARD SYSTEM REPORTS AS LISTED IN
APPENDIX A OF THE M&I DATA SERVICES PRODUCT PRICE LIST EXCLUDING NEW RETIREMENT
SYSTEM REPORTS.
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<PAGE> 70
Service Availability
<TABLE>
<CAPTION>
Product/Service Central Time
<S> <C>
ATM (BASE24 AVAILABILITY)(2)
Monday - Thursday 12:01 a.m. - 12:00 midnight
Friday 12:01 a.m. - 12:00 midnight
Saturday 12:01 a.m. - 12:00 midnight
Sunday 12:01 a.m. - 12:00 midnight
CARDBASE MANAGEMENT SYSTEM
Monday - Thursday 7:00 a.m. - 10:00 p.m.
Friday 7:00 a.m. - 10:00 p.m.
Saturday 7:00 a.m. - 10:00 p.m.
Sunday (nonstandard) 7:00 a.m. - 10:00 p.m.
CIS & DEPOSIT SYSTEM
Monday - Thursday 7:00 a.m. - 10:00 p.m.
Friday 7:00 a.m. - 10:00 p.m.
Saturday 7:00 a.m. - 10:00 p.m.
Sunday (nonstandard) 7:00 a.m. - 10:00 p.m.
GENERAL LEDGER
Monday - Thursday 7:00 a.m. - 8:00 p.m.
Friday 7:00 a.m. - 8:00 p.m.
Saturday 7:00 a.m. - 4:30 p.m.
LOAN SYSTEM
Monday - Thursday 7:00 a.m. - 10:00 p.m.
Friday 7:00 a.m. - 10:00 p.m.
Saturday 7:00 a.m. - 10:00 p.m.
Sunday (nonstandard) 7:00 a.m. - 10:00 p.m.
INFORMATION DESKTOP (ACCESS TO 2 DAY
OLD DATA)
Monday - Thursday 7:00 a.m. - 10:00 p.m.
Friday 7:00 a.m. - 10:00 p.m.
Saturday 7:00 a.m. - 6:00 p.m.
INFORMATION DESKTOP (ACCESS TO PRIOR
DAY DATA)
Acct Volume NORMAL PROCESSING DAY
<250,000 accounts 9:30 a.m. central time
= and > 250,000 accounts 10:30 a.m. central time
MONTH-END PROCESSING
</TABLE>
69
<PAGE> 71
<TABLE>
<S> <C>
12:00 p.m.
Next Day
TELLER SYSTEM
Monday - Thursday 6:45 a.m. - 10:00 p.m.
Friday 6:45 a.m. - 10:00 p.m.
Saturday 6:45 a.m. - 10:00 p.m.
Sunday (nonstandard) 6:45 a.m. - 10:00 p.m.
IRS GOVERNMENT REPORTING SYSTEMS
Monday - Thursday 7:00 a.m. - 10:00 p.m.
Friday 7:00 a.m. - 10:00 p.m.
Saturday 7:00 a.m. - 10:00 p.m.
Sunday (nonstandard) 7:00 a.m. - 10:00 p.m.
ACCOUNT ANALYSIS
Monday - Thursday 7:00 a.m. - 10:00 p.m.
Friday 7:00 a.m. - 10:00 p.m.
Saturday 7:00 a.m. - 10:00 p.m.
Sunday (nonstandard) 7:00 a.m. - 10:00 p.m.
SAFE BOX
Monday - Thursday 7:00 a.m. - 10:00 p.m.
Friday 7:00 a.m. - 10:00 p.m.
Saturday 7:00 a.m. - 10:00 p.m.
Sunday (nonstandard) 7:00 a.m. - 10:00 p.m.
VRU (MONEY TALKS)(2)
Monday - Thursday 12:01 a.m. - 12:00 midnight
Friday 12:01 a.m. - 12:00 midnight
Saturday 12:01 a.m. - 12:00 midnight
Sunday 12:01 a.m. - 12:00 midnight
ACCOUNTS PAYABLE
Monday - Thursday 7:00 a.m. - 8:00 p.m.
Friday 7:00 a.m. - 8:00 p.m.
Saturday 7:00 a.m. - 4:30 p.m.
FIXED ASSETS
Monday - Thursday 7:00 a.m. - 8:00 p.m.
Friday 7:00 a.m. - 8:00 p.m.
Saturday 7:00 a.m. - 4:30 p.m.
BANK CONTROL
Monday - Thursday 7:00 a.m. - 6:45 p.m.
Friday 7:00 a.m. - 9:30 p.m.
</TABLE>
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<TABLE>
<S> <C>
Saturday 7:00 a.m. - 4:30 p.m.
ACCOUNT RECONCILIATION
Monday - Thursday 7:00 a.m. - 6:45 p.m.
Friday 7:00 a.m. - 9:30 p.m.
Saturday 7:00 a.m. - 4:30 p.m.
DEPOSIT TELLER(2)
Monday - Thursday 12:01 a.m. - 12:00 midnight
Friday 12:01 a.m. - 12:00 midnight
Saturday 12:01 a.m. - 12:00 midnight
Sunday 12:01 a.m. - 12:00 midnight
</TABLE>
(2) M&I's objective is to provide 24 X 7 hour availability for these
systems. M&I does, however, need to perform, regular technical maintenance
(e.g., NCP maintenance), CPU IPLS, DASD installs, HIS gens, etc.) This type of
maintenance is performed between 2:00 a.m. and 6:00 a.m., CST/CDT. These
activities may result in system downtime during this window.
C. Processing Time. M&I will process transactions in an average of
2.5 seconds for teller transactions (not to exceed six (6) seconds for five
percent (5%) of all transactions per month) and in an average of three point
five (3.5) seconds (not to exceed seven (7) seconds for five percent (5%) of
all transactions per month) for CRT transactions as measured over a calendar
month, from the time the transaction is sent by the Customer's controller or
gateway to the time the processed data is returned to the Customer's controller
or gateway. Should M&I not be able to perform in accordance with the
Performance Standards because Customer failed to acquire network or equipment
recommended by M&I, or such additional network or equipment as may be
reasonably necessary based on the circumstances, M&I shall notify Customer in
writing and Customer shall either acquire such network and/or equipment or
accept the response time that is achieved.
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SCHEDULE 11.1
TERMINATION FEE
A. Termination for Convenience. Except as set forth in Paragraph D below,
if Customer elects to terminate this Agreement for any reason, Customer shall
pay M&I the Termination Fee computed in accordance with this Schedule 11.1. The
Termination Fee shall be paid at least sixty (60) days prior to the Effective
Date of Termination. In addition to the foregoing, Customer shall pay to M&I any
amortized but unpaid Conversion fees and all reasonable costs in connection with
the disposition of equipment, facilities and contracts specifically related to
M&I's performance of the Services under this Agreement.
B. Termination for Cause by M&I. If M&I terminates this Agreement in
accordance with Sections 11.2 or 11.3 of the Agreement, Customer shall pay M&I
the Termination Fee as set forth in this Schedule 11.1. The Termination Fee
shall be paid at least sixty (60) days prior the Effective Date of Termination.
In addition to the foregoing, Customer shall pay to M&I any amortized but unpaid
Conversion fees and all reasonable costs in connection with the disposition of
equipment, facilities and contracts specifically related to M&I's performance of
the Services under this Agreement.
C. Termination for Cause by Customer. If Customer terminates this
Agreement in accordance with Sections 11.2, 11.3 or 11.4, then Customer shall
not be obligated to pay M&I the Termination Fee.
D. Termination Fee. The Termination Fee shall be an amount equal to sixty
percent (60%) of the Estimated Remaining Value.
72
<PAGE> 1
EXHIBIT 10.10
BANK RESOURCES, INC.
================================================================================
- --------------------------------------------------------------------------------
Suite 106-36
4290 Bells Ferry Road
Kennesaw, Georgia 30144
(770) 591-7011 Fax (770) 516-9247
March 18, 1998
Organizers & Directors
Proposed De Novo Bank
c/o Mr. Lloyd Webber
Lehigh, FL
Ladies and Gentlemen:
We are pleased to offer the following description of the terms our services to
you in connection with the organization of a de novo bank to be located in
Lehigh, Florida. If the terms of our engagement meet with your approval please
so indicate by signing the enclosed copy of this letter and returning it to us
for our files. Our engagement will cover the following:
Assistance With Regulatory Process
We understand that you wish to file a charter application with the Office of the
Comptroller of the Currency (the "OCC") to organize a new nationally chartered
bank (the "charter application") and simultaneously file an application with the
Federal Deposit Insurance Corporation (the "FDIC") for deposit insurance. We
also understand that you wish to file an Application to become a Bank Holding
Company with the Federal Reserve Bank of Atlanta (the "Fed").
We will determine the specific regulatory steps needed to be taken before
submitting your application and advise you about such matters as the filing
fees, publication of notices, and brief you about the policies and procedures
generally applied by the OCC, Fed and the FDIC to evaluate such applications.
We will be responsible for preparing a feasibility analysis for your new bank to
demonstrate that there is a need for the bank and that the convenience of the
community will be enhanced by a new bank. The analysis will include demographic
data for the proposed bank's primary service area, information on your
competition and other relevant information and data which is required to be set
forth in the applications. The feasibility analysis will be contained in and
part of the charter application.
We will prepare a business plan for the new bank including the specific types of
proposed services to be offered by your new bank and the pricing of same. The
business plan will also define the appropriate capital structure for the new
bank and the supporting rationale for the structure.
We will provide you with draft policies and procedures, which you may customize,
to cover administrative functions of the new bank including, but not limited to,
lending, investment, security and audit with a view toward assisting the new
bank in passing the field examination conducted by the OCC, and the FDIC before
the applications will be approved.
We will assist in preparing Organizers' confidential Interagency Biographical
and Financial Report (the "IBF"), which must be filed with the charter
application, to ensure that such information complies as to form and
completeness with customary OCC, and FDIC review standards. Of course it will
be incumbent upon each Organizer to actively participate in the preparation of
this statement.
We will help you respond to any questions about the applications from the OCC
and the FDIC and work expeditiously to provide additional information,
clarifications, and modifications, as necessary, to the applications so that
the applications are deemed "technically complete" and "accepted" for
processing.
<PAGE> 2
BANK RESOURCES, INC.
================================================================================
- --------------------------------------------------------------------------------
Organizers & Directors
Proposed De Novo Bank
Lehigh, Florida Page 2 of 5 March 18, 1998
We will work with your legal counsel in the preparation of organizational
documents for the new bank including Articles of Association, by-laws and other
initial documents required to be filed with the regulators. The legal fees will
be your direct responsibility and are not part of our compensation.
We will assist in the preparation of the FR Y-1. We will assist in the
preparation of an Application to become a Bank Holding Company (collectively
the "BHC App") and in preparing an appropriate pro forma balance sheet and
income statements, as required by the Fed. We will assist you in responding to
any questions or requests for additional information from the Fed concerning
this application.
In summary, we will assist you with the content, presentation and format of the
charter and deposit insurance applications and biographical and financial
statements. You recognize and understand that the OCC, Fed and the FDIC expect
you to be completely familiar and in agreement with the content of the charter
and deposit insurance applications, and that Bank Resources cannot and does not
guarantee that the OCC will approve the proposed bank's charter or that the
FDIC will award deposit insurance.
Term of Engagement
We will continue to provide the aforementioned services until such time as the
proposed bank obtains charter approval from either the OCC and deposit
insurance from the FDIC. You understand and agree, however, that if our
services are required in conjunction with any protests by competing financial
institutions; or, as result of changes in the composition of the organizing
group; or, due to modifications in the bank's business plan after the charter
application is filed with the OCC and FDIC then such services are considered
beyond the scope of this engagement letter. If such additional services are
needed, we will bill you on the basis of the number of hours provided and at
our normal and customary rates per hour.
You may, however, elect to terminate this engagement at any time so long as you
are current in the payment of all fees and expense reimbursements required in
the section entitled "Compensation" below and current in the payment of all
fees and expenses (both billed and incurred) in the event that additional
services described in the preceding paragraph are provided. Any such
termination will become effective immediately upon receipt by us of a written
notice of termination. If we have completed the charter application and related
materials, then such termination will not alter the obligation of the
organizers to pay all professional fees contemplated in the following
description of "Compensation." You understand and agree that all payments
received prior to such termination will not be subject to refund. In the event
of a termination, we will cease providing you with all services.
Compensation
We will prepare the bank's charter application and deposit insurance
application which includes the combination feasibility study and business plan,
the related financial projections for the bank's first five years, and
assistance with the preparation of up to twenty IBF Reports. We will also
attend up to six organizational meetings and also attend the pre-filing meeting
with OCC staff. For the Charter Application services you agree to pay us
professional fees in the amount of $30,000.00 as follows: $4,000 on April 15,
1998; $4,000 on the fifteenth day of each month for six months thereafter; and
a final payment of $2,000 on the fifteenth day of the seventh month.
<PAGE> 3
BANK RESOURCES, INC.
================================================================================
- --------------------------------------------------------------------------------
Organizers & Directors
Proposed De Novo Bank
Lehigh, Florida Page 3 of 5 March 18, 1998
Once the Bank receives final charter approval from the OCC, you shall grant to
us stock options/warrants ("Options") to purchase 3,000 shares of the Bank's
common stock. The Options shall expire ten years from the date of award (or the
opening of the Bank, whichever is later) and the price each share of stock
purchased shall be $10.00 (the "exercise price").(1)
Notwithstanding anything to the contrary as described above, the Options shall
be awarded under substantially the same terms and conditions as any Stock
Warrants or Options which may be awarded to the Organizers of the Bank or the
Board of Directors. However the Options contemplated herein shall be
transferable; subject to "corporate reorganizations" (which may result in a
proportionate increase or decrease in the number of Options and/or the exercise
price); and/or, exercisable in whole or in part. In the event you organize a
bank holding company, the Options contemplated herein shall be issued by the
bank holding company.
In the event that the Options described above are not awarded for any reason,
within six months of the date the Bank is chartered, then the Company or the
Bank shall immediately pay Bank Resources, Inc. an amount equal to $1.40 per
option.
In addition to the professional fees described above, you will be invoiced on
or about the fifth business day of each month for all expenses incurred for
your account. We expect to incur such expenses as travel, telephone, facsimile,
demographic and peer data, express and local courier services, duplication and
binding of numerous copies of the applications and out of pocket expenses. We
apply a late fee of one percent (1%) per month to all unpaid invoices.
Our fees are not contingent on whether the Charter Application is granted.
Accordingly, we do not warrant or guarantee that the OCC will grant a charter
on your behalf.
Miscellaneous
Because we recognize that our engagement by you will necessarily involve
exposure to confidential information with respect to your proposed bank and
the organizers and directors thereof, we agree to hold such information in
confidence and will not disclose same to third parties without your prior
written consent. Likewise, the terms of our engagement by you and the proposed
bank are confidential. No disclosure may be made to a third party without our
prior written consent except by reason of legal, accounting, or regulatory
requirements.
You understand and agree that the terms of our engagement will be governed
under Georgia law and that this letter sets forth all of the terms and
conditions with respect to such engagement. Any amendment or
- -------------
(1) The number of options and exercise price are based on an initial
offering price per share of $10.00. Should the initial offering price be
different then the exercise price and the number of Options shall be increased
or decreased proportionately, as the case may be.
<PAGE> 4
modification of our engagement must be made in writing and signed by each of
us. Neither party to this engagement may bring an action more than one year
after the cause of action arises.
BANK RESOURCES, INC.
===============================================================================
Organizers & Directors
Proposed De Novo Bank
Lehigh, Florida Page 4 of 5 March 18, 1998
You agree to hold our firm and its employees harmless from any and all
liabilities, costs, and expenses relating to this engagement, and expenses (and
those of our legal counsel) incurred by reason of any action taken or committed
to be taken by us in good faith. In no event will we be liable for incidental
or consequential damages even if we have been advised of the possibility of
such damages.
------------------
We very much look forward to working with you on this project and trust that
this letter meets with your approval. Of course, please do not hesitate to
contact the undersigned should you have any questions regarding this matter.
BANK RESOURCES, INC.
By: /s/ Byron Richardson
--------------------------------------
E. Byron Richardson
Principal
The services, terms and fees described above are appropriate and acceptable to
our Organizing Group. I have been authorized by the Organizers to execute this
letter and thereby engage Bank Resources, Inc. The approval of this engagement
letter has been duly recorded in our Organization minutes. We will pay your
retainer of $4,000.00 on April 15, 1998. You may begin work immediately.
/s/ James D. Hull 4/15/98
- ------------------------------------ --------------------
(authorized signature) (Date)
James D. Hull
- ------------------------------------
(printed name)
<PAGE> 1
LEHIGH ACRES FIRST NATIONAL BANKSHARES, INC.
JUNE 26, 1998
LEHIGH ACRES FIRST NATIONAL BANKSHARES, INC., HAS AGREED TO PAY ATTORNEY
KENNETH K. THOMPSON THE SUM OF TEN THOUSAND AND NO/100 DOLLARS ($10,000.00) FOR
SERVICES RENDERED DURING THE ORGANIZATION PHASE OF LEHIGH ACRES FIRST NATIONAL
BANK. IF, FOR WHATEVER REASON THE BANK DOES NOT OPEN, MR. THOMPSON AGREES THAT
THERE WILL NOT BE ANY COMPENSATION DUE. IF THE BANK RECEIVES ALL REGULATORY
APPROVALS INCLUDING THE PRE-OPENING EXAMINATION, MR. THOMPSON WILL SEND AN
INVOICE TO THE BANK FOR PAYMENT OF HIS SERVICES FOR THE AMOUNT STATED ABOVE.
/s/ B. J. Bell
----------------------------
Benjamin Bell, Vice Chairman
/s/ Lloyd Weber
----------------------------
Lloyd Weber, President & CEO
/s/ Kenneth K. Thompson
-----------------------------
Kenneth K. Thompson
<PAGE> 1
EXHIBIT 10.12
THE WARRANTS EVIDENCED BY THIS CERTIFICATE HAVE BEEN ISSUED OR SOLD IN RELIANCE
ON EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT AND STATE LAWS OR PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND STATE LAWS.
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
STOCK WARRANT AGREEMENT
_________, 1999 _____ shares
Warrants to purchase ___ shares (equal to warrants to purchase one
share for each share purchased during the initial public offering, subject to
regulatory approval) of Common Stock (the "Shares") of Lehigh Acres First
National Bancshares, Inc., a Florida corporation (the "Company"), are hereby
granted to _________________________ (the "Warrant Holder") in consideration of
the financial risk associated with Warrant Holder's investment in the Company
during its organizational stage. Such Warrants are granted on the following
terms and conditions:
1. EXERCISE OF WARRANTS. The warrants granted in this agreement
(the "Warrants") may be exercised in whole or in part at any time beginning on
the later of the date that Lehigh Acres First National Bank, (the "Bank") opens
for business and the date that is the first anniversary of the date of the
Company's Registration Statement filed with the Securities and Exchange
Commission in connection with the Company's initial public offering is
completed (the "Vesting Date"). Exercise of the Warrants is subject to the
following:
(a) EXERCISE PRICE. The exercise price (the "Exercise Price")
shall be $10.00 per Share, subject to adjustment pursuant to
Section 2 below.
(b) EXPIRATION OF WARRANT TERM. The Warrants will expire at 5:00
p.m. Eastern Standard Time on the tenth anniversary of the
Vesting Date, and may not be exercised thereafter (the
"Expiration Date").
(c) PAYMENT. The purchase price for Shares as to which the
Warrants are being exercised shall be paid in cash, by wire
transfer, by certified or bank cashier's check, or by
personal check drawn on funds on deposit with the Bank.
(d) METHOD OF EXERCISE. The Warrants shall be exercisable by a
written notice delivered to the President or Secretary of the
Company which shall:
(i) State the owner's election to exercise the Warrants,
the number of Shares with respect to which it is
being exercised, the person in whose name the stock
certificate for such Shares is to be registered and
such person's address and tax identification number
(or, if more than one, the names, addresses and tax
identification numbers of such persons);
<PAGE> 2
(ii) Be signed by the person or persons entitled to
exercise the Warrants and, if the Warrants are being
exercised by any person or persons other than the
original holder thereof, be accompanied by proof
satisfactory to counsel for the Company of the right
of such person or persons to exercise the Warrants;
and
(iii) Be accompanied by the originally executed copy of
this Stock Warrant Agreement.
(e) PARTIAL EXERCISE. In the event of a partial exercise of the
Warrants, the Company shall either issue a new agreement for
the balance of the Shares subject to this Stock Warrant
Agreement after such partial exercise, or it shall
conspicuously note hereon the date and number of Shares
purchased pursuant to such exercise and the number of Shares
remaining covered by this Stock Warrant Agreement.
(f) RESTRICTIONS ON EXERCISE. The Warrants may not be exercised
(i) if the issuance of the Shares upon such exercise would
constitute a violation of any applicable federal or state
securities laws or other law or regulation or (ii) unless the
Company or the holder hereof, as applicable, obtains any
approval or other clearance which the Company determines to
be necessary or advisable from the Federal Reserve Board, the
Office of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation or any other state or federal
banking regulatory agency with regulatory authority over the
operation of the Company or the Bank (collectively the
"Regulatory Agencies"). The Company may require
representations and warranties from the Warranty Holder as
required to comply with applicable laws or regulations,
including the Securities Act of 1933 and state securities
laws.
2. ANTI-DILUTION; MERGER. If, prior to the exercise of Warrants
hereunder, the Company (i) declares, makes or issues, or fixes a record date
for the determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable on the Shares in shares of its capital
stock, (ii) subdivides the outstanding Shares, (iii) combines the outstanding
Shares, (iv) issues any shares of its capital stock by reclassification of the
Shares, capital reorganization or otherwise (including any such
reclassification or reorganization in connection with a consolidation or merger
or and sale of all or substantially all of the Company's assets to any person),
then the Exercise Price, and the number and kind of shares receivable upon
exercise, in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the holder of any Warrant exercised after such
time shall be entitled to receive the aggregate number and kind of shares
which, if such Warrant had been exercised immediately prior to such time, he
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, distribution, subdivision, combination, reclassification,
reorganization, consideration, merger or sale.
3. VALID ISSUANCE OF COMMON STOCK. The Company possesses the full
authority and legal right to issue, sell, transfer, and assign this Warrant and
the Shares issuable pursuant to this Warrant. The issuance of this Warrant
vests in the holder the entire legal and beneficial interests in this Warrant,
free and clear of any liens, claims, and encumbrances and subject to no legal
or equitable restrictions of any kind except as described herein. The Shares
that are
-2-
<PAGE> 3
issuable upon exercise of this Warrant, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and non-assessable, and
will be free of restrictions on transfer other than restrictions under
applicable state and federal securities.
4. COMPLIANCE WITH SECURITIES LAWS. This Agreement and the Warrants
represented hereby were issued in reliance on an exemption from registration
under the Securities Act of 1933 (the "Act") pursuant to Section 4(2) of the
Act, and other applicable exemptions under state securities laws. The Company's
reliance on such exemption is predicated in part on the Warrant Holder's
representations set forth herein. Warrant Holder understands that the Warrants
and the Shares issuable upon exercise of the Warrants may not be sold,
transferred or otherwise disposed of without registration under the Securities
Act of 1933, or an exemption therefrom, and that in the absence of an effective
registration statement covering such shares or an available exemption from
registration under the Securities Act, such Shares must be held indefinitely.
5. RESTRICTIONS ON TRANSFERABILITY. This Agreement, the Warrants, and
the Shares issuable on exercise of the Warrants may not be assigned or
transferred by the Warrant Holder without the Company's prior written consent
and, if so requested by the Company, the delivery by the Warrant Holder to the
Company of an opinion of counsel in form and substance satisfactory to the
Company stating that such transfer or assignment is in compliance with the
Securities Act of 1933 and applicable state securities laws. More particularly,
but without limiting the generality of the foregoing, the Warrants may not be
assigned, transferred (except as provided above), pledged or hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of these Warrants contrary to the
provisions hereof shall be without legal effect.
6. RESTRICTIVE LEGEND. Each certificate for Shares issued upon
exercise of the Warrant shall bear a legend stating that they have not been
registered under the Securities Act of 1933 or any state securities laws and
referring to the restrictions on transferability and sale herein.
7. MANDATORY EXERCISE; TERMINATION. If the Company's or any of its
financial institution subsidiaries' capital falls below the minimum
requirements contained in 12 CFR 3 or below a higher requirement as determined
by the Company's or such Subsidiary's primary bank regulatory agency, such
agency may direct the Company to require Warrant Holders to exercise or forfeit
some or all of their Warrants. All Warrants granted under this Stock Warrant
Agreement are subject to the terms of any such directive.
8. COVENANTS OF THE COMPANY. During the term of the Warrants, the
Company shall:
(a) at all times authorize, reserve and keep available, solely
for issuance upon exercise of this Warrant, sufficient shares
of common stock from time to time issuable upon exercise of
this Warrant;
(b) on receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft, or destruction, on delivery
of any indemnity agreement or bond reasonably satisfactory in
form and amount to the Company or, in the case of mutilation,
on
-3-
<PAGE> 4
surrender and cancellation of this Warrant, at its expense
execute and deliver, in lieu of this Warrant, a new Warrant
of like tenor; and
(c) on surrender for exchange of this Warrant or any Warrant
substituted therefor pursuant hereto, properly endorsed, to
the Company, at its expense, issue and deliver to or on the
order of the holder thereof a new Warrant or Warrants of like
tenor, in the name of such holder or as such holder (on
payment by such holder of any applicable transfer taxes) may
direct, calling in the aggregate on the face or faces thereof
for the issuances of the number of shares of Common Stock
issuable pursuant to the terms of the Warrant or Warrants so
surrendered.
9. NO DILUTION OR IMPAIRMENT. The Company shall not amend its
Certificate of Incorporation or participate in any reorganization, transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities or
any other voluntary action for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in
carrying out all such action as may be reasonably necessary in order to protect
the exercise rights of the holder against improper dilution or other
impairment.
10. AMENDMENT. Neither this Agreement nor the rights granted hereunder
may be amended, changed or waived except in writing signed by each party
hereto.
IN WITNESS WHEREOF, the Company has executed and the holder has
accepted this Stock Warrant Agreement as of the date and year first above
written.
LEHIGH ACRES FIRST NATIONAL
BANCSHARES,INC.
By:
-------------------------
President
(CORPORATE SEAL) Attest:
---------------------
Secretary
WARRANT HOLDER:
By:
-------------------------
Signature
----------------------------
Print Name
-4-
<PAGE> 1
EXHIBIT 10.13 Subscription Agreement
To the Board of Directors
of Lehigh Acres First National Bancshares, Inc.
I hereby subscribe for and agree to purchase the number of shares of
common stock of Lehigh Acres First National Bancshares, Inc., a Florida
corporation (the "Company"), set forth opposite my signature below (the
"Shares"). I have previously contributed funds to cover the start-up expenses
of the Company and desire to use these funds as the purchase price for the
Shares.
I am purchasing a total of 1,500 Shares, at $10 per share, for a total
of $15,000, paid through funds previously contributed to the Company. In lieu
of the Company reimbursing me for these funds and in satisfaction of any
liability the Company owes to me with respect to these funds, I am using these
funds to purchase Shares; and
In order to induce the Company to sell me the Shares, I represent
that:
(a) I am a director of the Company, and I am purchasing
the Shares for my own account for investment only,
and not with a view to, or for sale in connection
with, any distribution of the Shares in violation of
the Securities Act of 1933, any applicable state
securities laws, or any rule or regulation
thereunder (collectively, the "Securities Laws").
(b) I understand that (i) the Company's sale of the
Shares to me has not been registered under the
Securities Laws and therefore the Shares cannot be
sold, transferred, or otherwise disposed of unless
such transaction is subsequently registered under
the Securities Laws, or exemptions from such
registrations are then available; and (ii) a legend
to this effect will be placed on the certificate
representing the Shares.
(c) I understand that in the event the Company
successfully completes an initial public offering of
its common stock as registered under the Securities
Laws, the Company will redeem these shares from me
in the offering at $10.00 per share.
(d) I am purchasing these shares in a private offering
in connection with the formation of the Company to
be a bank holding company for Lehigh Acres First
National Bank.
Sincerely,
--------------------------
Name:
Subscription Accepted and Receipt of Funds Acknowledged:
LEHIGH ACRES FIRST NATIONAL BANCSHARES, INC.
By:
-----------------------
Name:
Title:
Date: June 22, 1999
<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 the Registration Statement on form
SB-2 of our report dated June 21, 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
June 22, 1999
